Impinj Q4 2025 Impinj Inc Earnings Call | AllMind AI Earnings | AllMind AI
Q4 2025 Impinj Inc Earnings Call
Speaker #1: Welcome to
Speaker #1: Impinj's fourth quarter and full year 2025 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 pressing the star key followed by zero.
Speaker #1: 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, to withdraw your question, please press star, then two.
Speaker #1: Please note this event is being recorded. I would now like to turn the conference over to Mr. Andy Cobb, Vice President, Corporate Finance and IR.
Speaker #1: Please go ahead,
Speaker #1: sir.
Andy Cobb: ... Thank you, Nick. Good afternoon, and thank you all for joining us to discuss Impinj's Q4 and full year 2025 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 Q4 and full year 2025 financial results and Q1 2026 outlook. We will then open the call for questions. 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.
Andy Cobb: ... Thank you, Nick. Good afternoon, and thank you all for joining us to discuss Impinj's Q4 and full year 2025 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 Q4 and full year 2025 financial results and Q1 2026 outlook. We will then open the call for questions. 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.
Speaker #2: discuss Impinj's fourth quarter Thank you, Nick. Good afternoon, and thank you all for joining us to and full year 2025 results. On today's call, Chris Diorio, Impinj's co-founder and CEO, will provide a brief overview of our market opportunity and performance.
Speaker #2: Cary Baker, our CFO, will follow with a detailed review of Impinj's fourth quarter and full year 2025 financial results, as well as our first quarter 2026 outlook.
Speaker #2: We will then open the call for questions. You can find management's prepared remarks plus trended financial data on the investor relations section of the company's website.
Speaker #2: this call about financial performance and future expectations that are based on our outlook as of We will make statements in today. Any such statements are forward-looking under the private securities litigation reform act of 1995.
Andy Cobb: 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 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 to the most comparable GAAP metrics.
Andy Cobb: 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 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 to the most comparable GAAP metrics.
Speaker #2: We believe we have a reasonable basis for making these forward-looking statements; however, our actual results could differ materially, because any such statements are subject to risks and uncertainties.
Speaker #2: We describe these risks and uncertainties in the annual and quarterly reports we file with the SEC. We do not undertake an expressly disclaim any obligation to statements, except as required by update or alter our forward-looking law.
Speaker #2: call, all financial metrics, except for revenue, were where we explicitly On today's state otherwise, are non-GAAP. All balance sheet and cash flow metrics, except for free cash flow, are GAAP.
Speaker #2: refer to our earnings release for a Please financial metrics to the most comparable GAAP metrics. Before reconciliation of non-GAAP outlook, note that we will participate in the turning to our results and Barclays 43rd annual industrial select Miami.
Andy Cobb: Before turning to our results and outlook, note that we will participate in the Barclays 43rd Annual Industrial Select Conference on 17 February in Miami, Susquehanna's 15th Annual Technology Conference on 26 February in New York, and the 26th Canaccord Genuity Global Technology and Industrial Growth Conference on 11 March in New York. We look forward to connecting with many of you at those events. I will now turn the call over to Chris.
Andy Cobb: Before turning to our results and outlook, note that we will participate in the Barclays 43rd Annual Industrial Select Conference on 17 February in Miami, Susquehanna's 15th Annual Technology Conference on 26 February in New York, and the 26th Canaccord Genuity Global Technology and Industrial Growth Conference on 11 March in New York. We look forward to connecting with many of you at those events. I will now turn the call over to Chris.
Speaker #2: Susquehanna's 15th annual technology conference on February 26th in New York. And the 2026 Canner Global Technology and Industrial Growth Conference on March 11th in New York.
Speaker #2: you at those events. I will now turn the call over to We look forward to connecting with many of Chris.
Chris Diorio: Thank you, Andy, and thank you all for joining the call. 2025 was a tough year for our industry. Tariffs and tariff-related supply chain whipsaws, inventory reductions at every layer of our retail markets, a downward trend in apparel imports, and protracted general merchandise adoption all weighed heavily on the RAIN market. It was also a transition year for us. We grew year-over-year Endpoint IC volumes by 9%, believe we gained Endpoint IC market share, made M800 our volume runner, launched Gen2X and proved it to be a must-have for solution success, drove Gen2X-enabled solutions at multiple lighthouse accounts, helped plant the seeds for accelerating food adoption, and exited the year with record adjusted EBITDA and cash. I am very pleased with how our team rose to meet the challenge.
Chris Diorio: Thank you, Andy, and thank you all for joining the call. 2025 was a tough year for our industry. Tariffs and tariff-related supply chain whipsaws, inventory reductions at every layer of our retail markets, a downward trend in apparel imports, and protracted general merchandise adoption all weighed heavily on the RAIN market. It was also a transition year for us. We grew year-over-year Endpoint IC volumes by 9%, believe we gained Endpoint IC market share, made M800 our volume runner, launched Gen2X and proved it to be a must-have for solution success, drove Gen2X-enabled solutions at multiple lighthouse accounts, helped plant the seeds for accelerating food adoption, and exited the year with record adjusted EBITDA and cash. I am very pleased with how our team rose to meet the challenge.
Speaker #3: Andy. And thank you all for joining the call. Thank you, 2025 was a tough year for our industry. Tariffs and tariff-related supply chain whipsaws, inventory reductions at every layer of our retail markets, a downward trend in apparel imports and protracted general merchandise adoption all weighed heavily on the rain market.
Speaker #3: It was also a transition year for us. We grew year over year and quantity volumes by 9%. Believe we gained endpoint AC market share made M800 our volume runner.
Speaker #3: Launched Gen 2X and proved it to be a must-have for solution success. Drove Gen 2X-enabled solutions at multiple lighthouse accounts. Helped plant the seeds and exited the year with record-adjusted for accelerating food adoption EBITDA and cash.
Speaker #3: team rose to meet the I am very pleased with how our challenge. Looking into 2026, we see in the first quarter, a confluence of order timing, ongoing retailer inventory burndown, product transitions, and a super seasonal systems decline due to project timing.
Chris Diorio: Looking into 2026, we see, in Q1, a confluence of order timing, ongoing retailer inventory burn down, product transitions, and a super seasonal systems decline due to project timing, driving revenue lower. Looking just a bit further out, we see conditions improving as Endpoint IC volumes rebound and growth returning as our investments in seeding new opportunities and our solutions focus pay off. Starting with Q1 Endpoint ICs, like last year, our second-largest North American supply chain and logistics end-user significantly shifted their label supplier allocations. Partners that anticipated share gains ordered ahead in Q4, whereas those with share losses are reducing inventory in Q1.
Chris Diorio: Looking into 2026, we see, in Q1, a confluence of order timing, ongoing retailer inventory burn down, product transitions, and a super seasonal systems decline due to project timing, driving revenue lower. Looking just a bit further out, we see conditions improving as Endpoint IC volumes rebound and growth returning as our investments in seeding new opportunities and our solutions focus pay off. Starting with Q1 Endpoint ICs, like last year, our second-largest North American supply chain and logistics end-user significantly shifted their label supplier allocations. Partners that anticipated share gains ordered ahead in Q4, whereas those with share losses are reducing inventory in Q1.
Speaker #3: lower. Looking just a bit further out, we see Driving revenue conditions improving as endpoint returning as our investments in seeding AC volumes rebound and growth new opportunities and our solutions focus pay off.
Speaker #3: First quarter endpoint ICs, starting with—like last year, our second large North American supply chain and logistics end user significantly shifted their label supplier allocations.
Speaker #3: Partners that anticipated share gains ordered ahead in the fourth quarter. Whereas those with share losses are reducing inventory in the first. Additionally, we are quickly pivoting to a custom-built endpoint IC for that end user, which I'll describe shortly.
Chris Diorio: Additionally, we are quickly pivoting to a custom-built Endpoint IC for that end user, which I'll describe shortly, causing a further temporary dip in Endpoint IC orders as partners reduce prior product inventory while we ramp volumes of the new IC. Second, we see apparel retailers reducing stock and underbuying demand, impacting our first quarter outlook. And finally, food volumes remain modest in the first quarter. Turning to our expectations as we exit the first quarter, I'll start with that custom Endpoint IC. Think of it as an ASIC, developed with the end user, tightly linked to their and our platforms, with added features like label authentication that solve key business needs while also eliminating unneeded features. They plan to fully switch to it this year. The IC also opens new opportunities for them to unlock and for us to participate in new outward-facing customer accounts.
Chris Diorio: Additionally, we are quickly pivoting to a custom-built Endpoint IC for that end user, which I'll describe shortly, causing a further temporary dip in Endpoint IC orders as partners reduce prior product inventory while we ramp volumes of the new IC. Second, we see apparel retailers reducing stock and underbuying demand, impacting our first quarter outlook. And finally, food volumes remain modest in the first quarter. Turning to our expectations as we exit the first quarter, I'll start with that custom Endpoint IC. Think of it as an ASIC, developed with the end user, tightly linked to their and our platforms, with added features like label authentication that solve key business needs while also eliminating unneeded features. They plan to fully switch to it this year. The IC also opens new opportunities for them to unlock and for us to participate in new outward-facing customer accounts.
Speaker #3: Causing a further temporary dip in endpoint IC orders as partners reduce prior product inventory while we ramp volumes of the new IC. Second, we see apparel retailers reducing stock and under-buying demand.
Speaker #3: outlook. And Impacting our first quarter finally, food volumes remain modest in the first quarter. Turning to our expectations as we exit the first quarter, I'll start with that custom endpoint IC.
Speaker #3: Think of it as an ASIC developed with the end user tightly linked to their and our platforms. With added features like label authentication that solved key business needs, while also eliminating unneeded features.
Speaker #3: They plan to fully switch to it this year. The IC also opens new opportunities for them to unlock and for us to participate in new outward-facing customer accounts.
Speaker #3: Second, we see endpoint IC demand for apparel normalizing as soon as the second quarter. Third, we see general merchandise growing as existing categories add SKUs and new categories get added.
Chris Diorio: Second, we see Endpoint IC demand for apparel normalizing as soon as Q2. Third, we see general merchandise growing as existing categories add SKUs and new categories get added. Fourth, we see food rollouts expanding to more stores. And finally, we see our solutions efforts opening major new account opportunities. To speed our pivot to solutions, we recently added Chris Hundley as an Executive Vice President for Enterprise Solutions. Chris adds significant software and solutions talent to our team. We are also doubling down on Gen2X as a solutions enabler, added EM Microelectronic as a Gen2X licensee, and are forging close Gen2X partnerships with leading ecosystem players. ... We not only see Gen2X increasing the performance and feature gap between M800 and its competition, but also see it as an essential toolkit for enterprise solutions, and we have a growing pipeline of solutions opportunities.
Chris Diorio: Second, we see Endpoint IC demand for apparel normalizing as soon as Q2. Third, we see general merchandise growing as existing categories add SKUs and new categories get added. Fourth, we see food rollouts expanding to more stores. And finally, we see our solutions efforts opening major new account opportunities. To speed our pivot to solutions, we recently added Chris Hundley as an Executive Vice President for Enterprise Solutions. Chris adds significant software and solutions talent to our team. We are also doubling down on Gen2X as a solutions enabler, added EM Microelectronic as a Gen2X licensee, and are forging close Gen2X partnerships with leading ecosystem players. ... We not only see Gen2X increasing the performance and feature gap between M800 and its competition, but also see it as an essential toolkit for enterprise solutions, and we have a growing pipeline of solutions opportunities.
Speaker #3: Fourth, we see food rollouts expanding the more solutions efforts opening major new stores. And finally, we see our account opportunities. To speed our pivot to solutions, we recently added Chris Hunley as an executive vice president for enterprise solutions.
Speaker #3: Chris adds significant software and solutions talent to our team. We are also doubling down on Gen 2X as a solutions enabler. Added EM microelectronic as a Gen 2X licensee.
Speaker #3: And are forging close Gen 2X partnerships with leading ecosystem players. We not only see Gen 2X increasing the performance and feature gap between M800 and its competition, but also see it as an essential toolkit for enterprise solutions.
Speaker #3: And we have a growing pipeline of solutions opportunities. We expect our solutions efforts to drive endpoint IC volumes and share, reader and reader IC revenue growth, and with time, meaningful software revenue.
Chris Diorio: We expect our solutions efforts to drive Endpoint IC volumes and share, reader and Reader IC revenue growth, and with time, meaningful software revenue, and perhaps most importantly, a selling model that focuses on solution value rather than individual components. Of course, even as we pursue solutions, we remain keenly focused on our current products. In retail apparel, multiple new end users are talking openly about RAIN adoption. We are pursuing wins with them, as well as further share shifts with existing retailers. In general merchandise, we see 2026 as the year that unlocks key new logos and current use cases, adds significant new ones, and drives IC volume goals. On the competitive front, we see Gen2X driving additional opportunities to us. In food, we see a ramp through 2026, led by bakery, with proteins to follow.
Chris Diorio: We expect our solutions efforts to drive Endpoint IC volumes and share, reader and Reader IC revenue growth, and with time, meaningful software revenue, and perhaps most importantly, a selling model that focuses on solution value rather than individual components. Of course, even as we pursue solutions, we remain keenly focused on our current products. In retail apparel, multiple new end users are talking openly about RAIN adoption. We are pursuing wins with them, as well as further share shifts with existing retailers. In general merchandise, we see 2026 as the year that unlocks key new logos and current use cases, adds significant new ones, and drives IC volume goals. On the competitive front, we see Gen2X driving additional opportunities to us. In food, we see a ramp through 2026, led by bakery, with proteins to follow.
Speaker #3: And perhaps most importantly, a selling model that focuses on solution value rather than individual components. Of course, even as we pursue solutions, we remain keenly focused on our current products.
Speaker #3: And retail apparel, multiple new end users are talking openly about rain adoption. as further share shifts with existing retailers. In general merchandise, we see 2026 is the year that unlocks key new logos and current use cases.
Speaker #3: Adds significant new ones. growth. On the competitive And drives IC volume front, we see Gen 2X driving additional opportunities to us. In food, we see a ramp through 2026 led by bakery with proteins to follow.
Chris Diorio: And although food volumes remain modest, the opportunity is staggeringly large, and we intend to lead and win it. Overall, we see industry Endpoint IC volumes rebounding from an uninspiring 2025 as these growth sectors layer on, with our leading market share driving an outsized portion of those volumes to us. We see our solutions revenue expanding, notably as our lighthouse end users outperform their peers and pull us into opportunities. And in all, we expect our focus on hitting solution price points where the ROI pencils out for the end user to pay off handsomely. Before I turn the call over to Cary for our financial review and Q1 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?
Chris Diorio: And although food volumes remain modest, the opportunity is staggeringly large, and we intend to lead and win it. Overall, we see industry Endpoint IC volumes rebounding from an uninspiring 2025 as these growth sectors layer on, with our leading market share driving an outsized portion of those volumes to us. We see our solutions revenue expanding, notably as our lighthouse end users outperform their peers and pull us into opportunities. And in all, we expect our focus on hitting solution price points where the ROI pencils out for the end user to pay off handsomely. Before I turn the call over to Cary for our financial review and Q1 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 #3: modest, the opportunity is And although food volumes remain staggeringly large and we intend to lead and win it. Overall, we see industry endpoint AC volumes rebounding from an uninspiring 2025 as these growth factors layer on.
Speaker #3: With our leading market share driving an outsized portion of those volumes to us. We see our solutions revenue expanding, notably as our lighthouse end users outperform their peers and pull us into opportunities.
Speaker #3: And in all, we expect our focus on hitting solution price points where the ROI pencils out for the end user to pay off handsomely.
Speaker #3: 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.
Speaker #3: For your constant effort driving our bold vision. As always, I feel honored by my incredible good fortune to work with you. Cary?
Speaker #2: Thank you, Chris. And good afternoon, everyone. Fourth quarter revenue was $92.8 million, down 3% sequentially compared with $96.1 million in third quarter 2025 and up 1% year over year from $91.6 million in fourth quarter 2024.
Cary Baker: Thank you, Chris, and good afternoon, everyone. Fourth quarter revenue was $92.8 million, down 3% sequentially compared with $96.1 million in Q3 2025, and up 1% year-over-year from $91.6 million in Q4 2024. 2025 revenue was $361.1 million, down 1% year-over-year compared with $366.1 million in 2024. Fourth quarter Endpoint IC revenue was $75.2 million, down 5% sequentially compared with $78.8 million in Q3 2025, and up 2% year-over-year from $74.1 million in Q4 2024. Endpoint IC revenue slightly exceeded our expectations, driven by returns orders. M800 was the volume runner, with unit volumes increasing sequentially.
Cary Baker: Thank you, Chris, and good afternoon, everyone. Fourth quarter revenue was $92.8 million, down 3% sequentially compared with $96.1 million in Q3 2025, and up 1% year-over-year from $91.6 million in Q4 2024. 2025 revenue was $361.1 million, down 1% year-over-year compared with $366.1 million in 2024. Fourth quarter Endpoint IC revenue was $75.2 million, down 5% sequentially compared with $78.8 million in Q3 2025, and up 2% year-over-year from $74.1 million in Q4 2024. Endpoint IC revenue slightly exceeded our expectations, driven by returns orders. M800 was the volume runner, with unit volumes increasing sequentially.
Speaker #2: revenue was $361.1 2025 million, down 1% year over year compared with 2024. Fourth quarter endpoint $366.1 million in IC revenue was $75.2 million, down 5% sequentially compared with $78.8 million in third quarter 2025 and up 2% year over year from $74.1 million in fourth quarter 2024.
Speaker #2: Endpoint IC revenue slightly exceeded our expectations, driven by turns orders. M800 was the volume runner, with unit volumes increasing sequentially. 2025 endpoint IC revenue declined 2% year over year, driven by the factors Chris already noted.
Cary Baker: 2025 Endpoint IC revenue declined 2% year-over-year, driven by the factors Chris already noted. Looking to Q1, we expect Endpoint IC revenue to decline sequentially at a high-teens percentage rate, driven primarily by supply chain and logistics, channel inventory reductions, retail weakness, and to a lesser extent, by annual Endpoint IC price reductions. Q4 systems revenue was $17.7 million, up 2% sequentially compared with $17.3 million in Q3 2025, and up 1% year-over-year from $17.5 million in Q4 2024. Systems revenue exceeded our expectations, driven by NRE revenue, while reader and gateway revenue, and reader IC revenue declined as anticipated. 2025 systems revenue grew 2% year-over-year, with reader and gateway growth more than offsetting declines in both reader ICs and test and measurement solutions.
Cary Baker: 2025 Endpoint IC revenue declined 2% year-over-year, driven by the factors Chris already noted. Looking to Q1, we expect Endpoint IC revenue to decline sequentially at a high-teens percentage rate, driven primarily by supply chain and logistics, channel inventory reductions, retail weakness, and to a lesser extent, by annual Endpoint IC price reductions. Q4 systems revenue was $17.7 million, up 2% sequentially compared with $17.3 million in Q3 2025, and up 1% year-over-year from $17.5 million in Q4 2024. Systems revenue exceeded our expectations, driven by NRE revenue, while reader and gateway revenue, and reader IC revenue declined as anticipated. 2025 systems revenue grew 2% year-over-year, with reader and gateway growth more than offsetting declines in both reader ICs and test and measurement solutions.
Speaker #2: Looking to first quarter, we expect endpoint IC revenue to decline sequentially at a high teens percentage rate driven primarily by supply chain and logistics channel inventory reductions, retail weakness, and to a lesser extent by annual endpoint IC price reductions.
Speaker #2: Fourth quarter systems revenue was $17.7 million, up 2% sequentially compared with $17.3 million in the third quarter of 2025, and up 1% year over year from $17.5 million in the fourth quarter of 2024.
Speaker #2: Systems revenue exceeded our expectations, driven by NRE revenue, while reader and gateway revenue and reader IC revenue declined as anticipated. 2025 systems revenue grew 2% year over year, with reader and gateway growth more than offsetting declines in both reader ICs and test and measurement solutions.
Speaker #2: Looking to first quarter, we expect systems revenue to decline more than seasonally, primarily due to project timing at our enterprise customers. Fourth quarter gross margin was $54.5% compared with $53% in third quarter 2025 and $53.1% in fourth quarter 2024.
Cary Baker: Looking to Q1, we expect systems revenue to decline more than seasonally, primarily due to project timing at our enterprise customers. Q4 gross margin was 54.5%, compared with 53% in Q3 2025, and 53.1% in Q4 2024. The year-over-year increase was driven by higher Endpoint IC direct margins, specifically from a richer mix of M800. The quarter-over-quarter increase was driven primarily by higher systems direct margins, specifically higher NRE revenue, and to a lesser extent, by higher Endpoint IC direct margins. 2025 gross margin was 55.3%, compared with 54% in 2024, with the increase due primarily to a richer mix of M800 Endpoint ICs.
Cary Baker: Looking to Q1, we expect systems revenue to decline more than seasonally, primarily due to project timing at our enterprise customers. Q4 gross margin was 54.5%, compared with 53% in Q3 2025, and 53.1% in Q4 2024. The year-over-year increase was driven by higher Endpoint IC direct margins, specifically from a richer mix of M800. The quarter-over-quarter increase was driven primarily by higher systems direct margins, specifically higher NRE revenue, and to a lesser extent, by higher Endpoint IC direct margins. 2025 gross margin was 55.3%, compared with 54% in 2024, with the increase due primarily to a richer mix of M800 Endpoint ICs.
Speaker #2: The year-over-year increase was driven by higher endpoint IC direct margins, specifically from a richer mix of M800. The quarter-over-quarter increase was driven primarily by higher systems direct margins, specifically higher NRU revenue, and to a lesser extent by higher endpoint IC direct margins.
Speaker #2: 2025 gross margin was $55.3% compared with $54% in 2024 with the increase due primarily to a richer mix of M800 endpoint ICs. Looking to first quarter, we expect gross margin to decline sequentially driven primarily by lower revenue on fixed cost and annual endpoint IC price reductions.
Cary Baker: Looking to Q1, we expect gross margin to decline sequentially, driven primarily by lower revenue on fixed costs and annual Endpoint IC price reductions. Total Q4 operating expense was $34.2 million, compared with $31.8 million in Q3 2025, and $33.6 million in Q4 2024. Research and development expense was $18.6 million. Sales and marketing expense was $8.2 million. General and administrative expense was $7.4 million. 2025 operating expense totaled $130.1 million, compared with $131.9 million in 2024. We expect total Q1 2025 operating expense to increase sequentially, driven primarily by normal seasonal factors.
Cary Baker: Looking to Q1, we expect gross margin to decline sequentially, driven primarily by lower revenue on fixed costs and annual Endpoint IC price reductions. Total Q4 operating expense was $34.2 million, compared with $31.8 million in Q3 2025, and $33.6 million in Q4 2024. Research and development expense was $18.6 million. Sales and marketing expense was $8.2 million. General and administrative expense was $7.4 million. 2025 operating expense totaled $130.1 million, compared with $131.9 million in 2024. We expect total Q1 2025 operating expense to increase sequentially, driven primarily by normal seasonal factors.
Speaker #2: Total fourth quarter operating expense was $34.2 million compared with $31.8 million in third quarter 2025 and $33.6 million in fourth quarter 2024. Research and development expense was $18.6 million, sales and marketing expense was $8.2 million, general and administrative expense was $7.4 million.
Speaker #2: 2025 operating expense totaled $130.1 million compared with $131.9 million in 2024. We expect total first quarter 2025 operating expense to increase sequentially driven primarily by normal seasonal factors.
Speaker #2: Fourth quarter adjusted EBITDA was $16.4 million, compared with $19.1 million in the third quarter of 2025 and $15 million in the fourth quarter of 2024. Fourth quarter adjusted EBITDA margin was 17.7%.
Cary Baker: Fourth quarter adjusted EBITDA was $16.4 million, compared with $19.1 million in Q3 2025, and $15 million in Q4 2024. Fourth quarter adjusted EBITDA margin was 17.7%. 2025 adjusted EBITDA was a record $69.6 million, compared with $65.9 million in 2024. 2025 adjusted EBITDA margin was a record 19.3%, in line with the long-term model we shared at our 2023 Investor Day. Fourth quarter GAAP net loss was $1.1 million. Fourth quarter non-GAAP net income was $15.6 million, or $0.50 per share on a fully diluted basis. 2025 GAAP net loss was $10.8 million. 2025 non-GAAP net income was $64.2 million, or $2.11 per share on a fully diluted basis. Turning to the balance sheet.
Cary Baker: Fourth quarter adjusted EBITDA was $16.4 million, compared with $19.1 million in Q3 2025, and $15 million in Q4 2024. Fourth quarter adjusted EBITDA margin was 17.7%. 2025 adjusted EBITDA was a record $69.6 million, compared with $65.9 million in 2024. 2025 adjusted EBITDA margin was a record 19.3%, in line with the long-term model we shared at our 2023 Investor Day. Fourth quarter GAAP net loss was $1.1 million. Fourth quarter non-GAAP net income was $15.6 million, or $0.50 per share on a fully diluted basis. 2025 GAAP net loss was $10.8 million. 2025 non-GAAP net income was $64.2 million, or $2.11 per share on a fully diluted basis. Turning to the balance sheet.
Speaker #2: 2025 adjusted EBITDA was a record $69.6 million, compared with $65.9 million in 2024. 2025 adjusted EBITDA margin was a record 19.3%, in line with the long-term model we shared at our 2023 investor day.
Speaker #2: Fourth quarter GAAP net loss was $1.1 million, fourth quarter non-GAAP net income was $15.6 million or 50 cents per share on a fully diluted basis.
Speaker #2: 2025 GAAP net loss was $10.8 million, 2025 non-GAAP net income was $64.2 million or $2.11 per share on a fully diluted basis. Turning to the balance sheet, we ended the fourth quarter with record cash cash equivalents and investments of $279.1 million, compared with $265.1 million in third quarter 2025 and $239.6 million in fourth quarter 2024.
Cary Baker: We ended the fourth quarter with record cash, cash equivalents, and investments of $279.1 million, compared with $265.1 million in third quarter 2025, and $239.6 million in fourth quarter 2024. Inventory totaled $85 million, down $7.7 million from the prior quarter. Fourth quarter capital expenditures totaled $1.5 million. Free cash flow was $13.6 million. 2025 capital expenditures totaled $12.9 million. Free cash flow was $45.9 million. Turning to our outlook. We expect first quarter revenue between $71 and 74 million, compared with $74.3 million in first quarter 2025, a year-over-year decrease of 2% at the midpoint. We expect adjusted EBITDA between $1.2 and 2.7 million.
Cary Baker: We ended the fourth quarter with record cash, cash equivalents, and investments of $279.1 million, compared with $265.1 million in third quarter 2025, and $239.6 million in fourth quarter 2024. Inventory totaled $85 million, down $7.7 million from the prior quarter. Fourth quarter capital expenditures totaled $1.5 million. Free cash flow was $13.6 million. 2025 capital expenditures totaled $12.9 million. Free cash flow was $45.9 million. Turning to our outlook. We expect first quarter revenue between $71 and 74 million, compared with $74.3 million in first quarter 2025, a year-over-year decrease of 2% at the midpoint. We expect adjusted EBITDA between $1.2 and 2.7 million.
Speaker #2: Inventory totaled $85 million, down 7.7 million from the prior quarter. Fourth quarter capital expenditures totaled $1.5 million, free cash flow was $13.6 million. 2025 capital expenditures totaled $12.9 million, free cash flow was $45.9 million.
Speaker #2: Turning to our outlook, we expect first quarter revenue between $71 and $74 million compared with $74.3 million in first quarter 2025, a year-over-year decrease of 2% at the midpoint.
Speaker #2: We expect adjusted EBITDA between $1.2 and $2.7 million. On the bottom line, we expect non-GAAP net income between $2.5 and $4 million reflecting non-GAAP fully diluted earnings per share between $0.08 and $0.13.
Cary Baker: On the bottom line, we expect non-GAAP net income between $2.5 and 4 million, reflecting non-GAAP fully diluted earnings per share between $0.08 and $0.13. In closing, I want to thank the Impinj team, our customers, our suppliers, and you, our investors, for your ongoing support. I will now turn the call to the operator to open the question and answer session. Nick?
Cary Baker: On the bottom line, we expect non-GAAP net income between $2.5 and 4 million, reflecting non-GAAP fully diluted earnings per share between $0.08 and $0.13. In closing, I want to thank the Impinj team, our customers, our suppliers, and you, our investors, for your ongoing support. I will now turn the call to the operator to open the question and answer session. Nick?
Speaker #2: In closing, I want to thank the Impinj Team, our customers, our suppliers, and you, our investors, for your ongoing support. I will now turn the call to the operator to open the question and answer session.
Speaker #2: Nick, thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touch-tone phone.
Operator: Thank you. 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. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. 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. The first question will come from Harsh Kumar with Piper Sandler. Please go ahead.
Operator: Thank you. 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. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. 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. The first question will come from Harsh Kumar with Piper Sandler. Please go ahead.
Speaker #2: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.
Speaker #2: Limit yourself to one question and one follow-up. If you have additional questions, as a courtesy to others, we ask that you please requeue, and we will take as many questions as time allows.
Speaker #2: At this time, we will pause momentarily to assemble our roster. And the first question will come from Harsh Kumar with Piper Sandler.
Speaker #2: At this time, we will pause momentarily to assemble our roster. And the first question will come from Harsh Kumar with Piper Sandler. Please go ahead.
Speaker #3: Yeah. Hey, guys. I wanted to hit upon the first quarter guidance a little bit. I think you're off something like 17, 18 million dollars relative to the expectation on the street.
Harsh Kumar: Yeah. Hey, guys. I wanted to hit upon the Q1 guidance a little bit. I think you're off something like $17 to $18 million relative to the expectation on the street. I know you've got a shift at your second customer in logistics. And you've also got some sort of a custom chip that you're developing and also seems like some excess inventory. So I was hoping that you could break down for us this miss between the impact from orders from the custom chip and the timing associated with it versus how much excess you have. And I'll ask my second question at the same time. It seems like there's a lot of stuff moving around.
Harsh Kumar: Yeah. Hey, guys. I wanted to hit upon the Q1 guidance a little bit. I think you're off something like $17 to $18 million relative to the expectation on the street. I know you've got a shift at your second customer in logistics. And you've also got some sort of a custom chip that you're developing and also seems like some excess inventory. So I was hoping that you could break down for us this miss between the impact from orders from the custom chip and the timing associated with it versus how much excess you have. And I'll ask my second question at the same time. It seems like there's a lot of stuff moving around.
Speaker #3: you've got a shift at EPA. I'm sorry, I know a shift at your second customer in logistics. And you've also got some sort of a custom chip that you're developing and also seems like some excess inventory.
Speaker #3: So I was us this miss hoping that you could break down for between the impact from orders from the custom chip and the timing associated with it versus how much excess you have.
Speaker #3: question at the same time. It And I'll ask my second seems like there's a lot of stuff moving around. You talked about food, sort of moving around apparel, moving around.
Harsh Kumar: You talked about food, sort of moving around, apparel moving around, but then you seem pretty confident that all of this will fix itself fairly fast, like in second quarter. These are large end markets, and I'm curious. What gives you the confidence that this will swing around to towards a better situation in as quickly as the second quarter?
Harsh Kumar: You talked about food, sort of moving around, apparel moving around, but then you seem pretty confident that all of this will fix itself fairly fast, like in second quarter. These are large end markets, and I'm curious. What gives you the confidence that this will swing around to towards a better situation in as quickly as the second quarter?
Speaker #3: But then you seem pretty confident that all of this will fix itself fairly fast, like in second quarter. These are large end markets, and I'm curious what gives you the confidence that this will swing around towards a better situation as quickly as the second quarter.
Speaker #4: Okay, thank you, Harsh. This is Chris. There's a lot to unpack in this question. I think Karen will tag-team it here. So I'm going to start by saying that, despite the starting points looking the same, we see 2026 very differently from 2025.
Chris Diorio: Okay. Thank you, Harsh. This is Chris. There's a lot to unpack in this question. I think Cary and I will tag-team it here. So I'm gonna start by saying that, despite the starting points looking the same, we see 2026 very differently from 2025. 2025, we took a competitive lead and held our own in what was an otherwise a pretty tough year. In 2026, we're gonna press that lead in what we believe is shaping up to be a growth year for the reasons that we cited in our prepared remarks. And relative to those prepared remarks, Cary and I will both go through some of the details on why we see things turning around and actually, you know, why I talked about exiting the quarter, you know, on an upward swing.
Chris Diorio: Okay. Thank you, Harsh. This is Chris. There's a lot to unpack in this question. I think Cary and I will tag-team it here. So I'm gonna start by saying that, despite the starting points looking the same, we see 2026 very differently from 2025. 2025, we took a competitive lead and held our own in what was an otherwise a pretty tough year. In 2026, we're gonna press that lead in what we believe is shaping up to be a growth year for the reasons that we cited in our prepared remarks. And relative to those prepared remarks, Cary and I will both go through some of the details on why we see things turning around and actually, you know, why I talked about exiting the quarter, you know, on an upward swing.
Speaker #4: 2025, we took a competitive lead and held our own in what was an otherwise a pretty tough year. In 2026, we're going to press that lead in what we believe is shaping up to be a growth year for the reasons that we cited in our prepared remarks.
Speaker #4: And relative to those prepared remarks, Karen and I will both go through some of the details on why we see things turning around and actually why I talked about exiting the quarter on an upward swing.
Chris Diorio: But just before I hand over to Cary to add a few points, I will say that custom chip for our second large American supply chain and logistics end user, it's not just in design. We are currently shipping it, and so it is in production now. Cary, why don't I turn over to you for a bit, and then we can go back and forth?
Speaker #4: But just before I hand over to Karen to add a few points, I will say that that custom chip for our second largest American supply chain and logistics end user is not just in design.
Chris Diorio: But just before I hand over to Cary to add a few points, I will say that custom chip for our second large American supply chain and logistics end user, it's not just in design. We are currently shipping it, and so it is in production now. Cary, why don't I turn over to you for a bit, and then we can go back and forth?
Speaker #4: We are currently shipping it. And so it is in production now. Karen, why don't I turn over to you for a bit, and then we can go back and forth.
Speaker #5: Thanks, Chris. Harsh, let me break down the Q1 revenue guide and how we built it. So as I noted, we're expecting endpoint I see revenue to decline sequentially at a high teens percentage.
Cary Baker: Thanks, Chris. Harsh, let me break down the Q1 guide, revenue guide and how we built it. So as I noted, we're expecting endpoint IC revenue to decline sequentially at a high-teens percentage. That's primarily on lower volume, as our inlay partners supporting our logistics customers burn down a few weeks of inventory. Think of each week of burn down approximating about $5 million of impact. To a much lesser degree, yearly price reductions and product mix are also impacting our first quarter. We're modeling pricing at $2 million, and the mix impact is smaller than that. There's also some retail weakness that we're factoring through our guide. Now, as we built our guide, we wanted to be prudent in doing so. So there's a couple things to consider in our guidance.
Cary Baker: Thanks, Chris. Harsh, let me break down the Q1 guide, revenue guide and how we built it. So as I noted, we're expecting endpoint IC revenue to decline sequentially at a high-teens percentage. That's primarily on lower volume, as our inlay partners supporting our logistics customers burn down a few weeks of inventory. Think of each week of burn down approximating about $5 million of impact. To a much lesser degree, yearly price reductions and product mix are also impacting our first quarter. We're modeling pricing at $2 million, and the mix impact is smaller than that. There's also some retail weakness that we're factoring through our guide. Now, as we built our guide, we wanted to be prudent in doing so. So there's a couple things to consider in our guidance.
Speaker #5: That's primarily on lower volume, as our inlay partners supporting our logistics customers burn down a few weeks of inventory. Think of each week of burn-down approximating about $5 million.
Speaker #5: To a much lesser degree, yearly price reductions and product mix are also impacting our first quarter. We're modeling pricing at a couple of million bucks, and the mix impact is smaller than that.
Speaker #5: There's also some retail weakness that we're factoring through our guide. Now, as we built our guide, we wanted to be prudent in doing so.
Speaker #5: So there's a couple of things to consider. In our guidance, first, the January turn orders have been strong. They're already double what few fourth quarter was at the same point in the quarter, and they're up more than 50% than they were last January.
Cary Baker: First, the January turn orders have been strong. They're already double what the fourth quarter was at the same point in the quarter, and they're up more than 50% than they were last January. The second piece I would highlight is that the elevating, elevated rescheduling behavior that we saw all of last year has significantly moderated and is approaching a normal, a return to normal levels right now. Then finally, I would add, our Endpoint IC business is nearly 100% booked to the midpoint of the guide, despite there being a few weeks left to turn business in the quarter.
Cary Baker: First, the January turn orders have been strong. They're already double what the fourth quarter was at the same point in the quarter, and they're up more than 50% than they were last January. The second piece I would highlight is that the elevating, elevated rescheduling behavior that we saw all of last year has significantly moderated and is approaching a normal, a return to normal levels right now. Then finally, I would add, our Endpoint IC business is nearly 100% booked to the midpoint of the guide, despite there being a few weeks left to turn business in the quarter.
Speaker #5: The second piece I would highlight is that the elevated rescheduling behavior that we saw all of last year has significantly moderated and is approaching a normal return to normal levels right add our endpoint I see business is nearly 100% booked to the midpoint of the guide, despite there being a few weeks left to turn business in the quarter.
Speaker #4: So Harsh, we'll pause there. Why don't you follow on and did we answer your question adequately, or did we leave parts of it
Chris Diorio: So Harsh, we'll pause there. Why don't you follow on, and did we answer your question adequately, or did we leave parts of it open?
Chris Diorio: So Harsh, we'll pause there. Why don't you follow on, and did we answer your question adequately, or did we leave parts of it open?
Speaker #4: open? No, no.
Harsh Kumar: No, no, super helpful. I just wanted to follow up on the second question that I asked, which was, you've got a lot of end markets moving around, food, apparel, all of which is getting hit, seems like in one Q, you mentioned, but then you're pretty confident that all of this will turn around. I was curious, are you just looking at your orders and saying this will turn around for you, or is there something happening within the end markets that is causing the orders to have come in into the one Q, and you're expecting something to happen in the end market to drive that business up?
Harsh Kumar: No, no, super helpful. I just wanted to follow up on the second question that I asked, which was, you've got a lot of end markets moving around, food, apparel, all of which is getting hit, seems like in one Q, you mentioned, but then you're pretty confident that all of this will turn around. I was curious, are you just looking at your orders and saying this will turn around for you, or is there something happening within the end markets that is causing the orders to have come in into the one Q, and you're expecting something to happen in the end market to drive that business up?
Speaker #3: Super helpful. I just wanted to follow up on the second question that I asked, which was you've got a lot of end markets moving around: food, apparel, all of which is getting hit, seems like, in one queue.
Speaker #3: You mentioned, but then you're pretty confident that all of this will turn around. I was curious that you're just looking at your are you looking at your orders and saying this will turn around for you, or is there something happening within the end markets that is causing the orders to have come in into the one Q and you're expecting something to happen in the end market to drive that business up?
Speaker #4: Yeah, so there's no easy answer to your question because the answer depends on the particular aspects of the end markets. In food, as I said in my prepared remarks, we see modest volumes, but in exportable growth.
Chris Diorio: Yeah. So there's no easy answer to your, to your question because the answer depends on the particular aspects of the end markets. In food, as I said, in our, in my prepared remarks, we see modest volumes, but inexorable growth. And we remain incredibly excited about that food opportunity. We see stores, or we see the number of stores expanding, especially in bakery, and we see opportunities in food space. In retail apparel, as we said, you know, we see ongoing retailer inventory burn down. We saw some of it in the latter part of the fourth quarter, now that we finally have the data, and we see it continuing in the first quarter. We expect that inventory burn down to normalize based on input from the retailers themselves, as well as from our partners.
Chris Diorio: Yeah. So there's no easy answer to your, to your question because the answer depends on the particular aspects of the end markets. In food, as I said, in our, in my prepared remarks, we see modest volumes, but inexorable growth. And we remain incredibly excited about that food opportunity. We see stores, or we see the number of stores expanding, especially in bakery, and we see opportunities in food space. In retail apparel, as we said, you know, we see ongoing retailer inventory burn down. We saw some of it in the latter part of the fourth quarter, now that we finally have the data, and we see it continuing in the first quarter. We expect that inventory burn down to normalize based on input from the retailers themselves, as well as from our partners.
Speaker #4: And we remain incredibly excited about that food opportunity. We see stores or we see the number of stores expanding, especially in bakery. And we see opportunities in food space.
Speaker #4: In retail, apparel, as we said, we see ongoing retailer inventory burn-down. We saw some of it in the latter part of the fourth quarter now that we finally have the data.
Speaker #4: And we see it continuing in the first quarter. We expect that inventory burn down to normalize based on input from the retailers themselves as well as from our partners.
Speaker #4: And we see new accounts coming online. For example, Abercrombie and Fitch, Aritzia, Old Navy, Academy Sports, and others. So we see new accounts coming online.
Chris Diorio: And we see new accounts coming online. For example, Abercrombie and Fitch, Aritzia, Old Navy, Academy Sports, and others. So we see new accounts coming online. And then, in supply chain and logistics space, of course, as Cary noted, we see the inventory burn down correcting, as well as the new IC adding volumes to us. So overall, we think we've got good visibility into the end opportunities that you've been, you just raised here, and that the reasons we feel positive about the situation exiting the quarter is that we see positive news there.
Chris Diorio: And we see new accounts coming online. For example, Abercrombie and Fitch, Aritzia, Old Navy, Academy Sports, and others. So we see new accounts coming online. And then, in supply chain and logistics space, of course, as Cary noted, we see the inventory burn down correcting, as well as the new IC adding volumes to us. So overall, we think we've got good visibility into the end opportunities that you've been, you just raised here, and that the reasons we feel positive about the situation exiting the quarter is that we see positive news there.
Speaker #4: And then in supply chain and logistics space, of course, as Karen noted, we see the inventory burn down correcting as well as the new I see added volumes to us.
Speaker #4: So overall, we think we've got good visibility into the opportunities that we've been talking that you just raised here. And the reasons we feel positive about the situation exiting the quarter is that
Speaker #4: there. Thank you.
Harsh Kumar: Thank you. Thank you, guys.
Harsh Kumar: Thank you. Thank you, guys.
Speaker #3: Thank you, guys.
Speaker #4: Thank you.
Chris Diorio: Thank you.
Chris Diorio: Thank you.
Speaker #1: The next question will come from Blaine Curtis with Jefferies. Please go
Operator: The next question will come from Blayne Curtis with Jefferies. Please go ahead.
Operator: The next question will come from Blayne Curtis with Jefferies. Please go ahead.
Speaker #1: ahead. Hey, guys.
Ezra Weener: Hey, guys, Ezra Weener in for Blayne. Thanks for taking my questions. Just first, want to make sure I understand this correctly. You said apparel is going to normalize in Q2. Do you also expect the logistics to normalize in Q2, or do you think that's going to take a little bit longer?
Ezra Weener: Hey, guys, Ezra Weener in for Blayne. Thanks for taking my questions. Just first, want to make sure I understand this correctly. You said apparel is going to normalize in Q2. Do you also expect the logistics to normalize in Q2, or do you think that's going to take a little bit longer?
Speaker #6: As you're aware, on for Blaine, thanks for taking my questions. Just first, I want to make sure I understand this correctly. You said apparel is going to normalize in Q2.
Speaker #6: Do you also expect the logistics to normalize in Q2, or do you think that's going to take a little bit?
Speaker #6: longer? We
Chris Diorio: We said that, we see apparel overall normalizing as early as Q2. We're not going to actually project the actual date. In the supply chain and logistics space, as Cary said just a minute ago, and Cary, I'll have you add again, we see the inventory correction happening in Q1. Cary, anything you'd add there?
Chris Diorio: We said that, we see apparel overall normalizing as early as Q2. We're not going to actually project the actual date. In the supply chain and logistics space, as Cary said just a minute ago, and Cary, I'll have you add again, we see the inventory correction happening in Q1. Cary, anything you'd add there?
Speaker #4: said that we see apparel overall normalizing as early as second quarter. We're not going to actually project the actual date. In the supply chain and logistics space, as as Karen said just a minute ago and Karen, I'll have you add again, we see the inventory correction happening in the first quarter.
Speaker #4: Karen,
Speaker #4: anything you'd add there?
Speaker #5: Yeah.
Cary Baker: Yeah. Ezra, I would say, you know, we're, we're entering the quarter with a few extra weeks of channel inventory related to supply chain and logistics. We're going to work very hard to burn that down in Q1, but we know from history that it's difficult to contain a correction to a single quarter, and it may spill over into the second quarter. So you'll have to wait for us to give an update, as we exit Q1 on how successful we are at burning that inventory down.
Cary Baker: Yeah. Ezra, I would say, you know, we're, we're entering the quarter with a few extra weeks of channel inventory related to supply chain and logistics. We're going to work very hard to burn that down in Q1, but we know from history that it's difficult to contain a correction to a single quarter, and it may spill over into the second quarter. So you'll have to wait for us to give an update, as we exit Q1 on how successful we are at burning that inventory down.
Speaker #5: Ezra, I would say we're entering the quarter with a few extra weeks of channel inventory related to supply chain and logistics. We're going to work very hard to burn that down in Q1.
Speaker #5: But we know from history that it's difficult to contain a correction to a single quarter, and it may spill over into the second quarter.
Speaker #5: So you'll have to wait for us to give an update as we exit Q1 on how successful we are at burning that inventory
Speaker #5: down. Got
Speaker #6: it. And then the my follow-up would be in terms of that ASIC, you talked a little bit about pricing and solutions. Can you talk a little bit about how you view that and that solution for the customer and how you think about kind of pricing and value going forward with that?
Ezra Weener: Got it. And then my follow-up would be, in terms of ASIC, you talked a little bit about pricing and solutions. Can you talk a little bit about how you view that and that solution for the customer, and how you think about kind of pricing and value going forward with that?
Ezra Weener: Got it. And then my follow-up would be, in terms of ASIC, you talked a little bit about pricing and solutions. Can you talk a little bit about how you view that and that solution for the customer, and how you think about kind of pricing and value going forward with that?
Speaker #4: Yeah. This is Chris. I'm happy to. We've been focused for a while on understanding end user problems, designing customizations through our platform that address the customer needs.
Chris Diorio: Yes, this is Chris. I'm happy to. You know, we've been focused for a while on understanding end user problems, designing customizations through our platform that address the customer needs. We did protected mode for a visionary European retailer and brought that chip broadly to market, and it's being used by them and many others. You can think overall of Gen2X as the same idea, custom features that we released broadly to market, and both of them have seen market success. In this case, you can think of the custom IC as being tailored to the specific needs of that end user, and it is an IC customized for them.
Chris Diorio: Yes, this is Chris. I'm happy to. You know, we've been focused for a while on understanding end user problems, designing customizations through our platform that address the customer needs. We did protected mode for a visionary European retailer and brought that chip broadly to market, and it's being used by them and many others. You can think overall of Gen2X as the same idea, custom features that we released broadly to market, and both of them have seen market success. In this case, you can think of the custom IC as being tailored to the specific needs of that end user, and it is an IC customized for them.
Speaker #4: We did protected mode for a visionary European retailer and brought that ship broadly to market, and it's being used by them and many others.
Speaker #4: You can think overall of Gen2X is the same idea: custom features that we release broadly to the market. And both success. In this case, you can think of the custom I see as being tailored to the specific needs of that end user.
Speaker #4: And it is an I see customized for them. And we see it as not only meeting their critical needs and helping their business go forward, but also giving them the opportunity to drive operational efficiencies across their organization and for them to expand their prowess.
Chris Diorio: And, we see it as not only meeting their critical needs and helping their business go forward, but also giving them the opportunity to, to drive operational efficiencies across their organization, and for them to expand their, their prowess in RAIN RFID to win new customer business, including with that IC. So we, as a company, are focused on working directly with those end users and truly enabling them to drive forward with their business and to expand it, and then for us to basically partner with them along the way. So expect us to do more of those kinds of opportunities. And as we build more and more whole solutions to tie that customized Endpoint IC and the radio link that supports it and features in our Reader ICs into an overall solutions offering more and more, and less just an IC offering.
Chris Diorio: And, we see it as not only meeting their critical needs and helping their business go forward, but also giving them the opportunity to, to drive operational efficiencies across their organization, and for them to expand their, their prowess in RAIN RFID to win new customer business, including with that IC. So we, as a company, are focused on working directly with those end users and truly enabling them to drive forward with their business and to expand it, and then for us to basically partner with them along the way. So expect us to do more of those kinds of opportunities. And as we build more and more whole solutions to tie that customized Endpoint IC and the radio link that supports it and features in our Reader ICs into an overall solutions offering more and more, and less just an IC offering.
Speaker #4: And Raynor FID to win new customer business, including with that I see. So we, as a company, are focused on working directly with those end users and truly enabling them to drive forward with their business and to expand it.
Speaker #4: And then for us to basically partner with them along the way. So expect us to do more of those kinds of opportunities. And as we build more and more whole solutions to tie that customized endpoint I see and the radio link that supports it and features in our reader I sees into an overall solutions offering, more and more, and less just an I see offering.
Speaker #4: So we're early in that stage where we focus on a solution sale rather than an individual I see sale. But expect us to drive in that
Chris Diorio: So we're early in that stage where we focus on a solution sale rather than an individual IC sale, but expect us to drive in that direction.
Chris Diorio: So we're early in that stage where we focus on a solution sale rather than an individual IC sale, but expect us to drive in that direction.
Speaker #4: direction. Ezra, this is Karen.
Cary Baker: Ezra, this is Cary. The only other thing I would add is we'll price that IC to market.
Cary Baker: Ezra, this is Cary. The only other thing I would add is we'll price that IC to market.
Speaker #5: The only other thing I would add is we'll price that I see to market. At least currently.
Speaker #4: Yeah. At current way of selling. In the future, we'll be looking for new opportunities to do solution
Chris Diorio: Yeah. At least currently, our current way of selling. Future, we'll be looking for new opportunities to do solution sales.
Chris Diorio: Yeah. At least currently, our current way of selling. Future, we'll be looking for new opportunities to do solution sales.
Speaker #4: sales.
Speaker #6: Awesome. Thank
Ezra Weener: Awesome. Thank you.
Ezra Weener: Awesome. Thank you.
Speaker #1: The next question will you. come from Jim Rashuti with Needham and Company. Please go ahead.
Operator: The next question will come from Jim Ricchiuti with Needham and Company. Please go ahead.
Operator: The next question will come from Jim Ricchiuti with Needham and Company. Please go ahead.
Speaker #3: Thanks. Good afternoon. I just want to follow up on this—this new chip. Is this for a subset of applications with this customer?
Jim Ricchiuti: Thanks. Good afternoon. I just want to follow up on, on this, this new chip. Is this, for a, a subset of applications with this customer?
Jim Ricchiuti: Thanks. Good afternoon. I just want to follow up on, on this, this new chip. Is this, for a, a subset of applications with this customer?
Speaker #4: No, Jim, it's for all applications with the customer. It's that they are going to switch to that chip. They plan to fully switch to that chip.
Chris Diorio: No, Jim, it's for all applications with the customer. It's that they're gonna switch to that chip. They plan to fully switch to that chip in 2026.
Chris Diorio: No, Jim, it's for all applications with the customer. It's that they're gonna switch to that chip. They plan to fully switch to that chip in 2026.
Speaker #4: In 2026.
Speaker #3: Okay.
Jim Ricchiuti: Okay.
Jim Ricchiuti: Okay.
Speaker #4: Customized for their
Speaker #4: Customized for their needs. Got it.
Chris Diorio: Customized for them, for their needs.
Chris Diorio: Customized for them, for their needs.
Jim Ricchiuti: Got it. Chris, will this, I don't recall you guys ever going down this path with a customer. What kind of concerns could this customer have about second sourcing, being able to source the chip from someone other than you, just to protect themselves? I'm wondering, does this have anything to do with the relationship, perhaps with EM Microelectronic?
Jim Ricchiuti: Got it. Chris, will this, I don't recall you guys ever going down this path with a customer. What kind of concerns could this customer have about second sourcing, being able to source the chip from someone other than you, just to protect themselves? I'm wondering, does this have anything to do with the relationship, perhaps with EM Microelectronic?
Speaker #3: Chris, will this—I don't recall you guys down this path with a customer. What kind of concerns could this customer have about second sourcing, being able to source the chip from someone other than you?
Speaker #3: Just to protect themselves. I'm wondering, does this have anything to do with the relationship, perhaps with EM Microelectronics?
Chris Diorio: Good question, and good connecting the dots, Jim. We're not far enough along to speak to any possibilities about the relationship with EM, but you're thinking in the right direction. Right now, we're focused on delivering to the customer's needs, ensuring they have adequate supply and giving them commitments of supply, so they have confidence in this chip and their ability to rely on it. As the future evolves and we do more of these things, and I wanna do more custom chips because we've got other enterprise customers with key needs that aren't addressed without customizations, we will be looking to ensure for them that they have adequate supply of chips, labels, reader ICs, and everything else, so they can feel confident moving down this path.
Speaker #4: Good question and good connecting the dots, Jim. We're not far enough along to speak to any possibilities along the about the relationship with EM, but you're thinking in the right direction.
Chris Diorio: Good question, and good connecting the dots, Jim. We're not far enough along to speak to any possibilities about the relationship with EM, but you're thinking in the right direction. Right now, we're focused on delivering to the customer's needs, ensuring they have adequate supply and giving them commitments of supply, so they have confidence in this chip and their ability to rely on it. As the future evolves and we do more of these things, and I wanna do more custom chips because we've got other enterprise customers with key needs that aren't addressed without customizations, we will be looking to ensure for them that they have adequate supply of chips, labels, reader ICs, and everything else, so they can feel confident moving down this path.
Speaker #4: Right now, we're focused on delivering to the customer's needs, ensuring they have adequate supply and giving them commitments of supply so they have confidence in this chip and their ability to rely on it.
Speaker #4: As the future evolves and we do more of these things, I want to do more custom chips because we've got other enterprise customers with key needs that aren't addressed without customizations.
Speaker #4: We will be looking to ensure for them that they have added adequate supply of chips, labels, reader ICs, and everything else so they can feel confident moving down this path.
Speaker #3: Got it. One final question, and I'll jump back in the queue. You suggested that Intensions gain market share in endpoint ICs. Your major competitor has introduced a new chip, and I'm wondering how you're thinking about market share, particularly with this new chip that you're introducing. And in a related question, it sounds like this competitor is still talking about a license payment in the June quarter.
Jim Ricchiuti: Got it. One final question, and I'll jump back in the queue. You suggested that in terms of gain market share in endpoint ICs, your major competitor has introduced a new chip, and, you know, I'm wondering how you're thinking about market share, you know, particularly with this new chip that you're introducing. And in a related question, it sounds like this competitor is still talking about a license payment in the June quarter. So, Cary, maybe you could help me out with, is that something we should be thinking about as well for Q2, the way it-
Jim Ricchiuti: Got it. One final question, and I'll jump back in the queue. You suggested that in terms of gain market share in endpoint ICs, your major competitor has introduced a new chip, and, you know, I'm wondering how you're thinking about market share, you know, particularly with this new chip that you're introducing. And in a related question, it sounds like this competitor is still talking about a license payment in the June quarter. So, Cary, maybe you could help me out with, is that something we should be thinking about as well for Q2, the way it-
Speaker #3: So Karen, maybe you could help me out with is that something we should be thinking about as well for Q2? The way it is?
Speaker #4: Jim, I'll say something. You can say that's a license payment in Q2, Jim. You should expect it. We do. So yes, we'll get the license payment to the other part of your question, Jim.
Chris Diorio: Jim, I'll take the first one.
Chris Diorio: Jim, I'll take the first one.
Cary Baker: You should expect the license payment in Q2, Jim. You should expect it.
Cary Baker: You should expect the license payment in Q2, Jim. You should expect it.
Chris Diorio: Yeah.
Chris Diorio: Yeah.
Cary Baker: We do.
Cary Baker: We do.
Chris Diorio: So, yes, we'll get the license payment. To the other part of your question, Jim. You know, we're focused on enabling solutions for enterprise end users. Those solutions are not just a chip. It's not just a chip and an antenna. It's a chip and an antenna, and the Airlink supporting it, and the Reader IC supporting that, and the firmware on the Reader IC supporting it, and the readers and gateway supporting it, and the partnership supporting it, and then solution software. We're focused on driving the entirety of those pieces to create an enterprise solution. And you see Gen2X as a key, key, key part of that initiative.
Chris Diorio: So, yes, we'll get the license payment. To the other part of your question, Jim. You know, we're focused on enabling solutions for enterprise end users. Those solutions are not just a chip. It's not just a chip and an antenna. It's a chip and an antenna, and the Airlink supporting it, and the Reader IC supporting that, and the firmware on the Reader IC supporting it, and the readers and gateway supporting it, and the partnership supporting it, and then solution software. We're focused on driving the entirety of those pieces to create an enterprise solution. And you see Gen2X as a key, key, key part of that initiative.
Speaker #4: We're focused on enabling solutions for enterprise end users. Those solutions are just not—I'm not just a chip. It's not just a chip and an antenna.
Speaker #4: It's a chip and an antenna, and the air link supporting it, and the reader IC supporting that, and the firmware on the reader IC supporting it, and the readers and gateway supporting it, and the partnership supporting it, and then solution software.
Speaker #4: We're focused on driving the entirety of those pieces to create an enterprise solution, and we firmly see Gen2X as a key part of that initiative.
Speaker #4: And we firmly believe that by delivering whole solutions and optimizing the solution for the end user we can outperform mix and match efforts using competitor products.
Chris Diorio: We firmly believe that by delivering whole solutions and optimizing the solution for the end user, we can outperform mix-and-match efforts using competitor products, and that's our focus.
Chris Diorio: We firmly believe that by delivering whole solutions and optimizing the solution for the end user, we can outperform mix-and-match efforts using competitor products, and that's our focus.
Speaker #4: And that's our focus.
Speaker #3: Thank
Jim Ricchiuti: Thank you.
Jim Ricchiuti: Thank you.
Speaker #3: you. Thank
Speaker #4: You. The next question will come.
Chris Diorio: Thank you.
Chris Diorio: Thank you.
Operator: The next question will come from Scott Searle with Roth Capital. Please go ahead.
Operator: The next question will come from Scott Searle with Roth Capital. Please go ahead.
Speaker #1: from Scott Searle with Roth Capital.
Speaker #1: Please go ahead. Hey, good
Scott Searle: Hey, good afternoon, thanks for taking my questions. Chris, maybe start. I just wanted to get a couple of clarifications on some of your, your comments and some of the initial questions. For starters, on the logistics softness, I want to clarify, is the customer that you're designing a custom chip for, are they in part then working down inventory to zero from legacy M700, M800 chips, and that's part of the pressure as well? And then, as it relates specifically to the custom ASIC, you know, I think you got asked the market share question, but I'll ask it maybe a different way. You know, I would imagine if they're moving in this direction, it should deliver higher share, as opposed to splitting the business historically with NXP.
Scott Searle: Hey, good afternoon, thanks for taking my questions. Chris, maybe start. I just wanted to get a couple of clarifications on some of your, your comments and some of the initial questions. For starters, on the logistics softness, I want to clarify, is the customer that you're designing a custom chip for, are they in part then working down inventory to zero from legacy M700, M800 chips, and that's part of the pressure as well? And then, as it relates specifically to the custom ASIC, you know, I think you got asked the market share question, but I'll ask it maybe a different way. You know, I would imagine if they're moving in this direction, it should deliver higher share, as opposed to splitting the business historically with NXP.
Speaker #6: Afternoon. Thanks for taking my questions. Chris, maybe I just wanted to get a couple of clarifications on some of your comments and some of the initial questions.
Speaker #6: For starters, on the logistics softness, I want to clarify: is the customer that you’re designing a custom chip for—in part—then working down inventory to zero from legacy M700, M800 chips, and that’s part of the pressure as well?
Speaker #6: And then, is it related specifically to the custom ASIC? I think you got to ask the market share question, but I'll ask it maybe a different way.
Speaker #6: I would imagine if they're moving in this direction, it should deliver higher share as opposed to splitting the business historically within XP. Should we be assuming, though, that you're going to be gaining 100% share with these types of customers?
Scott Searle: Should we be assuming, though, that you're gonna be gaining 100% share with these types of customers? And it sounds like there's more custom opportunities in the pipeline, so how is this gonna transition then over the course of 2026 and 2027? And then I had a follow-up.
Scott Searle: Should we be assuming, though, that you're gonna be gaining 100% share with these types of customers? And it sounds like there's more custom opportunities in the pipeline, so how is this gonna transition then over the course of 2026 and 2027? And then I had a follow-up.
Speaker #6: And it sounds like there's more custom opportunities in the pipeline. So how is this going to transition then over the course of 26 and 27?
Speaker #6: And then I had a follow-up.
Speaker #4: Yeah, Scott, I'll do my best to those questions. First, we're not just designing the chip, it's in production now. Second, it's dedicated to a single customer, which is our second large North American supply chain and logistics customer.
Chris Diorio: Yeah, Scott, I'll do my best to those questions. First, we're not just designing the chip; it's in production now. Second, it's dedicated to a single customer, which is our second largest North American supply chain and logistics customer. It is targeted at addressing their specific needs, and it is a chip specific to them. We already have high share at that account. It will maintain that share. We are exploring customizations for other enterprises that aren't as far down the path as we are in this particular instance, where we actually have the IC or the chip in production. But more importantly, I view this chip as us engaging closely enough with the enterprise, where they can share their needs, we can share what we can do, and we can together build a chip.
Chris Diorio: Yeah, Scott, I'll do my best to those questions. First, we're not just designing the chip; it's in production now. Second, it's dedicated to a single customer, which is our second largest North American supply chain and logistics customer. It is targeted at addressing their specific needs, and it is a chip specific to them. We already have high share at that account. It will maintain that share. We are exploring customizations for other enterprises that aren't as far down the path as we are in this particular instance, where we actually have the IC or the chip in production. But more importantly, I view this chip as us engaging closely enough with the enterprise, where they can share their needs, we can share what we can do, and we can together build a chip.
Speaker #4: It is targeted at addressing their specific needs and it is a chip specific to them. We already have high share at that account. It will maintain that share.
Speaker #4: And we are exploring customizations for other enterprises that aren't as far down the path as we are in this particular instance where we're actually have the IC or the chip in production.
Speaker #4: But more importantly, I view this chip as us engaging closely enough with the enterprise where they can share their needs, we can share what we can do, and we can together build a chip.
Speaker #4: It's not just an impinged chip, build a chip for them. It's we work together on it. They came forward with what they needed and we built it for them and they're going to be using it and we intend to keep doing so.
Chris Diorio: It's not just Impinj chip, build a chip for them, is we work together on it. They came forward with what they needed, and we built it for them, and they're gonna be using it, and we intend to keep doing so. You know, I have a mantra in the company, and I push it at every meeting we have, which is: We support our end customers. We never let an end customer down... and you should expect that, us to do that here. Harsh, what did I miss?
Chris Diorio: It's not just Impinj chip, build a chip for them, is we work together on it. They came forward with what they needed, and we built it for them, and they're gonna be using it, and we intend to keep doing so. You know, I have a mantra in the company, and I push it at every meeting we have, which is: We support our end customers. We never let an end customer down... and you should expect that, us to do that here. Harsh, what did I miss?
Speaker #4: I have a mantra in the company and I push it at every meeting we have, which is we support our end customers, we never let an end customer down.
Speaker #4: And you should expect us to do that here. Karen, what
Speaker #4: did I miss?
Cary Baker: Hey, Chris, let me, let me unpack the-- Oh, let me just unpack the inventory build just-
Cary Baker: Hey, Chris, let me, let me unpack the-- Oh, let me just unpack the inventory build just-
Speaker #3: Hey, Scott, let me
Speaker #3: unpack. Oh, just one clarification before I build.
Speaker #6: Oh, sorry. Before the inventory build—just Chris, to clarify then, do you retain the IP and the ability, then, to license it to additional customers within that same subvertical, or no?
Scott Searle: Oh, just one clarification. Oh, sorry. Before the inventory build, just Chris, to clarify then, do you retain the IP and the ability then to license it to additional customers within that same sub-vertical or no?
Scott Searle: Oh, just one clarification. Oh, sorry. Before the inventory build, just Chris, to clarify then, do you retain the IP and the ability then to license it to additional customers within that same sub-vertical or no?
Speaker #4: Yes, we do in this particular instance retain the IP. I can imagine other scenarios where there might be some shared IP in this instance.
Chris Diorio: Yes, we do, in this particular instance, retain the IP. I can imagine other scenarios where there might be some shared IP. In this instance, we retain the IP, but our focus, first and foremost, is supporting that customer. They're a lighthouse customer to us. I consider them a close partner. You should expect us to focus first on them with this particular chip, and we built it for them, specific to them.
Chris Diorio: Yes, we do, in this particular instance, retain the IP. I can imagine other scenarios where there might be some shared IP. In this instance, we retain the IP, but our focus, first and foremost, is supporting that customer. They're a lighthouse customer to us. I consider them a close partner. You should expect us to focus first on them with this particular chip, and we built it for them, specific to them.
Speaker #4: We retain the IP but our focus first and foremost is supporting that customer. There are lighthouse customers to us. I consider them a close partner.
Speaker #4: You should expect us to focus first on them with this particular chip and we built it for them specific to them.
Cary Baker: Scott, I'll just unpack the inventory build a little bit. Today, parcel tracking deployment uses the M800 exclusively. The M800 is our general purpose SKU, meaning it can also support virtually any retail, apparel, or general merchandise application. And that application fungibility gave some of our partners the confidence to lean in, build supply ahead of actually winning the award, knowing that they could move those ICs through other applications if necessary. So when we were looking at our fourth quarter, and we were building our fourth quarter, it came together as we expected. But when we unpacked it, unpacked the quarter in mid-January, and we matched that with our channel inventory reports from our inlay partners, we realized that the logistics-related build had masked the weakness in retail. Now, this will get better.
Speaker #3: And Scott, just unpack the bit. Today, parcel tracking deployment uses the M800 exclusively. The M800 is our general purpose SKU, meaning it can also support virtually any retail, apparel, or general merchandise application.
Cary Baker: Scott, I'll just unpack the inventory build a little bit. Today, parcel tracking deployment uses the M800 exclusively. The M800 is our general purpose SKU, meaning it can also support virtually any retail, apparel, or general merchandise application. And that application fungibility gave some of our partners the confidence to lean in, build supply ahead of actually winning the award, knowing that they could move those ICs through other applications if necessary. So when we were looking at our fourth quarter, and we were building our fourth quarter, it came together as we expected. But when we unpacked it, unpacked the quarter in mid-January, and we matched that with our channel inventory reports from our inlay partners, we realized that the logistics-related build had masked the weakness in retail. Now, this will get better.
Speaker #3: And that application fungibility gave some of our partners the confidence to lean in, build supply ahead of actually winning the award, knowing that they could move those ICs through other applications if necessary.
Speaker #3: So when we were looking at our fourth quarter and we were building our fourth quarter, it came together as we expected. But when we unpacked it, unpacked the quarter in mid-January and we matched that with our channel inventory reports from our inlay partners, we realized that the logistics-related build had matched the weakness in retail.
Speaker #3: Now, this will get better. With our logistics customer now ramping to the new custom IC that Chris just described, we will have better visibility into logistics-related inventory.
Cary Baker: With our logistics customer now ramping to the new custom IC that Chris just described, we will have better visibility into logistics-related inventory. We'll be able to match our shipments of that custom IC directly to that end customer's monthly consumption reports. We have to prove it, too, certainly, but we think this gets better going forward.
Cary Baker: With our logistics customer now ramping to the new custom IC that Chris just described, we will have better visibility into logistics-related inventory. We'll be able to match our shipments of that custom IC directly to that end customer's monthly consumption reports. We have to prove it, too, certainly, but we think this gets better going forward.
Speaker #3: We'll be able to match our shipments of that custom IC directly to that end customer's monthly consumption reports. We have to prove it to you, certainly, but we think this gets better going forward.
Speaker #3: We'll be able to match our shipments of that custom IC directly to that end customer's monthly consumption reports. We have to prove it to you, certainly, but we think this gets better going.
Speaker #6: Okay. Very helpful. And if I could, just as a follow-up, another market share question, Chris, you've referenced it a couple of times in your opening remarks.
Scott Searle: Okay, very helpful, and if I could, just as a follow-up, another market share question. Chris, you've referenced it a couple of times in your opening remarks, but Gen2X provides significant benefits and advantages. It only works with your Endpoint IC. So I'm wondering, as you look out over the next couple of quarters in 2026 and 2027, is this the primary driver of incremental share out there? And will you start to run the table a little bit more in terms of meaningful market share within your existing accounts? Thanks.
Scott Searle: Okay, very helpful, and if I could, just as a follow-up, another market share question. Chris, you've referenced it a couple of times in your opening remarks, but Gen2X provides significant benefits and advantages. It only works with your Endpoint IC. So I'm wondering, as you look out over the next couple of quarters in 2026 and 2027, is this the primary driver of incremental share out there? And will you start to run the table a little bit more in terms of meaningful market share within your existing accounts? Thanks.
Speaker #6: But Gen2X provides significant benefits and advantages and only works with your endpoint IC. So I'm wondering, as you look out over the next couple of quarters in 26 and 27, is this the primary driver of incremental share out there and will you start to run the table a little bit more in terms of meaningful market share within your existing accounts?
Speaker #6: Thanks.
Chris Diorio: Hmm. Yes, I'm gonna answer the question, yes. I believe that Gen 2X will be the significant driver of our market share gains. But you think of Gen 2X as a toolbox that we can bring to bear for enterprise customers who have an unmet need and allow us to solve their problem. So to the extent that we have significant enterprise accounts, which we do, we need a way to solve them. Consider Gen 2X to be the way we're going to be driving the solution, and going forward, even adding more features and capabilities to Gen 2X as we learn and do more.
Chris Diorio: Hmm. Yes, I'm gonna answer the question, yes. I believe that Gen 2X will be the significant driver of our market share gains. But you think of Gen 2X as a toolbox that we can bring to bear for enterprise customers who have an unmet need and allow us to solve their problem. So to the extent that we have significant enterprise accounts, which we do, we need a way to solve them. Consider Gen 2X to be the way we're going to be driving the solution, and going forward, even adding more features and capabilities to Gen 2X as we learn and do more.
Speaker #4: I'm going
Speaker #4: to, yes, I'm going to answer the question, yes. I believe that Gen2X will be the significant driver of our market Gen2X as a toolbox that we can bring to share gains.
Speaker #4: But you should think of bear for enterprise customers who have an unmet need and allow us to solve their problem. So to the extent that we have significant enterprise accounts, which we do, we need a way to solve them.
Speaker #4: Consider Gen2X to be the way we're going to be driving the solution and going forward, even adding more features and capabilities to Gen2X as we learn and do more.
Speaker #4: So essentially, you should think of Gen2X as a way to improve the readability and overall performance and protection capabilities provided by Rain RFID. To reduce labor costs, to speed inventory, to provide readability where you wouldn't have it otherwise, to localize where items are, to identify exits and theft, and many protect consumer privacy and many other areas where you put that whole toolbox together is the driver of our differentiation in the market.
Chris Diorio: So essentially, you should think of Gen2X as a way to improve the readability, overall performance, and protection capabilities provided by RAIN RFID, to reduce labor costs, to speed inventory, to provide readability where you wouldn't have it otherwise, to localize where items are, to identify exits and theft, and many, we protect consumer privacy in many other areas where you put that whole toolbox together. It's the driver of our differentiation in the market. It's kind of a manifestation of it, but it's also a manifestation of our overall solution strategy. So the two together, they're going to be the drivers of our success.
Chris Diorio: So essentially, you should think of Gen2X as a way to improve the readability, overall performance, and protection capabilities provided by RAIN RFID, to reduce labor costs, to speed inventory, to provide readability where you wouldn't have it otherwise, to localize where items are, to identify exits and theft, and many, we protect consumer privacy in many other areas where you put that whole toolbox together. It's the driver of our differentiation in the market. It's kind of a manifestation of it, but it's also a manifestation of our overall solution strategy. So the two together, they're going to be the drivers of our success.
Speaker #4: It's kind of the manifestation of it, but it's also a manifestation of our overall solution strategy for the two together. They're going to be the drivers of our
Speaker #4: success. Thank
Speaker #6: Hey, great. Thanks so much.
Scott Searle: Hey, great. Thanks so much. I'll get back in the queue.
Scott Searle: Hey, great. Thanks so much. I'll get back in the queue.
Speaker #6: I'll get back in the queue.
Chris Diorio: Thank you.
Chris Diorio: Thank you.
Speaker #1: The you. next question will come from Natalia Winkler with UBS. Please go
Operator: The next question will come from Natalia Winkler with UBS. Please go ahead.
Operator: The next question will come from Natalia Winkler with UBS. Please go ahead.
Speaker #1: ahead. Hi, thank you so
Natalia Winkler: Hi, thank you so much for taking my question. I just wanted to ask one more on the first quarter kind of outlook for you guys. So if I understood Cary correctly, Cary, you mentioned several weeks of inventory burn for retail, right? And it sounds like each week is $5 million. So if I'm thinking, you know, even of a sequential, you know, reduction of $20 million, it sounds like, you know, more than half of that is probably related to the retail inventory burndown. Is that kind of a fair way to think about it, or is it more nuanced?
Natalia Winkler: Hi, thank you so much for taking my question. I just wanted to ask one more on the first quarter kind of outlook for you guys. So if I understood Cary correctly, Cary, you mentioned several weeks of inventory burn for retail, right? And it sounds like each week is $5 million. So if I'm thinking, you know, even of a sequential, you know, reduction of $20 million, it sounds like, you know, more than half of that is probably related to the retail inventory burndown. Is that kind of a fair way to think about it, or is it more nuanced?
Speaker #7: much for taking my question. I just wanted to ask one more on the first quarter, kind of how it looked for you guys. So if I understood Karen correctly, Karen, you mentioned several weeks of inventory burn for retail, right?
Speaker #7: And it sounds like each week is 5 million. So if I'm thinking even of a sequential reduction of 20 million, it sounds like more than half of that is probably related to the retail inventory burden.
Speaker #7: Is that kind of a fair way to think about it, or is it more
Speaker #7: nuanced? No, I think
Cary Baker: I think that's a fair way to think about it. It's a few weeks of inventory, not several. It's primarily related to supply chain logistics for the reasons I just described. You're, you're correct in that the impact is about $5 million per week of burn down, and then the other factors, which are far less impactful, are pricing and mix. I sized pricing at a couple million dollars and mix of less than that.
Cary Baker: I think that's a fair way to think about it. It's a few weeks of inventory, not several. It's primarily related to supply chain logistics for the reasons I just described. You're, you're correct in that the impact is about $5 million per week of burn down, and then the other factors, which are far less impactful, are pricing and mix. I sized pricing at a couple million dollars and mix of less than that.
Speaker #3: that's a fair way to think about it. It's a few weeks of inventory, not several. It's primarily related to supply chain logistics for the reasons I just described.
Speaker #3: You're correct in that the impact is about $5 million per week of burn down. And then the other factors, which are far less impactful, are pricing and mix.
Speaker #3: A sized pricing at a couple of million dollars, and a mix of less than that.
Speaker #7: Awesome. Thank you so much. And then I guess a follow-up, can you guys help us understand clearly, it's a highly complex supply chain for retail, right, with kind of multiple different steps and stages in it.
Natalia Winkler: Awesome. Thank you so much. And then I guess a follow-up: Can you guys help us understand, you know, clearly it's a highly complex supply chain for retail, right? With kind of multiple different steps and stages in it. Can you walk us through your, you know, forecasting process and maybe part of the reason, like, why we're seeing such a strong kind of corrections and burnouts that may be a little bit less predictable than for some of the other end markets you guys cover?
Natalia Winkler: Awesome. Thank you so much. And then I guess a follow-up: Can you guys help us understand, you know, clearly it's a highly complex supply chain for retail, right? With kind of multiple different steps and stages in it. Can you walk us through your, you know, forecasting process and maybe part of the reason, like, why we're seeing such a strong kind of corrections and burnouts that may be a little bit less predictable than for some of the other end markets you guys cover?
Speaker #7: Can you walk us through your forecasting process and maybe part of the reason why we're seeing such a strong kind of corrections and burnouts that may be a little bit less predictable than for some of the other end markets you guys cover?
Speaker #3: Yeah. So the inventory build was related to logistics. We had a similar logistics build last year at the same time, but for different reasons.
Cary Baker: Yeah. So the inventory build was related to logistics. We had a similar logistics build last year at the same time, but for different reasons. It's nonetheless frustrating. This year's build is a result of our partners leaning in ahead of winning the supply awards or label awards following the label reallocation process. They were comfortable leaning in because up until the custom IC ships, the M800 goes into the package, the tracking deployment. The M800 is a fungible SKU across the industry in that it's general purpose, it can support retail apparel, general merchandise, and logistics.
Cary Baker: Yeah. So the inventory build was related to logistics. We had a similar logistics build last year at the same time, but for different reasons. It's nonetheless frustrating. This year's build is a result of our partners leaning in ahead of winning the supply awards or label awards following the label reallocation process. They were comfortable leaning in because up until the custom IC ships, the M800 goes into the package, the tracking deployment. The M800 is a fungible SKU across the industry in that it's general purpose, it can support retail apparel, general merchandise, and logistics.
Speaker #3: It's nonetheless frustrating. This year's build is a result of our partners leaning in ahead of winning the supply awards or label awards following the label reallocation process.
Speaker #3: They were comfortable leaning in because up until the custom IC ships, the M800 goes into the package-tracking deployment. The M800 is a fungible SKU across the industry, in that it's general purpose.
Speaker #3: It can support retail apparel. It can support general merchandise. It can support logistics. That fungibility gave our partners the confidence to lean in, build extra inventory, in hopes of winning the award because if they didn't win the award or didn't win as much of an award as they thought, they would be able to burn that inventory down through the rest of their market opportunities.
Cary Baker: That fungibility gave our partners the confidence to lean in, build extra inventory in hopes of winning an award, because if they didn't win the award or didn't win as much of an award as they thought, they would be able to burn that inventory down through the rest of their market opportunities. We didn't realize that in the fourth quarter as it was happening, because our fourth quarter, from a unit volume perspective, was coming in right as we expected. When we began unpacking the fourth quarter volumes in mid-January, and we matched that with the channel inventory reports we received around that same time, we realized that the logistics build had masked some weakness in retail apparel that we didn't anticipate and wasn't obvious to us until that point.
Cary Baker: That fungibility gave our partners the confidence to lean in, build extra inventory in hopes of winning an award, because if they didn't win the award or didn't win as much of an award as they thought, they would be able to burn that inventory down through the rest of their market opportunities. We didn't realize that in the fourth quarter as it was happening, because our fourth quarter, from a unit volume perspective, was coming in right as we expected. When we began unpacking the fourth quarter volumes in mid-January, and we matched that with the channel inventory reports we received around that same time, we realized that the logistics build had masked some weakness in retail apparel that we didn't anticipate and wasn't obvious to us until that point.
Speaker #3: We didn't realize that in the fourth quarter as it was happening because our fourth quarter, from a unit volume perspective, was coming in right as we expected.
Speaker #3: When we began unpacking the fourth quarter volumes in mid-January, and we matched that with the channel inventory reports we received around that same time, we realized that the logistics build had masked some weakness in retail apparel that we didn't anticipate and wasn't obvious to us until that point.
Speaker #3: Now, I think next year this gets better, and I know we have to prove that first given the last two years of channel inventory builds.
Cary Baker: Now, I think next year this gets better, and I know, I know we have to prove that first, given the last two years of channel inventory builds. But I think it gets better because we will only ship one SKU to that customer. It's only usable by that customer, and we will be able to match our shipments with their monthly consumption reports, and the difference between the two is the inventory that will be in the channel. So again, we have to prove it to you, but I think we get better next year at that.
Cary Baker: Now, I think next year this gets better, and I know, I know we have to prove that first, given the last two years of channel inventory builds. But I think it gets better because we will only ship one SKU to that customer. It's only usable by that customer, and we will be able to match our shipments with their monthly consumption reports, and the difference between the two is the inventory that will be in the channel. So again, we have to prove it to you, but I think we get better next year at that.
Speaker #3: But I think it gets better because we will only ship one SKU to that customer. It's only usable by that customer, and we will be able to match our shipments with their monthly consumption reports.
Speaker #3: And the difference between the two is the inventory that will be in the channel. So again, we have to prove it to you, but I think we get better next year at
Speaker #3: that.
Speaker #7: Thank
Guy Hardwick: Thank you.
Natalia Winkler: Thank you.
Speaker #1: The next question will come you. from Troy Jensen with Canter Fitzgerald. Please go
Operator: The next question will come from Troy Jensen with Cantor Fitzgerald. Please go ahead.
Operator: The next question will come from Troy Jensen with Cantor Fitzgerald. Please go ahead.
Speaker #1: ahead. Hey, gentlemen.
Troy Jensen: Hey, gentlemen, thanks for taking my questions. Maybe for Chris, or I guess either one of you guys, you know, these customers that were leaning in, right, in the hopes for the awards, sounds like they went to a competitor. So I'm just curious, why do you think we had this share loss in the quarter? It was really-
Troy Jensen: Hey, gentlemen, thanks for taking my questions. Maybe for Chris, or I guess either one of you guys, you know, these customers that were leaning in, right, in the hopes for the awards, sounds like they went to a competitor. So I'm just curious, why do you think we had this share loss in the quarter? It was really-
Speaker #8: Thanks for taking my questions. Maybe for Chris, or I guess either one of you guys, these customers that were leaning in, right, in hopes for the awards—sounds like they went to a competitor.
Speaker #8: So I'm just curious, why do you think we had this sheer loss in the quarter?
Speaker #8: Was running? No, they didn't go to a competitor,
Chris Diorio: No, they didn't go to a competitor, Troy. No, no, that wasn't part of it. There was none of that moving to a competitor. They weren't-
Chris Diorio: No, they didn't go to a competitor, Troy. No, no, that wasn't part of it. There was none of that moving to a competitor. They weren't-
Speaker #3: Troy. No, that wasn't part of it. There was none of that moving to a competitor.
Speaker #8: So just awarded?
Troy Jensen: Awarded?
Troy Jensen: Awarded?
Chris Diorio: They anticipated some wins. They started building to the new IC. At the same time, they know their existing inventory is gonna drop. It needs to get burned down. So they started buying ahead. The ones who, as we said in our prepared remarks, the ones who didn't win as much, now need to burn down their inventory in Q1.
Speaker #3: They anticipated there's a new IC coming? They anticipated some wins? They started building to the new IC? At the same time, they know their existing inventory is going to need to get burned down.
Chris Diorio: They anticipated some wins. They started building to the new IC. At the same time, they know their existing inventory is gonna drop. It needs to get burned down. So they started buying ahead. The ones who, as we said in our prepared remarks, the ones who didn't win as much, now need to burn down their inventory in Q1.
Speaker #3: So they started buying ahead the ones who as we said in our prepared remarks, the ones who didn't win as much now need to burn down their inventory.
Speaker #3: In the first quarter. So Troy, the only thing I'd add to Chris is that our logistics customer rebids their label suppliers each year. It's still the M800 for all labels, but the mix of inlay partners that support them each year can change.
Cary Baker: So Troy, the only thing I'd add to Chris is that our logistics customer rebids their label suppliers each year. It's still the M800 for all labels, but the mix of inlay partners that support them each year can change based on that rebidding process. And that rebidding process here, this year, coupled with the fungibility of the M800 that I just described, gave them the confidence to lean in and buy more supplies so they could be more responsive if they won the award or to win a greater share of the award. And they knew that if they didn't win as much, they would be able to take that inventory out through virtually any other retail apparel or general merchandise application.
Cary Baker: So Troy, the only thing I'd add to Chris is that our logistics customer rebids their label suppliers each year. It's still the M800 for all labels, but the mix of inlay partners that support them each year can change based on that rebidding process. And that rebidding process here, this year, coupled with the fungibility of the M800 that I just described, gave them the confidence to lean in and buy more supplies so they could be more responsive if they won the award or to win a greater share of the award. And they knew that if they didn't win as much, they would be able to take that inventory out through virtually any other retail apparel or general merchandise application.
Speaker #3: Based on that rebidding process—and that rebidding process this year, coupled with the fungibility of the M800 that I just described—gave them the confidence to lean in and buy more supplies so they could be more responsive if they won the award, or to win a greater share of the award.
Speaker #3: And they knew that if they didn't win as much, they would be able to take that inventory out through virtually any other retail apparel or general merchandise application.
Troy Jensen: Yep, okay, understood. So several partners probably thought they're going to win the award and went to one and-
Troy Jensen: Yep, okay, understood. So several partners probably thought they're going to win the award and went to one and-
Speaker #8: Yep. Okay. Understood. So several partners probably thought
Speaker #8: one and. Exactly.
Chris Diorio: Exactly.
Chris Diorio: Exactly.
Cary Baker: It was oversubscribed. The award was oversubscribed.
Cary Baker: It was oversubscribed. The award was oversubscribed.
Speaker #3: It was
Speaker #3: oversubscribed. The award was oversubscribed. Exactly.
Chris Diorio: Exactly, and then we compound it with a new chip entering the market, and there needs to be a further burn down of the existing M800 product.
Chris Diorio: Exactly, and then we compound it with a new chip entering the market, and there needs to be a further burn down of the existing M800 product.
Speaker #8: And then we compound it with a new chip entering the market, and there needs to be a further burn down of the existing Okay.
Troy Jensen: Yep. Okay, understood. And then, maybe just to follow up with the, you talked about retail SKU growth you're seeing. I'm curious if that's broad-based or is that just limited to a couple of your bigger customers?
Troy Jensen: Yep. Okay, understood. And then, maybe just to follow up with the, you talked about retail SKU growth you're seeing. I'm curious if that's broad-based or is that just limited to a couple of your bigger customers?
Speaker #8: Understood. And then maybe just to follow up with the you talked about retail SKU growth you're seeing. I'm curious if that's broad-based or is that just limited to a couple of your bigger customers?
Speaker #3: It was a SKU growth in general merchandise. You mean retail apparel growth? I think you mean SKU.
Chris Diorio: It was SKU growth in general merchandise. You mean retail apparel growth? I think you mean SKU growth in general.
Chris Diorio: It was SKU growth in general merchandise. You mean retail apparel growth? I think you mean SKU growth in general.
Speaker #3: growth in general merchandise. This
Speaker #8: is a comment on SKU growth. Was that just based on a few large customers, or is it more broad-based?
Troy Jensen: Just the comment on SKU growth, was that just based on a few large customers or is it more broad-based?
Troy Jensen: Just the comment on SKU growth, was that just based on a few large customers or is it more broad-based?
Chris Diorio: The comment on SKU growth in existing categories as well as the potential for new categories was related to a small number, a pretty small number of customers in the general merchandise space.
Speaker #3: The comment on SKU growth in existing categories, as well as the potential for new categories, was related to a small number—a pretty small number—of customers in the general merchandise space.
Chris Diorio: The comment on SKU growth in existing categories as well as the potential for new categories was related to a small number, a pretty small number of customers in the general merchandise space.
Speaker #8: Gotcha. Okay. Good luck this year, guys.
Troy Jensen: Gotcha. Okay. Good luck this year, guys.
Troy Jensen: Gotcha. Okay. Good luck this year, guys.
Speaker #3: Thank you,
Chris Diorio: Thank you, Troy.
Chris Diorio: Thank you, Troy.
Speaker #3: Troy. The next
Cary Baker: Thank you.
Cary Baker: Thank you.
Operator: The next question will come from Guy Hardwick with Barclays. Please go ahead.
Operator: The next question will come from Guy Hardwick with Barclays. Please go ahead.
Speaker #1: question will come from Guy Hardwick with Barclays. Please go ahead.
Speaker #9: Hi. Good
Guy Hardwick: Hi, good evening.
Guy Hardwick: Hi, good evening.
Speaker #9: evening.
Cary Baker: Hi, Guy.
Cary Baker: Hi, Guy.
Speaker #8: Hi, Hi, Guy.
Chris Diorio: Hi, Guy.
Chris Diorio: Hi, Guy.
Speaker #8: Guy. Just a couple of questions. So I think a year ago, when you had a inventory overhang in the T&L space, you said some similar comments that it could take more than a quarter to clear the inventory, but I think you actually cleared the inventory in just one quarter.
Guy Hardwick: Just a couple of questions. So I think a year ago, when you had an inventory overhang in the TNL space, you said some similar comments that it could take more than a quarter to clear the inventory, but I think you actually cleared the inventory in just one quarter. What's different this time? And as a follow-up, it looks like you have pretty good visibility on the Endpoint IC business, that you're pretty much already booked for Q1 within midpoint of your guidance, looking at your comments. So what does that tell you or tell us in terms of what's the underlying growth in the Endpoint IC market of 2025 levels?
Guy Hardwick: Just a couple of questions. So I think a year ago, when you had an inventory overhang in the TNL space, you said some similar comments that it could take more than a quarter to clear the inventory, but I think you actually cleared the inventory in just one quarter. What's different this time? And as a follow-up, it looks like you have pretty good visibility on the Endpoint IC business, that you're pretty much already booked for Q1 within midpoint of your guidance, looking at your comments. So what does that tell you or tell us in terms of what's the underlying growth in the Endpoint IC market of 2025 levels?
Speaker #8: time? What's different this And as a follow-up, it looks like you have pretty good visibility on the endpoint IC business that you're pretty much already booked for Q1 within mid-point of your guidance, looking at your comments.
Speaker #8: So what does that tell you, or tell us, in terms of what's the underlying growth in the endpoint IC market for 2025?
Speaker #8: levels? Yeah.
Cary Baker: Yeah. Guy, this is Cary. I'll try to take that, both of those, those questions. So yes, it is the same in that it's the supply chain logistics space. There are a variety of different reasons which, I, I've already covered. We. Last year, we were successful in burning all that channel inventory out in Q1. We are attempting to do the exact same thing this year. However, we know that inventory corrections are seldom contained to one quarter, and we just want to be cautious with our guidance so that if it does spill into Q2, we have room to do that. As it relates to our guidance, we are seeing strong signals from our bookings and our turns order in Q2 to date, so think of January through the first week of February.
Cary Baker: Yeah. Guy, this is Cary. I'll try to take that, both of those, those questions. So yes, it is the same in that it's the supply chain logistics space. There are a variety of different reasons which, I, I've already covered. We. Last year, we were successful in burning all that channel inventory out in Q1. We are attempting to do the exact same thing this year. However, we know that inventory corrections are seldom contained to one quarter, and we just want to be cautious with our guidance so that if it does spill into Q2, we have room to do that. As it relates to our guidance, we are seeing strong signals from our bookings and our turns order in Q2 to date, so think of January through the first week of February.
Speaker #3: Guy, this is Cary. I'll try to take that, both of those questions. So yes, it is the same in that it's the supply chain and logistics space.
Speaker #3: There are a variety of different reasons, which I've already covered. Last year, we were successful in burning all that channel inventory out in the first quarter.
Speaker #3: We are attempting to do the exact same thing this year. However, we know that inventory corrections are seldom contained to one quarter, and we just want to be cautious with our guidance so that if it does spill into the second quarter, we have room to do that.
Speaker #3: As it relates to our guidance, we are seeing strong signals from our bookings and our turns order in the quarter to date. So think of January, through the first week of February.
Cary Baker: That is turns at a higher rate than it was at the same time in fourth quarter, more than double and 50% up from last year, January. That has put us in a position where we are 100% booked to the midpoint of our guide for our Endpoint IC business, or nearly 100% booked. We're giving ourselves a little bit of a room, a little bit of room, because we aren't done with the annual price negotiations. We still have a couple that are outstanding there, and also the Chinese New Year occurs later this year than it did last year, and we typically see a low in bookings during those three weeks.
Speaker #3: That is turning at a higher rate than it was at the same time in the fourth quarter—more than double—and 50% up from last January.
Cary Baker: That is turns at a higher rate than it was at the same time in fourth quarter, more than double and 50% up from last year, January. That has put us in a position where we are 100% booked to the midpoint of our guide for our Endpoint IC business, or nearly 100% booked. We're giving ourselves a little bit of a room, a little bit of room, because we aren't done with the annual price negotiations. We still have a couple that are outstanding there, and also the Chinese New Year occurs later this year than it did last year, and we typically see a low in bookings during those three weeks.
Speaker #3: That has put us in a position where we are 100% booked to the midpoint of our guide for our endpoint IC business, or nearly 100% booked.
Speaker #3: We're giving ourselves a little bit of a room, a little bit of room because we aren't done with the annual price negotiations. We still have a couple that are outstanding there.
Speaker #3: And also, the Chinese New Year occurs later this year than it did last year. And we typically see a lull in bookings during those three
Speaker #3: weeks. Thank
Harsh Kumar: Thank you.
Guy Hardwick: Thank you.
Speaker #1: The next question will come from
Operator: The next question will come from Christopher Rolland with Susquehanna. Please go ahead.
Operator: The next question will come from Christopher Rolland with Susquehanna. Please go ahead.
Speaker #1: ahead.
Speaker #10: Hi there. This is Dylan Olivier on.
Dylan Olivier: Hi there, this is Dylan Olivier on for Chris. Thanks for taking my question. Maybe pivoting away a bit from this inventory situation and sort of a bigger picture question. I wanted to ask about sort of the competitive landscape, particularly against non-RFID components. We've heard some news flow of some end users kind of pivoting away to some more BLE and, you know, other protocols. Is that something that you consider a risk or, or do you remain confident in, in RFID as a long-term solution?
Dylan Ollivier: Hi there, this is Dylan Olivier on for Chris. Thanks for taking my question. Maybe pivoting away a bit from this inventory situation and sort of a bigger picture question. I wanted to ask about sort of the competitive landscape, particularly against non-RFID components. We've heard some news flow of some end users kind of pivoting away to some more BLE and, you know, other protocols. Is that something that you consider a risk or, or do you remain confident in, in RFID as a long-term solution?
Speaker #10: for Chris. Thanks for taking my you. question. Maybe pivoting away a bit from this inventory situation and sort of a bigger picture question, I wanted to ask about sort of the competitive landscape particularly against non-RFID components.
Speaker #10: We've heard some news flow of some end users kind of pivoting away to some more BLE and other protocols is that something that you consider a risk, or do you remain confident in RFID as a long-term solution?
Chris Diorio: Dylan, this is Chris. The simple answer is we remain confident in RAIN RFID as a long-term solution. They're just two different technologies, and active BLE with batteries has a particular use case, for tracking things like temperature and other kind of stuff that gets continuous data logging, and, and that's complementary. Passive BLE for beaconing operates in a narrow window of, of use cases, and, again, with some different features and capabilities that I also view as mostly complementary. The volume differences between the two are gigantic. I mean, in our industry delivered 52.8 billion ICs less in 2024. And, the volume differences are, are gigantic. The infrastructure is different. I view them as mostly complementary. Of course, with every complementary thing, there's a bit of overlap, but I don't really look at the competitiveness.
Speaker #3: Dylan, this is Chris. The simple answer is we remain confident in bringing RFID as a long-term solution. There are just two different technologies. And active BLE with batteries has a particular use case.
Chris Diorio: Dylan, this is Chris. The simple answer is we remain confident in RAIN RFID as a long-term solution. They're just two different technologies, and active BLE with batteries has a particular use case, for tracking things like temperature and other kind of stuff that gets continuous data logging, and, and that's complementary. Passive BLE for beaconing operates in a narrow window of, of use cases, and, again, with some different features and capabilities that I also view as mostly complementary. The volume differences between the two are gigantic. I mean, in our industry delivered 52.8 billion ICs less in 2024. And, the volume differences are, are gigantic. The infrastructure is different. I view them as mostly complementary. Of course, with every complementary thing, there's a bit of overlap, but I don't really look at the competitiveness.
Speaker #3: For tracking things like temperature and other kinds of stuff that get continuous data logging, and that's complementary. Passive BLE for beaconing operates in a narrow window of use cases.
Speaker #3: And again, with some different features and capabilities that I also view as mostly complimentary. The volume differences between the two are gigantic. I mean, our industry delivered 52.8 billion ICs less in 2024.
Speaker #3: And volume differences are gigantic. The infrastructure is different. I view them as mostly complimentary. Of course, with every complimentary thing, there's a bit of overlap.
Speaker #3: But I don't really look at the competitiveness. I look at complementary things, and trying to enable the end customer with a solution that meets their needs.
Chris Diorio: I look at complementary things and trying to enable the end customer with a solution that meets their needs.
Chris Diorio: I look at complementary things and trying to enable the end customer with a solution that meets their needs.
Speaker #10: Thanks, appreciate the color here. And then maybe more of a housekeeping question for my follow-up. But yeah, you had that EM Microelectronics license announcement in the quarter.
Dylan Olivier: Thanks. Appreciate the color here. And then maybe more of a housekeeping question for my second—for my follow-up. But, yeah, you had that EM Microelectronic license announcement in the quarter. Just wondering if-
Dylan Ollivier: Thanks. Appreciate the color here. And then maybe more of a housekeeping question for my second—for my follow-up. But, yeah, you had that EM Microelectronic license announcement in the quarter. Just wondering if-
Speaker #10: Just wondering how we should think about that impacting if there's going to be a recurring revenue, if that's going to be consistent through the year.
Chris Diorio: Yeah
Chris Diorio: Yeah
Dylan Olivier: ... how we should think about that impacting the model, if there's gonna be a recurring revenue, and if that's gonna be consistent through the year?
Dylan Ollivier: ... how we should think about that impacting the model, if there's gonna be a recurring revenue, and if that's gonna be consistent through the year?
Speaker #3: Yeah. There's an immaterial impact to revenue in 2026. We're still working on what that first chip might be likely a dual frequency IC, likely not available this year.
Cary Baker: Yeah, there's an immaterial impact to revenue in 2026. We're still working on what that first chip might be, likely a dual-frequency IC, likely not available this year.
Cary Baker: Yeah, there's an immaterial impact to revenue in 2026. We're still working on what that first chip might be, likely a dual-frequency IC, likely not available this year.
Chris Diorio: Just view it as a strategic partnership. And then just think that, so the answers that we gave to Jim's question, you know, view the strategic partnership as a way for us to deliver confidence to our end users.
Speaker #3: It just view it as a strategic partnership. And then just think to the answers that we gave to Jim's question, view the strategic partnership as a way for us to deliver confidence to our end
Chris Diorio: Just view it as a strategic partnership. And then just think that, so the answers that we gave to Jim's question, you know, view the strategic partnership as a way for us to deliver confidence to our end users.
Speaker #3: users. Great.
Dylan Olivier: Great. Thank you.
Dylan Ollivier: Great. Thank you.
Speaker #10: Thank you.
Speaker #1: The next question is a follow-up from Harsh Kumar of Piper Sandler. Please go
Operator: The next question is a follow-up from Harsh Kumar of Piper Sandler. Please go ahead.
Operator: The next question is a follow-up from Harsh Kumar of Piper Sandler. Please go ahead.
Speaker #1: ahead. Yeah.
Harsh Kumar: Yeah. Hey, guys. So I was curious, how long do you think it would take for you to be fully penetrated at your second-largest logistics customer with the custom chip? And am I correct in assuming that custom chips typically mean better pricing than a normal chip?
Harsh Kumar: Yeah. Hey, guys. So I was curious, how long do you think it would take for you to be fully penetrated at your second-largest logistics customer with the custom chip? And am I correct in assuming that custom chips typically mean better pricing than a normal chip?
Speaker #11: Hey, guys. So I was curious how long do you think it would take for you to be fully penetrated at your second largest logistics customer with the custom chip?
Speaker #11: And am I correct in assuming that custom chips typically mean better pricing than a normal chip?
Speaker #3: So I'll take the first answer so the customer plans to fully switch over to that chip this year. That's what I said in my prepared remarks.
Chris Diorio: So I'll take the first answer. So the customer plans to fully switch over to that chip this year. That's what I said in my prepared remarks. And as Cary said, we are pricing the chip to market. Cary, anything you want to add?
Chris Diorio: So I'll take the first answer. So the customer plans to fully switch over to that chip this year. That's what I said in my prepared remarks. And as Cary said, we are pricing the chip to market. Cary, anything you want to add?
Speaker #3: And as Cary said, we are pricing the chip to market. Cary, anything you want to add? Did I answer your question?
Cary Baker: Nope.
Cary Baker: Nope.
Chris Diorio: Did I answer your question, Harsh?
Chris Diorio: Did I answer your question, Harsh?
Speaker #3: Question, Harsh? Well, I guess there is.
Harsh Kumar: Well, I guess there is no market for a custom chip, right? You're the standard in RFID, and you've got a custom product. I would suspect... So, are you saying that you're pricing it similar to M800 or more than that?
Harsh Kumar: Well, I guess there is no market for a custom chip, right? You're the standard in RFID, and you've got a custom product. I would suspect... So, are you saying that you're pricing it similar to M800 or more than that?
Speaker #11: No market for a custom chip, right? The standard in RFID, and you've got a custom product. I would suspect so. Are you saying that you're pricing it similar to M800, or more than?
Speaker #11: that? I'm going to say
Chris Diorio: I'm gonna say that we're pricing it to, as I also said in some of the prepared remarks, a little bit further down, to drive an ROI for the end customer and for us, you know? So,
Chris Diorio: I'm gonna say that we're pricing it to, as I also said in some of the prepared remarks, a little bit further down, to drive an ROI for the end customer and for us, you know? So,
Speaker #3: that we're pricing it to, as I also said, in some of the prepared remarks, a little bit further down, to a drive-in ROI for the end customer.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Chris Diorio, Co-founder and CEO, for any closing remarks.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Chris Diorio, Co-founder and CEO, for any closing remarks.
Speaker #1: and answer session. I would like to turn the conference back over to Chris Diorio, co-founder and CEO, for any closing
Speaker #1: remarks. Thank
Speaker #3: You, Nick. I'd like to thank you all for joining the call today, and thank you for your ongoing support. Bye-bye.
Chris Diorio: Thank you, Nick. I'd like to thank you all for joining the call today, and, thank you for your ongoing support. Bye-bye.
Chris Diorio: Thank you, Nick. I'd like to thank you all for joining the call today, and, thank you for your ongoing support. Bye-bye.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
