Impinj (PI) 27 Apr 202020 Q1 Earnings call transcript

Good afternoon, and welcome to the Impinj First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Ellen Hayes-Roth, Investor Relations. Please go ahead.

Thank you, Operator. you results. joining thank Impinj’s to and XXXX first-quarter afternoon, all us for discuss Good call, Diorio, opportunity today’s brief On Chris overview provide CEO, of a will our market and Impinj's performance. Co-Founder and first CFO, will second a of results Cary Baker, quarter commentary. follow financial Impinj’s XXXX XXXX detailed with review our quarter and

Cary the session. and discussions. Sales then Jeff Impinj’s prepared is Marketing, We will and with data, Executive Chris on Impinj’s trended Q&A section open website. are the also will call in Dossett, remarks, along call available for of the Management’s Investor join and of the Vice financial President Relations on

we customers, are extent or the condition Any the as call. to Litigation expected Before expected date authorities, certain that not statements make historical meaning COVID-XX will or the company of Act potential partners facts, or the expected potential Private the such performance; impact government outlook regarding that our financial please objectives results, our represent start, conference forward-looking forward-looking of business, the including operating of we of plans, or are XXXX. of call make statements of they during Reform on and this those prospects; note we this responses within and the such Securities To only COVID-XX. our statements,

current reports SEC, our result about risks. While alter annual by any see to we filed on undertake, the do required or factors believe subject today, We a statements, risk of and in the or XX-Q results with are and and the new information, we could expressly for events, more as otherwise forward-looking update future actual as law. concerning reasonable, we risk materially any file the except information make, applicable these differ whether any disclosures disclaim, and our the obligation are not we in uncertainties. forward-looking based expectations COVID-XX-related statements to COVID-XX, factors because statements quarterly and including Please risks Form

explicitly are is all are During financial state Balance-sheet otherwise, today’s measures. a numbers for call, Free-cash-flow except we GAAP metrics measure. non-GAAP discuss, we non-GAAP basis. cash-flow where financial on a or revenue, and

to turning attend company that I’d the results note to like virtually Before our will outlook, and

Oppenheimer’s Xth Baird’s and XXXX May Growth Conference on Emerging Annual XXth Global

& Consumer, at forward connecting Xnd. Technology We on you Conference with to Services upcoming June look of events. these many

Chris will to Diorio, Chief Impinj’s and Officer. I Chris? Executive turn the now Co-Founder call

Thank and you, remain your joining all you Ellen. Thank and and call. for ones well. I safe you are our hope loved

of have The is have companies. us past few months the that to impact impacting families, people, known. all no around COVID-XX’s been us, Impinj tumultuous many indiscriminately impact. and most among stranger is communities

chain, no portend our users. COVID-XX has less And channel affected negatively the and uncertainty. supply end coming partners months

spots business in there and while we on taking our uncertainty bright However, we and our while results in is as quarter driving. the second retail, crisis, opportunities, aviation omnichannel were the focus quarter, negative, will the are on I automotive, outcome through supply steps we the particularly see strong. and and we see long-term this updating today in to well, chain are such retail first as you navigate Consequently, sentiment prevailing logistics. And for the are

this enable, who position balance end strong a than we today, market we and in sheet, products company entered stronger a advantage new it. are, products, competitive leadership game-changing our to crisis team, the market intend dedicated a RAIN users experiencing from stronger With especially when emerge

latter of requests from than unanticipated shown also March. XX% the COVID-XX. customer Even in employees amazing working shipped with part resiliency first-quarter more only face $X.X Impinj’s the expedite met our not but they in delivery home, of of have commitments million

and geographic diversity availability. team staged finished cost To increases goods operations among production navigated balanced our those maximize deftly meet delivery to suppliers, shipping commitments and

to that is around in equipment operations. world fight consumables and using to team are and facilities well track hospital Our against and hospitals COVID-XX, products aware the streamline the our healthcare

Because essential continuing our keep meet we our only cases, end users the employees use other use our also products while of to importance understand our we commitments but worldwide, strive in not hospitals to safe. in

the $X.X Our quarter new supply $XX.X have in in declines to a typical we record, set also gain. revenue did million, another growth, record, logistics revenue strong, by prior by Endpoint previously. believe, first North ICs gateway quarterly discussed in Systems led at was revenue opportunities set IC It so quarter. and by $X.X expedite despite million by and and, usually was first American exceeding last chain quarter, buoyed customer the revenue, reader requests, modest strong, we large seasonality, market our sales share million. the both which provider

Looking customer endpoint impacts forward quarter, see we pressure the COVID-XX the through and our base. on ICs as ripple second to both of systems

consumes their and align entered to we with partners, demand. we which requests our ICs store also apparel, the has healthy we, IC has Although changing declined significantly. Aviation the together IC automotive hard quarter much hit particularly push-out work and with retail Retail closures. as half demand, by worldwide, apparel, endpoint than endpoint although are more endpoint rapidly inventory been inlay smaller seeing backlog, than

RAIN both online its in using large. and holiday consequent IC long-term least IC who are expect are RAIN heightened opportunities, to at may usage to The those endpoint better are shipments demand IC normal. small, volumes, term. On in running long the growing, is chain competitors are not, those quarter, the in side, RAIN are be endpoint track positioned we our although from their are the sell optimize and supply and and also the than positive retailers new at today which logistics volumes volumes shipments, endpoint drive and second who to ROI deploying

the faces timing due baggage systems and to deployment also capital second-quarter use facing North Our now tracking Consumer-facing quarter cases have such race as from American to customer transitioning already expense airline project headwinds business, operations, second tight from budgets COVID-XX. paused.

paused. prevention also loss have retail For pilots most the part, and self-checkout in

supply allocation, and deployments spot, Here by a American last is bright our the systems large await opportunities, over consequent the we logistics long-term at potential evidenced chain in again, least large. the quarters, the six that and although opportunities, end-user project are North as second quarter, both and delivered capital

delays Impinj by quarter out To IC exceed at MXXX second round our impacted in production orders endpoint perspective, months, partners. shelter-in-place our our ramp suppliers now and two

third, and expedites significant further our order headwinds challenge. combined a engenders on our project, All quarter delay from products, pushouts systems revenue. second quarter million with to conspire the from a to second new told, the impacts North That and impact IC second quarter to endpoint opportunities first and American COVID-XX’s all $X.X quarter

strong our our Counterbalancing sheet, gamechanging strong is partners quarter and end in market pre-COVID-XX, we first users adoption those momentum products new RAIN have leadership the development. headwinds announced, and the our and already with in and balance confidence others have

ROI-driven continuing we huge. opportunity and Looking our examples. cases, few big, use opportunity, with will believe organic I highlight that growth future, to the remains with a recent

Plexus partner in an in facility repalletize manufacturing XX% gateway Impinj Malaysia a decrease that solution their the Our drove implemented to high-mix products. time

of and manufacturer year. to our and of process, our pick xSpan gateways a partner RXXX automate kitchen per with them Finland’s readers, dispatch thousands furniture, manual-order hundreds Oy, saving Finn-ID, Novart deployed euros of largest

garment from with across partners largest factories, China’s Xindeco centers Supoin, fashion an and Impinj-based and IoT our logistics deployed support retailers, Heilan, of their one solution

year. saving and item and automating tens tracking dollars sorting millions of stores, of retail per

product span has and to well online the match physical and to orders COVID-XX, fulfillment. have to online that stores their chain Today, then weeks, and The from are deployed retailers retailers store. in of RAIN supply brands situated anywhere and demand shut ship driven visionary with brands systems in

and retailers operational logistics with efficiencies, tracking during supply and to to visionary those brands We likewise surging to improve needing RAIN strategically expect advance providers, RAIN and this crisis. expect We chain leverage leading package and adoption. demand

laser us. and opportunities on on the focused are they long-term We both, offer

a will big a bring the With of from emerge retailers a visibility focused for of second to of determination the sight difficult, lost and position. company have we improvements a with the Enterprises the but on emerging COVID-XX will market from drive the hand stronger crisis we their We in are we we fierce businesses strengthen and benefits logistics know stronger in item-level future. suppliers, on to quarter not be tiller, steady this picture, management. the

continue the item for on emerge apparel renewed from leading crisis who consumer a retailers, a expect and less and focusing will with we our So hunger competition, fulfillment visibility this platform we focus will experience on omnichannel offers.

offers chain well which We sustained logistics, will also which improvements. our and operational focusing for and compelling we on continue see supply platform beyond will believe COVID-XX growth

the do so increase our competitiveness, as our breakeven belts a We EBITDA adjusted COVID-XX. we our other will to and balance side of use charting to path sheet on tighten

that is suppliers, happens, crisis our that this One When partners we pass. certainty and want will

their, we in time we part because small by with users And acted. our and us, we that future. That this need. how end no in stood part our them. That in there of we invested of did

As need. latter, contribution goal an for per match, and global local example raising an we an of set a to $XXX,XXX employee efforts those the roughly and or of overall, via employee $XXX Impinj support company in

wrote see the of part. we want not recent we As be a in we that to of acted, in I blog pride, our you proud post, That, hubris want did because out we to but we actions, and smallest of how even

well. care empathy and in be adversity. the safe of with and face responded Be

Cary? our over detailed financial to will for commentary. review I and now turn quarter call second the Cary

and afternoon everyone. Chris, good you Thank

more but echo the to businesses do comments, the appropriate cover today plan call as through both return period this uncertainty we Chris’ well discuss will we on of call, I for more-normal believe are as when to share In To detailed operating on are additional, basis economic we a a ongoing with unprecedented an earnings uncertainties. typically that market living light, about metrics we each given that will metrics upheaval, which not environment.

XXXX. grew revenue and million, $XX.X in XX.X% compared million in quarter Revenue and quarter first XXXX XX.X% quarter with company record. million First year-over-year a $XX.X $XX.X fourth was quarter-over-quarter, new

First IC growing was quarter $XX.X year-over-year endpoint million, XX.X% and a revenue record

quarter with driven $XX.X declined first Bookings fourth the by remained compared XXXX. We backlog. in XXXX then few quarter new and million end-user deployments, $XX.X endpoint XXXX million entered million through first quarter-over-quarter, with XX.X% IC $XX.X of in mid-March, and March. strong in weeks quarter last

uncertainty. second secured had in million double than still of Despite requests, $XX.X of requests As unanticipated latter $XX.X noted, March in million entered of already strong customer those a million we expedite quarter a also entering $X.X the the expedite our XXXX. backlog, customers with backlog we Chris quarter period as some supply second more part

reduced COVID-XX with sequentially quarter IC year-over-year. dramatically having Today, end-user both significantly, bookings and endpoint are down second demand,

our partners new this are also and We supporting to actively manage and demand our reschedule both backlog in inventory inlay their environment.

compared was year-over-year First million, XX.X% with $XX.X growing quarter systems revenue

reader and sales. led $XX.X North systems a by large to quarter million IC by $XX.X quarter American in with quarter-over-quarter typical the seasonality, first project basis, On compared in IC growth. X.X% partially to million due shipments strong and declined revenue offset primarily XXXX, gateway revenue reader fourth XXXX, reader

decline In quarter, to of the in large COVID-XX. the systems to project the will and expenditure second phase transitioning due capital North generally face tighter revenue operational an budgets the American

XX.X%, First endpoint quarter related ago took and in primarily gross applications a quarter. EU inventory charge obsolescence was last European that the gateways XX.X% demand for and for XX.X% older and band. to We operate frequency margin a compared ICs with optimized excess retail year significant reducing Covid-XX

be by operate new the it to endpoint expect the by We IC met and band. when in MXXX our frequency returns, EU that gateways demand,

XXX charge, margins this in quarter reduced do a material gross Normalizing XXX by E&O time, points the expect charge year-over-year higher we basis by E&O driven revenue. second XXXX. from our about At This basis gross margin primarily not charge increased points. leverage E&O for

was first million Sales XXXX expense quarter in was expense Total marketing quarter General XXXX. and million, with quarter expense compared $XX.X Research in million. $X administrative operating $XX $X.X expense and million. was development million. and $XX.X first was fourth and million $X.X

$X was profit in $X.X in a million, quarter fourth-quarter of XXXX loss EBITDA with $X first adjusted of a XXXX. and compared quarter million First million

First quarter GAAP net million. loss was $X.X

million diluted per of First share million using a or $X.XX share, weighted-average count net XX quarter $X.X income non-GAAP was shares.

$X.X cash cash, the down quarter, we prior of totaled the down $X.X XXXX. $XX.X compared and million activities property quarter quarter from the the cash with in In million $XX.X balance quarter first $XXX.X sheet, Inventory to million $X.X by investments from first-quarter was with XXXX. $XXX.X first and operating short-term and Turning and in equivalents and first million, million ended the quarter prior net provided million, million

flow was cash equipment purchases totaled million. $X.X Free $XXX,XXX.

I impacting few will items a now highlight business. our

ICs and have and shelter-in-place Currently, returned government-mandated our roughly were gateways and reduced XX Malaysia, orders caused shut to to post-processing XX% three some our operate and readers our suppliers of between several First, temporarily capacity. to suppliers down producing close. weeks. of capacity suppliers endpoint some In those have at for

capacity challenges due Second, reduced to products shipping we are transport experiencing and

a increased of costs result COVID-XX-related as disruptions.

and supply-chain all we near-daily. IC our able satisfy we in in quarter, picture fulfill believe Although uncertainties flexibility sufficient to demand were XXXX endpoint COVID-XX to affect the have supply to quarter orders the first demand second inventory and related and

Third, in discretionary are in continuing modulating the near-term, while invest spending we to

research investments. and development make capital and ROI-driven

our EBITDA other to to side adjusted impacts profitability, a necessary. on course-correct as course return COVID-XX near-term Although and the have we of breakeven COVID-XX will charted

We first model believe economy when that and returns. opportunity quarter underscores reopens the our of and our disruption demand business COVID-XX the clears, strong EBITDA adjusted of our strength the

foundation be and a market in us balance our the strong investments future. a invest stronger Our the in company weather will to are sheet position gives storm The tomorrow. stronger we the today of making flexibility

outlook, the we not plan have no for overcoming the do issues our we share guidance to give on precedent about importantly, share additional and, quantitative we ongoing not that all an to it is is quarter. metrics Turning a metrics our pandemic, basis. Instead, outlined these We will to business. there for most modern considering prudent perhaps feel second

quarter second quarter scheduled Xst, ship in April was million. of to backlog As $XX.X

requests Also year-over-year last similar Friday to million, months of week, down future as were XX% quarters quarter-over-quarter additional and $X quarter and bookings second XX% expect in already As that in of of to of we $X.X scheduled rescheduling ship rescheduled dates. had at quarterly quarter. we down the two remaining quarter Friday, the million backlog

the we for decline endpoint and to end-user systems further In expect demand and near-term, ICs

know competitive the are come COVID-XX steps remain delivering In on pass, crisis new the impact demand against will economy other company, the business. we that that that will emerging a will focused taking created. We side mitigate appropriate stronger will opportunities the we and COVID-XX that on disruption of back. the longer on more have reopen has to our decline term the the will and COVID-XX clear,

and closing, our suppliers team, Impinj for uncertain In want you, to times. I in our our support ongoing investors, thank customers, these our your

session. turn to the call I the open operator will to the now question-and-answer

Genuity. [Operator Canaccord our Please question first from Walkley comes ahead. Instructions] Mike And of go

doing Great. Thanks call. for taking the on my everybody's questions and hope well

With strong the very results Chris. - yes, quarter thanks, last

on just to it this results us build maybe buffer With in strong in, end give $X.X can for the pulled very your some end at in the an you is just million pulled some trying just inventory markets color supply was market or expecting chain issues.

- Dossett, Mike, number latest according that of - with adjust to and question. dates, shipment I’ll this is answer their number Jeff evolving We worked by the with understanding a partners elected to proactively inlay our our they a environment. demand as

in customer that relates particular say automotive change it would the in aviation retail, in demand, to I base end Chris broad and as outlined So of initial in comments. his

lot, the nice cashier I clearly to then company about the I stores, way thinking a waiting thought be long to thanks. time it checkout grocery this… was every near trends I checkout, well your term say of Chris, been to fact through during at move how in would lines the the list have have stores, in And Great, challenging I've

You and me both. and you me Mike,

on happening the discussions Yes, led imagine Is on term other you businesses yet? to short-term? everybody of during is call, in everyone's any times trying longer I guys really that figure of tough it more to, can to out kind position level customers the the better it with is these just side? just, discussion but Or

spoken it's about other emerge going COVID-XX. checkout, yes, tell have I that and the on too to loss to in retail side checkout. prevention to the to to little say needing of previously answer is things enabling order self But self that how a will The we've are early retail question enable

exposure desire things to for self and could more and drive come checkout, ability online the So, actually to for quickly. the potentially reduces exposure, reduces other back sales actually retailers

in returned only quickly. had more are but checkout operating that have they self retail normal more they to that course, the checkout, of stores if could had self limited conditions Now deployments worldwide is seeing very retailers potentially

those opportunities. they're seeing returning are more And we to our to going be how learn we to grow about end customers as So expect opportunities normal.

see more So And around I you future, become fulfillment in the visionary in with opportunities just important prepared shipping remarks. omnichannel the we from retailers and addition, in know it. mentioned will stores, more

see And so, driving we opportunities. omnichannel fulfillment incremental well as also

a our So shift opportunity in in shift go we instances, and how both to long-term end a us. market of those long-term see a for - long-term customers

Great thanks. plan that pass metrics forward. for some the thanks all Last line. and from Cary you sharing question going me, I'll

the maybe trends get give two points should Thanks. entering clarity, ship you an and the little systems maybe the in a Can overall on to about, end us million quarter. we idea think how those split to kind intermediate more of and of XX the and Just just scheduled between businesses term?

we bit think I information a so Yes, earlier comments. my provide in did little that

So of million to endpoint of it backlog related ICs. was that XX.X

you. Okay, great. Thank

it - then that’s And risk the was total of only comment comment. on a

X we've with schedule have sort million quarters. we last And Friday received of future So that. request that as to expect more into of of

In to saw the this same fact, requests we line. morning

we will it. there coming So more be know

Jaffray. comes go from Jensen Our Please next of ahead. question Piper Troy

that was on over that additional on follow-up like XX% bookings Maybe Cary a the Congrats, maybe everybody's a Glad quick information. hear nice month-over-month and data down results. just to well. that? The comment the point was go

bookings this quarter. was at Yes, the that in comment point year-over-year a same

month-to-month… So pretty much

XX% year-over-year Friday. as quarter. the Excuse at point same last this me, it XX% are quarter-over-quarter, of was quarter-over-quarter, metrics These

had order is what a retail vertical exposure you but can then follows think retails rank that? me the half rank about that order. said and exposure? guys remind consumes Chris, your also much I How you just you Maybe ICs, of

the ICs. so it's endpoint those retail market, the and more follow is be consumes than consistently Since to said the two-thirds. of market typically roughly yes, Troy half We've half that IC our could endpoint what sell So around more than market I trends. said broadly we said it volumes

So that. led apparel, tail a after long by then and retail

use consumer from industrial, Just automotive, race to aviation a long-tail. facing cases to really to timing, everything just to and

I'm I long-tail account one there's above this, of as would your I that that retail. say pokes really saying don't at another that that for out looking after up Jeff I'm know and

shipment Troy to this retail, and pallets, boxes, retail as it of following is growing Jeff, think is the movement Following there opportunity I and cases. relates

so, the virtually every only as opportunity it is And global industry but other logistics very Impinj to retail broadly, the chain applies platform. industry, for and not supply a broad-based rate

Yes one understood. a last guys But wondering, needed it's just to to still in Chris, seems And very, catalyst cool talk just to big side this for Chris, Maybe you lot helpful? to technology. RAIN the I'm historically opportunity about too healthcare one of for benefit been kind this a that early being just but industry the understand, to probably tell, it's start be just lately.

see RAIN for place and products hospitals, products there it in too supply shipments, hope for at just right the that pharmaceuticals, crash chains much surgical to so have could tracking We right cases bring. many to RAIN opportunities benefit is say early the use tell. in is medical time. the I'll so healthcare, and amazing so In we kits right

early that there. significant we opportunity. significant value whether a whether but it's predict is COVID-XX will It believe drive is adoption manifest to that - and forward And that too

& comes Dougherty question of Charlie Our from next go Please Company. Anderson ahead.

sentiments is everyone's echo Yes, safe, good to those taking questions. it’s And I my that hear. for thanks

So a all the on lot color. thanks that, for and

moment of feel then kind know follow-up. the we're Do curious, got like Friday, And was Cary that yet? that's point XX% trough curious the of I've I drop. On a how been a what time trajectory but been. number just trending. at has in last you that bookings I'm year-over-year the

is Charlie, Jeff. this

of with a I of of proactively And assessing changing the to think quarter our accelerate provide I work period elected while that inlay first into is uncertainty, the we were environment. as exiting our partners, still many insight inlay ICs. demand shipment would they're of or endpoint closely expedite a know partners period they that and in we a

shipping opportunities to and with inventory, positioned As they the the, you strategic them be of to regarding concerns viability meet customer. end wanting had to ongoing their will well prepare if of demand

see through that of against going time, reassessment they demand the assess period they period additional have been of as during their So ahead have on position and opportunity been pausing them. particular bookings a of they

to time their And customers idea As clearer as able they requirements appropriate therefore level ready demand. inventory. be become will they to we'll a those of get serve passes, assess And clear. of the we stand

thank that… you Jeff for

that I where year we IC backlog We had only would strong backlog very that's quarter. than approaching The is the double highlight XX.X a was that thing our exiting million were ago. triple on in more

That my question… follow-up was actually

very bookings the and COVID-XX, Charlie, broader prior potential strong strong XQ emerging coming very and into into to the had of a Yes understanding XQ pipeline. of period impact we had

that be evolving the demand a would So until became there it clearly market clear was favorably, more from COVID-XX. impact

inlay while as can't will closely that XQ. partners our we so, when serve they this to end through and from ensure as out it And pass, phase inventory and customers pass need with the ready it to we I have they demand the builds of to stand will predict work said,

doubling, haven't kind volatile in so given nice, the it, I the the wasn’t through then And that on business terms to more curious than how of that if that through number us you tends it right that really was lead tripling. of accelerating you clean was statistic Yes, also because factors before, ask backlog walk could read of through to that interesting be, maybe true degree? to read on potentially the going to

the the going end follow our not And it's million million a at IC in timing beyond quarter. not is Yes, the for plays but think looking highlight XX.X trends. volatile total I is at it, quarter, just it. of the our days so that, a it's see, point timing generally - XX.X certainly the impact first XX we we're point revenue into backlog if was you And as then to you Charlie, can and total say quarter can so that our speaking, look yes, backlog

factors that in on is IC? question biggest ascribe increase to you the backlog endpoint leading But what would the large to

Charlie, this is Jeff.

I reflection the inlay in strong were to and globe, emerging of assess think for changing partners demand will outlook demand prior our supply as to very COVID-XX. prior expectation of it's it's our environment, organic that And growth we've the opportunities chains COVID-XX all the endpoint to around they a ICs. return experienced and terms that that

I that, we Charlie the we the I also had only said is guess add thing that'll as share gains. call, modest believe on

when new So you growing. combine deployments just the total organic growth and gains, modest share RAIN was opportunities,

is Craig Hettenbach of next question Morgan ahead. go Stanley. Our from Please

thank Yes, you.

ask systems Just that, of success business. talked of in the wanted to on the kind you six that big ramp quarter program that about

the other in kind might pipeline In terms that might be not basis? the using about terms just some of see opportunities thinking of the to go a of gauge a as wanted of it same, on opportunities forward point but proof and and you

opportunities, continue especially and supply Yes, chain the so retail and logistics, we in pursue to in space. - Craig

be to tend support based. is of - that we and opportunities over And we've with to American large we even that still continue in it those As customer said the it's operational phase them. transitioning before, deployment North to project have existing the process the

other think to there you're going them, I think opportunities, we out look are to pursue those have for there. if So just to opportunities continue

timing COVID-XX those adds of wrinkle - also timing when based into they another of deployments, the uncertainties project deployments. the other come those project is the of - and timing But really significantly

broadly the just MXXX and there understanding on the And a out very today. then every follow-up company visibility for it. Got difficult is

kind get ramp up in the to to of this what the thoughts terms deploy? and some ultimately like delay, to of customers latter of the point year, curious Just maybe once that your - towards are in position of means,

Yes, so this is Chris again.

we ramp. production with our So continue

to for still second in MXXX We volumes and the the in the delighted expect to be on production are said, expect positively impact shipping factors we XXXX. business call. the quarter we our said that That Impinj

of next ahead. comes question from Our Please Jim Needham. go Ricchiuti

taking Ricchiuti. the today. of in Cikos It's questions for Jim Mike place here thanks

question are first understandably, production your had MXXX how two little I'm currently as ramping on now The building as so delayed. are was you I than partners far the guys more months curious there. a

I the have they update, prioritizing their update how think they existing in just MXXX of been progressing wanted to are get received and time on an we the an ramping? production last lines,

hold new the basically I now trying I to think the time for They and going to the comment demand made going be they're what prioritizing and still adjusting them production that understand environment, to they're as reevaluating were are there. last So would existing opportunities forward.

the get by the themselves At the qualifications those The do bodies they've qualifications those get customer their at customers done end by the either doing time, end got qualifications qualification. at potentially end at done qualification the and or and are customers same that independent to bodies that or are that. delayed the

customer we that see of significant a see incredibly So about other - MXXX IC COVID-XX, our still there demand. we'll are as that ongoing exit are qualified side And in more will excited delays. end such we at we What opportunities our expectation that and hope of ramp is the product.

ago. most features many, And thereby since that it's unique Monza it enable some we checkout. will prevention for has drive years significant As I've said we've before, introduced many self IC prevention the loss also first and loss innovation done

So for we're excited it. future it about we the forward. And pushing continue

closed Great, we And today that's that a world year, strengthen expectation I where curb investing comment there could, that been. more to you're had in then coming then other would and as obviously, was initially as guys R&D product obviously have was to much of or MXXX and the one where expenses I to in just the remove you interested different increasing some the guys question guys think is And trying a were to, it looking guess moderate launch? for. there that position you versus how spending we assume plays that behind leadership off if I into again, looking just increases know, are helpful. some And you to be of I far I those in

a it's Yes, great so question.

done the have reducing not and changed So we is What discretionary and we that or modulating R&D we though, across at capital our are our have board. plans. we've spend, looked investment

has occurring is other now. that now, just variety a travel not nonexistent almost right think So of marketing discretionary There's we're similar right type been expenses reduced.

So while breakeven back the as to increasing, we those because as And in factors. of of thought expect a we to COVID-XX? year but near anticipate of our our the rate result, spend the side we've we overall path EBITDA at going term, charted adjusted the decline it’s the profitability we profile increase beginning mentioned Chris at other to not on

our will of come next ROTH And Capital. question Instructions] Please go from [Operator ahead. Searle Scott

for Good the on color for the call. questions. and detail afternoon, thanks thanks taking And my additional

Focusing on two about idea, to the or talked month just some MXXX call issues is want months us two of by it about to can incremental from a the last you think two little in the I beginning the to delays, that total I months the slipping when days XX due give initial bit, an the China? in clarify you

on whole terms had product bit and still us MXXX, guys endpoint shared. was hinted of continue maybe color you provide relates in little of be to but Are develop number number of at how not the the was designs give some level idea backlog to as guys then that? of roadmap And a of you to in playing the there that engagement track able into IC to more can million, terms you that it a that XX.X

start I'll some of with this is questions. so the Chris, Okay,

So delay is the call. it's the not on last total, incremental two month

the qualifications. a call Although, both on of we've partners, chain out still in customers the in and said and lot supply end there's and our market as uncertainties

the navigate we're So, doing best those MXXX through to Impinj production uncertainties. ramp our

do be shipping volumes ago, I as a minute to we this just quarter. said expect And production

production obviously smaller we the had than those of be anticipated. volumes delays originally because Although will

we products, new new company. of terms developing It's lifeblood In the obviously of continue products. our

anything do we have the IC new announced the to it sense MXXX haven't and at will We recently makes other than offerings, And when time RXXX right Impinj course the and so. reader. Impinj products the announce endpoint we of

other side, emerge a market our and time Cary investing an COVID-XX company this R&D But to the and opportunity competitive more we competitiveness see to in as just stronger a drive future, in position. continue we as drive our said, on

IC anticipated a big endpoint MXXX of the be portion that to backlog? Was

smaller portion It ramp. production No, backlog it IC endpoint because wasn't. in was of the overall a it's

was given of a was of small that the setting, size So it Cary the it. numbers portion

customers understanding path engage with still halt engage continue to look qualification the of ground to issue. everything engagement remains But are along wins and that to an a you - on that to kind still with or additional customers that are is certification able you And front? and to new to able to design push get try

doing much slower. where still example able the do We engage, to are in give pilots. just are I'll we were to things the shutdown, pilots but can't one going extent stores be you to retail retail stores,

delays stores of that, delays pilots IC systems said the things So basically going retail endpoint closed, the some are and when other we - were it on. pilots, delay that

as just So closures store by the impacted of in and effects other industries, other the COVID-XX. we're equally

your those that quarter, numbers to the endpoint sure a you. Is way coming that's probably charges make the XXs, think which which in was if Got about little a good the low a seasonal the about I given the gross impact point margin, pricing XXX implies quarter. actually mid And ICs margin to in bit to that are is said from better in just it? case heard on basis into to that there gross correctly, shape first a you I I pretty translated number of correct want could if standpoint

impact basis correction Yes on it gross XXX margin. on point that well, one was

have we spot else without everywhere the on. about was but So would exactly been that logic XX.X%,

then of have inlay the a have any IC times their little partners what - customers? looks And history? Thanks. idea inventory versus and just with bit Do looks like and any working the like Do inlay sense of customers. you and you if talked better you terms at endpoint lead or their number I of you. weeks process lastly that could, Got in what past

partners that Scott. would This were healthy assess the inventory levels our we inlay emergence is prior of Jeff, I would to and appropriate. say and COVID-XX,

consume expedite facing the would elected quarter, inlay normal the COVID-XX, partners inventories. allow inventories they our of uncertainty shipments in so We in to of course those inventory. to have that anticipate more we’ll for those the some the Of partners year inlay of part, to security for the most through the hold on half demand the return of latter and additional second our hand

and time, partners assess work schedules. the decisions our partners of at that and very given And So, demand, inlay basis our point about information our of assessment future booking closely we then, and for any and marketplace. and to inlay near inventory, insight, into insights daily in inventories with outlook proactively make on shipment a data understanding share and

in plan with to for navigate continue they half to ready they they the as of closely hope latter a year. the help And and return uncertainty. stand see them prepare growth we'll period So, work in as our this of demand that to to through very partners to themselves

This would any like to Diorio closing to session. for remarks. conference over concludes back our I the question-and-answer turn Chris

like and I the call and well. say safe and you hope I all remain joining your to just are thank you today. loved you. for ones Thank

now is presentation. attending for conference Thank concluded. The you today's

disconnect. now may You