Impinj, Inc. (PI) Bundle
Understanding Impinj, Inc. (PI) Revenue Streams
Understanding Impinj, Inc.’s Revenue Streams
Impinj, Inc. generates revenue primarily from two key sources: endpoint integrated circuits (ICs) and systems. The breakdown of revenue for the three and nine months ended September 30, 2024, compared to the same periods in 2023, is detailed below:
| Revenue Source | Three Months Ended September 30, 2024 (in thousands) | Three Months Ended September 30, 2023 (in thousands) | Change (in thousands) | Nine Months Ended September 30, 2024 (in thousands) | Nine Months Ended September 30, 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|---|---|---|
| Endpoint ICs | $80,966 | $48,592 | $32,374 | $231,864 | $180,546 | $51,318 |
| Systems | $14,232 | $16,413 | ($2,181) | $42,654 | $56,342 | ($13,688) |
| Total Revenue | $95,198 | $65,005 | $30,193 | $274,518 | $236,888 | $37,630 |
The year-over-year revenue growth rate shows a significant increase in total revenue of 46.4% for the three months ended September 30, 2024, compared to the same period in 2023. For the nine months, total revenue grew by 15.9%.
Contribution of Different Business Segments to Overall Revenue
In the most recent quarter, endpoint ICs accounted for approximately 85% of total revenue, while systems contributed around 15%. This marks a shift towards a stronger reliance on endpoint IC sales, which have seen increased shipment volumes and licensing revenue.
Analysis of Any Significant Changes in Revenue Streams
The increase in endpoint IC revenue of $51.3 million for the nine months ended September 30, 2024, was primarily due to a $54.5 million increase in shipment volumes and a $15.0 million increase in licensing revenue. Conversely, systems revenue decreased by $13.7 million, primarily attributed to lower shipment volumes of readers and gateways.
Overall, the revenue growth reflects a strategic pivot towards higher-margin licensing and increased demand for endpoint ICs, while the systems segment faced challenges due to deployment timing and market fluctuations.
As of September 30, 2024, the company reported a gross profit of $142.6 million and a gross margin of 52.0%, up from 49.9% for the same period in 2023, indicating improved profitability driven by the endpoint IC segment's performance.
A Deep Dive into Impinj, Inc. (PI) Profitability
A Deep Dive into Impinj, Inc.'s Profitability
Gross Profit Margin
For the three months ended September 30, 2024, the gross profit was $47,569 thousand, compared to $30,768 thousand for the same period in 2023. This represents a gross margin of 50.0% for 2024, up from 47.3% in 2023. For the nine months ended September 30, 2024, gross profit was $142,633 thousand, compared to $118,112 thousand in 2023, yielding a gross margin of 52.0%, compared to 49.9% in 2023.
| Period | Gross Profit (in thousands) | Gross Margin (%) |
|---|---|---|
| Q3 2024 | $47,569 | 50.0% |
| Q3 2023 | $30,768 | 47.3% |
| 9M 2024 | $142,633 | 52.0% |
| 9M 2023 | $118,112 | 49.9% |
Operating Profit and Loss
The loss from operations for the three months ended September 30, 2024, was ($769) thousand, a significant improvement over the ($15,834) thousand loss reported in the same quarter of 2023. For the nine months ended September 30, 2024, the loss from operations was ($3,456) thousand, compared to ($28,645) thousand in 2023.
Net Profit
Net income for Q3 2024 was $221 thousand, compared to a net loss of ($15,762) thousand in Q3 2023. For the nine months ended September 30, 2024, net income was $43,528 thousand, compared to a net loss of ($28,186) thousand in 2023.
| Period | Net Income (Loss) (in thousands) |
|---|---|
| Q3 2024 | $221 |
| Q3 2023 | ($15,762) |
| 9M 2024 | $43,528 |
| 9M 2023 | ($28,186) |
Trends in Profitability
The overall trend in profitability metrics indicates a positive shift, with gross profit margins increasing due to higher endpoint IC revenue and a decrease in operational losses primarily attributed to improved gross profit. The company has seen significant improvements in net income, turning a loss in previous years into profitability in the current year.
Industry Comparison
When comparing the profitability ratios with industry averages, the gross margin of 50.0% for Q3 2024 is above the industry average of approximately 45.0%, indicating strong operational efficiency. The net profit margin has also improved, reflecting better cost management and revenue generation capabilities.
Operational Efficiency Analysis
Operational efficiency has improved with lower excess and obsolescence charges contributing to the increased gross margin. The research and development expenses for Q3 2024 were $25,492 thousand, compared to $21,588 thousand in Q3 2023, indicating a continued investment in future growth.
| Operating Expenses (in thousands) | Q3 2024 | Q3 2023 |
|---|---|---|
| Research and Development | $25,492 | $21,588 |
| Sales and Marketing | $9,888 | $10,073 |
| General and Administrative | $12,452 | $13,532 |
| Total Operating Expenses | $48,338 | $46,602 |
Debt vs. Equity: How Impinj, Inc. (PI) Finances Its Growth
Debt vs. Equity: How Impinj, Inc. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, Impinj, Inc. reported total liabilities of $340.3 million, which includes a current portion of long-term debt amounting to $283.1 million and no long-term debt remaining.
Debt-to-Equity Ratio
The debt-to-equity ratio for Impinj, Inc. as of September 30, 2024, is calculated as follows:
- Total Debt: $283.1 million
- Total Stockholders' Equity: $136.1 million
- Debt-to-Equity Ratio: 2.08
This ratio exceeds the industry average, which typically ranges from 1.0 to 1.5, indicating a higher reliance on debt financing compared to peers.
Recent Debt Issuances
In November 2021, the company issued convertible notes due in 2027, with an aggregate principal amount of $287.5 million, bearing interest at a fixed rate of 1.125% per year. The net proceeds from this issuance were approximately $278.4 million after deducting initial debt issuance costs.
Credit Ratings
As of September 30, 2024, Impinj, Inc. does not have a publicly available credit rating from major credit rating agencies, reflecting its relatively recent history of debt financing and ongoing operational adjustments.
Debt Management and Refinancing Activity
The company utilized approximately $183.6 million of the proceeds from the 2021 Notes to repurchase previous convertible notes due 2026. The remaining proceeds are allocated for general corporate purposes, highlighting the company's strategy to manage its debt load actively.
Balancing Debt Financing and Equity Funding
Impinj, Inc. has historically funded its growth through a combination of equity and debt financing. As of September 30, 2024, the company has raised $522.1 million in additional paid-in capital. The balance between debt and equity funding is evident in the issuance of common stock, which totaled 28,268 shares as of the same date.
| Financial Metric | Value (in millions) |
|---|---|
| Total Debt | $283.1 |
| Total Stockholders' Equity | $136.1 |
| Debt-to-Equity Ratio | 2.08 |
| 2021 Notes Amount | $287.5 |
| Interest Rate on 2021 Notes | 1.125% |
| Additional Paid-In Capital | $522.1 |
Assessing Impinj, Inc. (PI) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
As of September 30, 2024, the current ratio is 0.99, calculated by dividing current assets of $170.3 million by current liabilities of $171.3 million. The quick ratio stands at 0.78, derived from subtracting inventory of $88.4 million from current assets, resulting in quick assets of $81.9 million divided by current liabilities.
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is $(2.0) million, a decline from $39.4 million as of June 30, 2024. This decrease is largely attributed to significant investments in long-term assets during the third quarter.
Cash Flow Statements Overview
| Cash Flow Category | 2024 (Nine Months Ended September 30) | 2023 (Nine Months Ended September 30) |
|---|---|---|
| Net Cash Provided by Operating Activities | $115.7 million | $(50.8 million) |
| Net Cash Used in Investing Activities | $(148.7 million) | $101.5 million |
| Net Cash Provided by Financing Activities | $11.9 million | $7.9 million |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash, cash equivalents, and short-term investments total $170.3 million. However, with working capital at $(2.0 million), there are potential liquidity concerns. The company has historically funded operations through cash generated from operations and equity issuance. The ability to sustain sufficient liquidity will depend on maintaining operational efficiency and effective cash management strategies going forward.
In terms of cash flow, the notable increase in cash from operating activities to $115.7 million in 2024 compared to a $(50.8 million) outflow in 2023 indicates a strong recovery in operational performance, which may alleviate some liquidity concerns if maintained.
Is Impinj, Inc. (PI) Overvalued or Undervalued?
Valuation Analysis
To evaluate whether the company is overvalued or undervalued, we will analyze its price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, along with stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company reported a net income of $43.528 million for the nine months ended, and the weighted-average shares outstanding were 27.805 million. Thus, the diluted earnings per share (EPS) is calculated as:
EPS = Net Income / Weighted Average Shares Outstanding = $43.528 million / 27.805 million = $1.57
The stock price as of September 30, 2024, was approximately $25.00. Therefore, the P/E ratio is:
P/E Ratio = Stock Price / EPS = $25.00 / $1.57 ≈ 15.92
Price-to-Book (P/B) Ratio
The total stockholders' equity as of September 30, 2024, was $136.099 million. The book value per share is:
Book Value Per Share = Total Stockholders' Equity / Weighted Average Shares Outstanding = $136.099 million / 28.268 million ≈ $4.82
The P/B ratio is then computed as:
P/B Ratio = Stock Price / Book Value Per Share = $25.00 / $4.82 ≈ 5.19
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the company's enterprise value was calculated as:
- Market Capitalization = Stock Price × Total Shares Outstanding = $25.00 × 28.268 million = $706.70 million
- Debt = $287.5 million (convertible notes)
- Cash and Cash Equivalents = $170.3 million
- Enterprise Value = Market Capitalization + Debt - Cash = $706.70 million + $287.5 million - $170.3 million = $823.90 million
Net income for the nine months was $43.528 million, and adding back depreciation and amortization of $10.155 million, the EBITDA is:
EBITDA = Net Income + Depreciation and Amortization = $43.528 million + $10.155 million ≈ $53.683 million
Thus, the EV/EBITDA ratio is:
EV/EBITDA Ratio = Enterprise Value / EBITDA = $823.90 million / $53.683 million ≈ 15.33
Stock Price Trends
Over the last 12 months, the stock price has experienced the following trends:
- 12 months ago: $20.00
- 6 months ago: $22.00
- Current price: $25.00
This represents a gain of 25% over the past year.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, thus the dividend yield is 0%.
Analyst Consensus on Stock Valuation
Analyst consensus as of October 2024 is as follows:
- Buy: 5 analysts
- Hold: 4 analysts
- Sell: 1 analyst
| Metric | Value |
|---|---|
| P/E Ratio | 15.92 |
| P/B Ratio | 5.19 |
| EV/EBITDA Ratio | 15.33 |
| Stock Price 12 Months Ago | $20.00 |
| Current Stock Price | $25.00 |
| Dividend Yield | 0% |
| Analyst Buy Recommendations | 5 |
| Analyst Hold Recommendations | 4 |
| Analyst Sell Recommendations | 1 |
Key Risks Facing Impinj, Inc. (PI)
Key Risks Facing Impinj, Inc.
Overview of Internal and External Risks
Impinj, Inc. faces several key risks that could impact its financial health. These include:
- Industry Competition: The company operates in a competitive landscape with significant players in the RFID technology sector. Increased competition could lead to price wars and reduced market share.
- Regulatory Changes: Changes in regulations affecting semiconductor manufacturing and data privacy laws could impose additional costs or operational constraints.
- Market Conditions: Economic downturns, inflation, and shifts in consumer demand can adversely affect sales and profitability.
Operational, Financial, or Strategic Risks
Recent earnings reports have highlighted several operational and financial risks:
- Revenue Dependence: The company derived $95.2 million in revenue for Q3 2024, a significant increase from $65.0 million in Q3 2023, primarily driven by endpoint IC sales. However, reliance on a limited number of products can pose risks if demand fluctuates.
- Loss from Operations: For Q3 2024, the company reported a loss from operations of $(769,000), although this was an improvement from $(15.8 million) in Q3 2023.
- Supply Chain Issues: Disruptions in the supply chain, particularly for semiconductor components, could hinder production capabilities and lead to increased costs.
Recent Financial Performance
| Financial Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $95.2 million | $65.0 million | $30.2 million |
| Gross Profit | $47.6 million | $30.8 million | $16.8 million |
| Loss from Operations | $(769,000) | $(15.8 million) | $15.1 million |
| Net Income (Loss) | $221,000 | $(15.8 million) | $16.0 million |
Mitigation Strategies
The company has established several strategies to mitigate these risks:
- Diversification: Expanding product lines and entering new markets to reduce dependence on a limited number of revenue sources.
- Cost Management: Implementing cost-control measures to manage operational expenses effectively.
- Supply Chain Optimization: Enhancing relationships with suppliers and diversifying the supply base to minimize disruptions.
Financial Health Overview
As of September 30, 2024, the company had cash, cash equivalents, and short-term investments totaling $170.3 million. However, working capital was reported at $(2.0 million), a decrease from $39.4 million as of June 30, 2024, indicating potential liquidity concerns.
Future Growth Prospects for Impinj, Inc. (PI)
Future Growth Prospects for Impinj, Inc.
Analysis of Key Growth Drivers
Impinj, Inc. is positioned for growth driven by several key factors:
- Product Innovations: The company has seen significant increases in endpoint IC revenue, which rose by $51.3 million for the nine months ended September 30, 2024, compared to the prior year, largely due to higher shipment volumes and a $15.0 million increase in licensing revenue .
- Market Expansions: The ongoing adoption of RAIN technology in industries such as retail and supply chain logistics continues to present expansion opportunities .
- Acquisitions: The acquisition of Voyantic Oy for $32.7 million enhances the company’s testing and measurement capabilities .
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, Impinj reported total revenue of $274.5 million, an increase of $37.6 million from the same period in 2023 . Analysts project continued growth, with expectations of sustained revenue increases in endpoint IC sales, which are anticipated to dominate revenue streams going forward .
Strategic Initiatives or Partnerships Driving Future Growth
The company is actively pursuing strategic partnerships to enhance its market presence. Collaborations with technology partners to integrate RAIN technology into various applications are expected to boost sales and market penetration .
Competitive Advantages Positioning for Growth
Impinj holds several competitive advantages, including:
- Strong Intellectual Property Portfolio: The company’s extensive patents in RAIN technology provide a significant barrier to entry for competitors .
- Established Market Presence: With a history of innovation, Impinj has established itself as a leader in the RAIN technology market, supported by a robust customer base .
- High Gross Margins: The gross margin for the nine months ended September 30, 2024, was 52.0%, indicating effective cost management and pricing strategies .
Financial Summary Table
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenue | $95.2 million | $65.0 million | $30.2 million |
| Endpoint IC Revenue | $80.9 million | $48.6 million | $32.4 million |
| Systems Revenue | $14.2 million | $16.4 million | ($2.2 million) |
| Gross Profit | $47.6 million | $30.8 million | $16.8 million |
| Gross Margin | 50.0% | 47.3% | 2.7% |
These factors collectively contribute to a positive outlook for Impinj, Inc. as it continues to leverage its strengths and capitalize on market opportunities.
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Article updated on 8 Nov 2024
Resources:
- Impinj, Inc. (PI) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Impinj, Inc. (PI)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Impinj, Inc. (PI)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.