Impinj Inc

NASDAQ:PI

Earnings Call Transcript 2018-Q2

[Operator]

Good day, and welcome to Impinj’s Second Quarter 2018 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Yukio Morikubo, General Counsel. Please go ahead.

[Yukio Morikubo, General Counsel]

Thank you, Operator. Thank you all for joining us to discuss Impinj’s second quarter 2018 results. On today’s call, Chris Diorio, Impinj’s Co-Founder and CEO, will review our market opportunity and performance. Eric Brodersen, Impinj’s President, COO and Principal Financial Officer, will follow with a detailed review of our second quarter 2018 financial results and third quarter 2018 outlook. We will then open the call for questions about our second quarter 2018 results. Chris and Eric are calling-in from abroad. So Impinj’s CFO Consultant, Linda Breard; Impinj’s Executive Vice President of Sales and Marketing, Jeff Dossett; Impinj’s Senior Director of Strategic Planning, Andy Cobb; and I will assist with the Q&A session. Management’s prepared remarks, along with quarterly financial data for the last eight quarters, are available on the Company’s website.

On today’s call, we will make certain statements that are not historical facts, including those regarding our plans, objectives and expected performance. To the extent we make such statements, they are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements represent our outlook only as of the date of this conference call.

While we believe any forward-looking statements we make are reasonable, our actual results could differ materially because any statements based on current expectations are subject to risks and uncertainties. Please see the risk-factors sections in our annual and quarterly reports we file with the SEC for additional information about these risks. We do not undertake, and expressly disclaim, any obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Also, during today’s call, all statement-of-operations results, except for revenue, or where we explicitly state otherwise, are non-GAAP financial measures. Balance sheet metrics and cash flow metrics are on a GAAP basis. Today’s call to discuss our second quarter results was delayed due to an audit committee investigation that we previously disclosed was underway related to a complaint filed by a former employee. The audit committee retained independent counsel to oversee a thorough and careful investigation of the former employee’s complaint, and has completed its independent investigation.

The audit committee concluded there was no credible evidence supporting the former employee’s claims. Accordingly, the audit committee determined that no additional actions were necessary or warranted with respect to the claims or the investigation, including that no adjustments to past financial statements were appropriate or required, and that, at this time, no further investigatory steps need to be taken.

Based on the unusual timing of the call and specifically how late we are in the third quarter, we will limit our responses in today’s Q&A to questions regarding our second quarter results. We have provided third quarter guidance in our press release and will repeat that guidance later in this call. However, we will not comment further on the current quarter and ask that you limit your questions accordingly. We look forward to speaking with you about our results for the current quarter in our regular third quarter earnings call.

I will now turn the call to Chris Diorio, Impinj’s Co-Founder and Chief Executive Officer. Chris?

[Chris Diorio, Co-Founder and Chief Executive Officer]

Thank you, Yukio. Thank you all for joining the call. Second quarter revenue was $28.5 million, above the high end of our guidance. Endpoint IC sales exceeded expectations even as our inlay partners further reduced their inventory levels. Based on that reduction and our bookings trends, we anticipate third quarter endpoint IC sales will build on the second quarter’s momentum.

Our systems business rebounded from first quarter 2018 as reader IC supply improved and project-based deal timing turned more favorable. We saw continued strong reader IC demand in the second quarter and have ramped supply to meet that demand. Despite the sequential improvement in deal timing, on a year-over-year basis project timing and our APAC team reorganization continued to weigh on our systems business growth. Regardless, we remain confident in the quality and size of our opportunities and our pipeline is strong.

Turning to internal inventory, we reduced our overall inventory position by $1.4 million, led by an endpoint IC inventory reduction that exceeded expectations. We continue to forecast further overall inventory reductions in the second half of 2018.

Turning now to the market, I am energized by the many opportunities in front of us. For example, in June the International Air Transport Association mandated RAIN baggage tracking for all 283 IATA member airlines. For years, innovative airline-community members, including Delta Airlines, London Heathrow and Las Vegas’ McCarran Airport have proven real-world ROI for systems-level RAIN deployments.

IATA estimates the full-scale worldwide baggage-tracking rollout will save the industry more than $3 billion over the next seven years. We are well positioned to benefit from that rollout. But what really energizes me is the airline industry bringing the benefits of RAIN-enabled item connectivity directly to people, as evidenced by Delta’s Track-my-Bags feature in the Fly Delta application. I look forward to the day when businesses regularly extoll the benefits of RAIN connectivity to their customers.

On the topic of new products, in the second quarter we released a beta version of Impinj Speedway Connect software that delivers tag direction for our xSpan gateways and tag location or direction for our xArray gateways. The production version of Speedway Connect is available now. Speedway Connect offers a subset of ItemSense’s capabilities for up to 6 gateways per deployment, helping our partners bring RAIN solutions to market by simplifying system configuration and delivering tag direction or location to end-customer applications.

Our partners can upgrade Speedway Connect to ItemSense as the deployment grows in size or scope. Speedway Connect is one of many products our engineering team is hard-at-work developing for our platform roadmap. I want to remind investors that new products typically take time to become a significant percentage of revenue, so we continue to expect that new products will not materially affect 2018 revenue.

Turning briefly to tariffs, the U.S. imposition in late August of a new round of tariffs on products manufactured in China affects one pre-Monza R6 endpoint IC wafer product, and only those wafers that our inlay partners import and assemble in the U.S. We shipped enough additional inventory to the U.S. before the tariffs came in effect to accommodate anticipated customer demand through the end of 2019. For the longer-term, we are evaluating our supply chain and sourcing options.

On the organizational side, we welcomed Dan Gibson from Sylebra Capital Management to our board. We look forward to leveraging Dan’s financial, market, and Asia-region insights. Additionally, we ended the quarter with 241 issued and allowed patents, which we view as a key asset and a core strength of our business. As noted in our August 2 press release, Impinj’s Board of Directors commenced an independent investigation in connection with a complaint filed by a former employee.

Our Audit Committee retained independent counsel to assist in that investigation, and also advised the Securities and Exchange Commission of the investigation. I’m happy to say that that investigation recently concluded with no material findings. Impinj operates by the highest ethical principles, and the investigation’s outcome reaffirms my confidence in our team and in the ethics by which we run our business. The investigation’s conclusion means we can now turn our full attention to growing and scaling our business.

In summary, I am pleased with the Impinj team’s execution in the second quarter. We outperformed our guidance on revenue, EPS, adjusted EBITDA and inventory, and we continue to believe the first half of 2018 was the turning point for our business. I want to close by thanking every Impinj employee for their focus and dedication to executing our vision of identifying, locating, and authenticating every item in our everyday world.

I will now turn the call over to Eric for our detailed financial review and third quarter outlook. Eric?

[Eric Brodersen]

Thank you, Chris. Except for revenue, or unless explicitly stated otherwise, today’s statement of operations is on a non-GAAP basis. All balance sheet and cash flow metrics are on a GAAP basis. A reconciliation between our non-GAAP and GAAP measures, as well as how we define our non-GAAP measures, is included in our earnings release available on our website.

Second quarter 2018 revenue was $28.5 million, compared with $25.1 million in the prior quarter. Our second quarter revenue mix was 70% endpoint ICs and 30% systems. As a reminder, the latter includes reader ICs, readers, gateways, and software. This mix compares with 77% and 23%, respectively, in the prior quarter. Endpoint IC revenue was up 3% and systems was up 51% compared with the prior quarter.

Second quarter gross margin was 50.0%, compared with 49.2% in the prior quarter, with product mix the primary driver of the sequential improvement. Total second quarter operating expense was $18.3 million, compared with $19.5 million in the prior quarter. Research and development expense was $7.1 million; sales and marketing expense was $7.0 million; and general and administrative expense was $4.2 million.

We ended the quarter with 278 employees, compared to 284 at the end of the prior quarter. And, as of June 30, 2018 our first quarter restructuring plan is substantially complete as we executed a sublease for our vacant office space. Adjusted EBITDA was a loss of $4.0 million, compared with a loss of $7.1 million in the prior quarter and better than our guidance of a loss of $7.75 million to $6.25 million for the quarter.

GAAP net loss for the second quarter was $7.7 million. Non-GAAP net loss for the second quarter was $4.1 million, or $0.19 per share, using a weighted-average diluted share count of 21.3 million shares. On the balance sheet, we ended the second quarter with cash, cash equivalents and short-term investments of $52.8 million, compared to $57.9 million in the prior quarter.

Our GAAP net loss was slightly offset by $3.8 million of non-cash expenses, primarily stock-based compensation and depreciation and amortization. Our accounts receivable balance was $20 million, up from $17 million in the prior quarter. Inventory totaled $53.3 million, down $1.4 million from the prior quarter due to higher than forecasted revenue and improved operational execution. This inventory decrease is $3.4 million better than the approximately $2 million increase we had forecasted on our prior earnings call. We continue to expect overall inventory to decline through the second half of 2018.

Turning to the third quarter, we expect revenue to be between $33 and $34 million. We expect adjusted EBITDA to be a net loss of between $3.4 million to $2.4 million. On the bottom-line, we expect a non-GAAP loss of between $3.6 million and $2.6 million, and a non-GAAP loss of between $0.17 and $0.12 per share based on a weighted-average diluted share count of 21.4 million to 21.5 million shares.

These non-GAAP adjusted EBITDA and net income numbers exclude any non-recurring expenses associated with the Audit Committee investigation. And as Yukio noted earlier, given how late we are in the quarter, we will defer questions regarding third quarter trends and guidance to our next quarterly earnings call.

I will now return the call to the operator for questions about our second quarter 2018 results.

[Operator]

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Troy Jensen of Piper Jaffray. Please go ahead.

[Troy Jensen, Piper Jaffray]

Hey gentlemen, first of all, congrats on the nice results.

[Chris Diorio, Co-Founder and Chief Executive Officer]

Thanks, Troy.

[Linda Breard, Chief Financial Officer Consultant]

Thank you, Troy.

[Troy Jensen, Piper Jaffray]

Chris, maybe to start with you. I’d just be curious to know if you could hit on the verticals here, just wondering if this Q3 surge is really retailed for holiday season or if it’s much broader base than just that?

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Troy, this is Jeff, perhaps, I’ll take a first cut at that and I’ll speak specifically to performance in the second quarter. And of course, retail continues to be significant driver of RAIN deployment, especially in apparel, but we’re encouraged by the adoption of RAIN to solve business problems across a wide range of verticals, including healthcare, automotive, air transport, and others. So I would not call out any specific retail, any specific segment as driving our performance in the second quarter, instead I’d speak to the broad adoption across multiple sectors.

[Troy Jensen, Piper Jaffray]

All right, perfect. To follow-up on that, just can you talk about the timing of the airline mandate and with respect to revenues you already started to ramp for you and others in the industry?

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Sure, Troy, it’s a good question. And I’ll refer to comments Chris made in the script. The International Air Transport Association or IATA, as it’s commonly known, has mandated RAIN baggage tracking for all 283 IATA member airlines. Now some of the early adopters and innovators have already deployed RAIN infrastructure and RAIN-based services, such as Delta Airlines, as Chris mentioned, London Heathrow, Las Vega’s McCarran Airport, but this new initiative, this mandate across the entire industry will take a number of years to deploy at scale, but it is a clear definitive mandate to enable baggage tracking on a global basis. So we’re quite encouraged about RAIN adoption globally, and we feel well positioned to earn our fair share of that growing opportunity.

[Troy Jensen, Piper Jaffray]

All right, perfect. Let me ask maybe a financial question for Eric, or whosever in the room that can answer it. On the gross margin side, last year, when you guys were doing, there’s kind of low- to mid-$30 million, you’re getting 54% gross margins and I know it’s probably different now, and we’ve seen some ASP erosion, but can you talk at all about the business model now and then I’d imagine you guys have much more confidence in spending more given that looks like we have turned and certainly do you see the acceleration in the top line. So can you just help us out with what kind of business model can look like or breakeven point or…?

[Linda Breard, Chief Financial Officer Consultant]

Sure, I mean we’ll talk about Q2, Troy, at $28.5 million, 50% margin, we’re up sequentially with the growing margin over the prior quarter Q1, which was $25.1 million. Mix is a big factor in margin for the quarter. We’re not really commenting on go-forward and trends on this call today given the lateness in the quarter.

[Chris Diorio, Co-Founder and Chief Executive Officer]

Troy, as we said a couple of times, we’re going to wait until the full-time CFO comes on, and they will have a hand in building out the longer-term financial model.

[Troy Jensen, Piper Jaffray]

All right, understood. Well, congrats on a nice rebound, and good luck.

[Chris Diorio, Co-Founder and Chief Executive Officer]

Thanks, Troy.

[Operator]

The next question comes from Charlie Anderson of Dougherty & Company. Please go ahead.

[Charlie Anderson, Dougherty & Company]

Yes, good morning. Thanks for taking my questions. I want to start with sort of a two-parter on inventory. I’m just kind of curious on channel inventory, inlay partner inventory. At what point do you feel like a point of equilibrium has reached, did you already reach it, or is it sometime still between now and the end of the year? And then as far as your own inventory, you mentioned working that down, I wonder if there is targets we should be considering in terms of maybe inventory days or something or like that just to sort of understand where you intend to take inventory. And then I’ve got a follow-up.

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Thanks, Charlie. This is Jeff. I’ll take the first part of the question regarding channel endpoint inventory, and then I’ll pass it back to Linda to speak to Impinj inventory. As we said in the August 2nd press release, we believe that our inlay partners’ endpoint IC inventory adjustments are mostly resolved in the first half of 2018.

[Linda Breard, Chief Financial Officer Consultant]

And then Charlie, taking your second question about our inventory trends, we were down $1.4 million this quarter, which was – we actually expected to be up $2 million this quarter. So we were $3.4 million better than what we expected. In the second half of the year, not – we’ve said last quarter that we would expect it to continue to drive inventory down through the year. We have not provided specific guidance on what that number may be at the end of the year other than that we would materially reduce inventory.

[Charlie Anderson, Dougherty & Company]

Okay, great. Then within the systems business, it looks like you’re down a little bit year-over-year in gateway readers, but you seem to be up pretty decently on the reader IC portion of the business, it appears. I wonder if those two are related, maybe a market share loss on the reader gateway side results and higher reader IC business. I’m just trying to understand how we should think about those two in tandem in terms of what happened in the second quarter, and then any commentary on go-forward would be helpful. Thanks.

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Thanks, Charlie, this is Jeff. Just to clarify, large deal timing had an impact on a sequential – quarterly sequential basis, which was favorable. But when you look year-over-year, as comparisons, both deal timing and project timing had an unfavorable impact on the year-over-year comparison. The pipeline is strong and we feel confident about the market opportunities for systems going forward. The other impact that we referred to in previous calls is the restructuring that we undertook in the Asia Pacific region, which is well underway.

Of course, the Japan team, as we mentioned in our last call, is solid and unchanged and productive. We did make changes in leadership and key team members in sales, solution engineering, and other technical resources, and channel support, in China. We remain very excited about the opportunity – the growth opportunities in China. We feel like we have an excellent leadership and team in place in China to take advantage of those opportunities going forward. The team is ramping well, but it did have an impact on a year-over-year comparison basis on the systems business.

[Charlie Anderson, Dougherty & Company]

Could you maybe speak to just the upside in the reader IC business that appeared it was pretty up decently potentially in both sequentially and year-over-year?

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Yes. We started the year 2018 with clear growth in the reader IC demand and that continued in the second quarter. As Chris mentioned in his opening remarks, we’ve been able to substantially improve supply, which enabled us to service that growth in demand and we feel good about the opportunities for the reader IC business going forward as well.

[Charlie Anderson, Dougherty & Company]

Perfect. Thanks so much.

[Linda Breard, Chief Financial Officer Consultant]

Thanks, Charlie.

[Operator]

The next question comes from Chris Hettenbach of Morgan Stanley. Please go ahead.

[Chris Hettenbach, Morgan Stanley]

Great, thank you. Question for Chris just in terms of the first half year being a turning point, can you just talk about kind of your visibility and as the business starts to recover, particularly as inventories been cleaned up, how you’re thinking about kind of near-term growth.

[Linda Breard, Chief Financial Officer Consultant]

Chris, this is Linda. I would say, we – as we noted last quarter on the call, we are taking it a quarter at a time. So right now, we completed a solid quarter, and we’re guiding up for Q3 and that’s about all we can say from a forward-looking statement perspective at this point in the quarter.

[Chris Hettenbach, Morgan Stanley]

Okay. And then any other context around the Monza R6 in terms of that, what it means for you from an inventory perspective or customer shipment?

[Chris Diorio, Co-Founder and Chief Executive Officer]

Craig, are you asking tariff-related question?

[Chris Hettenbach, Morgan Stanley]

Yes.

[Chris Diorio, Co-Founder and Chief Executive Officer]

Okay.

[Linda Breard, Chief Financial Officer Consultant]

So Chris had it in our remarks already, it really relates to 1 pre-Monza R6 SKU that we have, and it’s only 1 ship to U.S.-based customers. So we have increased our inventory in the U.S. to mitigate tariff impacts in the near-term, and we believe the tariff will be immaterial to our financial statements in the near term.

[Chris Hettenbach, Morgan Stanley]

Okay, thank you.

[Linda Breard, Chief Financial Officer Consultant]

Thank you.

[Operator]

The next question comes from Mike Walkley of Canaccord Genuity. Please go ahead.

[Mike Walkley, Canaccord Genuity]

Great, thanks. Just one on the Q3 guidance walk-through. Can you help us just what you are assuming for the Audit Committee cost, the difference between GAAP and non-GAAP and are there any other onetime charges?

[Linda Breard, Chief Financial Officer Consultant]

Yes, Mike, great question. So we have – in our filed documents we have the onetime charge of $1.75 million for estimated investigation cost related to the matter. We have filed that, and we also have reconciliations from our GAAP to non-GAAP and adjusted EBITDA, which includes primarily stock comp and depreciation and then that $1.75 million of investigation cost.

[Mike Walkley, Canaccord Genuity]

Okay. Great, thank you. And then just on the business, any view on just the competitive environment, NXP’s remaining independent, there’s been some price pressure in the industry, could you maybe just discuss on a high level anything on the competitive environment during Q2?

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Yes, this is Jeff. I’ll answer that question and say, we haven’t seen any material change in the market dynamic, including competition in the second quarter.

[Mike Walkley, Canaccord Genuity]

Okay, great. And last question for me and I’ll pass it on. Just how we view the business with first half or clearing the inventory and you have – now we’re returning, maybe just some year-over-year growth in Q3 with your guidance. Just how do you see long-term may be business, just your view without giving guidance, just a view of maybe when the company would return to growth kind of in line with industry unit growth? Thank you.

[Linda Breard, Chief Financial Officer Consultant]

Yes. So, Mike, this is Linda. As we’ve said in our prepared remarks, we’re deferring questions at this point regarding future trends and guidance to our next quarterly earning calls, given how late we are in the quarter. So I appreciate the question, and we’ll be happy to discuss that topic further on our 3Q call.

[Mike Walkley, Canaccord Genuity]

Okay, great. Last question, just on the – with the Audit Committee review done, I’d assume that probably slowed any CFO search. Can you just update us maybe how far along you are in the process in terms of getting a new CFO in place?

[Linda Breard, Chief Financial Officer Consultant]

Sure. So we continue our CFO search. We’ve got several qualified candidates. I’m in that pool of candidates. So probably good to answer this Q&A, but the investigation did slow down a number of things, but I like to, again, thank the Impinj team for solid execution throughout this and focusing on the business and we look forward to 3Q.

[Mike Walkley, Canaccord Genuity]

Great. Thanks for taking my questions and great to see there is nothing from the review. Appreciate it.

[Linda Breard, Chief Financial Officer Consultant]

Thank you.

[Operator]

The next question comes from Mitch Steves of RBC Capital Markets. Please go ahead.

[Mitch Steves, RBC Capital Markets]

Hey guys, thanks for taking my questions. Just starting first, I got two, but first on the systems side of the business. Looks like that was up pretty maturely sequentially, so wanted to see if there was any sort of pulling that happened in the quarter that was actually the number you have expected for June?

[Linda Breard, Chief Financial Officer Consultant]

So Mitch your question was, systems business looks strong in 2Q 2018, was there any unusual pulling in the quarter is that.

[Mitch Steves, RBC Capital Markets]

Sure, sure.

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Mitch, I just the typical factors of deal timing and project timing impacted us favorably in 2Q.

[Mitch Steves, RBC Capital Markets]

Okay. And that was on the systems side specifically, correct?

[Jeff Dossett, Executive Vice President of Sales and Marketing]

That’s correct.

[Mitch Steves, RBC Capital Markets]

Okay. And then secondly, on the endpoints, can you just maybe update us on the ASP trends there, I know before your higher-end product was selling really well, so just wanted to see A, if that’s still the case and ASPs are increasing and secondly, if there is any sort of pricing pressure in the area or in the endpoint sales?

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Mitch, this is Jeff, again. There’s been no material change in the pricing dynamics in the marketplace in 2Q, of course, mix varies throughout the period according to end project demand, but nothing material to report or discuss in 2Q.

[Mitch Steves, RBC Capital Markets]

Got it. Perfect, thank you.

[Linda Breard, Chief Financial Officer Consultant]

Thanks, Mitch.

[Operator]

The next question comes from Jim Ricchiuti of Needham & Company. Please go ahead.

[Jim Ricchiuti, Needham & Company]

Thank you. Question about, I just wanted to follow-up on some of our comments about project timing. If we go back to the 2Q results, I am wondering if you can somehow if you’re are in a position to contrast the level of activity that you’re seeing in the market versus last year or is it are you seeing a level of activity that’s more consistent with what you saw two years ago, in terms of larger deals, the funnel of opportunities. Can you answer that?

[Jeff Dossett, Executive Vice President of Sales and Marketing]

Sure. This is Jeff. I would say that – in summary, I would say that we feel good about growth in market opportunities. We feel good about our – the strength of our pipeline. We feel good about our competitive position and in going after winning those market opportunities. I really want to reinforce that I think it’s very typical as an enterprise platform provider to have the factor of larger deal timing and project timing that is the acceleration or deceleration of projects according to end customer deployment scheduling. Very typical and the net effect is we feel comfortable about our position and the opportunity and the growth opportunities ahead.

[Jim Ricchiuti, Needham & Company]

Okay, thank you. And just more of a question on the level of demand that you’ve seen geographically. Is there anything you can say with respect to U.S. business versus European business?

[Jeff Dossett, Executive Vice President of Sales and Marketing]

What I would say is we see strength all around the globe. If I were to call out any, any region specifically, we did see impart as a result of the progress in our APAC reorganization and in China specifically, our engagement and visibility into the growth opportunities in China, in particular, continues to improve. I think much of that opportunity has existed for some time, but we feel really good about our level of engagement in that particular market. Our growing understanding of the unique growth opportunities that exist in China and we feel well positioned with strong leadership and a strong team in China to take advantage of those opportunities in collaboration with our growing partner ecosystem in China.

[Jim Ricchiuti, Needham & Company]

Okay, thank you. And last question for me, is there anything you can say any color with respect to your Q3 guidance with respect to operating expense, R&D versus sales and marketing, just anything that I don’t know how aggressively the R&D spending potentially is ramping up as it relates to your new product development efforts looking out over the next year? Can you say anything, any further color on guidance with respect to R&D, and sales and marketing?

[Linda Breard, Chief Financial Officer Consultant]

Yes, Jim, this is Linda. So we don’t typically talk – guide to OpEx and we’ll stay consistent with that on our 2Q guide. So we have the trend that’s out there for the last eight quarters that’s probably a good thing to look at as far as our spend.

[Jim Ricchiuti, Needham & Company]

Thank you.

[Linda Breard, Chief Financial Officer Consultant]

Thank you.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

[Linda Breard, Chief Financial Officer Consultant]

Thank you all for joining the call today on such short notice. We would also like to thank the Impinj team for all of your hard work, your dedication and solid execution this quarter. We appreciate the support of all of our stakeholders, and we look forward to discussing our third quarter results in our next earnings call. Thank you.

[Operator]

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