Lot to unpack from that call. Basically a light guide. I think the business model more clearly evolves over the next year.
1. They guided a bit light and the stock will be punished as it is priced for immediate growth. Some Reader ICs were pulled into Q3, some will push to 2026, nothing cancelled or changed other than timing making Q4 a little light). Retail seems cautious in terms of endpoint ICs.
2. The macro is impacting Impinj
3. Size of the freshness opportunity is still muddy at best, and muddy for them - depends on the SKUs involved, what are they actually tagging? Numbers were thrown around but I need to listen again. This is a large, exciting opportunity. Tagging produce is a tagging issue not an RFID issue. Chris said the issue is getting the tags on and to stay on is the challenge. Packaging will largely be the solution and many stores are already moving that way anyway - Trader Joes, Costco are the best examples, but even Kroger and Walmart or Safeway you see more items packaged in the produce section.
4. They are piloting "consumer experience" with two grocers (I think that is what I heard, 2 not just one) - this is tagging everything in the store. It has its own drivers beyond things that parish.
5. Impinj gave away Gen2X to reader partners to drive adoption of endpoint ICs, reader ICs, and systems (software) volumes. Gen2X is basically apps that solve problems enterprises have and work with the Impinj platform.
6. Where Chris sees the future business continues to trickle out - this has been coming to light over the last few calls and fireside chats - is that software (apps), machine learning, and cloud computing is a major opportunity with recurring revenue. Impinj a solutions company more so than a hardware company; Impinj RAIN hardware systems supply the data streams and if they can also deliver the software and cloud solutions that whole package may be where the real money is. Notice they discussed hiring more software engineers in the prepared remarks, and Chris already discussed that company is about 50% software engineers. He clearly sees Impinj as a platform being something special.
He compared RAIN to the mobile phone network infrastructure of the early 2000's as having arrive, people using it for voice. Then he said Apple and the iPhone (clearly an intentional choice) was released (there were smart phones but that was the catalyst) that drove use cases and the software applications to deliver on those use cases. He sees "the radio" as ready for prime time but that needs software (an ecosystem of apps and hardware) to deliver on the use cases. Gen2X is key part of that story and a gateway to their being a full solutions provider.
They will innovate in hardware but he also said there are lots of potential data pieces and capabilities that can be added to the endpoint IC and readers to deliver even more use cases. He kept it vague, not wanting to lift the curtain on products in development hardware and software.
There was also an interesting response to Harsh asking about E-commerce, Chris dodged a bit but said he chose the words specifically and they see opportunities in direct to consumer and also in 3PL or third party logistics. I think the latter, maybe both are connected with UPS (total speculation). If you listen to the recent UPS calls this makes some sense. Domestically, UPS is fully RFID loaded in terms of package labeling but not all use cases. Chris gushed about them in the call. They added a logistics person to the board and discussed him too in the prepared remarks.
So stay tuned was my take away, this could get real interesting well beyond the endpoint and reader IC numbers. |
