Impinj (PI)

RFID manufacturer Impinj (NASDAQ:PI) reported Q3 CY2025 results beating Wall Street’s revenue expectations, but sales were flat year on year at $96.06 million. The company expects next quarter’s revenue to be around $91.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.58 per share was 16.8% above analysts’ consensus estimates.

Company Overview

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.

Competitors offering endpoint chips include NXP B.V., EM Microelectronic, and Alien Technology.

A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Impinj grew its sales at an exceptional 20.2% compounded annual growth rate. Its growth beat the average semiconductor company and shows its offerings resonate with customers. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.

We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Impinj’s annualized revenue growth of 7.1% over the last two years is below its five-year trend, but we still think the results suggest healthy demand.

This quarter, Impinj’s $96.06 million of revenue was flat year on year but beat Wall Street’s estimates by 3.6%. Adding to the positive news, Impinj’s flat sales marked an inflection from its revenue decline last quarter, news that will likely give some shareholders hope. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 15.8% over the next 12 months, an improvement versus the last two years. This projection is commendable and implies its newer products and services will catalyze better top-line performance.

Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity 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.

This quarter, Impinj’s DIO came in at 177, which is 12 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.

In the semiconductor industry, a company’s gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

Impinj’s unit economics are reasonably high for a semiconductor business, pointing to a lack of meaningful pricing pressure and its products’ solid competitive positioning. As you can see below, it averaged an impressive 51.7% gross margin over the last two years. That means for every $100 in revenue, roughly $51.68 was left to spend on selling, marketing, R&D, and general administrative overhead.

This quarter, Impinj’s gross profit margin was 50.3%, in line with the same quarter last year. Zooming out, Impinj’s full-year margin has been trending up over the past 12 months, increasing by 1.1 percentage points. If this move continues, it could suggest better unit economics due to some combination of stable to improving pricing power and input costs (such as raw materials).

Although Impinj broke even this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 2.8% over the last two years. Unprofitable semiconductor companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

On the plus side, Impinj’s operating margin rose by 24.8 percentage points over the last five years, as its sales growth gave it operating leverage. Still, it will take much more for the company to reach long-term profitability.

This quarter, Impinj’s breakeven margin was up 1.5 percentage points year on year. The increase was encouraging, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Impinj’s full-year EPS flipped from negative to positive over the last five years. This is a good sign and shows it’s at an inflection point.

In Q3, Impinj reported adjusted EPS of $0.58, up from $0.56 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Impinj’s full-year EPS of $2.07 to grow 20.7%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Impinj has shown impressive cash profitability, and if maintainable, will be in a position to ride out cyclical downturns more easily while continuing to invest in new and existing products. The company’s free cash flow margin averaged 20.2% over the last two years, better than the broader semiconductor sector.

Taking a step back, we can see that Impinj’s margin expanded by 15.8 percentage points over the last five years. This is encouraging because it gives the company more optionality.

Impinj’s free cash flow clocked in at $17.95 million in Q3, equivalent to a 18.7% margin. This result was good as its margin was 13.8 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Impinj’s five-year average ROIC was negative 22.2%, meaning management lost money while trying to expand the business. Its returns were among the worst in the semiconductor sector.

Impinj reported $190.1 million of cash and $287.5 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $68.17 million of EBITDA over the last 12 months, we view Impinj’s 1.4× net-debt-to-EBITDA ratio as safe. We also see its $1.43 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were impressed by Impinj’s strong improvement in inventory levels. We were also glad its EPS outperformed Wall Street’s estimates. Looking ahead, revenue guidance for next quarter was just in line but EBITDA guidance beat. Zooming out, we think this was a good print with some key areas of upside. Investors were likely hoping for more, and shares traded down 9% to $220.95 immediately following the results.

Updated: December 4, 2025 at 9:21 PM EST

Before investing in or passing on Impinj, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

There are some positives when it comes to Impinj’s fundamentals. First off, its revenue growth was exceptional over the last five years. And while its relatively low ROIC suggests management has struggled to find compelling investment opportunities, its rising cash profitability gives it more optionality. On top of that, its expanding operating margin shows the business has become more efficient.

Impinj’s P/E ratio based on the next 12 months is 62.4x. At this valuation, there’s a lot of good news priced in. This is a good one to add to your watchlist - there are better opportunities elsewhere at the moment.

Wall Street analysts have a consensus one-year price target of $241.11 on the company (compared to the current share price of $157.55).