Impinj (NASDAQ:PI) Reports Q4 In Line With Expectations, Provides Optimistic Guidance For Next Quarter

Anthony Lee /
2023/02/08 4:19 pm EST
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RFID manufacturer Impinj (NASDAQ:PI) reported results in line with analyst expectations in Q4 FY2022 quarter, with revenue up 45.7% year on year to $76.6 million. Guidance for next quarter's revenue was $83.5 million at the midpoint, which is 8.64% above the analyst consensus. Impinj made a GAAP loss of $118 thousand, improving on its loss of $20 million, in the same quarter last year.

Is now the time to buy Impinj? Access our full analysis of the earnings results here, it's free.

Impinj (PI) Q4 FY2022 Highlights:

  • Revenue: $76.6 million vs analyst estimates of $76.3 million (small beat)
  • EPS (non-GAAP): $0.41 vs analyst estimates of $0.39 (6.3% beat)
  • Revenue guidance for Q1 2023 is $83.5 million at the midpoint, above analyst estimates of $76.9 million
  • Free cash flow was negative $12.3 million, down from positive free cash flow of $12.2 million in previous quarter
  • Inventory Days Outstanding: 116, up from 94 previous quarter
  • Gross Margin (GAAP): 52.4%, down from 55.5% same quarter last year

“2022 was a very strong year for Impinj,” said Chris Diorio, Impinj co-founder and CEO.

Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ:PI) is a maker of radio-frequency identification (RFID) hardware and software.

Demand for analog chips is generally linked to the overall level of economic growth, as analog chips serve as the building blocks of most electronic goods and equipment. Unlike digital chip designers, analog chip makers tend to produce the majority of their own chips, as analog chip production does not require expensive leading edge nodes. Less dependent on major secular growth drivers, analog product cycles are much longer, often 5-7 years.

Sales Growth

Impinj's revenue growth over the last three years has been strong, averaging 24.2% annually. And as you can see below, last year has been especially strong, with quarterly revenue growing from $52.6 million to $76.6 million. Semiconductors are a cyclical industry and long-term investors should be prepared for periods of high growth, followed by periods of revenue contractions (which can sometimes offer opportune times to buy).

Impinj Total Revenue

This was a great quarter for Impinj with 45.7% revenue growth, beating analyst estimates by 0.41%. This marks 7 straight quarters of revenue growth, which means the current upcycle has had a good run, as a typical upcycle tends to be 8-10 quarters.

However, Impinj believes the growth is set to even accelerate, and is guiding for revenue to grow 57.1% YoY next quarter, and Wall St analysts are estimating growth 28.4% over the next twelve months.

In volatile times like these we look for robust businesses with strong pricing power. Unknown to most investors, this company is one of the highest-quality software companies in the world, and their software products have been the default standard in critical industries for decades. The result is an impressive business that is up an incredible 18,152% since the IPO. You can find it on our platform for free.

Product Demand & Outstanding Inventory

Days Inventory Outstanding (DIO) are an important metric for chipmakers, as it reflects the capital intensity of the business and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise the company may have to downsize production.

Impinj Inventory Days Outstanding

This quarter, Impinj’s inventory days came in at 116, 56 days below the five year average, showing that despite the recent increase there is no indication of an excessive inventory buildup at the moment.

Key Takeaways from Impinj's Q4 Results

Since it has still been burning cash over the last twelve months it is worth keeping an eye on Impinj’s balance sheet, but we note that with a market capitalization of $3.34 billion and more than $173.7 million in cash, the company has the capacity to continue to prioritise growth over profitability.

We were very impressed by the strong improvements in Impinj’s operating margin this quarter. And we were also glad that the revenue guidance for the next quarter exceeded analysts' expectations. On the other hand, it was less good to see the inventory levels increase and gross margin deteriorated. Overall, this quarter's results still seemed pretty positive and shareholders can feel optimistic. The company is up 3.68% on the results and currently trades at $129.75 per share.

Should you invest in Impinj right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

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The author has no position in any of the stocks mentioned.