UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
For the quarterly period ended
For the transition period from to .
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
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.
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).
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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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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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 July 12, 2024,
IMPINJ, INC.
QUARTERLY REPORT ON FORM 10-Q
Table of Contents
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Page |
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3 |
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Item 1. |
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4 |
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4 |
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5 |
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Condensed Consolidated Statements of Comprehensive Income (Loss) |
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6 |
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7 |
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Condensed Consolidated Statements of Changes in Stockholders' Equity |
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9 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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29 |
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Item 4. |
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30 |
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Item 1. |
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31 |
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Item 1A. |
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31 |
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Item 2. |
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48 |
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Item 3. |
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48 |
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Item 4. |
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48 |
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Item 5. |
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49 |
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Item 6. |
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50 |
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51 |
2
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, but are not limited to, the following:
3
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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June 30, 2024 |
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December 31, 2023 |
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Assets: |
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Current assets: |
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Cash and cash equivalents |
$ |
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$ |
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Short-term investments |
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Accounts receivable, net |
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Inventory |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets, net |
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Operating lease right-of-use assets |
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Other non-current assets |
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Goodwill |
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Total assets |
$ |
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$ |
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Liabilities and stockholders' equity: |
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Current liabilities: |
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Accounts payable |
$ |
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$ |
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Accrued compensation and employee related benefits |
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Accrued and other current liabilities |
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Current portion of operating lease liabilities |
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Current portion of long-term debt |
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— |
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Current portion of deferred revenue |
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Total current liabilities |
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Long-term debt |
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Operating lease liabilities, net of current portion |
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Deferred tax liabilities, net |
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Deferred revenue, net of current portion |
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Total liabilities |
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Stockholders' equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss) |
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Accumulated deficit |
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Total stockholders' equity |
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Total liabilities and stockholders' equity |
$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
4
IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data, unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue |
$ |
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$ |
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$ |
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$ |
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Cost of revenue |
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Gross profit |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Amortization of intangibles |
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Restructuring costs |
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— |
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— |
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— |
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Total operating expenses |
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Income (loss) from operations |
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Other income, net |
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Income from settlement of litigation |
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— |
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— |
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— |
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Interest expense |
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( |
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( |
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( |
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Income (loss) before income taxes |
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( |
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Income tax benefit |
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Net income (loss) |
$ |
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$ |
( |
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$ |
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$ |
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Net income (loss) per share — basic |
$ |
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$ |
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$ |
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$ |
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Net income (loss) per share — diluted |
$ |
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$ |
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$ |
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$ |
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Weighted-average shares outstanding — basic |
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Weighted-average shares outstanding — diluted |
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See accompanying notes to condensed consolidated financial statements.
5
IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands, unaudited)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net income (loss) |
$ |
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$ |
( |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Unrealized loss on investments |
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Foreign currency translation adjustment |
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Total other comprehensive income (loss) |
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( |
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Comprehensive income (loss) |
$ |
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$ |
( |
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$ |
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$ |
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See accompanying notes to condensed consolidated financial statements.
6
IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
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Six Months Ended June 30, |
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2024 |
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2023 |
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Operating activities: |
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Net income (loss) |
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$ |
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Adjustments to reconcile net loss to net cash provided by operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Restructuring equity modification expense |
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— |
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Accretion of discount or amortization of premium on investments |
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( |
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Amortization of debt issuance costs |
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Deferred tax expense |
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( |
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Revaluation of acquisition-related contingent consideration liability |
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— |
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Changes in operating assets and liabilities, net of amounts acquired: |
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Accounts receivable |
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Inventory |
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Prepaid expenses and other assets |
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Accounts payable |
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Accrued compensation and employee related benefits |
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Accrued and other liabilities |
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Acquisition-related contingent consideration liability |
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( |
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— |
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Operating lease right-of-use assets |
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Operating lease liabilities |
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( |
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Deferred revenue |
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( |
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Net cash provided by (used in) operating activities |
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( |
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Investing activities: |
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Proceeds from sales of investments |
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— |
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Proceeds from maturities of investments |
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Purchases of intangible assets |
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— |
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( |
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Purchases of property and equipment |
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( |
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( |
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Business acquisitions, net of cash acquired |
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— |
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( |
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Net cash provided by investing activities |
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Financing activities: |
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Proceeds from exercise of stock options and employee stock purchase plan |
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Payment of acquisition-related contingent consideration |
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( |
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— |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
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Net increase in cash and cash equivalents |
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Cash and cash equivalents |
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Beginning of period |
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End of period |
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$ |
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$ |
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Supplemental disclosure of cashflow information: |
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Cash paid for interest |
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Purchases of property and equipment not yet paid |
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Operating lease liabilities arising from obtaining ROU assets |
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— |
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Lease liabilities arising from remeasurement of ROU assets |
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— |
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— |
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Acquisition-related contingent consideration liability |
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— |
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See accompanying notes to condensed consolidated financial statements.
7
IMPINJ, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, unaudited)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Accumulated |
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Comprehensive |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at December 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issuance of common stock |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Restructuring equity modification expense |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance at March 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance at June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-in |
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Accumulated |
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Comprehensive |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Issuance of common stock |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Common stock issued for Voyantic Acquisition (Note 4) |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance at June 30, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
||||
See accompanying notes to condensed consolidated financial statements.
8
IMPINJ, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements include Impinj, Inc. and its wholly owned subsidiaries. We have eliminated intercompany balances and transactions in consolidation. We have prepared these condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP"), and applicable rules and regulations of the Securities and Exchange Commission ("SEC"), regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Accordingly, these interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2023 included in Impinj, Inc.’s Annual Report on Form 10-K, which was filed with the SEC on February 12, 2024.
The unaudited condensed consolidated interim financial statements, in the opinion of management, reflect all adjustments, comprising normal recurring adjustments, necessary to state fairly our financial position, results of operations and our cash flows for the periods presented. Interim results are not necessarily indicative of the results for a full year or for any other future period.
Use of Estimates
Licensing of Intellectual Property
On March 13, 2024, we and NXP Semiconductors N.V. ("NXP") entered into a Settlement and Patent Cross-License Agreement (the “Settlement Agreement”). Under the Settlement Agreement, NXP made a one-time payment of $
We recognize revenue from licensing the right to use functional intellectual property, such as the Settlement Agreement discussed above, at the point in time the control of the license transfers to the customer, which is generally upon delivery, or as usage occurs. See Note 6 Commitments and Contingencies for additional details of the Settlement Agreement with NXP.
Recently Issued Accounting Standards Not Yet Adopted
In November 2023, the FASB released ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which amends reportable segment requirements, primarily through enhanced disclosures about significant segment expenses, including for public entities that have a single reportable segment. The standard is effective for fiscal years beginning after December 31, 2023 and interim periods within fiscal years beginning after December 31, 2024. We are currently evaluating the impact of this standard, if any, on our financial statement disclosures.
In December 2023, the FASB released ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which amends income tax disclosure requirements to enhance the transparency and decision usefulness for users of the financial statements. The standard is effective for fiscal years beginning after December 31, 2024. We are currently evaluating impact of this standard, if any, on our financial statement disclosures.
9
Note 2. Fair Value Measurements
Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
We do not have any financial assets or liabilities in Level 3 as of June 30, 2024, and only had the liability for the earnout consideration related to the Voyantic Oy acquisition in Level 3 as of December 31, 2023. We classified this liability as Level 3 because we determined the fair value using significant unobservable inputs.
We applied the following methods and assumptions in estimating our fair value measurements:
Cash Equivalents — Cash equivalents comprise highly liquid investments, including money market funds with original maturities of less than three months at the acquisition date. We record the fair value measurement of these assets based on quoted market prices in active markets.
Investments — Our investments comprise fixed income securities, which include U.S. government agency securities, corporate notes and bonds, commercial paper, treasury bills and asset-backed securities. The fair value measurement of these assets is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Long-term Debt — See Note 7 for the carrying amount and estimated fair value of the Notes.
Contingent Consideration — The contingent consideration liability is related to our acquisition of Voyantic Oy (see Note 4: Goodwill and Intangible Assets). We paid the contingent consideration amount of $
The following table presents the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in thousands):
|
|
June 30, 2024 |
|
|
December 31, 2023 |
|
||||||||||||||||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||||||
Cash equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Money market funds |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||||
Total cash equivalents |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Short-term investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
U.S. government agency securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Yankee bonds |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Agency bonds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Asset-backed securities |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total short-term investments |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Acquisition related contingent consideration liability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total liabilities at fair value |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
The following table presents additional information about liabilities measured at fair value for which the Company uses Level 3 inputs to determine fair value as of June 30, 2024 (in thousands):
|
|
Six Months Ended June 30, |
|
|
|
|
2024 |
|
|
Balance as of January 1 |
|
$ |
|
|
Change in fair value of contingent consideration liability due to remeasurement |
|
|
|
|
Contingent consideration payment made |
|
|
( |
) |
Balance as of June 30 |
|
$ |
|
|
10
At the acquisition date, we recorded the contingent consideration related to the Voyantic Oy acquisition at its fair value using unobservable inputs and used the Monte Carlo simulation option pricing framework, incorporating contractual terms and assumptions regarding financial forecasts, discount rates and volatility of forecasted revenue and gross margins. Developing and determining the unobservable inputs for Level 3 fair-value measurements and fair-value calculations is management's responsibility with assistance from a third-party valuation specialist. During the quarter ended June 30, 2024, we made the payment for contingent consideration and as of June 30, 2024, the contingent consideration liability is $
As of December 31, 2023, the contingent consideration liability was $
We expect short-term investments to mature within 1 year of the reporting date. See Note 7 for the carrying amount and estimated fair value of our convertible senior notes due
Investments
The following tables present the cost or amortized cost, gross unrealized gains, gross unrealized losses and total estimated fair value of our financial assets as of the dates presented (in thousands):
|
June 30, 2024 |
|
|||||||||||||
|
Cost or |
|
|
Gross |
|
|
Gross |
|
|
Total Estimated |
|
||||
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Fair Value |
|
||||
Description: |
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
U.S. government agency securities |
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Yankee bonds |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Asset-backed securities |
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Total |
$ |
|
|
$ |
— |
|
|
$ |
( |
) |
|
$ |
|
||
|
December 31, 2023 |
|
|||||||||||||
|
Cost or |
|
|
Gross |
|
|
Gross |
|
|
Total Estimated |
|
||||
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Fair Value |
|
||||
Description: |
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
U.S. government agency securities |
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Yankee bonds |
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Agency bond |
|
|
|
|
— |
||||||||||