Christopher Rolland: Thanks, Chris.
Chris Diorio: Thank you.
Operator: Thank you. The next question comes from Scott Searle with ROTH MKM. Please go ahead.
Scott Searle: Hey, good afternoon. Thanks for taking the questions. Nice to see the continued recovery in the core business and the outlook of those key customers. Maybe quickly on that front. On the retail apparel front, it sounds like that drove the upside for endpoint ICs in the first quarter and driving the outlook of the upside into the second quarter as well. Chris, is the retail apparel market now normalized as we get into the second quarter? Are we still recovering and working through some inline inventory in there, or these new design wins and ramp up in unit volumes, et cetera?
Chris Diorio: I’m going to start by saying thank you, and then I’m going to hand off to Jeff because I think Jeff can provide some commentary there. Jeff?
Jeff Dossett: Well, we are seeing some restocking taking place in both apparel, footwear and general merchandise to better match to an uptick in consumer demand. Whether or not that trend continues, it’s too early to call and probably not for us to call that. But overall, the partners who engage with those retailers signal some strength into the second quarter. And optimism, cautious optimism for the second half, but are awaiting more confirmation of the sustainability of that uptick in demand.
Chris Diorio: And I’m going to layer a little bit more on here. So we see multiple drivers. As we look out, we see embedded tagging, which replaces hard tags with soft labels, and our bags get soft labels down. So we see some tailwinds from that embedded tagging, obviously general merchandise, where we’re ready to talk about that going forward. And so we see tailwinds with general merchandise, as Jeff just highlighted, the retail revise and then our reference around solutions, our driving solutions in the market, and our strength in those solutions accounts, all four of those factors, we believe are tailwinds [indiscernible].
Scott Searle: Got you. And if I could follow-up on the DPP front, Chris, it’s a huge opportunity there. I wonder if you could walk us through what’s the process and some of the milestones that will look like over the next couple of years. You’re talking a lot about retail apparel on the traceability to engage consumers on that front. But I thought we were going to see tires and batteries kind of starting first some of those recyclable items, more so than we think about textiles. Has that changed in terms of the implementation of different product categories? Or is it just because the retail apparel is just such a large unit opportunity and drives incremental feature sets from Impinj? Thanks.
Chris Diorio: Yes. So, from my understanding of where DPP is today and not only the regulations kind of being ironed out with most patents being ironed out. Excuse me, batteries are going first, from my understanding, but also from my understanding that [indiscernible] DPP carrier for those batteries is QR codes. Textiles is the next one to come along with a much bigger category and the data carrier is not decided yet, so it could be multiple things. The agreements could be RAIN RFID, it could be QR codes, it could be NFC, RFID it could be a bunch of different things and it’s not site effectors committees working on figuring out what the data carriers. RAIN RFID is a big benefit that visibility – item visibility is great. It’s already on the apparel items that’s great.
It’s being embedded into the items, that’s great but we’re not in mobile phones. So that’s why I highlighted the opportunity in the mobile phones, and that there are now large enterprises in Europe that are pushing and letting their needs be known, that we need RAIN readers in mobile phones. And so whether that push will be enough is to be determined. But it’s the first time we’ve really had a real push from the leaders in the market and the enterprises in the market saying we need this capability. And so I think that your first – your first indicator will be over the next, call it one to two years whether RAIN is classified as a data carrier for DPP and we hope to make it some great.
Scott Searle: Okay. Thank you.
Chris Diorio: Thank you.
Operator: Thank you. The next question is a follow-up with Harsh Kumar from Piper Sandler. Please go ahead.
Harsh Kumar: Yes. Hey, guys. So a lot of us are going to probably be struggling with this as we model. So I thought I would just ask this openly. What should be the expected OpEx level going forward? In other words, I know you were spending $4 million, $4.5 million in legal. Is that a fair number for us to take out? And then I’ll just ask the second one that’s on my mind, too. Do you want us to still model the next year’s payment in some manner as it’ll come to in the second quarter of 2025? Or do you think it’s just appropriate to see what that number is and that it could change dramatically? Just love some thoughts on this?
Cary Baker: Hey, Harsh. This is Cary. So from an OpEx perspective, our Q2 OpEx or what we’ve embedded in our Q2 guide is pretty clean. There is immaterial litigation spend and the businesses normalizing following the reorganization that occurred in Q1. As I look to the second half, I would assume modest growth. We’re going to continue investing in this business and in front of this opportunity, but you’ve got a pretty good picture of our OpEx right now.
Harsh Kumar: Okay. And then what about the expected payment next year?
Cary Baker: Good question. That one is, it’s early, there is an ability for NXP to design out, but that is not something that’s easily done. So I don’t expect a huge increase in that payment, but I think it is fair to model that at this point and we’ll keep you up-to-date on where that might grow.
Harsh Kumar: Of course, thank you.
Chris Diorio: Thank you.
Operator: Thank you. The next question is a follow-up from Jim Ricchiuti with Needham & Company. Please go ahead.
