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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-37824
IMPINJ, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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91-2041398 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
400 Fairview Avenue North, Suite 1200, Seattle, Washington |
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98109 |
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (206) 517-5300
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
Common Stock, par value $0.001 per share |
PI |
The Nasdaq Global Select Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☑ |
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Accelerated filer |
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☐ |
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Non-accelerated filer |
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☐ |
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Smaller reporting company |
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☐ |
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Emerging growth company |
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☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of October 14, 2022, 25,914,998 shares of common stock were outstanding.
Table of Contents
IMPINJ, INC.
QUARTERLY REPORT ON FORM 10-Q
Table of Contents
2
Table of Contents
Risk Factor Summary
Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report captioned “Risk
Factors.” These risks include the following:
•if RAIN market adoption does not continue to develop, or develops slower than we expect, or if RAIN adoption by retailers and supply chain and logistics companies does not continue at the rate we expect, our business will suffer;
•our market is very competitive, and if we fail to compete successfully, our business and operating results will suffer;
•an inability or limited ability of enterprise systems to exploit RAIN information may adversely affect the market for our products;
•if end users or our direct customers fail to design our products into their products and systems, our operating results and prospects will be adversely affected;
•alternative technologies or standards, or changes in existing technologies or standards, may adversely affect RAIN market growth and our business;
•we obtain products we sell through third parties who operate outside of United States and with whom we do not have long-term supply contracts, and if we are unable to effectively manage our relationships with suppliers our operating results and financial condition would be adversely affected;
•we are vulnerable to silicon wafer shortages, which has and may continue to adversely affect our ability to meet demand for our products;
•our products must meet demanding technical and quality specifications and failure of our products to operate as expected could have an adverse effect on our operating results;
•Covid-19 has adversely affected our business, and the magnitude and duration of future Covid-19 effects on our business are uncertain;
•we rely on a small number of customers for a large share of our revenues;
•because we sell and fulfill through channel partners, our ability to affect or determine end-user demand is limited;
•our growth strategy depends in part on the success of strategic relationships with third parties and their continued performance and alignment;
•if we are unable to protect our intellectual property, then our business could be adversely affected;
•we are and may become party to additional intellectual property disputes, which could be time consuming, costly to prosecute, defend or settle, result in the loss of significant rights, and adversely affect RAIN adoption generally;
•we have a history of losses and have only achieved profitability intermittently, and we cannot be certain that we will attain or sustain profitability in the future;
•we have a history of significant fluctuations in our quarterly and annual operating results;
•servicing $287.5 million aggregate principal amount 1.125% convertible senior notes due 2027, or the 2021 Notes, may require a significant amount of cash, and we may not have sufficient cash flow or the ability to raise the funds necessary to satisfy our obligations under the 2021 Notes, in which case our indebtedness may limit our operating flexibility or otherwise affect our business; and
•our executive officers, directors, principal stockholders, together with their affiliates, beneficially owned approximately 24.8% of our outstanding common stock as of September 30, 2022, and as a result are able to exercise significant influence over matters subject to stockholder approval.
3
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
IMPINJ, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value, unaudited)
|
|
|
|
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|
|
|
September 30, 2022 |
|
|
December 31, 2021 |
|
Assets: |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
39,310 |
|
|
$ |
123,903 |
|
Short-term investments |
|
142,541 |
|
|
|
69,443 |
|
Accounts receivable, net |
|
40,667 |
|
|
|
35,449 |
|
Inventory |
|
31,925 |
|
|
|
21,958 |
|
Prepaid expenses and other current assets |
|
5,507 |
|
|
|
5,049 |
|
Total current assets |
|
259,950 |
|
|
|
255,802 |
|
Long-term investments |
|
19,200 |
|
|
|
14,225 |
|
Property and equipment, net |
|
31,121 |
|
|
|
27,500 |
|
Operating lease right-of-use assets |
|
11,414 |
|
|
|
11,667 |
|
Other non-current assets |
|
2,223 |
|
|
|
2,462 |
|
Goodwill |
|
3,881 |
|
|
|
3,881 |
|
Total assets |
$ |
327,789 |
|
|
$ |
315,537 |
|
Liabilities and stockholders' equity (deficit): |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
13,249 |
|
|
$ |
11,732 |
|
Accrued compensation and employee related benefits |
|
7,936 |
|
|
|
6,365 |
|
Accrued and other current liabilities |
|
6,080 |
|
|
|
2,481 |
|
Current portion of operating lease liabilities |
|
3,460 |
|
|
|
4,143 |
|
Restructuring liabilities |
|
102 |
|
|
|
591 |
|
Current portion of long-term debt |
|
— |
|
|
|
9,633 |
|
Current portion of deferred revenue |
|
2,808 |
|
|
|
558 |
|
Total current liabilities |
|
33,635 |
|
|
|
35,503 |
|
Long-term debt, net of current portion |
|
279,846 |
|
|
|
278,661 |
|
Operating lease liabilities, net of current portion |
|
11,790 |
|
|
|
11,934 |
|
Other long-term liabilities |
|
113 |
|
|
|
279 |
|
Deferred revenue, net of current portion |
|
344 |
|
|
|
236 |
|
Total liabilities |
|
325,728 |
|
|
|
326,613 |
|
Commitments and contingencies (Note 5) |
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|
|
|
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Stockholders' equity (deficit): |
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|
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Preferred stock, $0.001 par value — 5,000 shares authorized, no shares issued and outstanding at September 30, 2022 and December 31, 2021 |
|
— |
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|
|
— |
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Common stock, $0.001 par value — 495,000 shares authorized, 25,876 and 24,737 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively |
|
26 |
|
|
|
25 |
|
Additional paid-in capital |
|
390,432 |
|
|
|
351,422 |
|
Accumulated other comprehensive loss |
|
(1,730 |
) |
|
|
(39 |
) |
Accumulated deficit |
|
(386,667 |
) |
|
|
(362,484 |
) |
Total stockholders' equity (deficit) |
|
2,061 |
|
|
|
(11,076 |
) |
Total liabilities and stockholders' equity (deficit) |
$ |
327,789 |
|
|
$ |
315,537 |
|
See accompanying notes to condensed consolidated financial statements.
4
Table of Contents
IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
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|
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2022 |
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2021 |
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2022 |
|
|
2021 |
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Revenue |
$ |
68,270 |
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|
$ |
45,193 |
|
|
$ |
181,210 |
|
|
$ |
137,709 |
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Cost of revenue |
|
30,835 |
|
|
|
22,180 |
|
|
|
83,494 |
|
|
|
67,938 |
|
Gross profit |
|
37,435 |
|
|
|
23,013 |
|
|
|
97,716 |
|
|
|
69,771 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
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Research and development |
|
18,766 |
|
|
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16,789 |
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|
|
55,124 |
|
|
|
46,480 |
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Sales and marketing |
|
9,326 |
|
|
|
8,736 |
|
|
|
28,239 |
|
|
|
24,577 |
|
General and administrative |
|
11,087 |
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|
|
9,860 |
|
|
|
33,888 |
|
|
|
27,012 |
|
Restructuring costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,263 |
|
Total operating expenses |
|
39,179 |
|
|
|
35,385 |
|
|
|
117,251 |
|
|
|
99,332 |
|
Loss from operations |
|
(1,744 |
) |
|
|
(12,372 |
) |
|
|
(19,535 |
) |
|
|
(29,561 |
) |
Other income, net |
|
774 |
|
|
|
2 |
|
|
|
1,367 |
|
|
|
21 |
|
Induced conversion expense |
|
— |
|
|
|
— |
|
|
|
(2,232 |
) |
|
|
— |
|
Interest expense |
|
(1,205 |
) |
|
|
(526 |
) |
|
|
(3,716 |
) |
|
|
(1,576 |
) |
Loss before income taxes |
|
(2,175 |
) |
|
|
(12,896 |
) |
|
|
(24,116 |
) |
|
|
(31,116 |
) |
Income tax expense |
|
(24 |
) |
|
|
(28 |
) |
|
|
(67 |
) |
|
|
(130 |
) |
Net loss |
$ |
(2,199 |
) |
|
$ |
(12,924 |
) |
|
$ |
(24,183 |
) |
|
$ |
(31,246 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share — basic and diluted |
$ |
(0.09 |
) |
|
$ |
(0.53 |
) |
|
$ |
(0.95 |
) |
|
$ |
(1.30 |
) |
Weighted-average shares outstanding — basic and diluted |
|
25,743 |
|
|
|
24,330 |
|
|
|
25,384 |
|
|
|
24,040 |
|
See accompanying notes to condensed consolidated financial statements.
5
Table of Contents
IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Net loss |
$ |
(2,199 |
) |
|
$ |
(12,924 |
) |
|
$ |
(24,183 |
) |
|
$ |
(31,246 |
) |
Other comprehensive loss, net of tax: |
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on investments |
|
(504 |
) |
|
|
(7 |
) |
|
|
(1,691 |
) |
|
|
(6 |
) |
Total other comprehensive loss |
|
(504 |
) |
|
|
(7 |
) |
|
|
(1,691 |
) |
|
|
(6 |
) |
Comprehensive loss |
$ |
(2,703 |
) |
|
$ |
(12,931 |
) |
|
$ |
(25,874 |
) |
|
$ |
(31,252 |
) |
See accompanying notes to condensed consolidated financial statements.
6
Table of Contents
IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2022 |
|
|
2021 |
|
Operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(24,183 |
) |
|
$ |
(31,246 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation |
|
|
4,456 |
|
|
|
3,171 |
|
Stock-based compensation |
|
|
32,230 |
|
|
|
28,951 |
|
Accretion of discount or amortization of premium on investments |
|
|
301 |
|
|
|
694 |
|
Amortization of debt issuance costs |
|
|
1,203 |
|
|
|
283 |
|
Induced conversion expense related to convertible notes |
|
|
2,232 |
|
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(5,218 |
) |
|
|
(2,042 |
) |
Inventory |
|
|
(9,967 |
) |
|
|
17,895 |
|
Prepaid expenses and other assets |
|
|
45 |
|
|
|
(758 |
) |
Accounts payable |
|
|
1,107 |
|
|
|
(1,831 |
) |
Accrued compensation and employee related benefits |
|
|
1,571 |
|
|
|
754 |
|
Accrued and other liabilities |
|
|
1,741 |
|
|
|
1,063 |
|
Operating lease right-of-use assets |
|
|
2,490 |
|
|
|
2,218 |
|
Operating lease liabilities |
|
|
(3,064 |
) |
|
|
(2,772 |
) |
Restructuring liabilities |
|
|
(489 |
) |
|
|
133 |
|
Deferred revenue |
|
|
2,358 |
|
|
|
(6,106 |
) |
Net cash provided by operating activities |
|
|
6,813 |
|
|
|
10,407 |
|
Investing activities: |
|
|
|
|
|
|
Purchases of investments |
|
|
(159,837 |
) |
|
|
(36,431 |
) |
Proceeds from maturities of investments |
|
|
79,508 |
|
|
|
70,000 |
|
Purchases of property and equipment |
|
|
(5,975 |
) |
|
|
(14,181 |
) |
Net cash provided by (used in) investing activities |
|
|
(86,304 |
) |
|
|
19,388 |
|
Financing activities: |
|
|
|
|
|
|
Principal payments on finance lease obligations |
|
|
— |
|
|
|
(2 |
) |
Proceeds from exercise of stock options and employee stock purchase plan |
|
|
12,462 |
|
|
|
11,761 |
|
Payment of 2019 Notes |
|
|
(17,564 |
) |
|
|
— |
|
Net cash provided by (used in) financing activities |
|
|
(5,102 |
) |
|
|
11,759 |
|
Net increase (decrease) in cash and cash equivalents |
|
|
(84,593 |
) |
|
|
41,554 |
|
Cash and cash equivalents |
|
|
|
|
|
|
Beginning of period |
|
|
123,903 |
|
|
|
23,636 |
|
End of period |
|
$ |
39,310 |
|
|
$ |
65,190 |
|
|
|
|
|
|
|
|
Supplemental disclosure of cashflow information: |
|
|
|
|
|
|
Cash paid for interest |
|
$ |
1,803 |
|
|
$ |
863 |
|
Purchases of property and equipment not yet paid |
|
|
2,519 |
|
|
|
2,173 |
|
See accompanying notes to condensed consolidated financial statements.
7
Table of Contents
IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
|
|
|
Other |
|
|
Total |
|
|
|
Common Stock |
|
|
Paid-in |
|
|
Accumulated |
|
|
Comprehensive |
|
|
Stockholders' |
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Deficit |
|
|
Income (Loss) |
|
|
Equity (Deficit) |
|
Balance at December 31, 2021 |
|
|
24,737 |
|
|
$ |
25 |
|
|
$ |
351,422 |
|
|
$ |
(362,484 |
) |
|
$ |
(39 |
) |
|
$ |
(11,076 |
) |
Issuance of common stock |
|
|
483 |
|
|
|
— |
|
|
|
4,611 |
|
|
|
— |
|
|
|
— |
|
|
|
4,611 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
11,314 |
|
|
|
— |
|
|
|
— |
|
|
|
11,314 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(10,461 |
) |
|
|
— |
|
|
|
(10,461 |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(677 |
) |
|
|
(677 |
) |
Balance at March 31, 2022 |
|
|
25,220 |
|
|
$ |
25 |
|
|
$ |
367,347 |
|
|
$ |
(372,945 |
) |
|
$ |
(716 |
) |
|
$ |
(6,289 |
) |
Issuance of common stock |
|
|
327 |
|
|
|
1 |
|
|
|
1,884 |
|
|
|
— |
|
|
|
— |
|
|
|
1,885 |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
10,859 |
|
|
|
— |
|
|
|
— |
|
|
|
10,859 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(11,523 |
) |
|
|
— |
|
|
|
(11,523 |
) |
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(510 |
) |
|
|
(510 |
) |
Induced conversion on 2019 Notes |
|
|
— |
|
|
|
— |
|
|
|
(5,681 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,681 |
) |
Balance at June 30, 2022 |
|
|
25,547 |
|
|
|
26 |
|
|
|
374,409 |
|
|
|
(384,468 |
) |
|
|
(1,226 |
) |
|
|