Q4 2024 Impinj Inc Earnings Call
Welcome to impinges fourth quarter and full year 2024 financial results conference call and webcast all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by person to Starkey followed by zero.
Operator: Welcome to Impinj's fourth quarter and full year 2024 financial results conference call and webcast. All participants will be in a listen only mode. Should you need assistance, please single a conference specialist by pressing the star key followed by zero.
Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. And to withdraw your question, please press star, then two. Please note that this event is being recorded.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on a touchtone phone and to withdraw your question. Please press Star then two please note that this event is being recorded.
Tracy Moran: Due to Mr. Andy Cobb's laryngitis, I would now like to turn the conference over to Ms. Tracy Moran, Senior Investor Relations Manager. Please go ahead.
Speaker Change: Mr. Andy Cops Laryngitis, I would now like to turn the conference over to MS. Tracy Moran Senior Investor Relations manager. Please go ahead.
Tracy Moran: Thank you Nick good afternoon, and thank you all for joining us to discuss <unk> fourth quarter and full year 2024 result.
Tracy Moran: Thank you, Nick. Good afternoon, and thank you all for joining us to discuss Impinj's fourth quarter and full year 2024 results. On today's call, Chris Diorio, Impinj's co-founder and CEO, will provide a brief overview of our market opportunity and performance. Cary Baker, Impinj's CFO, will follow with a detailed review of our fourth quarter and full year 2024 financial results and first quarter 2025 outlook. We will then open the call for questions. Andy Cobb, Impinj's Vice President of Strategic Finance, will join us for the Q&A.
Speaker Change: On today's call Kristi, Oreo Impinges co founder and CEO will provide a brief overview of our market opportunity and performance.
Speaker Change: Cary Baker Impinges CFO will follow with a detailed review of our fourth quarter and full year 'twenty 'twenty four financial results and first quarter 2025 outlook.
Andy Cops: Then open the call for questions Andy.
Andy Cops: Andy card Impinges, Vice President of strategic Finance will join us for the Q&A Hussein Macquarie, who normally joins that unfortunately has to players so it cannot be here today.
Tracy Moran: Hussein Mecklai, who normally joins us, unfortunately has the flu, so cannot be here today. You can find management's prepared remarks plus trended financial data on the investor relations section of the company's website. We will make statements in this call about financial performance and future expectations that are based on our outlook as of today. Any such statements are forward looking under the Private Securities Litigation Reform Act of 1995. Whereas we believe we have a reasonable basis for making these forward-looking statements, our actual results could differ materially because any such statements are subject to risks and uncertainties.
Speaker Change: You can find management's prepared remarks, plus trended financial data on the Investor Relations section of the company's website.
Speaker Change: We will make statements in this call about financial performance and future expectations that are based on our outlook as of today any such statements are forward looking under the private Securities Litigation Reform Act of 1995.
Speaker Change: Whereas we believe we have a reasonable basis for making these forward looking statements. Our actual results could differ materially because any such statements are subject to risks and uncertainties. We describe these risks and uncertainties in the annual and quarterly reports, we file with the SEC we.
Tracy Moran: We describe these risks and uncertainties in the annual and quarterly reports we file with the SEC.
Tracy Moran: We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements except as required by law. On today's call, all financial metrics except for revenue or where we explicitly state otherwise are non-GAAP. All balance sheet and cash flow metrics except for free cash flow are GAAP. Please refer to our earnings release for a reconciliation of non-GAAP financial metrics for the most comparable GAAP metrics. Before turning to our results and outlook, note that we will participate in Susquehanna's 14th Annual Technology Conference on February 27th in New York, the Cantor Global Technology Conference on March 11th in New York, and the 37th Annual Roth Conference on March 18th in Dana Point.
Speaker Change: We do not undertake and expressly disclaim any obligation to update or alter our forward looking statements, except as required by law.
Speaker Change: On today's call all financial metrics, except for revenue or where we explicitly state otherwise are non-GAAP, all balance sheet and cash flow metrics, except for free cash flow our GAAP.
Speaker Change: Please refer to our earnings release for a reconciliation of non-GAAP financial metrics and the most comparable GAAP metrics.
Speaker Change: Before turning to our results and outlook note that we will participate in Susquehanna 14th Annual Technology Conference on February 27th in New York, The Cantor Global Technology Conference on March 11th in New York and the 37th annual Roth Conference on March 18th in Dana point, we look forward to connecting with many of you.
Tracy Moran: We look forward to connecting with many of you at those events.
Chris: At those events I will now turn the call over to Chris.
Chris Diorio: I will now turn the call over to Chris.
Chris Diorio: Thank you, Tracy. And thank you all for joining the call.
Chris: Thank you Tracy.
Speaker Change: You all for joining the call.
Chris Diorio: 2024 marked our fourth consecutive year of double digit revenue growth and another yearly revenue record. Underlying that growth was market strength and retail apparel, general merchandise and supply chain and logistics. our information unit volumes grew 34% over 2023. Our top line growth, combined with strong operating leverage and our favorable litigation settlement, drove record annual adjusted EBITDA and free cash 2024 also ushered in two major market First, start of item level food. Second, Impinj Gen2x, which dramatically expands the landscape of enterprise solutions we and our partners can deliver. The long term secular tailwinds underlying our industry remain strong, and our leadership position in it is as strong as ever.
'twenty 'twenty four marked our fourth consecutive year of double digit revenue growth and another yearly revenue record.
Speaker Change: Underlying that growth was market strength in retail apparel general merchandise and supply chain and logistics.
Speaker Change: Alright, punish the unit volumes grew 34% over 2023.
Speaker Change: Our topline growth combined with strong operating leverage and a favorable litigation settlement drove record annual adjusted EBITDA and free cash flow.
Speaker Change: 2024 also ushered in two major market catalysts.
Speaker Change: First startup item level through text.
Speaker Change: Second impinged Gen, two X, which dramatically expands the landscape of enterprise solutions, we and our partners can deliver.
Speaker Change: The long term secular tailwind underlying our industry remains strong.
Speaker Change: And our leadership position in it is as strong as ever.
Chris Diorio: That said, we faced headwinds at the end of the fourth quarter that will spill into the first. Geopolitical Uncertainty in Paris and users changing label partner share allocations. Aggressive Label Price Shopping Shorter ordering cycles disrupted partner book First quarter impact includes some partners having extra endpoint I see inventory and asking us to reschedule or Compounded by no large new programs ramping in first half 2025. cannot sustain our prior 34% N2NSC unit volume growth pace in the first quarter. So our focus is helping our inlay partners clear a few weeks of inventory and together navigating the geopolitical and tariff landscape.
Speaker Change: That said, we faced headwinds at the end of the fourth quarter that will spill into the first.
Speaker Change: Geopolitical uncertainty in Paris.
Speaker Change: Users changing label partner share allocations.
Speaker Change: Aggressive labor price shopping and shorter ordering cycles disrupted partner bookings.
Speaker Change: First quarter impact includes some partners, having extra endpoint IC inventory.
Speaker Change: You're asking us to reschedule orders.
Speaker Change: Compounded by no large new programs ramping in first half 2025.
Speaker Change: We cannot sustain our prior 34% endpoint IC unit volume growth pace in the first quarter.
Speaker Change: So our focus is helping our inlay partners clear a few weeks of inventory and together navigating the geopolitical and tariff landscape.
Chris Diorio: And through it all, using our best in class products, enterprise solutions leadership and Gen 2x to regain momentum and increase market share as we accelerate out of a disappointing first quarter. For 2025, we continue to anticipate solid industry rain label expansion. driven by growth in retail apparel, general merchandise and supply chain and logistics. buoyed by modest but growing food Recent conversations with our Enterprise and Service Bureau partners suggest that US retail demand is solid. US demand for brain labels is healthy and growing in the EU, if not growing, is at least stable. Our eFamily Reader IC order book is strong across all large partners and geography.
Speaker Change: And through it all using our best in class products.
Speaker Change: We're priced solutions leadership in Gen. Two X to regain momentum and increase market share as we accelerate out of a disappointing first quarter.
Speaker Change: For 2025, we continue to anticipate solid industry rain label expansion.
Speaker Change: Driven by growth in retail apparel general merchandise and supply chain and logistics.
Speaker Change: By modest but growing food volumes.
Speaker Change: Recent conversations with our enterprise and service Bureau partners suggest that U S retail demand is solid.
Speaker Change: U S demand for brain labels is healthy and growing in the EU if not growing is at least stable.
Speaker Change: Our <unk> family Reader IC order book is strong across all large partners and geographies buoy.
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Speaker Change: Bullying our belief.
Chris Diorio: got our first quarter and point I see headwinds are temporary Turning to solutions. Today we are directly engaged with two large grocery One focused on perishables and the other on seamless self-check. Imagine grocery checkout as easy as today's apparel checkout at our visionary European retailer. In terms of potential end-point IC volumes, both are larger than any program that has come before. And in terms of the overall opportunity, food is huge. One, if not both of these enterprises may ramp in 2026.
Speaker Change: And our first quarter endpoint IC headwinds are temporary.
Speaker Change: Turning to solutions today, we are directly engage with two large grocery chains, one focused on perishables and the other on seamless self checkout.
Speaker Change: Imagine grocery checkout as easy as today's apparel checkout at our visionary European retailer.
Speaker Change: In terms of potential endpoint IC volumes.
Speaker Change: Both are larger than any program that has come before.
Speaker Change: And in terms of the overall opportunity food is huge.
One if not both of these enterprises may ramp in 2026.
Chris Diorio: in general merchandise. The large North American retailers multi category rollout continues. Compliance increasing quarterly and room to grow in 2025. In supply chain and logistics, the second large North American end user increased their label volumes in 2024, and we expect modest growth in 2025 as they continue their autonomous reading journey using our eFamily Reader ICs. The visionary European retailers ongoing rollout of our self checkout and loss prevention solution grew in the fourth quarter, driving strong gateway revenue. but will decline in the first quarter if that program completes successfully. That said, our opportunity in new RAIN-based use cases with them is far from over, including their ongoing embedded tagging RAM.
Speaker Change: In general merchandise.
Speaker Change: The large north American retailers multi category rollout continues.
Speaker Change: Compliance, increasing quarterly and room to grow in 2025.
Speaker Change: In supply chain and logistics, the second large north American end user increase their label volumes in 2024, and we expect modest growth in 2025.
Speaker Change: Continue their autonomous reading journey, using our E family Reader Ics.
Speaker Change: The visionary European retailers ongoing rollout of our self checkout and loss prevention solutions grew in the fourth quarter.
Speaker Change: Having strong gateway revenue.
Speaker Change: But it will decline in the first quarter as that program complete successfully.
Speaker Change: That said our on our opportunity in new rain based use cases with them is far from over including their ongoing embedded tagging brand.
Speaker Change: In addition to our direct engagements we have partners using our E family reader Ics and Gen. Two X two expand existing use cases like loss prevention and enabled previously challenging use cases like always on overhead reading retail stores.
Chris Diorio: In addition to our direct engagements, we have partners using our eFamily Reader ICs and Gen 2x to expand existing use cases like loss prevention, and enable previously challenging use cases, like always on overhead reading in retail stores. Those partner engagements further expand our platform's footprint and create multiple N5.2IC shared gain opportunities for us.
Speaker Change: Those partner engagements further expand our platform's footprint.
Speaker Change: Create multiple endpoint IC share gain opportunities for us.
Speaker Change: Our December launch of Gen. Two X was a bellwether event for our industry.
Chris Diorio: Our December launch of Gen2x was a bellwether event for our industry. Gen 2x dramatically enhances the performance and security of rain systems. The response from our ecosystem has been overwhelming. with our top six reader partners already deploying Gen 2X and others. including prior competitor. working with us to deliver clear benefits to end users. Gen 2x is embedded natively in our M800. So unlocking it simply requires reader enabled. BINJUAX enables smaller, more cost effective M800 inlays for most use cases, but especially for cosmetics, accessories and food. adding to our recurring implement the opportunity We already have multiple enterprises piloting and using Gen2X.
Speaker Change: Gen two X dramatically enhances the performance and security of rain systems.
Speaker Change: The response from our ecosystem has been overwhelming.
With our top six reader partners already deploying <unk> and others.
Speaker Change: Including prior competitors.
Speaker Change: Working with us to deliver clear benefits to end users.
Speaker Change: Gen two exits embedded natively in our M 800.
Speaker Change: So unlocking it simply requires reader enablement.
Speaker Change: <unk> enables smaller more cost effective and 800 inmates for most use cases, but especially for cosmetics accessories and food.
Speaker Change: Adding to our recurring insulin I see opportunity.
Speaker Change: We already have multiple enterprises, piloting and using Gentoo X.
Chris Diorio: with more on the way.
Speaker Change: More on the way.
Speaker Change: On the organizational Brian Jeff Dossett, our Chief revenue Officer announced his retirement after eight years that impinge.
Chris Diorio: On the organizational front, Jeff Dossett, our chief revenue officer, announced his retirement after eight years at Impinj. Jeff, we will miss you. But know that we will continue your mission to build peerless solutions, engineering and sales teams that leverage our platform to win and delight fortune 100 employees. Gahan Richardson, a seven-year Impinj veteran, will lead the sales organization.
Speaker Change: Jeff.
Speaker Change: We will Miss you.
Speaker Change: But know that we will continue our mission to build Peerless solutions engineering and sales teams.
Speaker Change: That leverage our platform, who went into like Fortune 100 enterprises.
Speaker Change: Gohan Richardson at seven year impinge veteran will lead the sales organization.
Speaker Change: In closing.
Chris Diorio: In closing. 2024 was another year of strong revenue growth and free cash flow. We delivered record adjusted EBITDA and earnings per share. Successfully resolved our patent litigation and delivered market-leading products and innovation.
Speaker Change: 24 was another year of strong revenue growth and free cash flow.
Speaker Change: We delivered record adjusted EBITDA and earnings per share.
Speaker Change: Successfully resolved our patent litigation had delivered market leading products and innovations.
Chris Diorio: Looking forward, we see first quarter headwinds. But we have been through tough times before. each time repress our competitive advantages to emerge a stronger company in a stronger market position. This time we are better positioned with a far more seasoned team than we have ever been to do so. As we continue driving our bold vision to connect every item in our everyday world, I remain confident in our market position and energized by the opportunities ahead.
Speaker Change: Looking forward, we see first quarter headwinds.
Speaker Change: But we have been through tough times before.
Speaker Change: Each time, we press, our competitive advantages to emerge a stronger company and a stronger market position.
Speaker Change: This time, we are better positioned.
Speaker Change: With a far more seasoned team.
Speaker Change: Then we have ever been to do so.
Speaker Change: As we continue driving our bold vision to connect every item in our everyday world I remain confident in our market position and energized by the opportunities ahead.
Speaker Change: Before I turn the call over to Kerry for our financial review and first quarter outlook.
Chris Diorio: Before I turn the call over to Cary for our financial review and first quarter outlook. I'd like to again thank every member of the Impinj team for your constant effort driving our bold vision. As always. I feel honored by my incredible good fortune to work with you, Cary.
Speaker Change: I'd like to again, thank every member of the pinch team for your constant effort in driving our bold vision.
Speaker Change: As always I.
Speaker Change: I feel honored by my incredible good fortune to work with you Sir.
Speaker Change: Hey.
Speaker Change: Thank you, Chris and good afternoon, everyone. When I joined in <unk> five years ago, I was drawn both to the massive opportunity and the leverage of recurring silicon revenue.
Cary Baker: Thank you, Chris.
Cary Baker: And good afternoon, everyone. When I joined Impinj five years ago, I was drawn both to the massive opportunity and the leverage of recurring silicon revenue. 2024 offered a glimpse of what that future holds with exceptional operating margin expansion on the back of strong revenue. We delivered record annual adjusted EBITDA and record free cash flow while just scratching the surface of our market opportunity. Today, more than ever, I am energized by our secular demand and operating leverage potential. Fourth quarter revenue was $91.6 million, down 4% sequentially compared with $95.2 million in third quarter 2024, and up 30% year-over-year from $70.7 million in fourth quarter 2024.
Speaker Change: 2024 offered a glimpse of what that future holds with exceptional operating margin expansion on the back of strong revenue growth we.
Speaker Change: We delivered record annual adjusted EBITDA and record free cash flow, while just scratching the surface of our market opportunity.
Speaker Change: Today more than ever item agenda, and energized by our secular demand and operating leverage potential.
Speaker Change: Fourth quarter revenue was $91 6 million down 4% sequentially compared with $95 2 million in third quarter of 2024 and up 30% year over year from $70 7 million in fourth quarter 2023.
Cary Baker: Fourth quarter endpoint IC revenue was $74.1 million, down 9% sequentially compared with $81 million in third quarter 2024, and up 37% year-over-year from $53.9 million in fourth quarter 2023. Although we typically see fourth quarter declines, this year was below our expectations as we accommodated partner push-off requests. Looking to the first quarter, we again expect a sequential endpoint IC revenue decline. Fourth quarter systems revenue was $17.5 million, up 23% sequentially compared with $14.2 million in third quarter 2024, and up 4% year over year from $16.8 million in fourth quarter 2023. Systems revenue exceeded our expectations, driven by strength in reader, gateway, and reader IC sales.
Speaker Change: Fourth quarter endpoint IC revenue was $74 1 million down 9% sequentially compared with 81 billion in third quarter, 2024, and up 37% year over year from $53 9 million in fourth quarter 2023.
Speaker Change: Although we typically see fourth quarter declines this year was below our expectations as we accommodated partner pushout requests.
Speaker Change: Looking to the first quarter, we again expect a sequential endpoint IC revenue declined.
Speaker Change: Fourth quarter systems revenue was $17 5 million up 23% sequentially compared with $14 2 million in third quarter, 2024, and up 4% year over year from $16 8 million in fourth quarter 2023.
Speaker Change: Systems revenue exceeded our expectations driven by strength in reader gateway and reader IC sales bookings.
Cary Baker: Looking to the first quarter, we expect systems revenue to decline more than seasonally as the self-checkout and loss prevention deployment at the visionary European retailer concludes successfully. Total 2024 revenue was $366.1 million, up 19% year-over-year compared with $307.5 million in 2020. Endpoint IC revenue grew 30% year over year, driven by apparel, general merchandise, supply chain and logistics, the long tail of applications, and licensing revenue. Systems revenue declined 18% year over year, with reader and gateway declines more than offsetting growth in both test and measurement and reader ICs. fourth quarter gross margin was 53.1% compared with 52.4% in third quarter 2024 and 50.9% in fourth quarter 2023.
Speaker Change: Welcome to the first quarter, we expect systems revenue declined more than seasonally as the self checkout and loss prevention deployment at the visionary in European retailer conclude successfully.
Speaker Change: Total 24 revenue was $366 1 million up 19% year over year, compared with $307 5 million in 2023.
Speaker Change: Endpoint IC revenue grew 30% year over year, driven by apparel general merchandise supply chain and logistics, the long tail of applications and licensing revenue.
Speaker Change: Systems revenue declined 18% year over year with reader and a gateway declines more than offsetting growth in both test and measurement and reader Ics.
Speaker Change: Fourth quarter gross margin was 53, 1% compared with 52, 4% in third quarter of 2024, and 59% in fourth quarter 2023.
Cary Baker: The year over year increase was driven by leverage on fixed costs. The quarter over quarter increase was driven by a higher systems revenue mix and improved endpoint IC direct margin. Full year 2024 gross margin was 54% compared with 51.9% in 2023, with the increase due primarily to licensing revenue. Looking to first quarter 2025, we expect gross margin to decline modestly sequential. Total fourth quarter operating expense was $33.6 million compared with $32.5 million in third quarter 2024 and $33 million in fourth quarter 2023. Research and Development Expense was $18 million. Sales and Marketing Expense was $7.8 million.
Speaker Change: The year over year increase was driven by leverage on fixed cost the.
Speaker Change: The quarter over quarter increase was driven by a higher systems revenue mix and improved endpoint IC direct margins.
Speaker Change: Full year 2024, gross margin was 54% compared with 51, 9% in 2023 with the increase due primarily to licensing revenue.
Speaker Change: Looking to the first quarter 2025, we expect gross margin to decline modestly sequentially.
Speaker Change: Total fourth quarter operating expense was $33 6 million compared with $32 5 million in third quarter of 2024 and $33 million in fourth quarter 2023.
Speaker Change: Research and development expense was $18 million sales and marketing expense was $7 8 million general and administrative expense was $7 90.
Cary Baker: General and Administrative Expense was $7.9 million. 2024 operating expense totaled $131.9 million compared with $137.8 million in 2023. We expect total first quarter 2025 operating expense to increase sequentially driven by normal seasonal factors. Fourth quarter adjusted EBITDA was $15,000,000 compared with $17,300,000 in Q3 2024 and $3,000,000 in Q4 2023. Fourth quarter adjusted EBITDA margin was $16,400,000 2024 adjusted EBITDA with $65.9 million compared with $21.8 million in 2023. 2024 Adjusted EBITDA Margin was 18%. Fourth quarter gap net loss was $2.7 million, fourth quarter non-gap net income was $14.5 million or $0.48 per share on a fully diluted basis.
Speaker Change: 2020 for operating expense totaled $131 9 million compared with $137 8 million in 2023.
We expect total first quarter 2025 operating expense to increase sequentially driven by normal seasonal factors.
Speaker Change: Fourth quarter, adjusted EBITDA was $15 million compared with $17 3 million in third quarter of 2024 and $3 million in fourth quarter 2020.
Speaker Change: Fourth quarter adjusted EBITDA margin was 16, 4%.
Speaker Change: 124, adjusted EBITDA was $65 9 million compared with $21 8 million in 2023.
Speaker Change: 2024, adjusted EBITDA margin was 18%.
Speaker Change: Fourth quarter.
Speaker Change: GAAP net loss was $2 7 million fourth quarter non-GAAP net income was $14 5 million or <unk> 48 per share on a fully diluted basis.
Cary Baker: 2024 gap net income was $40.8 million. 2024 non gap net income was $62.9 million or $2.11 per share on a fully diluted basis. Turning to the balance sheet, we ended the fourth quarter with cash, cash equivalents, and investments of $239.6 million. Inventory totaled $99.3 million, up $11 million from the prior quarter, with the increase coming primarily from endpoint ICs. Fourth quarter net cash provided by operating activities was $12.6 million, property and equipment purchases totaled $4.1 million, free cash flow was $8.5 million. For the full year, net cash provided by operating activities was $128.3 million. Property and equipment purchases totaled $17.1 million.
Speaker Change: 2024, GAAP net income was $40 8 million 2024, non-GAAP net income was $62 9 million or $2 11 per share on a fully diluted basis.
Speaker Change: Turning to the balance sheet, we ended the fourth quarter with cash cash equivalents and investments of $239 $6 million.
Speaker Change: Inventory totaled $99 3 million up $11 million from the prior quarter with the increase coming primarily from endpoint Ics.
Speaker Change: Fourth quarter net cash provided by operating activities was $12 6 million property and equipment purchases totaled $4 1 million free cash flow was $8 five mode for.
Speaker Change: For the full year net cash provided by operating activities was $128 3 million property and equipment purchases totaled $17 1 million.
Cary Baker: Excluding the $45 million income from the litigation settlement, free cash flow was $66.2 million, driven by revenue growth and operating margin expansion.
Speaker Change: Excluding the $45 million income from the litigation settlement free cash flow was $66 2 million driven by revenue growth and operating margin expansion.
Cary Baker: Before turning to our guidance, I want to highlight a few items unique to our results and outlook. First, endpoint IC revenue will decline sequentially in the first quarter, primarily driven by volume as our channel burns through a few weeks of inventory. To a much lesser degree, yearly price reductions and product mix, specifically M800 ramping at lower ASPs, impact our first quarter outlook. Second, we anticipate first quarter gross margin to mark the low point for the year. Second quarter product gross margin will begin benefiting from higher M-800 mix and lower cost waste. Third, while our January bookings exceeded our fourth quarter run rate, to be prudent, we are assuming fewer turns at the midpoint of our revenue guidance.
Speaker Change: Before turning to our guidance I want to highlight a few items unique for our results and outlook.
Speaker Change: First endpoint IC revenue will decline sequentially in the first quarter, primarily driven by volume as our channel Burns through a few weeks of inventory.
Speaker Change: To a much lesser degree yearly price reductions and product mix, specifically <unk> hundred ramping at lower Asps Impac.
Speaker Change: Impact our first quarter outlook.
Speaker Change: Second we anticipate first quarter gross margin to Mark the low point for the year.
Speaker Change: Second quarter product gross margin will begin benefiting from higher and 800 mix and lower cost wafers.
Speaker Change: Third while our January bookings exceeded our fourth quarter run rate to be prudent we are assuming a few returns at the midpoint of our revenue guidance.
Speaker Change: Turning to our outlook, we expect first quarter revenue between 70 and $73 million, we expect adjusted EBITDA between one one and $2 6 million on.
Cary Baker: According to our outlook, we expect first quarter revenue between 70 and 73 million. We expect adjusted EBITDA between 1.1 and 2.6 million. On the bottom line, we expect non-GAAP net income between 1.7 and 3.2 million, reflecting non-GAAP fully diluted earnings per share between 6 cents and 11 cents.
Speaker Change: On the bottom line, we expect non-GAAP net income between $1, seven and $3 2 million, reflecting non-GAAP fully diluted earnings per share between six and 11.
Cary Baker: In closing, I want to thank the Impinj team, our customers, our suppliers, and you, our investors for your ongoing support.
Speaker Change: In closing I want to thank the impinge team our customers our suppliers and you our investors for your ongoing support I.
Operator: I will now turn the call to the operator to open the question and answer session.
Speaker Change: I will now turn the call to the operator to open the question and answer session Nick.
Speaker Change: Yes.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
Operator: We will now begin the question and answer session. To ask a question, you may press star, then one, on your touch-tone phone. If you are using a speaker phone, please pick up your handset before pressing the key.
Operator: If at any time your question has been addressed, and you would like to withdraw your question, please press star and then. As a courtesy to others, we ask that you limit yourself to one question and one follow-up. If you have additional questions, please re-cue, and we will take as many questions as time allows.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two.
Speaker Change: As a courtesy to others, we ask that you limit yourself to one question and one follow up if you have additional questions. Please re queue and we will take as many questions. As time allows at this time, we will pause momentarily to assemble our roster.
Operator: At this time, we will pause momentarily to assemble our roster.
Speaker Change: And your first question today will come from Blayne Curtis with Jefferies. Please go ahead.
Blaine Curtis: And your first question today will come from Blaine Curtis with Jeffries. Please go ahead.
Cary Baker: Hey, good afternoon. Thanks for taking my question. I guess a couple I just wanted to kind of understand the timing of which because you did kind of have a flatter December and you've been through these cycles before. Did you have any kind of thoughts that this might happen back then? I'm just trying to understand the timing when things kind of flattened out. Were you sensing some inventory? And then maybe you can talk about when did you see the bulk of these pushouts come to you?
Blayne Curtis: Hey, good afternoon, Thanks for taking my question.
Blayne Curtis: I guess a couple I just wanted to kind of understand the timing of words, because you did kind of have a flatter December.
Blayne Curtis: You've been through these cycles before did you have any kind of.
Blayne Curtis: Thought that this might happen back then I'm just trying to understand the timing when things kind of flattened out where are you sensing some inventory and then maybe can you talk about when did you see the bulk of these push outs come to you.
Gary: Yes, Gary.
Cary Baker: Yep. Cary, go ahead. So, Blay, thanks for the question.
Bryan: Go ahead Bryan.
Speaker Change: Thanks for the question so as it relates to the channel inventory build we built a few weeks of excess channel inventory and we believe the cause of that was a mix between demand and timing with demand being the larger factor.
Cary Baker: So as it relates to the channel inventory build, we built a few weeks of excess channel inventory. And we believe the cause of that was a mix between demand and timing with demand being the larger factor. From a demand perspective, our channel inventory levels are a function of their expected demand and the bit that they build ahead of that demand. 90 days ago, we and our partners expected stronger demand entering 2025.
Speaker Change: From a demand perspective, our channel inventory levels are a function of their expected demand and the business. The best that they build ahead of that demand.
Speaker Change: 90 days ago, we and our partners expected stronger demand entering 2025 and <unk>.
Chris Diorio: And for example, the pullback we've seen with our second large North American supply chain logistics customers was unanticipated when we guided Q4. From a timing perspective, aggressive label price shopping and end customers adjusting their inlay supplier mix has resulted in pockets of inventory, because not all of our partners run with the same amount of endpoint IC inventory. And then lastly, you're probably also seeing inlay partners order shorter to shorter leading times and bringing down their inventory levels to match. Great, thanks.
Speaker Change: For example, the pullback we've seen with our second large north American supply chain logistics customers was unanticipated when we guided Q4.
Speaker Change: From a timing perspective aggressive label price shopping and end customers adjusting their inlay supplier mix has resulted in pockets of inventory because not all of our partners to run with the same amount of endpoint IC inventory and then lastly, we'll probably also seen inlay partners order shorter and shorter lead times and bringing dollars.
Speaker Change: Inventory levels to match.
Speaker Change: Great. Thanks, and then maybe if you can just relate this to some of the other corrections you've seen do you feel like you're ahead of this one anymore because in the past has taken a couple of quarters to kind of dig out I know you said Q1 will be the bottom I think the question is going to be how fast do you recover this year. So I'm just kind of curious how you think about the shape of this correction versus other ones you've seen in the.
Chris Diorio: And then maybe you just relate this to some of the other corrections you've seen. Do you feel like you're ahead of this one anymore? Because in the past, it's taken a couple of quarters to kind of dig out. I know you said Q1 would be the bottom. I think the question is going to be, how fast do you recover this year?
Chris Diorio: So I'm just kind of curious how you think about the shape of this correction versus other ones Yeah, Blaine, this is Chris. I'll say a few words and I'll see if Cary wants to jump in. When we saw the corrections starting in the back half of the fourth quarter, we took swift action. And as I said in my prepared remarks, I've seen this play before. We're better positioned this time with a more seasoned team than we've ever been. We're not calling the duration of the correction that we're going to go through, but we are actively working through it.
Speaker Change: Past.
Speaker Change: Yes, Blayne. This is Chris I'll say, a few words and I'll see if Terry wants to jump in.
Speaker Change: When we saw.
Speaker Change: The correction starting in the back half of the fourth quarter, we took swift action.
Speaker Change: And as I said in my prepared remarks.
Speaker Change: This play before where better seasons.
Speaker Change: Your position that time with more seasoned team that we've ever been we're not calling the duration of the of the correction that we're going to go through but we are actively working through it and as I said working with our partners to burn down their excess channel inventory and emerge in a stronger position on the other side and I personally believe that we're in a far better position to emerge.
Chris Diorio: And as I said, working with our partners to burn down their excess channel inventory and emerge in a stronger position on the other side. And I personally believe that we're in a far better position to emerge in that stronger position given everything we've got going on in the market. Enterprise solutions and 800. We're in a strong position this time. So expect us to accelerate out, but we're not predicting the timing right.
Speaker Change: And that stronger position given everything we've got going on the market <unk> Enterprise solutions and 800 were in a strong position. This time, so expect us to accelerate out, but we're not predicting the timing right now.
Cary Baker: Yeah, when you know, I'll start by just highlighting, we only guide one quarter at a time, we're not going to hazard a guess on to Q at this point, what we see our customers ordering with very short lead times, given the market uncertainty, we are prudently modeling fewer turns in our our guide input. And specifically, we're modeling zero terms for endpoint IC business. Are there scenarios where to second quarter endpoint IC product revenue recovers on a smaller channel inventory headwind? Yes. But we understand that these problems are rarely a one quarter issue. And while we see those scenarios of a potential snapback, we're going to prepare for a larger headwind and hope for a better outcome.
Speaker Change: Yes, Glenn.
Start by just highlight we only guide one quarter at a time, we're not going to hazard a guess on <unk> at this point, what we see our customers ordering with very short lead times given the market uncertainty. We are prudently modeling fewer turns in our guide input and specifically remodeling enduro terms for our endpoint IC business.
Speaker Change: Are there scenarios, where second quarter endpoint IC product revenue recovers on a smaller channel inventory headwinds, yes, but we understand that these problems are rarely a one quarter issue.
Speaker Change: And while we see those scenarios of a potential snapback were going to prepare for a larger headwind and hope for a better outcome.
Blaine Curtis: Appreciate it. Thanks.
Speaker Change: I appreciate it thanks Ed.
Harsh Kumar: Unknown Speaker And your next question today will come from Harsh Kumar with Piper Sandler. Please go ahead.
Ed: Thank you.
Ed: And your next question today will come from harsh Kumar with Piper Sandler. Please go ahead.
Cary Baker: Yeah, hey guys, I wanted to ask on a similar note on the success inventory, how many weeks of excess inventory do you think you have? And is it spread out over a bunch of different areas or mostly concentrated and one or two sort of in their partners or industry, however you want to categorize it? But the main question is, how many weeks success do you think you have?
Harsh Kumar: Yeah, Hey, guys I wanted to ask kind of similar.
Note on the success inventory, how many weeks of excess inventory do you think you have and is it spread out over a bunch of different areas are mostly concentrated in and wanted to shut off and nobody knows our industry. However, you want to categorize it but the main question is how many weeks, especially I think you have.
Carrie: Hey, harsh this is Carrie I think it's a few weeks.
Cary Baker: Hey Harsh, this is Cary. I think it's it's a few weeks. It's more concentrated than is typical.
Carrie: It's more concentrated than is typical a lot of it relates to logistics given the change in demand, we see from our second large logistics provider.
Cary Baker: A lot of it relates to logistics given the change in demand we see from our second large logistics provider.
Speaker Change: Okay. Great. So my second question was on that is when you are talking about the change in demand that you're referring to the Amazon deal with UBS, which is now public where.
Cary Baker: Okay, great. So my second question was on that is, when you're talking about the change in demand, are you referring to the Amazon deal with UPS, which is now public where the volumes will decline? Is that is that the large function that you are referring to at at your second largest customer?
Speaker Change: The volumes will decline is that is that the large function that youre referring to.
Speaker Change: The.
Speaker Change: Our second largest customer.
Harsh Kumar: Well harsh we don't name specific customers, but if you've been following the news you know there's been changes in logistics demand.
Cary Baker: Well, Harsh, we don't name specific customers. But you know, if you've been following the news, you know, there's been changes in logistics demand. Yeah, and harsh, there's another element as well, there's been some share allocations as well. So our inlay partners built ahead, assuming a certain portion of share, it was a share reallocation, which on top of that, a bit of a push out has resulted in some channel inventory. That's, that's the that's the bulk of the channel inventory that we need to correct not all of it, but the bulk of Got it.
Speaker Change: Yes, harsh there's another element as well there's been some share allocations as well.
Speaker Change: Our our inlay partners built ahead, assuming a certain portion of share it was a share reallocation, what's on top of that a bit.
Speaker Change: At a a pushout.
Speaker Change: That has resulted in some channel inventory.
Speaker Change: The bulk of the channel inventory that we need to correct not all of it the bulk of it.
Speaker Change: Got it okay I'll get back in queue guys. Thank you.
Harsh Kumar: Okay, I'll get back in queue guys. Thank Sure, thank you.
Speaker Change: Sure. Thank you.
Speaker Change: Again, if you have a question. Please press star and then one.
Jim Ricchiuti: Again, if you have a question, please press star and then one. And your next question today will come from Jim Ricchiuti with Needham and Company.
Speaker Change: And your next question today will come from Jim Ricchiuti with Needham <unk> Company. Please go ahead.
Jim Ricchiuti: Please go ahead. I think you alluded to the fact that you're not really seeing large program ramps and obviously that that that impacts the first half of the year.
Jim Ricchiuti: Hi, Thanks.
Jim Ricchiuti: You alluded to the fact that youre not really seeing large program ramps and obviously that that impacts the first half of the year and I'm just wondering.
Jim Ricchiuti: And again I know you can't give guidance.
Chris Diorio: And I'm just wondering, and again, I know you can't give guidance beyond the quarter, but when would you Or maybe you could just characterize what you see in the pipeline in terms of program ramps that potentially has could have some impact further out in the So, Jim, we see a strong enterprise pipeline. I cited two food opportunities in our prepared remarks. There's other opportunities in our pipeline from the overall enterprise perspective. we see good tailwinds for our industry. We saw strong rain label growth last year. And as we see those new opportunities layer in, we expect strong growth in the future.
Jim Ricchiuti: On the quarter, but.
Speaker Change: When would you.
Speaker Change: Maybe you could just characterize what you see in the pipeline in terms of program ramps.
Speaker Change: That potentially has could have some impact further out in the year.
Jim Ricchiuti: So Jim.
Jim Ricchiuti: We see a strong enterprise pipeline.
Jim Ricchiuti: Excited to food opportunities in our prepared remarks.
Jim Ricchiuti: Other opportunities in our pipeline.
Jim Ricchiuti: From an overall enterprise perspective.
Speaker Change: C. Good tailwind for our industry.
Jim Ricchiuti: <unk> ranked label growth last year.
Jim Ricchiuti: And as we see those new opportunities layer in we expect strong growth in the future, but they'll just we're in a bit of a lull right now with no new Fortune 100 company companies.
Chris Diorio: But they'll just, we're in a bit of a lull right now with no new Fortune 100 companies really jumping into the market, at least in the first half. And if there is movement in the second half, it'll be just the beginnings of the land. So just to put it all in a nutshell, strong enterprise pipeline, a lot of interest. happens to be a low rate.
Jim Ricchiuti: Jumping into the market at least in the first half.
Jim Ricchiuti: There is movement in the second half it'll be just the beginnings of the land.
Jim Ricchiuti: So just to put it all in a nutshell strong enterprise pipeline a lot of interest.
Jim Ricchiuti: To be a low right now.
Jim Ricchiuti: Got it and Chris with respect to the.
Jim Ricchiuti: And Chris, with respect to the customers that are working in the grocery vertical, obviously it's been public, Kroger's doing something. Can you say whether the second grocer is a U.S. based grocer or is it a European Jim Of course, we know, I think for competitive reasons, we prefer not to not to give an answer to that question right now. But it is a large opportunity. And it's one that we've decided to work directly with that enterprise end user because of the potential built into it. Thank you. I'm sorry, I can't answer directly.
Jim Ricchiuti: The customers that are working in the grocery vertical obviously, that's been public kroger's doing something can you say, whether the second grocer as a U S based grocer or is it a European grocer.
Jim Ricchiuti: Jim.
Jim Ricchiuti: Of course, we know.
Jim Ricchiuti: For competitive reasons, we prefer not to not to give an answer to that question right now.
Jim Ricchiuti: But it is a large opportunity.
Jim Ricchiuti: And it's one that we've decided to work directly with that enterprise end user because of the potential built into it.
Jim Ricchiuti: Okay.
Jim Ricchiuti: Thank you.
Jim Ricchiuti: Im sorry, I cant answer directly.
Jim Ricchiuti: Fair enough. Okay, thank you, Jim.
Jim Ricchiuti: Fair enough.
Jim Ricchiuti: Okay. Thank you Jim.
Speaker Change: Your next question today will come from Troy Jensen with Cantor Fitzgerald. Please go ahead.
Troy Jensen: Your next question today will come from Troy Jensen with Cantor Fitzgerald. Please go ahead.
Cary Baker: Hey, gentlemen, thanks for taking my question. Maybe a couple here for for Cary. You guys talked about aggressive endpoint price Can you just kind of talk to us about what is the ASP reductions or is there any more insight in there? Yeah, so when we think of endpoint IC from from kind of our pricing impact, which I think is where you're going on, on your question, Troy, I would say given the current market dynamics, the negotiations came in line largely with our expectations. Our focus in this year's negotiations was driving the M800 adoption. As you know, the M800 is a lower price skew.
Troy Jensen: Hey, gentlemen, thanks for taking my question, maybe a couple of here for clarity.
Speaker Change: You just talked about aggressive endpoint price shopping.
Speaker Change: Can you just kind of talk to us about what is the ASP reductions or just any more insight than that.
Speaker Change: Yeah, so when we think of.
Speaker Change: Endpoint IC from kind of our pricing impact, which I think is where youre going on.
Troy Jensen: Good question Troy I will.
Troy Jensen: Given the current market dynamics the negotiations keen in line largely with our expectations. Our focus on this year's negotiations was driving the MH 100 adoption.
Troy Jensen: As you know the number 800 is a lower price SKU. So we can expect average asps to come down as the <unk> hundred ramps as a percentage of our mix. The trade off. However is from comes from the gross margin line, where we expect accretion as the lower cost <unk> hundred ramps into a volume running skew.
Cary Baker: So we can expect average ASPs to come down as the M800 ramps as a percentage of our mix. The tradeoff, however, is from comes from the gross margin line, where we expect accretion as the lower cost M800 ramps into our volume running skew.
Cary Baker: And Troy, I'll say a little bit more in terms of aggressive label price shopping. There's a bit of bonding over capacity out in the market right now. And so there's a fairly competitive market dynamic at the label level. And so we're seeing end users price shop aggressively, service bureaus price shop aggressively, and that aggressive price shopping has resulted in delayed orders.
Troy Jensen: And I'll say, a little bit more in terms of aggressive label price shopping.
Troy Jensen: Got it.
Troy Jensen: Bonding overcapacity out in the market right now and so there is a fairly competitive market dynamic at the label level and so we're seeing end users on price shop aggressively service bureaus and shop price shop aggressively and that aggressive price shopping.
Troy Jensen: <unk> has resulted in delayed orders to us.
Speaker Change: Got you understood and then in conjunction with that just curious you talked about gross margins being.
Cary Baker: In conjunction with that, Cary talked about gross margins being down modestly in Q1, could you just frame what modestly means? Yeah, I think let me let's let's talk about the impacts that we'll see to gross margin.
Speaker Change: Being down modestly in Q1 could you just frame what modest means.
Speaker Change: Yes, I think let me, let's talk about.
Speaker Change: The impacts that we will see.
Gross margin.
Cary Baker: I did say modestly, you know, it'll mark the low point for the year. And we'll begin benefiting as we move forward from the M 800 mix and lower cost wafers flowing through. Now, when you deconstruct the guide, you have the top and the bottom line, you can back into roughly what you might think that gross margin will be. But I think that I think the key point is to understand that it'll build throughout the year, as we ramp the M 800. And as we get to those lower cost wafers.
Speaker Change: I did say modestly.
Speaker Change: Mark the low point for the year.
Speaker Change: And we will begin benefiting as we move forward from the MH.
Speaker Change: <unk> hundred mix and lower cost wafers flowing through now when you deconstruct the guidance you have the top and the bottom line you can back into roughly what you might think that gross margin will be but I think so I think the key point is to understand that it will build throughout the year as we ramp the <unk> 800, and as we get to those lower cost wafers.
Speaker Change: Alright understood.
Troy Jensen: All right, understood.
Troy Jensen: Good luck guys. Thank you, Troy.
Speaker Change: Thank you Troy.
Speaker Change: Your next question today will come from Christopher Roland with Susquehanna. Please go ahead.
Christopher Rolland: Your next question today will come from Christopher Rolland with Susquehanna. Please go ahead.
Christopher Rolland: Hey, thanks for the question. Um, yeah, just to follow up, I guess, first of all, on the, the price shopping comment, just understand that is that pricing between you and your IC competitor? Help me understand that a little bit more. And then, Chris, I think you also mentioned an aggressive low, is there a lower margin inlay guy out there? I just sorry, help me understand the, the pricing dynamic here that you were talking about.
Christopher Roland: Hey, Thanks for the question.
Speaker Change: Yes, just a follow up.
Christopher Roland: First of all on the.
Christopher Roland: The price shopping comment.
Speaker Change: Just to understand that is that pricing between you and your IC competitor.
Chris: Help me understand that a little bit more and then Chris.
Chris: Chris I think you also mentioned.
Chris: Rex is.
Chris: Is there a lower margin inlay guy out there I'm sorry.
Chris: Sorry help me understand the.
Chris: The pricing dynamic here that you were talking.
Sure Chris Thanks for the question so the level of price shopping is twofold, it's from the enterprise.
Cary Baker: Chris, thanks for the question. So the label price shopping is twofold. It's from the enterprise and users to the service bureaus. That's from the service bureaus to the bonders, people who actually take RICs and put them on inlets, because there's some excess bonding capacity in the market. And it's pretty competitive market right now. There's a lot of there's a lot of price shopping around that, which has resulted in the delayed orders. So I was referring to the price shopping. It is from our customer, it is between our customer and our customer's customer, our customer's customer's customer, which is the enterprise end user.
Chris: Enterprise end users to service growth that's on the service bureaus to the Bonder Speedways actually take our Ics on a less because there is some excess bonding capacity in the market and it's pretty competitive market right now.
Chris: But there's a lot of price shopping around.
Chris: Debt, which has resulted in the delayed orders to us when I was referring to the price shopping is from our customer is between our customer and our customers and customer our customers customers' customer, which is the enterprise end user.
Cary Baker: Does that help? That does help. Thank you. Thank you for that, that clarity.
Chris: Does that help.
Speaker Change: That does help thank you. Thank you for that clarity.
Cary Baker: And then I know you guys only guide one quarter at a time, but any any broad thoughts as to, you know, how this inventory dynamic may impact seasonality? Is there going to be any seasonality going forward? Or do we flatline off this base? Just just any broad thoughts?
Speaker Change: And then I know you guys only guide one quarter at a time, but.
Speaker Change: Any broad thoughts as to.
Speaker Change: How this inventory dynamic may impact seasonality is there going to be any seasonality going forward or do we flatline off this base.
Speaker Change: Just just any broad thoughts.
Cary Baker: Nothing specific, I think would be appreciated by all Yeah, it's so, you know, we only got one quarter time and I really don't want to hazard a guess on on the second quarter right now. You know, some of the factors that we're seeing going into our guide. First, our January bookings were strong. They exceeded our fourth quarter run rate. And that January strength includes endpoint IC turns orders. But to be prudent, we're assuming fewer turns at the guide, at the midpoint of our guide, and specifically zero turns on our endpoint IC business. We just want to give ourselves some time to get our arms around the situation.
Speaker Change: Nothing specific I think would be appreciated by all of us.
Speaker Change: Yes.
Speaker Change: So.
Speaker Change: We only guide one quarter at a time and I really don't want to hazard, a guess on the second quarter right now.
Speaker Change: Some of the factors that we're seeing going into our guide.
Speaker Change: First our January bookings were strong we exceeded our fourth quarter run rate.
Speaker Change: And that January has strength includes endpoint IC turns orders.
Speaker Change: But to be prudent we're assuming fewer turns at the guide at the midpoint of our guidance specifically zero turns on our endpoint IC business. We just wanted to give ourselves some time to get our arms around the situation.
Cary Baker: We are working hard to clear out the channel inventory, but we know that can take some time. So that's really how we're thinking about it right now. And we'll provide more update as we go.
Speaker Change: We are working hard too.
Speaker Change: To clear out the channel inventory, but we know that can take some time. So that's really how we're thinking about it right now and we'll provide more update as we go.
Chris Diorio: Yeah, there's one word I'd like you to take away. It's just prudent. That's the word that Kerry used. And that's the word that we're all behind that word. And that's where we stand right now. Just we're being prudent as we look forward.
Speaker Change: Yes, there is one word I'd like you to take away it just prudent.
Speaker Change: They are used.
Speaker Change: Where that where that.
Speaker Change: Yes.
Speaker Change: We're all behind that word and Thats, where we stand right now just we're being prudent as we look forward.
Scott Searle: Okay, thank you very much, guys. Thank you.
Speaker Change: Okay. Thank you very much guys.
Speaker Change: Thank you.
Scott Searle: And your next question today will come from Scott Searle with Ross Capital. Please go ahead.
Speaker Change: Your next question today will come from Scott Searle with Roth Capital. Please go ahead.
Chris Diorio: Hey, good afternoon. Thanks for taking the questions.
Speaker Change: Hey, good afternoon, thanks for taking the questions Hey, Chris maybe just given the.
Chris Diorio: Hey, Chris, maybe, you know, just given the, the near term inventory headwinds, I'm wondering if you could talk about the dynamic of the longer term growth in the marketplace, right? You've consistently talked about the historic endpoint, I see unit growth of 25 to 30%. Is that demand profile changing at all when you're looking at 2025? Or is that still tracking, we're just working through a near term inventory?
Scott Searle: Near term inventory headwinds I'm wondering if you could talk about the dynamic of the longer term growth in the marketplace right you've consistently talked about the historic endpoint IC unit growth of 25% to 30%.
Scott Searle: Is that demand profile changing at all when you're looking at 2025 or is that still tracking we're just working through near term inventory issue.
Scott Searle: No Scott I wish I could answer that question for you.
Chris Diorio: No, Scott, I wish I could answer that question for you. We'll have a better read on it a little bit through the year. What we see right now is essentially what I said in our prepared remarks, we see strength in North America, kind of driven a little bit across the board, retail, apparel, retail, general merchandise and supply chain and logistics, as well as new opportunities, and then the growing food opportunities. So North America, we see is still solid, and it's still going forward. The EU is flattish, at least from our current perspective. And we don't usually call out Asia, and that's smaller anyway.
Scott Searle: I'll have a better read on it a little bit.
Scott Searle: Through the year, what we see right now.
Scott Searle: Essentially what I said in our prepared remarks, we see strength in North America.
Scott Searle: Kind of driven a little bit across the board retail apparel retail general merchandise and supply chain and logistics as well as new opportunities and then the growing food opportunities. So North America, we see is.
Scott Searle: Still solid and its and its still going forward the eu's flattish at least from a current perspective.
Scott Searle: And we don't usually call out Asia, and Thats smaller anyway. So it's.
Chris Diorio: So it's hard for me to project what those factors mean for 2025. Overall, in the longer term, we see long term secular tailwinds underlying our industry, the food opportunity layering on, at least in it, you know, if we see some ramps heading into 2026, on top of other things that are going on, suggest that, you know, we that the future is very bright. And we fundamentally believe it's very bright. I just can't hazard a guess right now on 2025, especially given the geopolitical dynamic, the tariff situation, all those other things. And I wish I could give you a better answer.
Scott Searle: It's hard for me to project, what those factors mean for 2025 overall in the longer term, we see long term secular tailwind is underlying our industry the.
Scott Searle: Opportunity layering on at least.
Scott Searle: We see some ramps heading into 2026 on top of other things that are going on suggests that debt.
Scott Searle: The future is very bright and we fundamentally believe it's very bright that just can't hazard, a guess right now on 2025, especially given the geopolitical dynamics that tariff situation all of those other things I wish I could give you a better answer but right now I can.
Chris Diorio: But as of right now, I can't.
Chris Diorio: Hey, Chris, just clarification on the tariff issue when you say geopolitical, is that because customers were pre buying and pre shipping ahead of any sort of a tariff situation? Or is there some other dynamic going on there?
Speaker Change: Hey, Chris just a clarification on the tariff issue when you say geopolitical is that because customers will pre buying.
Speaker Change: And free shipping ahead of any sort of the tariff situation or is there. Some other dynamic going on there and then if I could finally, just wrap up with the pipeline. It sounds like the pipeline is still pretty active I was wondering if you could expand beyond food I think you've addressed that a couple of times, but with your large north American retailer general merchandise I think they will move into the.
Chris Diorio: And then if I could finally just wrap up with the pipeline, it sounds like the pipeline is still pretty active.
Chris Diorio: I was wondering if you could expand beyond food. I think you've addressed that a couple of times. But with your your large North American retailer, General Merchandise, I think they were moving to the phase three, how things like that are progressing on that front? And leveraging that existing customers, supply channel or supply chain, right? I think you were talking about other big box retailers starting to pull forward. Has that dynamic change at all or some of those opportunities still existing in 25? Thanks.
Speaker Change: Phase III, how things like data progressing on that front and leveraging that existing customers supply channel or our supply chain right. I think you were talking about other big box retailers are starting to pull forward has that dynamic changed at all or some of those opportunities still existing in 'twenty five.
Speaker Change: Yes, Okay I'll do my best on those questions.
Chris Diorio: Yeah, okay, I'll do my best on those questions. In terms of the geopolitical situation, it was it was less of a pull forward, and less of I'm gonna use the word sourcing uncertainty and the sourcing uncertainty being primarily, if you're if you're a supplier to an enterprise, you need to know where to source out based on what the tariff situation is. So we're seeing we're seeing some delayed orders, just resourcing decisions based on where the tariffs might hit. And that is resulting in short, short, shorter order cycles, and essentially causing at least from our perspective, where we are right now, delay orders to us as those decisions get made.
Speaker Change: In terms of the geopolitical situation. It was it was less of a pull forward and lesser than he used the word sourcing uncertainty and the sourcing uncertainty being primarily.
Speaker Change: If you are a supplier to an enterprise.
Speaker Change: You need to know where to source out based on what the tariff situation is so we're seeing we're seeing some delayed orders just we're sourcing decisions based on where the tariffs might head and that is resulting in short short shorter order cycles and is essentially cutting at least from our perspective, where we already have the way orders to us as those decisions get made.
Speaker Change: In terms of the pipeline.
Chris Diorio: In terms of the pipeline, we have ongoing efforts. With our lead customers, our lead enterprise end users in the retail apparel space, we still see significant opportunities there. And we'll be expanding some of the engagements in the retail apparel space. Because as I mentioned in the prepared remarks, some of the things our partners are doing around loss prevention and self checkout around overhead reading could open up a new wave of opportunities in retail. On top of that, obviously, there's further expansion in retail general merchandise, second large North American supply chain, a logistics end user with some spillover to other big box retailers.
Speaker Change: We have ongoing efforts.
With our lead customers have either enterprise end users.
Speaker Change: In the retail apparel space, we still see significant opportunities there and we'll be expanding some of the engagements in that retail apparel space because as I mentioned in the prepared remarks, some of the things our partners are doing around loss prevention at checkout around overhead reading.
Speaker Change: It opened up a new wave of opportunities in retail.
Speaker Change: On top of that obviously.
Speaker Change: There is further expansion in retail general merchandise second large north American supply chain logistics and user with some spillover.
Speaker Change: Two other big box retailers.
Chris Diorio: We're taking advantage of some of the tag categories. And then the third big thing we're looking at is the enterprise mobile transitioning into consumer mobile date for the enterprise mobile is not yet announced yet. But you know, we're obviously talking about it, all of us are talking about it, the date for a transition to consumer mobile is further out in time. That's still, you know, a guarded expectation on our part, but we're going to do everything we can to drive that consumer opportunity, which will truly change the dynamics in the industry. So it's all of the things we just basically points a picture to a bright future.
Speaker Change: We're taking advantage of some of the tech categories.
Speaker Change: And then the third Big thing we're looking at is.
Speaker Change: <unk>.
Speaker Change: Enterprise mobile transitioning into consumer mobile data.
Speaker Change: Enterprise mobile, it's not yet announced yet but.
Speaker Change: Obviously talking about it all of US are talking about it the date for a transition to consumer mobile is further out in time, that's still a guarded.
Speaker Change: Expectation on our part, but we're going to do everything we can to drive that consumer opportunity, which will truly change the dynamics in the industry.
Speaker Change: <unk>.
Speaker Change: It's all of the things, we just basically points picture to a bright future, but right now we got a little bit of a rough patch to go through it.
Chris Diorio: Right now, we got a little bit of a rough patch to go through.
Speaker Change: Great. Thanks, so much.
Scott Searle: Thanks so much.
Speaker Change: Sure. Thank you.
Harsh Kumar: Sure, thank you.
Speaker Change: And your next question today is a follow up from harsh Kumar of Piper Sandler. Please go ahead.
Harsh Kumar: And your next question today is a follow-up from Harsh Kumar of Piper Sandler. Please go ahead.
Harsh Kumar: Yes, Hey, guys. So I wanted to ask you about this.
Harsh Kumar: Yeah, hey, guys. So I wanted to ask you about this, the new customer that at the grocery level, could you at least, I know, you don't want to give us a name, could you tell us if it's a large customer or a smaller boutique type grocery chain? And then the other part two of the question is, if you're going to be having one of these guys ramp in a meaningful way in the in 2026, would you not start to see some volumes, perhaps in 2025, maybe second half of doing like part Yeah, so harsh.
Speaker Change: The new customer.
Speaker Change: At the grocery level could you at least I know you don't want to give us the name could you tell us if it's a large customer or a smaller boutique.
Speaker Change: Grocery chain and then the other part two of the question is if you are going to be having one of these guys ramp in a meaningful way and in.
Speaker Change: In 2026 would you not start to see some volumes, perhaps in 2025, maybe second half of doing like partners.
Harsh Kumar: Yes, so harsh I'll take that one.
Chris Diorio: I'll take that one. The answer to the first part of the question is large customer, although anytime you talk food is large. So, you know, so we're actually but to be specific, it's in grocery. It's not in fast food or those kind of things. So it is grocery at the item level. Mm hmm. And then the timeframe. Because, you know, when you think about the size of the opportunities, the opportunities are so large, the larger an opportunity is, the more measured the pace, you just have to accept that. We anticipate some endpoint IC volumes in the back half of the year, obviously, a lot depends on the pace at which the customers go and things like that, we expect some volumes, some volumes in the back half of the year.
The.
Harsh Kumar: Answer to the first part of the question is large customer about.
Harsh Kumar: Anytime we talk through this large.
Harsh Kumar: So we're actually but to be specific in grocery.
Harsh Kumar: Not in fast food or are those kind of things so <unk> grocery at the item level.
Harsh Kumar: Mhm and then.
Harsh Kumar: The timeframe.
Harsh Kumar: Because.
Harsh Kumar: When you think about the size of the opportunities. These opportunities are so large the larger opportunity is a more measured pace you just have to accept that.
Harsh Kumar: We anticipate some.
Harsh Kumar: Endpoint IC volumes in the back half of the year, obviously, a lot depends on the pace at which the customers go and things like that we expect some volumes some volumes in the back half of the year.
Harsh Kumar: And ideally one or both of those will ramp into 2026 now that said the one that we're not citing right now since it is a self checkout opportunity. We have a lot of work to do to get it fully up and running and working so we're early days and at the same whereas it took us some time to do the self checkout loss prevention opportunity with VISIONAIRE.
Chris Diorio: And ideally, one or both of those will ramp into 2026. Now that said, the one that we're not citing right now, since it is a self checkout opportunity, we have a lot of work to do to get it fully up and running and working. So we're early days. And then the same whereas it took us some time to do the self checkout and loss prevention opportunity with the visionary European retailer, we really need to roll up our sleeves and get this one working for this particular grocer. It's not a loss prevention opportunity, it's self-checkout, but self-checkout at item level grocery is going to take some work on our side.
Harsh Kumar: European retailer, we really need to work roll up our sleeves and get this one working for this particular grocer it's.
Harsh Kumar: It's not a loss prevention opportunity itself checkout, but self checkout at item level grocery is going to take some work on our side I believe we're the best company to do it we're best positioned to do it and if anybody can do what we can we're going to give it our best shot and I believe we will make it go but I can't keep at this timing yet.
Harsh Kumar: I believe we're the best company to do it, we're best positioned to do it, and if anybody can do it, we can. We're going to give it our best shot, and I believe we will make it go, but I can't give you the timing yet. Understood. Thank you.
Harsh Kumar: Understood. Thank you. Thank you Chris for that color.
Chris Diorio: Thank you, Chris, for that call. Sure.
Harsh Kumar: Sure. Thank you harsh.
Operator: Thank you, Harsh. concludes our question and answer session.
Speaker Change: Concludes our question and answer session I would like to turn the conference back over to Kristy Oreo co founder and CEO for any closing remarks.
Chris Diorio: I would like to turn the conference back over to Chris Diorio, co founder and CEO for any closing remarks. Thank you, Nick. And I'd like to thank all of you for joining the call today. Thank you for your ongoing support.
Speaker Change: Thank you, Nick and I would like to thank all of you for joining the call today.
Speaker Change: Thank you for your ongoing support.
Operator: Bye bye.
Speaker Change: Bye bye.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Operator: The conference has now concluded. Thank you for attending today's presentation.
You may now disconnect.
Speaker Change: Yeah.
Speaker Change: [music].