What happened
Shares of Impinj (PI 3.56%), a maker of radio-frequency identification devices (RFID) and software to track them, tumbled 6.1% through 11:20 a.m. ET this morning despite edging out analyst expectations in its Q2 2023 earnings report last night.
Heading into the report, Wall Street had forecast that Impinj would earn $0.30 per share (adjusted for one-time items) on sales of $85 million. Impinj "beat" on both top and bottom lines, however. Adjusted earnings for the quarter came in at $0.33 per share, while sales were $86 million -- a "new record" for quarterly sales.
NASDAQ: PI
Key Data Points
So what
That's the good news. The bad news is that while Impinj succeeded in growing its sales 44%, it failed to achieve true profitability as calculated according to generally accepted accounting principles (GAAP). Although "adjusted" earnings exceeded expectations and were termed profitable, the company's actual GAAP results showed a loss of $0.30 per share -- though this was better than last year's Q2 loss of $0.45 per share.
Now what
The worst news, however -- and presumably the biggest reason Impinj stock is tumbling today -- concerned guidance.
Citing "weak endpoint IC revenue from retail apparel inventory destocking," management forecast that Q3 sales will range from only $63 million to $66 million, a big sequential drop-off from Q2 and about a 5.6% decline from Q3 last year. Given that Wall Street analysts have been forecasting a 29% increase in sales in Q3, it's understandable that investors might be spooked by Impinj's forecast today.
Additionally, while Impinj reported a non-GAAP profit but a GAAP loss in Q2, management is forecasting both GAAP and non-GAAP losses in Q3 -- about $0.70 per share GAAP, and $0.09 per share non-GAAP. Wall Street was hoping for at least a non-GAAP profit for the quarter -- $0.38 per share. The fact that Impinj doesn't think it will be able to report a profit under that more lenient standard feels especially disheartening.
Long story short, what we're looking at here with Impinj is a company with no history of profits, no history of free cash flow, few prospects for either in the near future, and revenues that had been rising and helping to sustain the stock...now turning south instead.
Add it all up, and today's not looking like a great day to own Impinj stock.
