Volume Growth Drives Strong Results for Impinj

By Timothy GreenMarketsFool.com

Impinj (NASDAQ: PI), a provider of RAIN radio frequency identification solutions, reported its fourth-quarter and full-year results on Feb. 16. Revenue expanded by nearly 50% compared with the fourth quarter of 2015, driven by strong endpointintegrated circuit (IC) unit volume growth.Earnings grew as well, but the company expects to post a non-GAAP loss during the first quarter. Here's what investors need to know about Impinj's fourth-quarter results.

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Impinj results: The raw numbers

Metric

Q4 2016

Q4 2015

Year-Over-Year Change

Revenue

$33.7 million

$22.6 million

49.1%

Net income attributable to common shareholders

$0.1 million

($2.0 million)

N/A

Non-GAAP EPS

$0.11

$0.07

57.1%

Data source: Impinj.

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Image source: Impinj.

What happened with Impinj this quarter?

Strong unit growth drove the company's results.

  • Endpoint IC unit volume grew by 70% year over year, totaling 6 billion in 2016.
  • Gross margin increased by 120 basis points year over year to 55.6%.
  • Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $2.4 million, up from $1.5 million during the prior-year period.
  • Impinj raised $107 million in 2016 from equity offerings, including its IPO in July and a secondary offering during the fourth quarter. Total cash and investments were $100.5 million at the end of 2016.

Impinj provided guidance for the first quarter of 2017.

  • Revenue is expected to be in the range of $30.0 million to $31.5 million. This compares with revenue of $22 million during the first quarter of 2016. Revenue is seasonally lower during the first half due to new annual pricing for endpoint ICs.
  • Adjusted EBITDA is expected to be in the range of a loss of $1.0 million to a gain of $0.5 million.
  • Non-GAAP EPS is expected between a loss $0.06 and a gain of $0.01.

What management had to say

Impinj CEO Chris Diorio summed up both the fourth quarter and 2016:

CFO Evan Fein said during the conference call that the company is on its way to hitting its long-term targets:

Looking forward

Impinj's first-quarter guidance represents year-over-year revenue growth of about 42% at the midpoint, a slowdown compared to the fourth quarter. Seasonality is a factor, according to the company, and it expects this effect will diminish as it continues to grow.

Earnings guidance calling for a non-GAAP loss at the midpoint suggests that costs are going to continue to rise faster than revenue. That was true during the fourth quarter, with operating expenses rising 56.7%, but revenue growth was enough to drive earnings higher.

Impinj is still a small company in the early innings of driving adoption of its radio frequency technology. The company expects endpoint IC volume to reach 7.8 billion to 8 billion units in 2017, a 32% increase compared to 2016.

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Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.