10-Q 1 pi-20220630.htm 10-Q 10-Q
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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 June 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)

 

 

Delaware

 

91-2041398

(State or other jurisdiction of
incorporation or organization)

 

(I.R.S. Employer
Identification No.)

 

400 Fairview Avenue North, Suite 1200, Seattle, Washington

 

98109

(Address of principal executive offices)

 

(Zip Code)

Registrant’s telephone number, including area code: (206) 517-5300

 

Securities registered pursuant to Section 12(b) of the Act:

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.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

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 15, 2022, 25,599,992 shares of common stock were outstanding.

 


Table of Contents

IMPINJ, INC.

QUARTERLY REPORT ON FORM 10-Q

 

Table of Contents

 

 

 

 

 

Page

 

 

Risk Factor Summary

 

3

 

 

 

 

 

 

 

PART I. — FINANCIAL INFORMATION

 

 

Item 1.

 

Financial Statements (Unaudited)

 

4

 

 

Condensed Consolidated Balance Sheets

 

4

 

 

Condensed Consolidated Statements of Operations

 

5

 

 

Condensed Consolidated Statements of Comprehensive Loss

 

6

 

 

Condensed Consolidated Statements of Cash Flows

 

7

 

 

Condensed Consolidated Statements of Changes in Stockholders' Equity

 

8

 

 

Notes to Condensed Consolidated Financial Statements

 

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

33

Item 4.

 

Controls and Procedures

 

34

 

 

PART II. — OTHER INFORMATION

 

 

Item 1.

 

Legal Proceedings

 

35

Item 1A.

 

Risk Factors

 

35

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

56

Item 3.

 

Defaults Upon Senior Securities

 

56

Item 4.

 

Mine Safety Disclosures

 

57

Item 5.

 

Other Information

 

57

Item 6.

 

Exhibits

 

58

 

 

Signatures

 

59

 

 

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 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 may 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 may become party to 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 25.4% of our outstanding common stock as of June 30, 2022, and as a result are able to exercise significant influence over matters subject to stockholder approval.

 

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Table of Contents

 

PART I — FINANCIAL INFORMATION

 

Item 1. Financial Statements (unaudited)

IMPINJ, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value, unaudited)

 

 

June 30, 2022

 

 

December 31, 2021

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

32,580

 

 

$

123,903

 

Short-term investments

 

130,719

 

 

 

69,443

 

Accounts receivable, net

 

40,128

 

 

 

35,449

 

Inventory

 

32,047

 

 

 

21,958

 

Prepaid expenses and other current assets

 

3,603

 

 

 

5,049

 

Total current assets

 

239,077

 

 

 

255,802

 

Long-term investments

 

20,440

 

 

 

14,225

 

Property and equipment, net

 

28,726

 

 

 

27,500

 

Operating lease right-of-use assets

 

10,044

 

 

 

11,667

 

Other non-current assets

 

2,240

 

 

 

2,462

 

Goodwill

 

3,881

 

 

 

3,881

 

Total assets

$

304,408

 

 

$

315,537

 

Liabilities and stockholders' equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

10,099

 

 

$

11,732

 

Accrued compensation and employee related benefits

 

5,928

 

 

 

6,365

 

Accrued and other current liabilities

 

2,920

 

 

 

2,481

 

Current portion of operating lease liabilities

 

3,635

 

 

 

4,143

 

Restructuring liabilities

 

119

 

 

 

591

 

Current portion of long-term debt

 

 

 

 

9,633

 

Current portion of deferred revenue

 

2,632

 

 

 

558

 

Total current liabilities

 

25,333

 

 

 

35,503

 

Long-term debt, net of current portion

 

279,449

 

 

 

278,661

 

Operating lease liabilities, net of current portion

 

10,408

 

 

 

11,934

 

Other long-term liabilities

 

113

 

 

 

279

 

Deferred revenue, net of current portion

 

364

 

 

 

236

 

Total liabilities

 

315,667

 

 

 

326,613

 

Commitments and contingencies (Note 5)

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Preferred stock, $0.001 par value — 5,000 shares authorized, no shares issued and outstanding at June 30, 2022 and December 31, 2021

 

 

 

 

 

Common stock, $0.001 par value — 495,000 shares authorized, 25,547 and 24,737 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

26

 

 

 

25

 

Additional paid-in capital

 

374,409

 

 

 

351,422

 

Accumulated other comprehensive (loss) income

 

(1,226

)

 

 

(39

)

Accumulated deficit

 

(384,468

)

 

 

(362,484

)

Total stockholders' equity

 

(11,259

)

 

 

(11,076

)

Total liabilities and stockholders' equity

$

304,408

 

 

$

315,537

 

 

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

$

59,796

 

 

$

47,268

 

 

$

112,940

 

 

$

92,516

 

Cost of revenue

 

28,294

 

 

 

22,491

 

 

 

52,659

 

 

 

45,758

 

Gross profit

 

31,502

 

 

 

24,777

 

 

 

60,281

 

 

 

46,758

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

18,369

 

 

 

15,900

 

 

 

36,358

 

 

 

29,691

 

Sales and marketing

 

9,614

 

 

 

8,196

 

 

 

18,913

 

 

 

15,841

 

General and administrative

 

11,995

 

 

 

8,998

 

 

 

22,801

 

 

 

17,152

 

Restructuring costs

 

 

 

 

 

 

 

 

 

 

1,263

 

Total operating expenses

 

39,978

 

 

 

33,094

 

 

 

78,072

 

 

 

63,947

 

Loss from operations

 

(8,476

)

 

 

(8,317

)

 

 

(17,791

)

 

 

(17,189

)

Other income (expense), net

 

429

 

 

 

(4

)

 

 

593

 

 

 

19

 

Induced conversion expense

 

(2,232

)

 

 

 

 

 

(2,232

)

 

 

 

Interest expense

 

(1,250

)

 

 

(525

)

 

 

(2,511

)

 

 

(1,050

)

Loss before income taxes

 

(11,529

)

 

 

(8,846

)

 

 

(21,941

)

 

 

(18,220

)

Income tax expense

 

6

 

 

 

(60

)

 

 

(43

)

 

 

(102

)

Net loss

$

(11,523

)

 

$

(8,906

)

 

$

(21,984

)

 

$

(18,322

)

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share — basic and diluted

$

(0.45

)

 

$

(0.37

)

 

$

(0.87

)

 

$

(0.77

)

Weighted-average shares outstanding — basic and diluted

 

25,429

 

 

 

24,120

 

 

 

25,204

 

 

 

23,895

 

 

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands, unaudited)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

$

(11,523

)

 

$

(8,906

)

 

$

(21,984

)

 

$

(18,322

)

Other comprehensive loss, net of tax:

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

(510

)

 

 

1

 

 

 

(1,187

)

 

 

1

 

Total other comprehensive loss

 

(510

)

 

 

1

 

 

 

(1,187

)

 

 

1

 

Comprehensive loss

$

(12,033

)

 

$

(8,905

)

 

$

(23,171

)

 

$

(18,321

)

 

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

Operating activities:

 

 

 

 

 

 

Net loss

 

$

(21,984

)

 

$

(18,322

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

2,973

 

 

 

2,076

 

Stock-based compensation

 

 

22,173

 

 

 

18,031

 

Accretion of discount or amortization of premium on investments

 

 

419

 

 

 

468

 

Amortization of debt issuance costs

 

 

806

 

 

 

188

 

Induced conversion expense related to convertible notes

 

 

2,232

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(4,679

)

 

 

(973

)

Inventory

 

 

(10,089

)

 

 

12,265

 

Prepaid expenses and other assets

 

 

1,463

 

 

 

(186

)

Accounts payable

 

 

(2,201

)

 

 

(3,053

)

Accrued compensation and employee related benefits

 

 

(437

)

 

 

422

 

Accrued and other liabilities

 

 

366

 

 

 

364

 

Operating lease right-of-use assets

 

 

1,623

 

 

 

1,458

 

Operating lease liabilities

 

 

(2,034

)

 

 

(1,834

)

Restructuring liabilities

 

 

(472

)

 

 

630

 

Deferred revenue

 

 

2,202

 

 

 

(6,553

)

Net cash provided by (used in) operating activities

 

 

(7,639

)

 

 

4,981

 

Investing activities:

 

 

 

 

 

 

Purchases of investments

 

 

(115,697

)

 

 

(19,825

)

Proceeds from maturities of investments

 

 

46,805

 

 

 

41,000

 

Purchases of property and equipment

 

 

(3,724

)

 

 

(7,858

)

Net cash provided by (used in) investing activities

 

 

(72,616

)

 

 

13,317

 

Financing activities:

 

 

 

 

 

 

Principal payments on finance lease obligations

 

 

 

 

 

(2

)

Proceeds from exercise of stock options and employee stock purchase plan

 

 

6,496

 

 

 

9,243

 

Payment of 2019 Notes

 

 

(17,564

)

 

 

 

Net cash provided by (used in) financing activities

 

 

(11,068

)

 

 

9,241

 

Net increase (decrease) in cash and cash equivalents

 

 

(91,323

)

 

 

27,539

 

Cash and cash equivalents

 

 

 

 

 

 

Beginning of period

 

 

123,903

 

 

 

23,636

 

End of period

 

$

32,580

 

 

$

51,175

 

 

 

 

 

 

 

 

Supplemental disclosure of cashflow information:

 

 

 

 

 

 

Cash paid for interest

 

$

1,803

 

 

$

863

 

Purchases of property and equipment not yet paid

 

 

891

 

 

 

5,069

 

See accompanying notes to condensed consolidated financial statements.

 

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Table of Contents

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

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

)

 

 

(11,259

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income

 

 

Equity

 

Balance at December 31, 2020

 

 

23,350

 

 

$

23

 

 

$

423,759

 

 

$

(314,666

)

 

$

3

 

 

$

109,119

 

Cumulative-effect adjustment from adoption of ASU 2020-06

 

 

 

 

 

 

 

 

(32,743

)

 

 

3,442

 

 

 

 

 

 

(29,301

)

Issuance of common stock

 

 

702