Q2 2026 Impinj Inc Earnings Call

July 29, 2026

Operator: Welcome to Impinj Q2 2026 Financial Results Conference Call. 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. 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 and then two. 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 Investor Relations. Please go ahead.

Speaker #2: 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.

Operator: To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star and then two. 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 Investor Relations. Please go ahead.

Speaker #2: please press star, and then two. 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 Investor Relations.

Speaker #2: Please go ahead. Thank you, Nick. Good afternoon, and thank you all for joining us to discuss Impinj's second quarter 2026 results. On today's call, Chris Diorio, Impinj's co-founder and CEO, will provide a brief overview of our market opportunity and performance.

Andy Cobb: Thank you, Nick. Good afternoon, and thank you all for joining us to discuss Impinj's Q2 2026 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 Q2 financial results and Q3 outlook. We will then open the call for questions. You can find management's prepared remarks plus trended financial data on the company's investor relations 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. We believe we have a reasonable basis for making these forward-looking statements, our actual results could differ materially because any such statements are subject to risks and uncertainties.

Speaker #2: Cary Baker, Impinj's CFO, will follow with a detailed review of our second quarter financial results and third quarter outlook. We will then open the call for questions.

Speaker #2: You can find management's prepared remarks, plus trended financial data, on the company's investor relations website. We will make statements in this call about financial performance and future expectations that are based on our outlook as of today.

Andy Cobb: 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. We believe we have a reasonable basis for making these forward-looking statements, our actual results could differ materially because any such statements are subject to risks and uncertainties.

Speaker #2: Any such statements are forward-looking under the private securities litigation reform act of 1995, whereas we believe we have a reasonable basis for making these forward-looking statements our actual results could differ materially because any such statements are subject to risks and uncertainties.

Speaker #2: 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.

Andy Cobb: 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. Before turning to our results and outlook, note that we will participate in the 2026 Jefferies Semiconductor, IT Hardware & Communications Technology Conference on 25 August in Chicago and the Piper Sandler Growth Frontiers Conference on 15 September in Nashville. We look forward to connecting with many of you this quarter. I will now turn the call over to Chris.

Speaker #2: On today's call, all financial metrics, except for revenue, were where we explicitly state otherwise are non-GAAP. All balance sheet and cash flow metrics, except for free cash flow, are GAAP.

Speaker #2: Please refer to our earnings release for reconciliation of non-GAAP financial metrics to the most comparable GAAP metrics. Before turning to our results and outlook, note that we will participate in the 2026 Jefferies Semiconductor IT Hardware and Communications Technology Conference on August 25th in Chicago, and the Piper Sandler Growth Frontiers Conference on September 15th in Nashville.

Andy Cobb: Please refer to our earnings release for a reconciliation of non-GAAP financial metrics to the most comparable GAAP metrics. Before turning to our results and outlook, note that we will participate in the 2026 Jefferies Semiconductor, IT Hardware & Communications Technology Conference on 25 August in Chicago and the Piper Sandler Growth Frontiers Conference on 15 September in Nashville. We look forward to connecting with many of you this quarter. I will now turn the call over to Chris.

Speaker #2: We look forward to connecting with many of you this quarter. I will now turn the call over to Chris.

Speaker #3: Thank you, Andy. And thank you all for joining the call. Our second quarter results were strong with revenue adjusted EBITDA and earnings per share setting new quarterly records.

Chris Diorio: Thank you, Andy, and thank you all for joining the call. Our Q2 results were strong, with revenue, adjusted EBITDA, and earnings per share setting new quarterly records. For the second consecutive quarter, Endpoint IC bookings also hit an all-time high, driven by strong demand across retail apparel, general merchandise, and supply chain and logistics. Looking to the Q3, we see accelerating demand and strong product revenue growth. Starting with silicon, Q2 Endpoint IC product revenue exceeded our expectations, with unit volume setting a new quarterly record. In supply chain and logistics, the custom ASIC ramp at our second-large North American supply chain and logistics end user is ahead of schedule, with our inlay partners rapidly filling their supply chain and full conversion expected in the Q3. In retail apparel and general merchandise, stronger than expected demand drove outsized revenue even as channel inventory declined.

Speaker #3: For the second consecutive quarter, endpoint IC bookings also hit an all-time high, driven by strong demand across retail apparel, general merchandise, and supply chain and logistics.

Speaker #3: Looking to the third quarter, we see accelerating demand and strong product revenue growth. Starting with silicon, second quarter endpoint IC product revenue exceeded our expectations, with unit volume setting a new quarterly record.

Chris Diorio: Starting with silicon, Q2 Endpoint IC product revenue exceeded our expectations, with unit volume setting a new quarterly record. In supply chain and logistics, the custom ASIC ramp at our second-large North American supply chain and logistics end user is ahead of schedule, with our inlay partners rapidly filling their supply chain and full conversion expected in the Q3. In retail apparel and general merchandise, stronger than expected demand drove outsized revenue even as channel inventory declined.

Speaker #3: In supply chain and logistics, the custom ASIC ramp at our second large North American supply chain and logistics end user is ahead of schedule, with our inlay partners rapidly filling their supply chain and full conversion expected in the third quarter.

Speaker #3: In retail apparel and general merchandise, stronger than expected demand drove outsized revenue even as channel inventory declined. We believe market expansion, retailer pull-ins before temporary tariffs expired last week, and consumer resilience drove the demand strength.

Chris Diorio: We believe market expansion, retailer pull-ins before temporary tariffs expired last week, and consumer resilience drove the demand strength. Looking forward, strong bookings suggest continued market expansion and demand on top of our inlay partners rebuilding their IC inventory back to normal levels. Reader IC revenue also beat our expectations, driven by strong enterprise demand. Looking to Q3, we expect Reader ICs to be our fastest-growing product line. For both Endpoint and Reader ICs, we have sufficient wafers to support the demand with strong support from our foundry partner. Turning to food. A few weeks ago, another large US grocer publicly cited their ongoing bakery pilot using RAIN to track in-store inventory and product expiration dates. Three of the five largest US grocers have now announced pilots or deployments across bakery, deli, or meats. I will take a moment to give some color on the food opportunity.

Speaker #3: Looking forward, strong bookings suggest continued market expansion and demand on top of our inlay partners rebuilding their IC inventory back to normal levels. Reader IC revenue also beat our expectations, driven by strong enterprise demand.

Speaker #3: Looking to the third quarter, we expect Reader ICs to be our fastest-growing product line. For both endpoint and Reader ICs, we have sufficient wafers to support the demand, with strong support from our foundry partner.

Speaker #3: Turning to food, a few weeks ago, another large US grocer, publicly cited their ongoing bakery pilot. Using rain to track in-store inventory and product expiration dates.

Speaker #3: Three of the five largest US grocers have now announced pilots or deployments across bakery, deli, or meats. I'll take a moment to give some color on the food opportunity.

Speaker #3: We are currently supporting four distinct types of food programs. First, Store Replenishment, led by Quick Serve Restaurants and focused on availability and freshness. Second, In-Store tore Inventory, led by Supermarkets and focused on stocking and product expiration.

Chris Diorio: We are currently supporting four distinct types of food programs. First, store replenishment, led by quick-serve restaurants and focused on availability and freshness. Second, in-store inventory, led by supermarkets and focused on stocking and product expiration. Third, loss identification, also led by supermarkets and focused on flagging unscanned items at point of sale. Fourth, automated self-checkout, led by the large, vertically integrated European grocer we've discussed previously. A few enterprises in the first and second categories have progressed to chain-wide rollouts, consuming a modest number of Endpoint ICs relative to current RAIN industry volumes, but still small relative to the total opportunity. The third and fourth categories are still in proof of concept, with encouraging results to date. Notably, the opportunity breadth and sheer number of large engaged enterprises so early in the market cycle is far larger and faster than anything I've seen in our industry's history.

Speaker #3: Third, Loss Identification, also led by Supermarkets and focused on flagging unscanned items at point of sale. And fourth, Automated Self Checkout, led by the large vertically integrated European grocer we've discussed previously.

Speaker #3: A few enterprises in the first and second categories have progressed to chain-wide rollouts, consuming a modest number of endpoint ICs relative to current RAIN industry volumes, but still small relative to the total opportunity.

Speaker #3: The third and fourth categories are still in proof of concept, with encouraging results to date. Notably, the opportunity breadth and sheer number of large, engaged enterprises so early in the market cycle is far larger and faster.

Speaker #3: Than anything I've seen in our industry's history. With all the excitement around food, I need to encourage you not to lose sight of the opportunities in the supply chain and logistics and general merchandise markets.

Chris Diorio: With all the excitement around food, I need to encourage you not to lose sight of the opportunities in the supply chain and logistics and general merchandise markets. The former is poised to expand from shipments to e-commerce and third-party logistics. The latter continues its inexorable growth and expansion, with many large categories such as OTC pharmaceuticals, cosmetics, and health and beauty not yet deployed. Given their head start, both markets today are consuming significantly more Endpoint ICs than food. Also, both offer significant solutions opportunities for us. Touching on those solutions, despite only modest Q2 reader and gateway shipments to our lighthouse enterprises, our solutions engagements with those enterprises continue advancing. We're focused on two enterprise pain points, replenishment and point of sale, using our Endpoint and Reader ICs, readers, gateways, and software to provide real-time event data around supply chain transitions and at front of store.

Speaker #3: The former is poised to expand from shipments to e-commerce and third-party logistics. The latter continues its inexorable growth and expansion, with many large categories such as OTC pharmaceuticals, cosmetics and health and beauty not yet deployed.

Speaker #3: Given their head consuming significantly more endpoint ICs than food, also both offer significant solutions opportunities for us. Touching on those solutions, despite only modest second quarter Reader and Gateway shipments to our Lighthouse enterprises, our solutions engagements with those enterprises continue advancing.

Speaker #3: We're focused on two enterprise pain points: replenishment and point of sale, using our endpoint and Reader ICs readers, gateways, and software to provide real-time event data around supply chain transitions and at front of store.

Speaker #3: And we are engaging partners to sell and deploy those solutions. We believe the event data our solutions deliver for example, a 100% certain event that a store received an item will dramatically improve AI models that analyze and automate enterprise operations.

Chris Diorio: We are engaging partners to sell and deploy those solutions. We believe the event data our solutions deliver, for example, a 100% certain event that a store received an item, will dramatically improve AI models that analyze and automate enterprise operations. We're incredibly well-positioned to lead and win in solutions using machine learning to find moving items in confined read zones, Gen2X to improve item readability, label production systems to ensure label quality and reliability, custom ASICs as needed, and solutions engineering and sales to truly deliver the use case. Although we are still in the early days of solutions delivery, my focus is expanding our company from being primarily a component seller to also being a solution provider. I'm confident we can do so, and given our solutions demand, I have never been more excited about our future than I am today.

Speaker #3: We're incredibly well-positioned to lead and win in solutions using machine learning to find moving items and confined read zones, gen to X to improve item readability, label production systems to ensure label quality and reliability, custom ASICs as needed, and solutions engineering and sales to truly deliver the use case.

Speaker #3: Although we are still in the early days of solutions delivery, my focus is on expanding our company from being primarily a component seller to also being a solution provider.

Speaker #3: I'm confident we can do so, and given our solutions' demand, I have never been more excited about our future than I am today. In closing, this month marks our 10-year anniversary as a public company.

Chris Diorio: In closing, this month marks our 10-year anniversary as a public company, our timing couldn't be better. Our market opportunity is expanding rapidly with the growth rate in supply chain and logistics, general merchandise, and food outpacing retail apparel, which is in mainstream adoption. We delivered a quarter with record revenue, adjusted EBITDA, earnings per share, and Endpoint IC volumes, and look to another strong quarter ahead. We have a stellar team energized by the opportunities in front of us and driving forward with pace and conviction. As always, before I turn the call over to Cary for our financial review and Q3 outlook, I'd like to thank every member of the Impinj team for your tireless effort. I feel honored by my incredible good fortune to work with you. Cary?

Speaker #3: And our timing couldn't be better. Our market opportunity is expanding rapidly, with the growth rate in supply chain and logistics general merchandise and food outpacing retail apparel which is in mainstream adoption.

Speaker #3: We delivered a quarter with record revenue, adjusted EBITDA, earnings per share, and endpoint IC volumes, and look to another strong quarter ahead. And we have a stellar team.

Speaker #3: Energized by the opportunities in front of us and driving forward with pace and conviction. As always, before I turn the call over to Cary for our financial review and third quarter outlook, I'd like to thank every member of the Impinj team for your tireless effort.

Speaker #3: I feel honored by my incredible good fortune to work with you. Cary?

Speaker #2: Thank you, Chris. And good afternoon, everyone. Second quarter revenue was a record 108.4 million, up 46% sequentially from 74.3 million in first quarter 2026 and up 11% year over year from 97.9 million in second quarter 2025.

Cary Baker: Thank you, Chris, and good afternoon, everyone. Q2 revenue was a record $108.4 million, up 46% sequentially from $74.3 million in Q1 2026, and up 11% year over year from $97.9 million in Q2 2025. Q2 Endpoint IC revenue was a record $96.4 million, up 53% sequentially from $63.2 million in Q1 2026, and up 14% year over year from $84.6 million in Q2 2025. Excluding licensing revenue, Endpoint IC product revenue grew 26% sequentially and 16% year over year, significantly exceeding our expectations. Looking forward, we expect Q3 Endpoint IC product revenue to increase sequentially above the high end of typical seasonal growth. Q2 systems revenue was $12 million, up 8% sequentially from $11 million in Q1 2026, and down 10% year over year from $13.3 million in Q2 2025.

Speaker #2: Second quarter endpoint IC revenue was a record 96.4 million, up 53% sequentially from 63.2 million in first quarter 2026 and up 14% year over year from 84.6 million in second quarter 2025.

Speaker #2: Excluding licensing revenue, endpoint IC product revenue grew 26% sequentially and 16% year over year, significantly exceeding our expectations. Looking forward, we expect third-quarter endpoint IC product revenue to increase sequentially, above the high end of typical seasonal growth.

Speaker #2: Second quarter systems revenue was 12 million, up 8% sequentially from 11 million in first quarter 2026 and down 10% year over year from 13.3 million in second quarter 2025.

Speaker #2: Systems revenue met expectations with Reader IC strength offsetting label production systems weakness. Looking forward, we expect a strong sequential third quarter systems revenue increase.

Cary Baker: Systems revenue met expectations with Reader IC strength offsetting label production systems weakness. Looking forward, we expect a strong sequential Q3 systems revenue increase. Q2 gross margin was a record 60.9%, compared with 52.4% in Q1 2026, and 60.4% in Q2 2025. The sequential increase was driven primarily by licensing revenue. The year-over-year increase was driven primarily by Endpoint IC product mix, specifically a richer mix of M800, partially offset by lower systems revenue mix. Excluding licensing revenue, Q2 product gross margin was 53.6%, compared with 52.6% in Q2 2025. Looking forward, we expect Q3 product gross margin to increase sequentially. Total Q2 operating expense was $35.3 million, compared with $35.5 million in Q1 2026 and $31.5 million in Q2 2025. Operating expense met expectations. Research and development expense was $20.2 million. Sales and marketing expense was $7.1 million.

Speaker #2: Second-quarter gross margin was a record 60.9%, compared with 52.4% in the first quarter of 2026 and 60.4% in the second quarter of 2025. The sequential increase was driven primarily by licensing revenue.

Speaker #2: The year-over-year increase was driven primarily by endpoint IC product mix, specifically a richer mix of M800, partially offset by lower systems revenue mix.

Speaker #2: Excluding licensing revenue, second quarter product gross margin was 53.6% compared with 52.6% in second quarter 2025. Looking forward, we expect third quarter product gross margin to increase sequentially total second quarter operating expense was 35.3 million, compared with 35.5 million in first quarter 2026 and 31.5 million in second quarter 2025.

Speaker #2: Operating expense met expectations. Research and development expense was 20.2 million, sales and marketing expense was 7.1 million, general and administrative expense was 8.1 million.

Cary Baker: General and administrative expense was $8.1 million. Looking to Q3, we expect Q3 operating expense to increase sequentially. Q2 adjusted EBITDA was a record $30.7 million, compared with $3.4 million in Q1 2026 and $27.6 million in Q2 2025. Q2 adjusted EBITDA margin was a record 28.3%. Excluding licensing revenue, adjusted EBITDA margin was 15%. Q2 GAAP net income was $12.2 million. Q2 non-GAAP net income was a record $27 million, or $0.86 per share on a fully diluted basis. Turning to the balance sheet. We ended the Q2 with cash equivalents, and investments of $263.7 million, compared with $235.2 million in Q1 2026 and $260.5 million in Q2 2025. Inventory totaled $91.5 million, up $5.2 million from the prior quarter. Q2 capital expenditures totaled $2.4 million. Free cash flow was $29.2 million.

Speaker #2: Looking to third quarter, we expect third quarter operating expense to increase sequentially. Second quarter adjusted EBITDA was a record 30.7 million, compared with 3.4 million in first quarter 2026 and 27.6 million in second quarter 2025.

Speaker #2: Second quarter adjusted EBITDA margin was a record 28.3%. Excluding licensing revenue, adjusted EBITDA margin was 15%. Second quarter GAAP net income was $12.2 million.

Speaker #2: Second quarter non-gap net income was a record 27 million, or 86 cents per share on a fully diluted basis. Turning to the balance sheet, we ended the second quarter with cash, cash equivalents, and investments of 263.7 million, compared with 235.2 million in first quarter 2026 and 260.5 million in second quarter 2025.

Speaker #2: Inventory totaled $91.5 million, up $5.2 million from the prior quarter. Second quarter capital expenditures totaled $2.4 million. Free cash flow was $29.2 million. Turning to our outlook, we expect third quarter revenue between $105.5 and $108.5 million, compared with $91.4 million product revenue in the second quarter of 2026, a quarter-over-quarter increase of 17% at the midpoint.

Cary Baker: Turning to our outlook. We expect Q3 revenue between $105.5 and $108.5 million, compared with $91.4 million product revenue in Q2 2026, a quarter-over-quarter increase of 17% at the midpoint. We expect adjusted EBITDA between $20.7 and $22.2 million. On the bottom line, we expect non-GAAP net income between $18.5 and $20 million, reflecting non-GAAP fully diluted earnings per share between $0.59 and $0.63. In closing, I want to thank the Impinj team, our customers, our suppliers, and you, our investors, especially those of you still holding IPO shares today at our 10-year listing anniversary, for your ongoing support. I will now turn the call to the operator to open the question and answer session. Nick?

Speaker #2: We expect adjusted EBITDA between 20.7 and 22.2 million, on the bottom line we expect non-gap net income between 18.5 and 20 million, reflecting non-gap fully diluted earnings per share between 59 cents and 63 cents.

Speaker #2: In closing, I want to thank the Impinj team, our customers, our suppliers, and you, our investors, especially those of you still holding IPO shares today at our 10-year listing anniversary, for your ongoing support.

Speaker #2: I will now turn the call over to the operator to open the question-and-answer session. Nick?

Speaker #1: 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.

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 and 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'll pause momentarily to assemble the roster. The first question will come from Harsh Kumar with BMO Capital Markets. Please go ahead.

Cary Baker: 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 and 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'll pause momentarily to assemble the roster. The first question will come from Harsh Kumar with BMO Capital Markets. Please go ahead.

Speaker #1: 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 and then two.

Speaker #1: 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.

Speaker #1: At this time, we'll pause momentarily to assemble the roster. The first question will come from Harsh Kumar with BMO Capital Markets. Please go ahead.

Speaker #3: Yeah, hey, Chris and the entire Impinj team. I guess congratulations on two distinct things: your 10-year anniversary and the biggest quarter you guys have put up, and also the biggest guide from what I believe, not including royalties.

Harsh Kumar: Yeah. Hey, Chris, and the entire Impinj team. I guess congratulations on two distinct things, your 10-year anniversary and the biggest quarter you guys put up, and also the biggest guide from what I believe, not including royalties. To that end, Chris, I wanted to ask you, the Q3 guide is quite a bit of a surprise to me, and I was curious if you could provide us with some color on where you are seeing outsized trend relative to your previous expectations.

Speaker #3: So to that end, Chris, I wanted to ask you the third quarter guide is quite a bit of a surprise to me, and I was curious if you could provide us some us with some color on where you are seeing outside strength relative to your previous expectations.

Speaker #4: Okay. Harsh, thank you for your kind words. And so to answer your question about where we're seeing strength, as I said in our prepared remarks, we're seeing pull in general merchandise, supply chain logistics, and food.

Chris Diorio: Okay. Harsh, thank you for your kind words. To answer your question about where we're seeing strength, as I said in our prepared remarks, we're seeing pull in general merchandise, supply chain logistics, and food. Obviously, there's also continued expansion in retail apparel. There continue to be new programs that are coming online, as well as growth in existing programs. Although retail apparel is in mainstream adoption, and therefore its pace of growth has slowed in terms of an overall volume number, it's still contributing significant volume growth to us. On top of that, we saw share gains last year in the overall market, and those share gains are giving us momentum in 2026.

Speaker #4: Obviously, there's also continued expansion in retail apparel. There continue to be new programs that are coming online, as well as growth in existing programs.

Speaker #4: So although the retail apparel is in mainstream adoption, and therefore its pace of growth has slowed in terms of an overall volume number, it's still contributing significant volume growth to us.

Speaker #4: On top of that, we saw share gains last year in the overall market, and those share gains are giving us momentum in 2026. You put all those pieces together, strong market demand, market pull for solutions, multiple verticals going, and our strength in the market, and they all contribute to a strong Q2 and a strong 3Q.

Cary Baker: You put all those pieces together, strong market demand, market pull for solutions, multiple verticals going, and our strength in the market, they all contribute to a strong Q2 and a strong Q3.

Speaker #3: Thank you, Chris. And then I think you spent quite a bit of time on food and laying out how you will play it. I know that the largest retailer in the United States has implemented food tracking—yeah, food tracking for deli and bakery.

Harsh Kumar: Thank you, Chris. I think you spent quite a bit of time on food and laying out how you will play it. I know that the largest retailer in the United States is implementing food tracking for deli and bakery. I was curious about how that is going, because it wasn't announced by you, it was announced by one of your inlay partners. Are you concerned about tariffs at all, or are you seeing anything? It doesn't seem like you're seeing anything, but I'd be curious if that's something in the back of your mind.

Speaker #3: I was curious about how that is going. Because it wasn't announced by you, it was announced by one of your inlay partners. And then also, are you concerned about tariffs at all, or are you seeing anything?

Speaker #3: It doesn't seem like you're seeing anything, but I'd be curious if that's something in the back of your mind.

Speaker #4: Okay, two questions. First on food, and then the second one on tariffs. In the food space, you know, Harsh, we as a company tend to let our partners and customers speak for themselves.

Chris Diorio: Okay, two questions. First on food, the second one on tariffs. In the food space, Harsh, we as a company tend to let our partners and customers speak for themselves.

Speaker #4: I devoted a significant portion of my script to the food opportunity overall because like I said, I'm truly excited about this opportunity. The number of large enterprises that are engaged is far greater than anything I've seen in our history.

Chris Diorio: I devoted a significant portion of my script to the food opportunity overall because, like I said, I'm truly excited about this opportunity. The number of large enterprises that are engaged is far greater than anything I've seen in our history. Just think about it. You look at supply chain and logistics, it was led primarily by one enterprise. You look at some of the growth in retail apparel in the old days, it was led by a very small number of enterprises. Here we've got three of the five largest US grocers jumping in at the beginning. The demand and the pace is something I haven't experienced. I'm very excited about food. We're working with those grocers, including the one you mentioned. I'm supporting them as we can, very much as we can.

Speaker #4: I mean, just think about it. You look at supply chain and logistics—it was led primarily by one enterprise. You look at some of the growth in retail apparel in the old days—it was led by a very small number of enterprises.

Speaker #4: Here we've got three to five largest US grocers jumping in at the beginning. So just the demand and the pace is something I haven't experienced.

Speaker #4: So I'm very excited about food. We're working with those grocers, including the one you mentioned. I'm supporting them as we can, very much as we can.

Speaker #4: But I'll let them speak for themselves in terms of where their program is. And then tariffs, yeah. As I said in my prepared remarks, we did see some pull-aheads in the second quarter before the prior tariffs expired a week ago.

Chris Diorio: I'll let them speak for themselves in terms of where their program is.

Harsh Kumar: Tariffs?

Chris Diorio: Regarding the tariffs, as I said in my prepared remarks, we did see some pull-aheads in Q2 before the prior tariffs expired a week ago. We did see some channel inventory burn down as our inlay label partners filled into the demand for product inventory before those tariffs expired. That said, we still see strength in the market built on consumer resilience, ongoing category expansion, and market expansion. As Cary said in his prepared remarks, we see very strong demand for our Endpoint IC. Yes, pull ahead for tariffs. Yes, continued strength in the market. On top of that, we expect our inlay label partners to rebuild their inventories in H2 of the year.

Speaker #4: And we did see some channel inventory burn down as our inlay and label partners filled into the demand to for product inventory before those tariffs expired.

Speaker #4: That said, we still see strength in the market, built on consumer resilience and ongoing category and market expansion. And as Cary said in his prepared remarks, we see very strong demand for our endpoint IC.

Speaker #4: So, yes, pull-ahead for tariffs. Yes, continued strength in the market. And on top of that, we expect our inlay and label partners to rebuild their inventories in the back half of the year.

Speaker #3: Thank you. And congratulations again.

Harsh Kumar: Thank you, and congratulations again.

Speaker #4: Thank you, Harsh.

Chris Diorio: Thank you, Harsh.

Speaker #2: Thanks, Harsh.

Harsh Kumar: Thanks, Harsh.

Cary Baker: Thanks, Harsh.

Speaker #1: The next question will come from Christopher Roland with Susquehanna. Please go ahead.

Operator: The next question will come from Christopher Rolland with Susquehanna. Please go ahead.

Cary Baker: The next question will come from Christopher Rolland with Susquehanna. Please go ahead.

Speaker #5: Hey, guys. Thanks for the question. Mine is around and Chris, you mentioned logistics. On your main partner there, they had some very positive comments about RFID.

Christopher Rolland: Hey, guys. Thanks for the questions. Mine is around, Chris, you mentioned logistics on your main partner there. They had some very positive comments about RFID and an increased deployment there basically going from a scanner world to a RFID world. Then also, perhaps most significantly, an expansion internationally as well. On this, if you could talk about what that means for you guys and any other movement on other logistics potential engagements and customer opportunities.

Speaker #5: And an increased deployment there, basically going from a scanner world to RFID world. And then also and perhaps most significantly, an expansion internationally as well.

Speaker #5: So, on this, if you could talk about what that means for you guys, and any other movement on other logistics, potential engagements, and customer opportunities.

Speaker #4: Yeah, thank you, Chris. I'll do my best here. Obviously, I could talk a long time on that topic. We do our very best to support that customer.

Chris Diorio: Yeah. Thank you, Chris. I'll do my best here. Obviously, I could talk a long time on that topic. We do our very best to support that customer. I call them a customer, but they're really a partner of ours. We do our very best to support them with all their initiatives. We work closely together. We support each other, we at Impinj, on the Impinj side, are very thrilled about what they've got going on. They spoke a little bit about AI and the opportunities with AI, the one thing I'd like to say there is that we deliver what I like to call hard event data. I made a point in my prepared remarks about 100% certainty that an item arrived at a certain location. When we read it, we have certainty that that's the item, it arrived at that time, and that location.

Speaker #4: I call them a customer, but they're really a partner of ours. We do our very best to support them with all their initiatives, and we work closely together.

Speaker #4: We support each other. And we impinge on the Impinj side. We are very thrilled about what they've got going on. They spoke a little bit about AI and the opportunities with AI.

Speaker #4: And the one thing I'd like to say there is that we deliver what I like to call hard event data. I made a point in my prepared remarks about 100% certainty that an item arrived at a certain location.

Speaker #4: When we read it, we have certainty that that's the item, it arrived at that time, and that location. And that kind of hard data is a boon to AI models.

Chris Diorio: That kind of hard data is a boon to AI models because you don't have to create synthetic data. There's no inference or anything on what's going on with the underlying data for the model. The data are real. The AI model has the job of optimizing the enterprise's operations. That partner's ability to ingest the real hard event data, optimize their operations, and then take their learnings to their customers, who then become our customers, is where I want to take the company and deliver solutions to that partner's customers. That's where I talk about third-party logistics opportunities. Huge opportunity with them. We will support them, never let them down, and I am incredibly excited about the future in supply chain and logistics. Now, of course, there are other companies in the supply chain and logistics space.

Speaker #4: Because you don't have to create synthetic data. There's no inference or anything on what's going on with the underlying data for the model. The data are real.

Speaker #4: And then the AI model has the job of optimizing the enterprise's operations. So that partner's ability to ingest the real, hard event data, optimize their operations, and then take their learnings to their customers, who then become our customers, is where I want to take the company and deliver solutions to that partner's customers.

Speaker #4: And that's where I talk about third-party logistics opportunities. So huge opportunity with them. We will support them. Never let them down. And I am incredibly excited about the future in supply chain and logistics.

Speaker #4: Now, of course, there are other companies in the supply chain and logistics space. We are supporting them as well. Supporting them through partners and doing what we can to drive the whole overall industry forward.

Chris Diorio: We are supporting them as well, supporting them through partners, and we're doing what we can to drive the whole overall industry forward. Of course, the partner we work with is well ahead of everybody else.

Speaker #4: But of course, the partner we work with is well ahead of everybody else.

Speaker #5: Excellent. Thank you, Chris.

Christopher Rolland: Excellent. Thank you, Chris.

Speaker #4: Thank you.

Chris Diorio: Thank you.

Speaker #5: Additionally, you're great at kind of looking ahead at some of these trends. So I guess, first of all, if you could talk about any new opportunities and markets or opportunities you see on the horizon.

Christopher Rolland: Additionally, you are great at kind of looking ahead at some of these trends. I guess first of all, if you could talk about any new opportunities, end markets or opportunities you see on the horizon. Then circling back on one that has some potential is the digital passport, product passport opportunity. Can you talk about any progress we might have seen there?

Speaker #5: And then, circling back on one that has some potential, is the digital passport—product passport—opportunity. Can you talk about any progress we might have seen there?

Speaker #4: Yeah, so I'll do my best. New opportunities on the horizon—outside of supply chain and logistics and food, I think you should just take note of the categories I mentioned around retail, general, and merchandise.

Chris Diorio: Yes, I will do my best. New opportunities on the horizon outside of supply chain and logistics and food. I think you should just take note of the categories I mentioned around retail general merchandise. The three categories I mentioned, OTC pharma, health and beauty, and cosmetics are all gigantic. They would all benefit significantly from tagging whether it is for expiration, guarantees of product, availability on a shelf, stock accuracy. Those categories, we believe, hold a significant potential future volume opportunity for us. If I just look across that set, retail apparel, retail general merchandise, especially those three categories on top of everything that has been tagged already, supply chain and logistics and food, that is enough to propel us and our industry forward. Now, turning to DPP.

Speaker #4: The three categories I mentioned, OTC, pharma, health and beauty, and cosmetics are all gigantic. They would all benefit significantly from tagging. Whether it's for expiration, guarantees of product, availability on a shelf, stock accuracy, and so those categories we believe hold a significant potential volume, future volume opportunity for us.

Speaker #4: If I just look across that set, retail apparel, retail general and merchandise, especially those three categories on top of everything that's been tagged already, supply chain and logistics and food, that's enough to propel us on our industry forward.

Speaker #4: Now, turning to DPP, I've been pushing forward this vision for a long time, of getting reduce in the hands of consumers. And the DPP benefit as part of that, but it's really more than a DPP benefit.

Chris Diorio: I have been pushing forward this vision for a long time of getting readers in the hands of consumers and the DPP benefit as part of that, but it is really more than a DPP benefit. It is giving consumers the ability to get information about items they own and recycling at end of life. The Qualcomm announcement a while back, that they are embedding RAIN RFID reading in their mobile phone chipsets, at least initially for industrial devices, but they said also that that can be ported to consumer devices. The progress at the regulatory side around DPP, I see all of that coming to a confluence by the end of this decade, and DPP helping to drive the consumer use case, and consumers helping to drive the DPP use case.

Speaker #4: It's giving consumers the ability to get information about items they own and recycling it end of life. The Qualcomm announcement a while back that they're embedding radar 50 reading in their mobile phone chipsets, at least initially for industrial devices, but they said also that it can be ported to a consumer devices.

Speaker #4: The progress on the regulatory side around DPP—I see all of that coming to a confluence by the end of this decade, with DPP helping to drive the consumer use case.

Speaker #4: And consumers are helping to drive the DPP use case. So, it's a little bit early to post results there because both of those things are in the early days.

Chris Diorio: A little bit early to post results there, because both of those things are in the early days, but in the out years here, they hold huge promise for our future.

Speaker #4: But in the out years, they hold huge promise for our future.

Speaker #5: Thanks, Chris.

Christopher Rolland: Thanks, Chris.

Speaker #4: Okay, thank you.

Chris Diorio: Okay. Thank you.

Speaker #2: The next question will come from Jim Ricchiuti with Needham and Company. Please go ahead.

Operator: The next question will come from James Ricchiuti with Needham & Company. Please go ahead.

Chris Diorio: The next question will come from James Ricchiuti with Needham & Company. Please go ahead.

Speaker #3: Hi, thanks. Good afternoon. Chris, just with respect to OTC, cosmetics, and health and beauty, I'm not aware of the large general merchandise retailer moving forward with that phase of deployment.

James Ricchiuti: Hi. Thanks. Good afternoon. Hey, Chris, just with respect to OTC, cosmetics, and health and beauty aids, I'm not aware of the large general merchandise retailer moving forward with that phase of the deployment. Do you anticipate this potentially being a driver in 2027? If you can't comment directly on that, can you give us a sense that if we do see a retailer like this customer moving forward, how would you think about this scaling versus some of the other general merchandise categories in the past?

Speaker #3: Do you anticipate this potentially being a driver in 2027? And if you can't comment directly on that, can you give us a sense that if we do see a retailer like this customer moving forward, how would you think about this scaling versus some of the other general merchandise categories in the past?

Speaker #4: So Jim, so let me be clear. I mentioned those categories because I see the opportunity there. And obviously, there's been broad interest in the past.

Chris Diorio: Jim, let me be clear. I mentioned those categories because I see the opportunity there, and obviously there's been broad interest in the past. If you really want to look at it was the cosmetics use case that got this whole industry going in the first place back 25 years ago. It's because those categories haven't gone yet. I see the opportunity there. I know from history about the opportunity there, and we are doing work internally to enable those categories. That said, there's been no announcement that I know of by any retailer that they're moving forward with those categories. I'm not trying to put words in anybody's mouth, it's just where I see the opportunity. As I think about the size of those categories, obviously they're smaller than food, but they're gigantic, and they drive sales uplift for enterprises.

Speaker #4: If you really want to look at it, it was the cosmetics use case that got this whole industry going in the first place back 25 years ago.

Speaker #4: So it's because those categories haven't gone yet. I see the opportunity there. I know from history about the opportunity there. And we are doing work internally to enable those categories.

Speaker #4: That said, there's been no announcement that I know of by any retailer that they're moving forward with those categories. I'm not trying to put words in anybody's mouth.

Speaker #4: It's just where I see the opportunity. As I think about the size of those categories, obviously, they're smaller than food. But they're gigantic. And they drive sales uplift for enterprises.

Speaker #4: So health and beauty, huge. Cosmetics and the need there, like I said, it drove our industry in the first case. And OTC pharma would be the first step towards prescription pharma.

Chris Diorio: Health and beauty, huge. Cosmetics and the need there, like I said, it drove our industry in the first case. OTC pharma would be the first step towards prescription pharma. I can't cite the numbers, I don't have them off the top of my head, but the OTC market is also gigantic. All of those categories are taggable. They take work, but it can be done. I'm excited about those categories to the point where we as a company are putting some effort into helping them go. Did I answer your question, Jim?

Speaker #4: And I can't cite the numbers. I don't have them off the top of my head, but the OTC market is also gigantic. All of those categories are taggable.

Speaker #4: They take work, but it can be done. So I'm excited about those categories to the point where we as a company are putting some effort into helping them go.

Speaker #4: Did I answer your question, Jim?

Speaker #3: Yeah, and I knew it would be a tough question to answer directly. But you did, I think, provide some good color on the market opportunity.

James Ricchiuti: Yeah, I knew it would be a tough one to answer directly.

Chris Diorio: Okay.

James Ricchiuti: You did, I think, provide some good color on the market opportunity. I wanted to switch gears a little bit on the competitive environment. Your major competitor has introduced a new Endpoint IC. I'm wondering whether this might impact some of the share gains that you've made in recent years. Curious how you see the competitive landscape at the moment. Then if I could just ask a quick one to Cary, just with respect to gross margin improvement in Q3 on the product side, how much of that is this full conversion of the ASIC ramp, the logistics side of the business? Two questions.

Speaker #3: I wanted to switch gears a little bit on the competitive environment. Your major competitor has introduced a new endpoint IC. I'm wondering whether this might impact some of the share gains that you've made in recent years.

Speaker #3: Curious how you see the competitive landscape at the moment. And then if I could just ask a quick one to carry, just with respect to gross margin improvement in Q3 on the product side, how much of that is this full conversion of the ASIC grant logistics side of the business.

Speaker #3: Two questions. Apologize.

Chris Diorio: Yeah.

James Ricchiuti: Apologize.

Speaker #4: That's all right. I can go first.

Chris Diorio: That's all right. I can go first, Cary.

Speaker #5: Okay, you want to go first? Go ahead, Carrie.

Chris Diorio: Okay. You want to go first then? Go ahead, Cary.

Speaker #3: So, on the gross margin side, Jim, it's really our continued ramp with the M800. So, think of the custom ASIC as part of the M800 platform and contributing to the 300 basis points of gross margin accretion that the M800 will eventually deliver.

Cary Baker: On the gross margin side, Jim, it's really our continued ramp with the M800. Think of the custom ASIC as part of the M800 platform and contributing to the 300 basis points of gross margin accretion that the M800 will eventually deliver. In Q2, on a product gross margin basis, we saw gross margin increase by about 120 basis points sequentially. I expect a roughly similar increase sequentially in Q3, again, on a product gross margin basis. Chris, I'll hand it over to you.

Speaker #3: So in Q2, on a product gross margin basis, we saw gross margin increase by about 120 basis points sequentially. I expect a roughly similar increase sequentially in Q3, again, on a product gross margin basis.

Speaker #4: And Chris, I'll hand it over to you.

Speaker #5: Okay. Yeah. And Jim, to your question, obviously our key competitor highlighted strong demand for their products. We see strong demand as well, evidenced by our second quarter results and third quarter guide.

Chris Diorio: Okay. Yeah. Jim, to your question, obviously our key competitor highlighted strong demand for their products. We see strong demand as well, evidenced by our Q2 results and Q3 guide, and propelled by last year's share gains. They saw strong demand, we see strong demand, and that strong demand is driven by market growth. We feel good about our share position today. They have introduced a new product. We have not seen it significantly in market yet, and I think you know from our M800 ramp and prior product ramps that introducing new product in our industry, given that the end customers need to qualify them and a lot of those products go through our testing, takes a while. We feel good about our share position.

Speaker #5: And that propelled by last year's share gains. So they saw strong demand. We see strong demand. And that strong demand is driven by market growth.

Speaker #5: We feel good about our share position today. They have introduced a new product. We have not seen it significantly in market yet. And I think you know from our M800 ramp prior product ramps that introducing new product in our industry, given that the end customers need to qualify them and a lot of those products go through the through ARC testing, takes a while.

Speaker #5: So we feel good about our share position now. We feel good about where we are driving forward. And we have very high-performing products in market that are meeting end customers' need.

Chris Diorio: We feel good about where we are driving forward, and we have very high performing products in market that are meeting end customers' needs. We're driving forward with Gen2X to improve readability, machine learning to do the things we said around solutions, confine read zones, and identify transitions. We'll be driving forward in the solution space, winning our fair share of the market. Jimmy, good?

Speaker #5: We're driving forward with Gen 2X to improve readability, using machine learning to accomplish the things we mentioned around solutions, confined read zones, and identifying transitions.

Speaker #5: And we'll be driving forward in the solution space, winning our fair share of the market.

Speaker #3: Jim, you good? Good. Thanks very much. Appreciate it.

James Ricchiuti: Good. Thanks very much. Appreciate it.

Speaker #5: Okay. Thank you.

Chris Diorio: Okay. Thank you.

Speaker #2: 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.

Chris Diorio: The next question will come from Scott Searle with Roth Capital. Please go ahead.

Speaker #5: Hey, good afternoon. Thanks for taking the questions. Congrats on the anniversary and congrats on the quarter. Hey, Chris, maybe quickly to follow up on your comments with Gen 2X.

David Brown: Hey, good afternoon. Thanks for taking the questions. Congrats on the anniversary and congrats on the quarter.

Chris Diorio: Hey, good afternoon. Thanks for taking the questions. Congrats on the anniversary and congrats on the quarter.

Chris Diorio: Thank you.

David Brown: Hey, Chris, maybe quickly to follow up on your comments with Gen 2X, significant in terms of-

Chris Diorio: Hey, Chris, maybe quickly to follow up on your comments with Gen 2X, significant in terms of-

Speaker #5: Significant in terms of throughput and readability. I'm wondering if you could extrapolate a little bit on that in terms of market share potential—kind of what you're seeing in terms of engagement with customers.

Chris Diorio: Yeah

David Brown: throughput and readability. I'm wondering if you could extrapolate a little bit on that in terms of market share potential, kind of what you're seeing in terms of engagement with customers. Gen 2X, as I understand it, huge performance advantages when you're using Endpoint ICs from Impinj. How is that impacting the share outlook when you're talking to existing and new customers? I'm wondering if you could factor in or kind of fold in the custom ASIC development as well. You gave an update in terms of where that was with the preexisting customer, but you had referenced earlier that we might see additional customers moving into that direction. Kind of wondering how that's playing out.

Chris Diorio: throughput and readability. I'm wondering if you could extrapolate a little bit on that in terms of market share potential, kind of what you're seeing in terms of engagement with customers. Gen 2X, as I understand it, huge performance advantages when you're using Endpoint ICs from Impinj. How is that impacting the share outlook when you're talking to existing and new customers? I'm wondering if you could factor in or kind of fold in the custom ASIC development as well. You gave an update in terms of where that was with the preexisting customer, but you had referenced earlier that we might see additional customers moving into that direction. Kind of wondering how that's playing out.

Speaker #5: Gen 2X, as I understand it, offers huge performance advantages when you're using endpoint ICs from Impinj. So, how is that impacting the share outlook when you're talking to existing and new customers?

Speaker #5: I'm wondering if you could factor in, or kind of fold in, the custom ASIC development as well. You gave an update in terms of where that was with the pre-existing customer, but you had referenced earlier that we might see additional customers moving in that direction.

Speaker #5: So I'm kind of wondering how that's playing out.

Speaker #4: Yeah. I'll do my best here. So on the Gen 2X front, the vast majority of labels today are still read with handheld readers. It's for inventory visibility.

Chris Diorio: Yeah. I'll do my best here. On the Gen 2X front, the vast majority of labels today are still read with handheld readers. It's for inventory visibility. We see and have been able to demonstrate a material benefit from Gen 2X in that handheld reading scenario, which is, especially in some of the more difficult-to-read categories like food, which is giving us a leg up in the market. We have partners like Zebra and Qualcomm and others who are pushing forward with Gen 2X because of its readability benefits. In the base market, handheld-driven inventory counting, we see a benefit from Gen 2X with our Endpoint ICs. You don't have to have 100% Impinj Endpoint ICs out there. You get the benefit from the Impinj side with Gen 2X.

Speaker #4: We see and have been able to demonstrate in material benefit from Gen 2X in that handheld reading scenario, which is especially in some of the more difficult to read categories like food.

Speaker #4: Which is giving us a leg up in the market. We have partners like Zebra and Qualcomm and others who are pushing forward with Gen 2X because of its readability benefits.

Speaker #4: So in the based market, handheld-driven inventory counting we see a benefit from Gen 2X with our endpoint ICs. And you don't have to have 100% impinged endpoint ICs out there.

Speaker #4: You get the benefit from the impinged side with Gen 2X. If I then turn to the rapidly growing part of the market, at least on a percentage basis, which is fixed reading, for transitions, point of sale, store, exits, there, Gen 2X has an outsized benefit.

Chris Diorio: If I then turn to the rapidly growing part of the market, at least on a percentage basis, which is fixed reading for transitions, point-of-sale, store exits, there, Gen 2X has an outsized benefit because we've tailored the capabilities of Gen 2X to enable the ML enhancements we're driving to the solution that literally make the solution go. For us, those Gen 2X enhancements are critical to our solutions efforts, evidence the fact that our two very high-share enterprise end users in supply chain and logistics and retail apparel are both using Gen 2X to enhance the readability or essentially to enable their use case. What you'll see us doing going forward is using Gen 2X more and more to enable solutions we literally otherwise could not do.

Speaker #4: Because we've tailored the capabilities of Gen 2X to enable the ML enhancements we're driving to the solution that literally make solution go. So for us, those Gen 2X enhancements are critical to our solutions efforts.

Speaker #4: Evidence the fact that our two very high share and enterprise end users and supply chain and logistics and retail apparel are both using Gen 2X to enhance the readability or essentially to enable their use case and what you'll see us doing going forward is using Gen 2X more and more to enable solutions.

Speaker #4: We literally, otherwise, could not do. So Gen 2X, in my mind, is key to fixed reading solutions, which is where we're the market is heading and where we're taking the company.

Chris Diorio: Gen 2X, in my mind, is key to fixed reading solutions, which is where the market is heading and where we're taking the company. Tell me the second part of the question because I forgot it already.

Speaker #4: I mean, the second part of the question, because I forgot it already.

Speaker #5: Custom ASIC.

Speaker #3: Oh, sorry. Custom ASIC.

David Brown: Oh, sorry.

Chris Diorio: Oh, sorry.

Chris Diorio: Oh, custom ASIC.

David Brown: Custom IC.

Chris Diorio: Custom IC.

Chris Diorio: Yeah. Custom ASIC.

Speaker #5: Yeah.

David Brown: Yeah, custom.

Chris Diorio: Yeah, custom.

Speaker #4: Custom ASIC. So we've obviously already delivered one custom ASIC. We will we don't have anything else to report right now on the custom ASIC side.

Chris Diorio: Custom ASIC. We've obviously already delivered one custom ASIC. We don't have anything else to report right now on the custom ASIC side. We will do custom ASICs as needed, and I use that word carefully because when you do a custom ASIC, you also have the operations issues around just having a custom product. Where we need a custom ASIC and the customers can use it, we'll build it. Where we don't need a custom ASIC, if they can just get by with base Gen2X, we will do that. Don't expect us to push everything to a custom ASIC because it creates a kind of overall operations headache. We have to manage through it. As needed, where we need to do something special for an enterprise, we will do so.

Speaker #4: We will do custom ASICs as needed. And I use that word carefully because when you do a custom ASIC, you also have the operations issues around just having a custom product.

Speaker #4: So where we need a custom ASIC and the customers can use it, we'll build it. And we don't need where we don't need a custom ASIC, they can just get by with base Gen 2X.

Speaker #4: We will do that, so don't expect us to push everything to a custom ASIC, because it creates kind of an overall operations headache, and it provides—we have to manage through it.

Speaker #4: But as needed, where we need to do something special for an enterprise, we will do so.

Speaker #5: And Chris, if I could, just to follow up on the food front. There's been a lot of progress on that front, both within North America and, it sounds like, as well within the European marketplace.

David Brown: Chris, if I could just follow up on the food front.

Chris Diorio: Chris, if I could just follow up on the food front.

Chris Diorio: Sure.

David Brown: A lot of progress on that front, both within North America and sounds like as well within the European marketplace. We're in a pilot phase.

Chris Diorio: A lot of progress on that front, both within North America and sounds like as well within the European marketplace. We're in a pilot phase.

Speaker #5: But we're in a pilot phase. So could you provide a little bit of color as we're starting to look into 2027? Is the expectation now that these will convert from pilots into full-fledged deployments?

Chris Diorio: Yeah.

David Brown: Could you provide a little bit of color as we're starting to look into 2027? Is the expectation now that these will convert from pilots into full-fledged deployments? With that backdrop, given where the market is, given the growth that you're seeing now, and the unit opportunity that just exists within those existing pilot customers, of the three to top five in North America and Europe, are we due for an inflection point now in terms of RAIN RFID ICs as we go into 2027 and 2028?

Chris Diorio: Could you provide a little bit of color as we're starting to look into 2027? Is the expectation now that these will convert from pilots into full-fledged deployments? With that backdrop, given where the market is, given the growth that you're seeing now, and the unit opportunity that just exists within those existing pilot customers, of the three to top five in North America and Europe, are we due for an inflection point now in terms of RAIN RFID ICs as we go into 2027 and 2028?

Speaker #5: And with that backdrop, given where the market is, given the growth that you're seeing now and the unit opportunity that just exists within those existing pilot customers, right, of the three of the top five, in North America and Europe, are we due for an inflection point now in terms of rain RFID, ICs as we go into 2027 and 2028?

Speaker #4: That's a hard question for me to answer. Because we don't guide that out into 2027. And when you're talking about programs this size, the obviously, there's a huge commitment on the part of the end user to go forward.

Chris Diorio: That's a hard question for me to answer, because we don't guide that out into 2027. When you're talking about programs this size, obviously there's a huge commitment on the part of the end user to go forward. We do have at least one enterprise that has already deployed many hundreds of stores and is continuing with the store rollout, as well as talking about moving to additional categories. We've got the other grocers in there. I think I'm just going to have to revert back to what I said, the pace of the adoption and the number of end users here is unlike anything I've seen. Because we're generating positive results for the enterprises, I do expect rapid growth on a percentage basis. Now, the other retail apparel, supply chain logistics, retail general merchandise are far ahead in terms of volumes.

Speaker #4: We do have, at least one enterprise that is already deployed many hundreds of stores and is continuing with that, the store rollout, as well as talking about moving to additional categories.

Speaker #4: We've got the other grocers in there, so I think I'm just going to have to revert back to what I said. The pace of the adoption and the number of end users here is unlike anything I've seen, and because we're generating positive results for the enterprises, I do expect rapid growth on a percentage basis.

Speaker #4: Now, the other retail apparel, supply chain and logistics, retail general merchandise are far ahead in terms of volumes. So it's going to take a good bit of time until food volumes cross over because those other categories are still growing.

Chris Diorio: It's going to take a good bit of time until food volumes cross over, because those other categories are still growing. In terms of excitement, I'm incredibly excited about food.

Speaker #4: But in terms of excitement, I'm incredibly excited about food.

Speaker #5: Great. That's helpful. Thanks so much, and congrats again.

Scott Searle: Great. That's helpful. Thanks so much, and congrats again.

Speaker #4: Thank you.

Chris Diorio: Thank you.

Speaker #1: The next question will come from Troy Jensen with Canter Fitzgerald. Please go ahead.

Operator: The next question will come from Troy Jensen with Cantor Fitzgerald. Please go ahead.

Chris Diorio: The next question will come from Troy Jensen with Cantor Fitzgerald. Please go ahead.

Speaker #6: Hey, gentlemen. Congrats, also. Maybe a question for both of you guys. Chris, for you first, I'd love you just to expand a little bit on your comments about being a solution provider, or focusing more on that.

Troy Jensen: Hey, gentlemen. Congrats also. Maybe a question for both of you guys. Chris, for you first, I'd love you just to expand a little bit on your comments about being a solution provider or focusing more on that, what do you have to do. Does this compete at all with some of your partners? Just to expand, it would be great.

Speaker #6: And what do you have to do? Does this compete at all with some of your partners? Just expanding would be great.

Speaker #4: Troy, I'm going to start with the partner side. This opportunity is so big, and our opportunity to grow the pie is so large, that outside of our endpoint IC competitor, I view everybody else as a partner.

Chris Diorio: Troy, I'm going to start with the partners side. This opportunity is so big, our opportunity to grow the pie is so large that outside of our Endpoint IC competitor, I view everybody else as a partner. There's no reason for us to compete with anybody out in this space, including in solutions delivery, because the opportunities are so compelling. I mentioned the opportunities just on the food side. It's just one of them. The loss identification at point of sale. We had one grocer come to us and say they lose $100 million a year from theft at point of sale, primarily proteins and liquor products, wines and beers and alcohol. That's a huge number for a grocer. The opportunities are there. The opportunities are for fixed reading, yet you can't just go in with a handheld and solve the thing.

Speaker #4: I mean, there's no reason for us to compete with anybody out in this space, including in solutions delivery. Because the opportunities are so compelling.

Speaker #4: I mentioned the opportunities just on the food side. It's just one of them. The lost identification at point of sale—we had one grocer come to us and say they lose $100 million a year from theft at point of sale.

Speaker #4: Primarily proteins and liquor products—wines, beers, and alcohol. I mean, that's a huge number for a grocer. So the opportunities are there. The opportunities are for fixed reading.

Speaker #4: And yet, you can't just go in with a handheld and solve the thing. So we are developing solutions that include every layer of our platform, plus a huge push on the software side to do the ML part, the device management part, the solutions management part.

Chris Diorio: We are developing solutions that include every layer of our platform, plus a huge push on the software side to do the ML part, the device management part, the solutions management part. Rather than serving up raw data to the enterprise, we serve up events and working closely with our partners to deliver those solutions to an enterprise. Impinj by itself cannot go out and deploy 5,000 stores. We have to partner, there's huge opportunities for us and the partner, including ERP partners, WMS partners, as well as other RAIN RFID partners. The opportunity is there. It's fixed reading solutions to drive a new chapter in this industry beyond just inventory counting. I am incredibly excited about it, and it's where I'm pushing the company.

Speaker #4: So rather than serving up raw data to the enterprise, we serve up events. And working closely with our partners to deliver those solutions to an enterprise.

Speaker #4: Impinged by itself cannot go out and deploy 5,000 stores. We don't have we have to partner. And there's a huge opportunities for us and the partner including ERP partners, WMS partners, as well as other rain RFID partners.

Speaker #4: So the opportunity is there. It's fixed reading solutions to drive a new chapter in this industry beyond just inventory counting. And I am incredibly excited about it, and it's where I'm pushing the company.

Operator 2: Well, the passion.

Operator: Well, the passion.

Speaker #4: Did I answer your question?

Chris Diorio: Did I answer your question?

Operator 2: Very much so.

Operator: Very much so.

Speaker #6: It very much so. I love the passion here. But maybe just a follow-up for Cary—just on the MA partners that are handling the IC transition with your logistics customer. I mean, thoughts on—do you have good visibility on that?

Chris Diorio: Yep.

Operator 2: I love the passion here, maybe just a follow-up for Cary.

Operator: I love the passion here, maybe just a follow-up for Cary.

Cary Baker: Yep

Operator 2: inlay partners that are handling the IC transition with your logistics customer. Thoughts on, do you have good visibility on that? Is there any kind of risk of getting surprised on channel inventory during that transition?

Operator: inlay partners that are handling the IC transition with your logistics customer. Thoughts on, do you have good visibility on that? Is there any kind of risk of getting surprised on channel inventory during that transition?

Speaker #6: Is there any kind of risk of getting surprised on channel inventory during that transition?

Speaker #5: Yeah. It's a good question, Troy. After missteps in the last couple of Q1s, yeah, we're very alert to this. Because those missteps have been centered around that second large supply chain logistics customer.

Cary Baker: Yeah, it's a good question, Troy. After missteps in the last couple of Q1s, yeah, we're very alert to this, because those missteps have been centered around that second large supply chain logistics customer. Both years are different reasons, but the crux of the issue was our inability to see the channel inventory that our partners held in support of that customer. Until this year, our second-largest supply chain logistics customer used our general purpose M800. That SKU can go into any apparel, general merchandise, or food application, which made it difficult for us to understand and have visibility into just how much inventory they were holding for supply chain versus what they were holding for the rest of their market.

Speaker #5: Now, both years are different reasons, but the crux of the issue was our inability to see the channel inventory that our partners held in support of that customer.

Speaker #5: So until this year, our second large supply chain logistic customer used our general purpose M800. That SKU can go into any apparel, general merchandise, or food application, which made it difficult for us to understand and have visibility into just how much inventory they were holding for supply chain versus what they were holding for the rest of their market.

Speaker #5: And because this end customer typically does a share reallocation at the end of the year, we found ourselves in the early part of the next year navigating some channel inventory noise.

Cary Baker: Because this end customer typically does a share reallocation at the end of the year, we found ourselves in the early part of the next year navigating some channel inventory noise. With the transition to a custom IC, we have much better visibility. We know what we ship into the channel, we know what gets pulled from the channel, and therefore we know what is left in the channel when the day is done. One of the things that we've learned from having this better visibility is that the purchasing seasonality of our inlay partners in support of this customer is dislocated from the seasonality of the package volume of this customer. Our peak season supporting this customer is Q2 into Q3, with a steeper decline in Q4 consumption as the ecosystem prepares for that annual RFP process.

Speaker #5: But with the transition to a custom IC, we have much better visibility. We know what we ship into the channel, we know what gets pulled from the channel, and therefore we know what is left in the channel when the day is done.

Speaker #5: One of the things that we've learned from having this better visibility is that the purchasing seasonality of our inlay partners in support of this customer is dislocated from the seasonality of the package volume of this customer.

Speaker #5: So our peak season supporting this customer is Q2 into Q3, with a steeper decline in fourth quarter consumption as the ecosystem prepares for that annual RFP process.

Speaker #5: So, we feel good that our visibility into this channel is much improved versus the prior two years, but we understand that we have to prove it to you in Q1 of '27.

Cary Baker: We feel good that our visibility into this channel is much improved versus the prior two years, but we understand that we have to prove it to you in Q1 of 2027.

Speaker #6: Yep, understood. Congrats. It's going to be a fun couple of years, guys.

Operator 2: Yep. Understood. Congrats. It's going to be a fun couple of years, guys.

Troy Jensen: Yep. Understood. Congrats. It's going to be a fun couple of years, guys.

Speaker #4: Yes. Thank you. Thanks, Troy.

Cary Baker: Thank you.

Chris Diorio: Thank you. Thanks, Troy.

Speaker #1: 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.

Chris Diorio: The next question will come from Guy Hardwick with Barclays. Please go ahead.

Speaker #5: Hi, this is Nick Ignari on for Guy. Thanks for taking my question. So, you guys mentioned endpoint IC bookings reached another all-time high. Maybe if you can just discuss the composition of those bookings by vertical, and how much visibility they provide into Q4 and early 2027 demand.

Nick Ignari: Hi, this is Nick Ignari on for Guy. Thanks for taking my question. You guys mentioned Endpoint IC bookings reached another all-time high. Maybe if you can just discuss the composition of those bookings by vertical, and how much visibility they provide into Q4 and early 2027 demand.

Speaker #5: Yeah. So thanks, Nick. Thanks for the question. As you know, we delivered record bookings in Q2, and that was after posting record bookings. What we're previously record bookings in Q1.

Cary Baker: Yeah. Thanks, Nick. Thanks for the question. As you noted, we delivered record bookings in Q2, and that was after posting record bookings, what were previously record bookings in Q1. We see several drivers of that booking strength. Kind of first and foremost, after a prolonged period of softness, we are starting to see encouraging signs from retail apparel and general merchandise. There continues to be market expansion in both of those verticals, and the consumer remains very resilient. We also saw some pull-ins from the retailers ahead of the July tariff reset. Now, fortunately, that reset wasn't a large reset, and the rates aren't that different than the expiring rates. Second, in supply chain and logistics, the custom IC ramp at our second-largest North American retail supply chain logistics customer is ahead of schedule.

Speaker #5: We see several drivers of that booking strength. Kind of first and foremost, after a prolonged period of softness, we are starting to see encouraging signs from retail apparel and general merchandise.

Speaker #5: There continues to be market expansion in both of those verticals, and the consumer remains very resilient. We also saw some pull-ins from the retailers ahead of the July tariff reset.

Speaker #5: Now, fortunately, that reset wasn't a large reset, and the rates aren't that different than the expiring rates. Then, second, in supply chain and logistics, the custom AC ramp at our second large North American retail supply chain and logistics customer is ahead of schedule.

Speaker #5: Our inlay partners are filling their channel and filling their supply chain. And we expect full conversion at some point in the third quarter. And then finally, as you noted, some of those bookings or some of our customers are booking into the fourth quarter, which is a little further out than our standard six to eight week lead time.

Cary Baker: Our inlay partners are filling their channel and filling their supply chain, and we expect full conversion at some point in Q3. Finally, as you noted, some of our customers are booking into Q4, which is a little further out than our standard six to eight-week lead time. If I were to break it down, it's those three factors in that order that are driving the booking strength.

Speaker #5: But if I were to break it down, it's those three categories, or those three factors, in that order, that are driving the booking strength.

Speaker #5: Okay, great. Thanks for the call there. And just maybe to put a finer point on the retailer pull-ins, can you help quantify the impact?

Nick Ignari: Okay, great. Thanks for the color there. Just maybe to put a finer point on the retailer pull-ins, can you help quantify that impact? Was this a modest boost or a meaningful portion of the Endpoint IC upside in the quarter? Maybe what assumptions are embedded in Q3 guidance around that? Thank you.

Speaker #5: Was this a modest boost, or a meaningful portion of the endpoint IC upside in the quarter? And then, maybe, what assumptions are embedded in Q3 guidance around that?

Speaker #5: Thank you. It was a small benefit to the quarter. That's why I listed it as third on that list. It's hard to quantify specifically, but we know that retailers have signaled that.

Cary Baker: It was a small benefit to the quarter. That's why I listed it as third on that list. It's hard to quantify specifically, but we know that retailers have signaled that. We know that some of our partners in our ecosystem have said they think it's happening. We don't think it was a meaningful driver of the growth.

Speaker #5: We know that some of our partners in our ecosystem have said they think it's happening. But we don't think it was a meaningful driver of the growth.

Speaker #5: Great, thanks. I'll pass it along. Thank you.

Nick Ignari: Great. Thanks. I'll pass it along.

Speaker #4: Thank you.

Cary Baker: Thank you.

Chris Diorio: Thank you.

Speaker #1: This concludes our question-and-answer session. I would like to turn the conference back over to Chris Diorio, co-founder and CEO, for 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 closing remarks.

Chris Diorio: This concludes our question and answer session. I would like to turn the conference back over to Chris Diorio, Co-founder and CEO, for closing remarks.

Speaker #4: Okay, thank you, Nick. I'd like to thank everybody for joining the call today, and a special thanks for your ongoing support. Thank you very much.

Chris Diorio: Okay. Thank you, Nick. I'd like to thank everybody for joining the call today, and a special thanks for your ongoing support. Thank you very much. Bye-bye.

Speaker #4: Bye-bye.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Chris Diorio: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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