Impinj (PI) 28 Oct 202020 Q3 Earnings call transcript

Good day, and welcome to the Impinj Third Quarter 2020 Earnings Conference Call. All participants will be a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Ellen Hayes-Roth, Investor Relations. ahead. go Please

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

call the Officer, with open session. then website. questions. the Jeff and on Revenue will We remarks, Chris trended Q&A Chief Impinj's for are Impinj's available in the is call along Dossett, data, Management's prepared the on Investor also financial of and Relations will join Cary section

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

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

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

look XX turning to company that to at will XX. January Needham and many will now like I on Technology We and these in XXrd Conference to Diorio, Chris Annual you forward Officer. turn Roath results connecting I’d the November to the outlook, the Before and Chief upcoming our events. call Grwoth participate Co-Founder of Virtual with Conference Chris? note the Executive on Impinj’s

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

by driven quarter market Third our by apparel retail of rebounding many endpoint volumes COVID-XX. improved sequentially segments impacted revenue that sales, drove primarily IC remain

inventory expedite quarter normalized demand by endpoint inlay sequentially by end. in the requests and third by So ICs marked tempered partners increased and quarter remained total quarter reduction was in latter demand second opportunities look XXXX. we the to X.X% excited shutdowns below endpoint quarter our third to third as of both our revenue forward requests, remain strength Endpoint IC to part into we XXXX. from half. first quarter Regardless essentially reschedule at due and market XXXX customer IC second quarter about backlog up weakness systems customer recovery Year-to-date by revenue revenue aided quarter second

expanding. in lab. Impinj more more the multiple receiving adoption Auburn We from fourth endpoint Looking testing to growth. our now certifications inlay ICs quarter anticipate than and seasonal MXXX the quarter declines. MXXX partners XXX accelerating growth opportunities shipped fourth and quarter volume in University's million third revenue with approvals typical anticipate and we despite sequential the We We see

sequentially impacting revenue retail, new demand quarter the reducing to calls. reader revenue from sports. prior in user IC inventory sales with we and remained the inventory North increasing shipping expect obscuring fulfilling solution our additional our automotive in COVID-XX us and could demand not declined that chain further logistics We a do inventory in quarter chain end gateways demand reader systems on quarter distributors supply where such logistics continued anticipate consumer-facing sequentially in fulfillment and Compounding user continued improvements reduced to Supply Third shipments fourth they fourth from distributor as to the match quarter. on their hand. use American and discussed travel the out orders cases the bright partners. primarily and We spot reseller to end and with and that from

modest generated deployment also our remain large quarter and shipments logistics opportunity revenue uncertain. again the end second quarter. that our into and supply quarter but North and fourth in We RXXX readers modest said pace revenue anticipate end user from third large, from timing of That as the last we Impinj user is chain we American

suppressing new general remain against open fourth improving puts In balance those and to we RXXX in excited enterprise its demand end With the ahead. beginning supply we from American clarity when as chain Looking its already the the shoots near class and user large of has demand prospects channel to and remain rebound our supply end. capabilities in believe takes quarter transition systems our some phase. green engendering for first systems see inventory recovery. chain end announcement constrained of revenue fixed the reductions to ramp second COVID-XX's have supply logistics business chain altered verticals about from ongoing an logistics operational businesses North will the American we and fundamentally COVID-XX we the North availability RXXX recent continuing opportunities a demand user but and operations term, readers end-user the

and omnichannel labor intensive, the deploy have endpoint foot with quarter retailers to to focused the quick down in for ICs traffic fulfillment fewer the retailers fulfillment imperative are mostly retail than a term they handheld see readers. at first lesser fourth growing latter ICs, extent using do stores. near demand reader because but Consequently, centers we Looking for for on

Our prevention pipeline omnichannel reading and self-checkout, fixed of strong in remain especially remain but retail loss paramount. investments opportunities

also RAIN We two and now forward and paths to see terminals. retailers driving RAIN-based One prevention entirely RAIN exit distinct loss gates, uses RAIN-based is RAIN-enabled go tags self-checkout. self-checkout and

afford self-checkout This RFEAs. The more allows RAIN merged legacy opportunities see In us. and traditional chain forward focuses exit significant for into their transitioning and paths. go readers tagged promises RAIN retailers path and combines logistics also supply The former identifying we gates through RAIN other latter and both EAS on doors. the requires deployments; dock and whereas pallets use to terminals. gateways traction quicker One tags RFEAs with combination

company supply logistics installations scratching operating teams American for slowed retail at a with large second In again former and phase a pacing and user the underlying other we and or the we tags; in Regardless The other stronger peak exiting end and on pallet strength deployment side drives ladder tags, our transitioning market the deployments. rebounded but they gateway than sweet remain. with only our COVID-XX closing, are the installation by total of first The are COVID-XX both experience tagged in both carton markets, we deployment of quarter sales both. been it. from leverage core The to position focuses our when belts. the reader are North have just here partners’ in Like stronger on surface pipeline. chain impacting when in conveyor users a deployments entered revenue large COVID-XX drive reader and Regardless of effects remain cartons volumes spot our on the we our identifying sales its and focused platform a third opportunity. starting our strong operational have

in need. that new center sits more on squarely With the underlying is and by We of deliver also us to sheet, to our want users secular the the of evidenced strong picture focused remain and vision RAIN a digital ever. a strength in that and use on trends COVID-XX transformation the our to front compelling prior products game-changing opportunity transformation opportunity strong end balance big business digital the and our on platform than

focusing us. for retailers logistics and and apparel driving chain leading business leading and will companies on supply opportunities on them We operational continue improvements for

now so breakeven do even fourth charting expenses, a as detailed will we the on call COVID-XX. for will our financial the to close Be We and over EBITDA of Cary? turn eye on be adjusted outlook. I review quarter keep path well. side to safe and Cary other a

and outlook on provide cover Today Thank Good metrics for will current quarter. the you, earnings afternoon the everyone. our Chris. financial a calls we typically discuss I

XXXX million quarter with year-over-year $XX.X million quarter-over-quarter $XX.X in $XX.X and was second million declining third in revenue Third quarter X.X% increasing quarter and compared XX.X% XXXX.

with in environment $XX.X half XX.X% in quarter partners quarter reducing they year-over-year in inventory million third latter XX.X% Third quarter the the drove of first $XX.X in and orders $XX.X quarter with XXXX. third quarter turns million our endpoint declining revenue IC recovering inlay dynamic increasing and a quarter-over-quarter The quarter. in and favorable built the demand XXXX returning the second million XXXX third retail compared was

now While our demand revenue inventory due reflects that our inlay revenue growth at in part channel quarter we our XXXX believe third reduction partners, declined environment. year-over-year to year-to-date our

will XXXX IC from revenue endpoint inventory. lower typically comparison we benefit with quarter endpoint where XXXX expect against quarter fourth revenue while Generally XXXX a will ahead on par inlay XXXX. fourth quarter is third sequentially, reduce in partners Looking IC

declining third XX.X% in as by declined quarter. American revenue but inventory and continued million comparison and $XX.X deployment quarter-over-quarter quarter-over-quarter impacted large pace demand, XXXX. revenue Third revenue XXXX dynamics. generating and was $X.X modest against of Gateway North declined third project with revenue grew $X.X timing in quarter quarter-over-quarter quarter the a declining Reader second quarter channel year-over-year and partner the difficult systems year-over-year million XX.X% year-over-year million compared

contributions The modest partners for lower in readers to risk. built reduce supply logistics deployment and financial revenue chain second progressed to American and due quarter-over-quarter supply quarter with in at declined modest quarter. the Reader inventory second to and retail demand IC handheld comparison year-over-year North where

American We customer the offset expect quarter as moving and revenue fully is logistics by fourth and to North dynamics inventory rebounding systems the remain chain phase. supply demand broad-based by operational partner constrained channel to

General last a XX.X% was revenue by driven gross offset gross driven revenue and charges. margin year On million. lower in expense and of basis quarter. quarter lower was with was XXXX. Research declined a quarter basis XXXX administrative development was and on by On Sales $XX.X margin partially and E&O XX.X% XXX E&O and offset by $X.X gross second margin and million ago charges. quarter third million Total with in points leverage basis compared marketing $XX.X million. points XX expense partially basis third $X.X mix Third million mix operating by million. quarter-over-quarter year-over-year a revenue expense XX.X% quarter $X.X lower compared expense $XX.X declined was

a XXXX. EBITDA of of in XXXX second loss was million quarter and profit $X.X a adjusted Third compared third of loss $X.X quarter $X.X in million with a million quarter

quarter net was GAAP million. $XX.X Third loss

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

purchases short-term quarter ended of million equipment second activities with $XX third totaled from balance was third $X.X quarter cash $XX.X from second to million. quarter Turning $XXX,XXX sheet. quarter increasing $XXX.X million cash $XX compared Free million and XXXX quarter net operating $XX.X the the billion totaled of flow In in investments $X.X in Inventory million XXXX cash, third in the and with property and and used We million. third million was quarter cash negative and $XXX.X XXXX. XXXX. equivalents

initiatives. the associated used will outflow excluded flow an update million provide cash few We net of have operating cash class quarter with cash in on $X.X our our lawsuits. of strategic I and shareholder third a activities the from action settlement now free

endpoint First and This millimeter terms. IC and post project improve spans continues. flow increase driven responsiveness, inventory partner broaden our the operations capital investment processing in vital our diversity our and ROI will multiple years XXX geographic our

XXXX begin will expenditure of like more XXXX return will dividends beginning capital in XXXX ahead a and to XXXX. generate the positive This over Looking versus will time paying investment look shareholders. or

millimeter will be expect source our MXXX we inventory Second, of to adequate cash XXXX in of endpoint we we inventory XXXX That and XXX XXXX. wafers stage cash IC our XXX in as will maintain improve. millimeter days In transition of the XXX a supply family. uses millimeter to

engineering by our ambitious entered roles we to filled the of those with Third, of most XXXX hiring boost goals investment quarter. third end open and

As that in a expect consequence expense XXXX. increase fourth will operating we and an quarter in grow investment we into

to return and expenses monitor to plan EBITDA other adjusted side our continue in COVID-XX. will remain we forward confident of breakeven Looking to the on

Turning to our outlook.

$XX.X year-over-year a We range. the $XX.X and at between million revenue midpoint XX.X% expect quarter of decline the fourth be million to

EBITDA $X.X adjusted a We of loss expect between and to $X.X million million. be

non-GAAP In million $X.XX shares. net minus count weighted our of between to XX of the million the your team, reflecting you On ongoing closing earnings we now share bottom our XX.X share million $X.X loss Impinj question per call I want to expect the open investors to line million and on and XX the non-GAAP will and for answer session. average between your turn $X.X and customers, our diluted thank operator support. I and to suppliers

you. Thank

from with Stanley. We question will first now question-and-answer go session. the Ted [Indiscernible] comes [Operator begin Instructions] ahead. Our Morgan Please

on if just Ted transition line around costs like in update you could Craig is remarks. to sounded begin expected for question the The and It takes an there. on gross your prepared and puts curious Great. wafers on My Hettenbach. dividends your provide Thanks, is paying in millimeter XXX you XXXX. margins this

just there and expectations more little adoption as bit So a your for curves color that ramps? cost and

Ted we've Impinj already wafers. I'm almost to going Chris say is for millimeter that XXX the which million our thanks for, that Hi speaking, joining noted us, is I shipped your this in units for script XXX thanks question. as of MXXX IC thanks

example approvals forward lab and in also from the to we Impinj returns. of into quarter We inlay into and Auburn's heading which fourth prevention mode cases in product and self-checkout We've us line. address allows look have growth seamless loss certifications testing then to protected features key product in that coming and use strength that some millimeter for new key XXX and multiple XXXX and University with so introduced

remainder For some to details. little the question of over the I'll bit of a turn Cary the more of it for

expect lower two we're gross Yes. we the to accretion get improvements cost and going There the point. MXXX Hey with MXXX. Ted on to are significant margin the

XXX noted, millimeter XXX from moved to millimeter you First we've as wafer.

node. dive So result to into our even that we also be more more per once has a of margin size we more volumes process importantly little more reduced moved dye and dye our to aggressive we get Moore's and a a and down this maintaining wafer that We've we've get margins the we've result It's of wafer price as per at a cost. the on and the but law shrunk anticipate as allowed generating while accretion us point gross more gross up production that deeper ramp. improved

noted QX. gross So in in as We'll Chris we units that did QX. than improving do would expect margin start about XXX XXXX. I million to more in

layering a mind IC improvement for we to not of have the of when we typically as think a and keep Now replacement in our increase MXXX that it introduced new that a effect. mix it's

gross the that year, So margin that we'll mix move through as MXXX we'll we improvement our our start seeing results. share our build of and in and

migrated for we diameter. the note nearest And our roughly because many as that we dye twice down I'll wafer more just in competitor Chris, as one wafer add this significantly same law size just have thing is Moore's

bit So curve down also migrated although the little higher wafer costs because opportunities depreciation we is Moore's steeper for the in bit see a a law future then that and process then. we the

a up Thank to XXXX sounds you it. more I for can. levels. is going quick follow-up XXXX's CapEx bit come then one also Got like just It if and to

bit color pace curious you and provide maybe Just little current quarter if more could XXXX a beyond? for the the on

Yes.

$X.X on flow our in we pace of So the really process quarter current improvement CapEx. We million the did effort. hit

be and ‘XX expect would in fiscal QX step to we for then with were up consistent pretty I XXXX. where year another modest So in

Thanks. Got it.

with Michael Canaccord Walkley from comes ahead. question go Please Genuity. next Our

staying and taking and healthy. everybody for on Chris question just... is the my Thanks hope Great. call safe

Thank you Mike same and I hope the you. to

very Thank much. Yes. you

bit first IC more anticipated me the a I endpoint for for Just the question they quarters. than rebounded

just for adoption. adoption inventory to that long-term buying controls that given of I have pandemic areas RAIN to all just highlight to of for other the has retailers that improving RAIN Can the pandemic? improving change guys you customers contactless with and the think you great So kind pipeline for see checkout was just benefits procedures have patterns interactions improve discuss importance the and and because your stressed in

Mike some to to will that look thanks I and to question. Jeff begin comments. answer for your add Chris Cary is and This and

You're digital value. their particular in right. transformations absolutely If of improved the that is visibility move bright in there spot is their increasing get end enable to a intent invest in COVID-XX interest in things them and it to to that visionary through create all business customers of the and of

and by encouraged strengthening in digital customer these a our opportunities the and large chain very see interest we're and in to We pipeline in in generally. end of logistics intent transformations. supply So more invest retail

they contributes it matching a The wherever chain. to better specific to initiatives. at know and to inventory deliver that So shifting retailers supply execute that customer throughout efficient from inventory a that to against color center shift here at size demand and customer inventory to optimize but closest specifically or and these level a as inventory in the particular distribution just efficiency garment in and have trying goal service then item particular very need level, the noted is retailers in given is and their the you demand not as an we by a demand understand that are be be may in item specific to near what most is to location, RAIN store it or to serve where that's omnichannel omnichannel general effectively wherever available forefront at that is significantly

the by entire interest across chain. encouraged the very and gain supply visibility So intent that again, we're to

retailers RAIN-enabled fulfillment modernize prevention add because you their your the determine are and kind deactivated this supply there. you're and on following need Mike to kind chain gates exit going looking is stores electronically In we the and self-checkout at omnichannel see to basically the that point RAIN sale to will keys text of see post-COVID-XX deactivating do And do what we of self-checkout the of tag to then prevention order and Chris. is that I loss to need be lot deactivated.

opportunity and and is forward. interest going retards opportunity see which future that in significant investments as two highlighted long-term see see ways the self-checkout but prevention we script we loss an So we are there the the and for the I highlighted we why talked about those

and kind question about in crossing years building certainly just seems the get huge with to North Chris industries talked is you Thanks what that Great. the more that we've you've American growth and it of supply your drive chasm project logistics the customer talked and investment like as having over starting a key to call chain guess say one out there that RAIN now might “crossing” one off see it two I second other customer going. any adoption? almost you currently that is other the the have you be that for up besides same lining RAIN industries to chasm do area two, ones large then questions the and first as is that large close and are testing

we with the the industry. focused opportunity of and those which but a and larger conveyors logistics bit logistics supply them and and sense in for kind as gateway being moving about items supply bellwaters the about chain a between see significantly little associated being opportunity supply have the logistics difference more pallets so just are there tracking associated talked some on being talked broadly opportunities we've and So chain through and opportunity opportunity about chain supply readers that both different we is first with the primarily second they chain is

loss has that the consumer handler a to and see don't handheld inventory prevention. you historically using loss desire and analogy self-checkout the reading a that's certainly driven as as returns opportunity do environment is now accounting you we been just second retail all using again and to retail chasm do fixed prevention then what just crossing for being and not seamless driving that for driving self-checkout an this Turning and because

this see won't retailers And say an in those stores. industry opportunity. So opportunity loss in to and the yet, come was future. doing to we for self-checkout counting fixed see get forward we've in that's again see large that chasm then the the we opportunities invest some prevention I to crossed so pass to to inventory driving but opportunity beyond handle reading retail driving an the it and that we

on of the question the think COVID be me inventory in term of to guys highlighted. ease last for shorter sounds business any that line the near-term and terms that's pass some testing starting activity the it to things the systems slowing systems I'll still if that just there but it there you timing in other new Is is these all and customer systems lumpiness lot some sales I and on a a contracts access may or deals? adoption and due a just case is on of for challenge of trialing at is like

Yes. Jeff. ahead Go

our begun Yes. modest do re-engage new work our provide within use pipeline to environments onset work are to able increasingly end are have systems initially see that reactivation Jeff. had to a to as We're able we operations We opportunities. of end and of deployments and signs Mike also the the to safe seeing new is in seeing to or return businesses of adapt second that COVID-XX the recovery is customer this increasingly cases undertake of in the quarter partners with paused customer pandemic. testing been near-term

and healthy with So seeing That the when will is around across the which our engagement said translates inventory appropriate distributors we encouraging. distributors into around continue being all exit that that an is anticipate the do systems fourth globe. with quarter, are will inventories systems activity and being activity satisfied systems placed but demand fourth globe. quarter in primarily That in into even uptick already demand we the we

looking and results end match better XXXX for customer anticipate our actual we'd So market demand. to

the All again right. making That's helpful. progress ranting. XXX you're Thanks and on for questions taking and congrats my

Mike. much Thank you very

very Mike. Thanks much

Roth with from Please ahead. Searle Scott Our Capital. next question comes go

just Thanks guys your to of I and and my you Mike's questions. for Good healthy team are echo safe taking hope sentiments. Chris kind afternoon.

Thank you.

equilibrium the quickly like terms Hey just to gross you're customers. back on front ICs. related to in in inventory working your margin up through at follow of It seems

You've it that decreases questions I frame. the MXXX moving certification your the January, through process. that got percentage current what's Is pricing you of on of the Is product the time you're time. February slowly in expectation sounds point still some mix on follow a also when that is? on kick with offset think it's the MXXX new typically the that have very know of like front small coming XXXX? does of time do at follow-up at in customers big you in qualifying and looking broad-based but MXXX hindrance this that you're the the track at of the terms What some exiting to MXXX up kind But and

Chris. Okay. This is

terms follow on Let then Jeff to and and margin me I'll start with gross to overall it question. the question up hand of the qualifications in over the certifications

I adoption to we many are testing [indiscernible] compared moving we when introduced pace Auburn with they the been pandemic pace years -- so expect where pace [indiscernible] the have kept been our of when still University accelerating did would Auburn So we COVID-XX you units quicker. we have and is a and happy if are we million having we're XXX of ago and we obviously said ideal launching clip That happened other compare now have the delayed so customer hadn't themselves good than XXXX. approvals outside new heading a as approvals a of COVID-XX not adoption expect approval just or and both product those user said once although say certifications adoption and by less end they let's not accelerating the except at University of end do into into it's

be I and it negative to I moving I momentum. just a whatsoever. so positive see would are approvals qualifications as hindrance a The and factor a Yes not now think or that say you

negotiations there at the our ahead to process the I no fourth are in in this we the negotiations think that pricing very as annual is year are updates quarter. for in really years share engaged time. terms We're of or material typical early and in pricing

of And from the front there's get of of is line a we large the you that like the customer relates an operational in system opportunity? are kind the the business can given back close now from of the things benefits you're Got of Could quickly one a we close this environment of year like that could that's us some sure touch do a and there of just give about you big no current couple North terms of as look but difficult second on and omnichannel board. completing on just and what you sounds its environment lot I to is more but equilibrium it systems it American size Thanks. in dynamics the I'm enter standpoint, environment? coming coupled systems as magnitude logistics, across to kind XXXX, goal but the does if going business endpoint on been interest and customers? how a it you with I business XXXX that deployment idea this and XXXX XXXX like in think the or it standpoint new going moving the by does impacted more progress it look guess as can to with systems winning ICs

for try and couple There's cover will maybe of a I to and whatever or questions two I'm going or Cary one in out forget me. teach there

our do look and chain we're large that impacted difficulty chain going customer that American the something. them shipment and touch supply ability. have don't second it's the to we we break to the logistics facilities getting want and of the is and North COVID-XX. across running said opportunity going of pace a volumes reluctance of large getting The the supporting to board in and actually they our they're on uncertainty the that uncertain to forward then true work just by all full is opportunity to partners exacerbated growing tilt So customers and rollouts statement that kind timing large COVID-XX. The are, remain with it's to are supply it's by in we to things a That when and said quite in

inherent uncertainty large the exacerbated So we with would COVID-XX. have is customer any by deploying

and do deal transform growing like to yet to closing their at customers the see see trying of those the of gauge end end pipeline little basically terms ago a In we their COVID-XX digital said investments. these same We timing determine end are a to deals digitally need operations growing of a customers of big Jeff the opportunities. time pacing and for while

So like pace end consequent say of the pipeline now I case and that on of indeed the COVID-XX just in said and the is see growing of have into work which those that's going we any the ball user I'll the is customer the some running what of better don't anybody these and feel a pace else and terms large crystal opportunities. than end of I go visibility that think to depend ramp. script deployments pace of deployments to going in we timing we what are is going end in to now what

Great. much Thanks guys. so

The okay only thing thanks add, I would Scott.

Scott. Thanks

Thanks.

Company. comes & Please from Needham question Our ahead. Jim next with go Ricchiuti

about good levels. in XXXX comment is revenues roughly with I think talking afternoon. the script Hi The IC endpoint consistent

and So alluded that. I don't pretty increase sequential see QX which we normally he guess a think healthy that that I to in implies

season. better uncertainty a trying in your improvement the given around as level dynamic just holiday maybe in seeing to that sense get to especially QX confidence I'm that So the

you I Thank is the question. Jim. This Yes. appreciate Cary.

our calls pace volume volume. bit at earnings the quarter were time That on were little able quarter and felt quarter channel a we that the with bookings bookings QX. that and return that XX% accelerated endpoint we and even burn reported disciplined return were into normal that we quarter-to-date kind moving as up in the we of on continued the a that our So began inventory we last that throughout of decided business QX turned to versus QX quarter-to-date the our we IC we turns way through quarter and to the

into moving our our really translate because revenue QX from in that greater have compare to a normal So would QX. revenue doesn't the perspective than demand was seasonal we

in following that's endpoint we're exactly to will normal only say X% So year XXXX, we year-to-date not be at when we that we'll XXXX. of that we with QX necessarily volume able we're we perspective along an and the think IC but parity about dynamic versus up the from because anticipate at don't seasonality on complete actual why

Chris. how going how and months. holiday see giving I'm COVID-XX environment the the impact there of just season I'm the to we're to are some whether next is business two we're thereof visibility over this being to thoughtful the have it's predictions or so we as terms Jim add you our but large that not just relative how lack the in progresses just holiday see uncertainties season we're or materializes to the as you and and and uncertainties overall to going wait economy And

volume to we've that that for way our quarter the we're to the saw we not maintain turn And is QX. outlook the we're Yes. going translated assuming in fourth Jim

bit uncertainty become we've a our that more a for QX. on little estimate little for conservative wrestled So terms down or

at expenses sequential it how with terms levels might about marketing that your and a is basis? similar any see sales pattern R&D marketing of in QX sales just And on it. and R&D help on for and think should should we, we we and how looking Got if a

Yes.

substantially had expense QX. in mentioned I up QX. for R&D in hiring we ambitious plan expect step we that a pretty a that completed on plan the year. hiring So We

in fully is not those number. So hires QX the expense associated our with reflected

I are naturally it as than new looking than a fourth in QX ready So on folks we're quarter that's up to then full expected the get and of team also some is testing those coming quarter products we've greater QX got door. grow out into couple getting would non-wage spend with anticipate a to those up the and

you. Thank Okay.

question Charlie Security. go Our with Colliers next Anderson ahead. Please comes from

logistics. taking my Good with I afternoon. Yes. chain questions. Thanks to start wanted for supply

well. You mentioned largest a pipeline as customer there a think also pipeline good and your robust I described

lot there had and and who's now. you've of is new customer a the starting there activity deploy also clearly So large one

stepping way just you logos passing new as So like every new we're on I'm compare going the to and a feel it so I be decade wonder to where feel back this year? does appointments adding we're ago curious you Do with like Chris or apparel just or there you? over a apparel crossed to on there us of you there? the up. long also for fully follow I the size over of if remind And term sort is could to lot Maybe you've still out opportunity of evangelism relative the got

Yes. Okay.

Okay. question. Thanks Charlie. I'll with do a my best

we sold roughly number part especially we number that the year billion endpoint least terms worldwide. it we're with North where Asia. the in the in apparel ICs per of units with The with total opportunity not worldwide. total see Europe, and parts of is the size number probably that's items of holding that start XX% of items me we connectable today that's total XX think still mostly a of stand and Let latter first. sold of America at are apparel as That's It's the number apparel

been And see a that but opportunity so still ramp has driven. handheld good to we date

just and a mentioned deploy out use those prevention terms crossed that the of a of self-checkout very days it's But in kind in we said early chasm cases future. as I loss loss we itself and as prevention yet not check opportunity opportunities. in So the the have prior see to that answer it

opportunity retail modern see these technologies. future It's opportunity customers invest and new opportunity. to and the opportunities tagging So we and retailers transform growth expansion of basically stores will COVID-XX become the continued stores that and their see the and consumers an end it's retail even they than guardedly and needs. visionary the optimistic address needs We drive more themselves getting transitioning to the bigger who space basically It's an were in It's for that. beyond tagging. quickly

of good were sort driven number penetrated where to the accounting XX% transitioning that's So then inventory retail. opportunity went of a more probably big history and use still even for in Handful we're cases. ahead still growing, we years of

supply use to the just talk case. logistics now over Moving chain about and

been many is a the large in it Macy's been But have sized the opportunities duck it Decathlon. of small about have In but another chain example logistics opportunity lot be been firmly the through and it's North customers that that they industry will historically automotive parts forward. things. of these cases early and retail and logistics supply it that case chain and case end and tracking end that are was use chain items tracking items In have and there [indiscernible] So for the not other days and the still optimistic past. chasm extent logistics do pallets will users but doors. to pulled and supply American Marx opportunities see just of an large we the we has talked Spencer pull and postal so supply that of across the We've

about chain the and are reasons very let's do is things or we our So who have bellwether the and more. space and a will the enter optimism hope same important just that large other two they one do least companies things of in end believe doing for we logistics say that be into and future users at to supply for the

then And -- Great. Okay.

your Did that question? answer

so. absolutely No Yes.

that follow-up my mentioned was I you it in for complete could So hires the here. engineering mostly you curious

capabilities headroom Thanks. there's standpoint. some improve team, hiring if you sort of to the you've maybe to made some I'm of where you've an of I what So the just going to the strategy that wonder is articulate could what are curious some the the that's there? engineering step areas brought cause from up. behind

in prevention in supply areas self-checkout. is development verticals with that chain development logistics focus been retail would terms So terms our logistics. hiring core us of Two our overall and then Silicon cases and citing we've partners two use Silicon and in solutions those two loss be and supply areas focus those for chain core of that retail engineering in and for us

areas because the opportunities why hope and both invest exit that's to through believe core we our we focus we ramp I other future those and side which we've been hiring sense it soon COVID-XX. and makes see the is see for as of the because ideally now hiring for So we opportunities of

so Great. much. you Thank

Thank you.

Kumar next Sandler, The ahead comes yes. question from please go with Piper Harsh

Hi I guys. had couple questions. Yes. a of

your systems. about on So my question was commentary

around small down of quarter fourth maybe that the to the burn you're or would would and an it side mean guess actually level able be as that mentioned IC You on question and saw you were September for to talking a you're be does purposes the systems quarter. same to the constrained in you inventory but grow. endpoint other then step related we the sort to I that clarity in

in left that shipping some where excess industry the Where in inventory your there's implied the out system in think the systems your in law is demand? will are do that you that's amount real to of. of the point start that you distributors mirroring commentary inventory think the I still of the

think fourth would will a the that demand is and around This with at I first systems quarter Jeff. that current exit the point answer adjusted the we key appropriate globe take for distributors I will our step the environment. inventories and in is we say that healthy

that modest healthy and XXXX is progress means anticipate the demand appropriate re-emerging satisfy to the recovery making XQ it So continuing and progress. We with in and then inventories we systems we're come and that in work did into service good down to the inventories.

just this is little Yes. add to Cary. can for Jeff. a I Thanks If Harsh, the Hi question. bit

demand articulated has So with or the channel he with being inventory. matched met

for factor that other goes operational deployment. one systems when consider American to in looking what that they and in phase to QX at move first our The revenue chain you're the that QX more logistics North is QX delivered be its revenue away supply as might of fully revenue customer the

So factor consider model. in that's important new to an an It's additional headwind.

to them suppose semiconductor I second And there's at for are actually side pretty space. when for cars on and clarity. my the significantly time The some are environment. built. question guys a auto improving of stocks lot semiconductor get auto least you in of so leak seeing we of Thank that the a cover a sort the Understood.

along So an to auto is guys sector you which be for the potentially the point making down is appears retail. with line the important here recovering sector I'm

normal kind get you you back when is for would estimate So and to you and best to environment? answer question talk this a to tough a when your you customers of guesstimate ask to

third say cases again would new have that and now opening the in and in done with quarter end use customers additional -- our underway the I automotive. and active are have reactivated been are automotive their partners deployments is said who in What sector Jeff. in some existing is is have I solution as some This during testing re-engaged being

I distributor about will that into point that demand of It's fulfilled in modest hard re-engagement. translating is our our our translate into it inventory, specifically with experiencing when a recovery to still a So automotive. more to partners but encouraging think your see outside automotive call re-engagement is specific

Thank Understood. you.

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

I'd much as and it two like joining you and quarters for today the all I today. well. I for your us all thank said in again safe I very remain ones you loved are and you past call the hope to say Thank joining will and

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

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