Impinj, Inc. (NASDAQ:PI) Q2 2023 Earnings Call Transcript

Chris Diorio: So Scott, I’m going to take the first part of your question and then hand over to Jeff and Cary to talk about the pricing and the negotiations. Retail apparel is still buy our estimate only about 25% penetrated. So there is still huge growth opportunities in that market. Retail general merchandise has enormous growth opportunities and then supply chain and logistics layers on top. We still see retail as being the primary driver of endpoint IC volumes. We also see – we see long-term secular growth in our industry. It’s a long-term opportunity, we have confidence in that long-term opportunity adoption has increased and will increase over time. So, we’re going to manage through this downturn, we’re going to come out stronger to the other side, we’re going to be delivering into those opportunities, we’re going to leverage our strengths and we’re confident in the future.

But as we just noted on the call, given the dynamics that are consequence of the inventory shortfalls let me take that back, that are a consequence of the product shortfalls we had in 2022, we now entered an over inventory situation at our partners as they’re burning down their safety stock, now seeing that we have enough wafers, there is some gyrations that we have to work through. We’re going to work through as much of them as we can in the third quarter. There will be a tail into the fourth, and we’ll report out as soon as we know more information about the fourth on our next call and provide more visibility going forward. But the long-term opportunity in front of us remains strong. To the second part of your question in terms of pricing and when to negotiations happen.

Cary Baker: Yes, you are absolutely correct, Scott, historically, price negotiations have occurred late in the fourth quarter and result in low-to-mid single digit ASP declines in the first quarter. That hasn’t been the case in the last couple years as our cost has increased in order to maintain the integrity of our margin model, we pass those costs onto our customers. I don’t want to project what’s going to happen right now, but our goal I would reiterate is maintaining the integrity of the margin model. So, it’s tough to do that unless we see a cost decline for Impinj.

Chris Diorio: Thank you.

Scott Searle: Okay, thank you.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Chris Diorio, Co-Founder and CEO for any closing remarks.

Chris Diorio: Thank you, MJ. I would like to thank you all for joining the call today. I hope you and your loved ones are and remain safe and well. Thank you.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.