Welcome to the Impinj first quarter 2022 earnings conference call and webcast. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Andy Cobb, Vice President, Strategic Finance. Please go ahead. Thank you, operator. Good afternoon, and thank you all for joining us to discuss Impinj's first quarter 2022 results. On today's call, Chris Diorio, Impinj's Co-Founder and CEO, will provide a brief overview of our market opportunity and performance. Cary Baker, Impinj's CFO, will follow with a detailed review of our first quarter 2022 financial results and second quarter 2022 outlook. We will then open the call for questions. Jeff Dossett, Impinj's CRO, will join us in the Q&A session. You can find management's prepared remarks plus trended financial data on the Investor Relations section of the company's website. We will make statements in this call about future expectations and financial performance based on our outlook as of today. Any such statements are forward-looking under the Private Securities Litigation Reform Act of 1995. While we believe we have a reasonable basis for making these forward-looking statements, our actual results could differ materially, because any statements we make today are subject to risks and uncertainties. We describe these risks and uncertainties in the annual and quarterly reports we file with the SEC. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements except as required by applicable law. On today's call, all financial metrics, except for revenue or where we explicitly state otherwise, are non-GAAP. Balance sheet and cash flow metrics are on a GAAP basis. Please refer to our earnings release for a reconciliation of non-GAAP financial metrics to the most comparable GAAP metrics. Before turning to our results and outlook, note that we will participate in the Oppenheimer 7th Annual Emerging Growth Conference on May 10th and Baird's Global Consumer, Technology & Services Conference in New York on June 7th. We look forward to connecting with many of you at those events. I will now turn the call over to Chris. Thank you, Andy, and thank you all for joining the call. Our first quarter results were strong. Revenue and profitability exceeded our guidance, with revenue setting a new quarterly record. Bookings were also strong, further increasing our record backlog that now extends into 2023. Demand for our endpoint ICs, reader ICs, readers, and gateways all showed extraordinary strength. At the same time, we remain supply constrained, limiting both first quarter revenue and our ability to satisfy that extraordinary demand. As challenging as these constraints are today, our industry's broad-based secular adoption, strong long-term unit volume CAGR, and sustained demand from enterprises' need for process digitization positions Impinj to benefit significantly when upside wafers become available. First quarter endpoint IC revenue exceeded our expectations, setting a new quarterly record. For retailers, the adoption drivers continue to be in-store inventory visibility and omni-channel fulfillment, and for both retailers and supply chain and logistics providers, supply chain visibility and process digitization. Retailers increased their apparel tagging while also expanding into new categories like home goods, driving growth in our endpoint IC demand and backlog. For at least the next several quarters, we see retail expansion centered on apparel, home goods, and general merchandise, and supply chain expansion centered on parcel shipment traceability as key business drivers. Overall, we see multiyear growth tailwinds for our endpoint ICs. First quarter endpoint IC unit volume demand exceeded shipments by more than 50%, like it has for the past three quarters. Yet again, we believe our inlay partners would have layered on additional bookings if we had more wafers. Although we did secure modest upside wafers from our foundry partner, allowing us to commit second and third quarter shipment volumes that equal or exceed first quarter, our supply is still far short of demand. Until our foundry partner can deliver significant upside wafers in the process nodes we use, we will continue focusing on maturing our post-processing capacity to be ready to quickly turn those wafers when they do become available. First quarter systems revenue also exceeded our expectations. Reader revenue is a bright spot, with supply chain and logistics demand driving record shipments. Reader IC revenue fell short of expectations due to a COVID outbreak at the post-processing supplier for our prior generation Indy ICs and testing delays for our new E Family ICs. Total first quarter systems demand exceeded our supply. Like for the past two quarters, we entered second quarter with significant reader and reader IC backlog and strong demand. Looking to second quarter, we anticipate component shortfalls continuing to limit our reader supply. We also anticipate strong reader IC volumes and revenue growth as shipments begin catching up to demand. Looking further out, we expect overall system supply to mostly catch up to demand by year-end. On the project front, the second large North American supply chain and logistics customer advanced their reader deployment and contributed their largest quarterly revenue to date. Looking into 2023, we expect this customer to drive a large endpoint IC opportunity. We also secured an order from the visionary European retailer to deploy our RAIN-based loss prevention product broadly starting second quarter 2022. This deployment will cover far more stores than last year's deployment, and we expect roughly 3x as much revenue from it, recognized over several quarters. We began staging key components for this deployment in the first quarter. This loss prevention win is the result of focused Impinj engineering and close teamwork with our go-to-market partners. It also represents a defining opportunity for our platform, moving us one step closer to unlocking the RAIN self-checkout opportunity that retailers identify as the most important after inventory visibility and is key to their vision of the store of the future. We continue focusing on inventing solutions to hard but compelling end user problems, driving new platform-based growth vectors for the years to come. Looking to 2023, we expect secular trends to continue driving endpoint IC unit volume growth in a market that is still less than 1% penetrated. That expectation is built on the use case expansion we see at existing enterprise end users, healthy growth at new enterprises looking to deploy, and new verticals ramping. RAIN delivers visibility and insights that no other technology can directly match. On the organizational side, Christina Balam joined our executive team as Vice President of Human Resources. Christina was most recently at NetMotion Software and brings deep HR strength and experience to Impinj. I'm delighted to partner with Christina in enriching our team and culture. Welcome, Christina. We also formalized Impinj's sustainability commitments in partnership with our suppliers and customers, driving multiple initiatives focused on how our products can improve item recyclability. Impinj takes its responsibility to leave the world a better place for our children and grandchildren seriously, and we are investing to deliver on our sustainability commitments. Before I close, I want to say that all of us at Impinj are shocked and saddened by the Russian government's senseless war in Ukraine. Impinj's employees, matched by the company, donated $200,000, or roughly $600 per employee, to humanitarian aid for the Ukrainian people. We also suspended all business in and with Russia and Belarus, and expect our partners to comply with all sanctions and restrictions related to this unprovoked and brutal aggression. We pray for peace, and for human rights and dignity, and for Russia to halt this horror they have created. In closing, I'd like to thank every member of the Impinj team for their incredible effort this quarter. We delivered record revenue and solid profitability while investing in our team, company, and platform. As we continue working side by side with our ecosystem partners to navigate the ongoing supply chain challenges, I remain confident in our market position and energized by our growing demand. I will now turn the call over to Cary for our detailed financial review and second quarter outlook. Cary? Thank you, Chris, and good afternoon, everyone. On today's call, I will review our first quarter financial results and second quarter financial outlook. First quarter revenue was $53.1 million, up 1% sequentially compared with $52.6 million in fourth quarter 2021, and up 17% year-over-year from $45.2 million in first quarter 2021. First quarter endpoint IC revenue was $38.8 million, up 1% sequentially compared with $38.4 million in fourth quarter 2021, and up 2% year-over-year from $38.1 million in first quarter 2021. Endpoint IC revenue exceeded our expectations, driven by higher volumes and a slightly more favorable mix of specialty and industrial endpoint ICs than we had anticipated. Looking forward, we expect a slight sequential increase in second quarter 2022 endpoint IC revenue. First quarter systems revenue was $14.3 million, up 1% sequentially compared with $14.2 million in fourth quarter 2021, and up 100% year-over-year from $7.2 million in first quarter 2021. Systems revenue exceeded our expectations, driven by stronger reader revenue than we had anticipated. On a sequential basis, reader revenue increased while gateway and reader IC revenue declined. On a year-over-year basis, reader IC, reader, and gateway revenue all increased. We expect a modest sequential increase in second quarter 2022 systems revenue, driven by reader IC revenue and initial gateway shipments into the new loss prevention deployment for the visionary European retailer. First quarter gross margin was 57%, compared with 58.2% in fourth quarter 2021, and 50.3% in first quarter 2021. The sequential decrease was driven by a smaller contribution from both sales of fully reserved inventory and underlying product margins, partially offset by lower indirect costs. The year-over-year increase was driven by underlying product margins and product mix. In addition to the margin-rich specialty and industrial endpoint ICs, a higher mix of Impinj M700 also provided a first quarter gross margin tailwind. The first quarter benefit from selling fully reserved inventory was immaterial. Total first quarter operating expense was $26.8 million, compared with $25.3 million in fourth quarter 2021, and $21.9 million in first quarter 2021. Research and development expense was $12.8 million. Sales and marketing expense was $6.4 million. General and administrative expense was $7.6 million. We expect second quarter operating expense to increase sequentially. First quarter adjusted EBITDA was a profit of $3.5 million, compared with a profit of $5.3 million in fourth quarter 2021, and a profit of $900,000 in first quarter 2021. First quarter GAAP net loss was $10.5 million. First quarter non-GAAP net profit was $2.4 million or $0.09 per share using a weighted average diluted share count of 27 million shares. Turning to the balance sheet. We ended the first quarter with cash equivalents, and investments of $193.4 million, compared with $207.6 million in fourth quarter 2021, and $119.3 million in first quarter 2021. The sequential cash decline was due primarily to increased WIP and raw materials inventory and other working capital changes. The latter including some inventory prepayments to improve our chance of securing off-site supply. Inventory totaled $31.6 million, up $9.6 million from the prior quarter, with roughly half of the increase in endpoint ICs and the other half in systems. First quarter net cash used in operating activities was $14.8 million, driven by net cash changes in operating assets and liabilities. Property and equipment purchases totaled $3.1 million. Free cash flow was -$17.9 million. Before I turn to our second quarter guidance, I want to highlight a few items unique to first quarter and also give an update on a few of our strategic initiatives. First, a stronger than expected mix of margin-rich specialty and industrial endpoint ICs drove first quarter gross margin strength. Given the nuance in our recent gross margins, I want to give a more specific gross margin outlook today than I plan to give going forward. Our second quarter 2022 guidance assumes a non-GAAP gross margin range between 53% and 54%. We expect third quarter 2022 gross margins in a similar range. Looking further out, we anticipate future 300 mm endpoint IC innovations to create opportunities for additional gross margin accretion. Second, first quarter inventory increased sequentially across both endpoint ICs and systems, driven primarily by a $3 million increase in raw material and a $4.8 million increase in WIP. Endpoint IC inventory increased for two reasons. First, wafer production timing drove an increase in raw materials. However, that timing will not change the number of endpoint ICs we have to sell in second or third quarters, which as Chris noted, should equal or exceed first quarter shipments. Second, higher cost wafers are now flowing through our inventory. Systems inventory increased primarily due to us sourcing key reader and gateway components ahead of the new loss prevention deployment for the visionary European retailer, and to a lesser extent, delivery timing. Third, we expect our second quarter operating expense to increase sequentially, driven by annual merit and cost of living salary increases, a full quarter of accrual for our cash bonus, the timing of non-wage expenses, and us continuing to invest in our platform. Finally, we expect second and third quarter revenue to remain supply constrained. Partner inventory levels remain very low, especially for endpoint ICs, with our wafer deliveries pacing our partners' production cadence. From today's vantage point, demand will continue to outstrip supply for at least the remainder of 2022. Turning to our outlook. We expect second quarter revenue to be between $54 million and $56 million, a 16% year-over-year increase at the midpoint of the range, compared with $47.3 million in second quarter 2021. We expect an adjusted EBITDA profit between $100,000 and $1.6 million. On the bottom line, we expect non-GAAP net income between a loss of $1.1 million and a profit of $400,000, reflecting non-GAAP earnings per share between a loss of $0.05 and a profit of $0.01 on a weighted average diluted share count between 25.3 million and 27.2 million shares. In closing, I want to thank our Impinj team, our customers, our suppliers, and you, our investors, for your ongoing support. I will now turn the call to the operator to open the question-and-answer session. Operator? Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. As a courtesy to others, we ask that you limit yourself to one question and one follow-up. If you have additional questions, please requeue and we will take as many questions as time allows. At this time, we will pause momentarily to assemble our roster. Our first question comes from Toshiya Hari with Goldman Sachs. Please go ahead. Hi, everyone. Good afternoon, and thank you so much for taking the question, and congrats on a very strong set of results. Chris, I had two questions. First of all, on kind of the supply-demand environment, particularly in your endpoint IC business, I think, you know, you're supply constrained in your systems business as well. If I, you know, caught your commentary correctly, I think you noted that by the end of the year, you'd expect supply to somewhat catch up to demand. I was hoping to get some color on the endpoint IC side. I realize it's hard to predict, but you know, how significant is the delta between supply and demand today, and more importantly, when would you expect your foundry partner to be in a position to address what you need? Okay. Thank you, Toshiya. Thank you for your kind words. As I noted in our prepared remarks, demand exceeds our ability to supply by more than 50%, and we're basically four quarters in that domain, this being the fourth quarter. We're doing everything we can to increase supply, and we know that our foundry partner is prioritizing for upside wafers. It just isn't enough. We said in our prepared remarks that we can deliver consistent wafer volumes into second and third quarter. You know, as these situations, these supply-demand imbalances always ease, as we know, because the semiconductor industry goes through these cycles occasionally. I've never been in one as severe as this, but they go through these cycles. It's just very difficult for me to speculate when. I prefer not to speculate out to fourth quarter or beyond, just to say that we're working very closely with our foundry partner to get upside wafer supply, and we are preparing ourselves as best we can, so that when those upside wafers become available, our post-processing is primed and ready to be able to handle them and to get ICs into our partners' hands as quickly as possible. Thank you for that. Then quick follow-up on gross margins, maybe for Cary. Thank you for providing guidance on gross margins. Super helpful. The sequential decline that you're guiding to in Q2, I guess, down from 57% in Q1 to 53.5% at the midpoint for Q2, is that primarily specialty and industrial SKUs normalizing lower, or did I miss something else that could potentially drive gross margins down on a sequential basis? I guess part two on gross margins, you mentioned medium to long term, you'd expect opportunity associated with 300 mm becoming a bigger percentage of your business. Can you help us quantify, you know, what that upside could look like relative to the 53.5% guide for Q2 and Q3? Thank you. Yeah. Thanks, Toshiya. I appreciate the question. Yes, as you said, gross margin for Q2, we're expecting in a range of 53%-54%. That is a step down from where we've been in recent quarters, which benefited from a strong mix of specialty and industrial SKUs. You know, the other item that's impacting Q2 is we're really starting to see higher cost wafers flow through our inventory and through our COGS right now. So we're starting to get close to where we expect to normalize based on our current supply mix. You know, two years ago, when we started talking about the M700 and the benefits that it would have to gross margin, we were in roughly the 50% gross margin range. These first two chips on the M700 family has really what's provided us with this 300 or so basis point improvement from what was our previous gross margin run rate. You know, we're not done yet innovating on the M700 platform, and we expect to launch more chips that will drive more opportunity for us to drive gross margin accretion in the future. Very helpful. Thank you so much. Thank you, Toshiya. The next question comes from Scott Searle with ROTH Capital. Please go ahead. Hey, good afternoon. Thanks for taking my questions. It's like a positive Groundhog Day, good results, but constrained by the wafer environment. Yes, it is. Hey, maybe, just quickly to make sure I get a clarification, I wanna make sure I heard the numbers correctly again, that 50%+ upside was limited again on the endpoint IC front. You know, from a gross margin standpoint, Cary, I wanted to make sure I understood, this is the level that you're expecting to normalize as we go out further onto the time horizon as well. I think you indicated on the wafer front, still wafer constrained in the third quarter. I'm wondering if that is, given your current visibility, if that entails a step up in the third quarter from the second quarter. I'll say a few words just about the wafer demand. As we said in our prepared remarks, the demand exceeds supply by more than 50%, and our partners would have layered on additional bookings if we had more supply. I use the word extraordinary or extraordinarily strong in my intro because the demand is very strong today. We see enterprises deploying in multiple verticals, expanding their deployments, new enterprises coming online. The demand's there, supply is short. Cary, would you like to take the second part? Yeah. Scott, thanks for the question. You know, as we noted, you know, gross margin in Q2 will be in the 53%-54% range. Based on our current supply mix, I anticipate a somewhat similar range in Q3 and really near-term movement from that dictated by, first by supply and then second by mix of revenue between endpoint ICs and systems. I think we're getting to a normalized rate right now. There will always be movement in our gross margins. Looking forward, think of the M700 platform as it relates to gross margin as a multiyear growth path. What we're seeing right now is the first step of the first two chips on the M700 platform. We're continuing to work on it. This is part of the place we're putting our engineering dollars. As we have more innovation to announce on that, we will do so, and then I'll be able to talk more about our ambitions for gross margin accretion from here. Perfect. Very helpful. If I could, just to follow up on your post-processing comments, you guys have been investing in the back end, but you made some comments in terms of outbreaks. I'm wondering if you could provide a little bit more color or detail, your comfort level in terms of where you are from a post-processing standpoint, both as we look into the near term, second, third quarter, and kind of how you're positioned as demand and supply equilibrium come back into balance. Thanks. Sure. Thanks. Yes. I need to differentiate between the reader ICs and our endpoint ICs. There was a post-processing outbreak at the testing house. I'm sorry. There was a post-processing outbreak at the supplier for our prior-generation Indy reader ICs. That COVID outbreak limited the number of prior-generation Indy reader ICs we were able to get in the quarter. If I turn to the endpoint ICs, we continue to build our post-processing capacity. I said on a prior call, straightening and widening the pipes so that when upside wafers come, and oftentimes when you're in these steep cycles, they come rapidly on the other side. When those wafers come, we're ready to catch them and turn them quickly. Did I answer your question okay? Yeah, you did. Perfect. Thank you so much. Okay. Thank you. Thanks, Scott. The next question comes from Mike Walkley with Canaccord Genuity. Please go ahead. All right. Good afternoon, guys. It's Dan on for Mike. Thanks for taking my questions. Congrats on the strong Q1 execution despite the supply chain challenges. Just wondering if you could provide us with some color on your large projects pipeline. I know you mentioned you had a record backlog, but if you could just let us know how to think about this or maybe even, you know, provide some extra details, that'd be great. This is Jeff. Our pipeline, opportunity pipeline is and remains strong. Within our pipeline, large potential opportunities are increasing as a proportion of the total pipeline. We're very encouraged by the interest of visionary end customers in retail and supply chain and logistics in particular, as they look to optimize their operations to improve supply chain visibility and other process digitization that lays the foundation for optimizing business efficiencies and enabling them to better serve their customers. We're seeing growth broadly, geographically, and across key market segments and the use cases or needs of those customers in those segments. And Dan, I guess I want to add, this is Chris. As you think about the visionary European retailer rolling out our RAIN-based loss prevention product broadly, I believe that deployment is a bellwether for opportunities to come because as we can deploy loss prevention, the real reason to do loss prevention is so you can do self-checkout. Retailers have been asking for self-checkout for a long period of time to improve and streamline retail stores. That self-checkout, along with better inventory visibility, as I said in the prepared remarks, is really the vision for stores of the future. There are huge opportunities in retail, starting with retail apparel, just because that's where the industry took off first, but expanding to all kinds of other retail items, home goods as a general merchandise. We're in the early days of a transition. Not a transition, an expansion from handheld-driven inventory counting, primarily in retail, to fixed reading opportunities in retail, supply chain and logistics broadly, aviation, and other opportunities. We believe that that expansion into those fixed reading opportunities positions Impinj very well as a consequence of our platform and the investments we've made in our platform. Great. Thank you for that. Just as a quick follow-up, could you just provide us with an update on s ome of the competitive dynamics you're seeing? And any feel for market share gains given your M700 differentiation? This is Chris. I'll take that. In terms of market share gains, we look at the end of every year at the RAIN Alliance data. For 2021, the RAIN Alliance published a number of roughly 29 billion units delivered in that year, which is 36%, I'm sorry, 36% year-over-year growth. We believe we gained a few points of share in 2021. In terms of 2022, obviously there is an ongoing competitive dynamic. We do our best to allocate our supply and work with our partners to be as competitive in the market as we possibly can be. We don't have good visibility in terms of the actual numbers of units until the end of the year with the RAIN Alliance, and we don't actually, you know, speculate on terms of what those numbers are until we have you know, hard numbers at the end of the year. Great. Thank you very much. Thank you. The next question comes from Harsh Kumar with Piper Sandler. Please go ahead. Yeah. Hey, guys. First of all, congratulations. You know, solid results, solid guide. Chris and Cary, I had a question on the logistics comment, customer comment that you made. I believe you mentioned that you saw a ramp-up in readers associated with the second-largest customer, and expecting endpoint ICs to ramp up in 2023. I was curious if you could provide us with some color. Does this mean that that customer is going into implementation in 2023, or how should we look at that? Yeah. Harsh, thank you for your kind words and, I'll take a first cut at answering your question, then see if Cary, or Jeff or Cary wanna jump in. We did say that second-largest North American supply chain and logistics customer advanced their reader deployment and contributed their largest quarterly revenue to date. Yes, they have continued to deploy. At every stage in one of these fixed reading deployments, after you've deployed enough readers and the customer is you know ready, they begin to flip the switch over from getting the fixed infrastructure ready to consuming tag volumes. We expect you know this is our expectation based on where they are, that switch flipping will occur in 2023 and will generate significant endpoint IC opportunities. That's an expectation on our part based on what we know about the deployment. The endpoint IC opportunities with that customer can be quite large. Prefer not to quantify anything here because, again, there's certain timing in terms of the cutover and the pace at which they really begin ramping up. Our expectation is given the scope of the deployment and the pace at which they're progressing, we do expect a significant opportunity in 2023. Very helpful, Chris. I'm gonna leave this topic, but I'm gonna ask you for one small clarification on that. When somebody like that goes live with the so-called implementation, does that mean that they go 100% with all products that they are managing the logistics for, or can they do it in stages, i.e., certain geos and certain types of products versus others? Yeah. Thank you for the clarification, and it is an important point, Harsh. Thank you. In general, we do not see end customers going from 0% to 100% in one step. It's just very difficult to happen. We see some large enterprises going category by category. They'll pick some scope, some categories of items or some categories of supply chain and logistics, special deliveries, and start there. They'll use that smaller set of items to test their processes, prove their operational efficiencies, basically, you know, do the upfront work to prove that everything's working, and then they expand from a first category into multiple categories. In other types of deployments, we'll see enterprises go geography by geography. You know, and I'll use as an example H&M, one of the retailers that has been expanding country by country. They roll out one country, and then they move on to the next one. It is very rare to see a large enterprise do a cut over all at once because the risks in doing so, not just from the RAIN RFID perspective, but from their entire back-end perspective, being ready for it, the risks are just too high. But to get back to the first part of your question, what we see and feel from this second-largest North American supply chain and logistics customer is they are at the point where we believe next year they will have the opportunity to do a significant turn-on of the capacity they have already deployed. The reader capacity they've already deployed. Great. Thanks, guys. As a courtesy, I'll step back in line and let somebody else ask a question. Thank you. Thank you, Harsh. The next question comes from Troy Jensen with Lake Street Capital. Please go ahead. Hey, gentlemen. Congrats on the great results. I guess I want to kind of piggyback on Harsh's comments here, this second big logistics customer. They reported in their 10-K that they transported 6.4 billion packages in 2021. You know, assuming $0.01 per tag, that equates to about a $64 million opportunity annually when they're at 100%. I know you don't wanna quote numbers, but I guess your comments on that and then is there any ratio on, you know, infrastructure spending that's needed to facilitate that? I guess I feel like we can quantify the size of the tag opportunity, but I'm a little uncertain on how to quantify the infrastructure side there. Yeah. Troy, this is Chris. I'm gonna take a stab at your question. First, in regards to the overall endpoint IC opportunity, you know, we don't cite the name of any particular end customer. In fact, we've mentioned two of the large North American supply chain logistics customers, a first and a second and other, you know, significant retail opportunities. What I will say is that the size of the Fortune 500 or in many cases Fortune 100 end customers that are deploying RAIN RFID today suggest that multi-billion unit opportunities per enterprise are not uncommon, or said another way, could actually be quite common. There are many entities that move or sell billions of units per year. The numbers you're thinking about in terms of the endpoint ICs can be quite large, especially as multiple of these enterprises move forward. In terms of the ratio of endpoint ICs to systems opportunity, the way we think about it is the endpoint IC opportunity is the recurring opportunity. The systems is what we need to deploy in order to make that recurring opportunity happen. Up front, we generate good systems revenue, as we said, for the visionary European retailer, 3x as much revenue in the second deployment as the one they did last year. This is for the loss prevention and self-checkout. That's important to us, and it's valuable to us, and it, you know, and we continue investing in systems. The real value in those systems deployments is to drive endpoint IC volumes and for our entire platform preference for Impinj endpoint ICs. Perfect. Understood. How about just one follow-up for me. M700 as a percentage of tag sales, I think, you exceeded the halfway mark a quarter or two ago. Any other color you can give us there? I'm just curious how much room you have here to expand, you know, the margin contribution rate from the M700. Yeah. Troy, this is Cary. I'll take a shot at that one. You know, as you noted, we ramped M700 as a percentage of our sales mix, you know, quite significantly last year. In third quarter it became our volume runner, and in fourth quarter it was the lion's share of our sales mix. You know, as I look to 2022, you know, growth from kind of where we are right now is limited by supply, and our supply and our mix of the supply between 200 mm and 300 mm. As you're doing that translation from M700 mix to gross margin, you know, we provided some pretty good color this quarter on not only Q2, but where we think Q3 is gonna be. I think that's the right range to think about us until the supply mix changes, which we will certainly make you aware of when that happens. Then as I noted before, as additional innovation on 300 mm endpoint ICs occurs, then we could drive more opportunity for gross margin accretion. Perfect. Okay. Keep up the good work. Thanks, Troy. Thanks, Troy. Again, if you have a question, please press star then one to be joined into the queue. The next question comes from Chris Grenga with Needham & Company. Please go ahead. Hi. Hi, good afternoon. Thank you for taking the question. Thanks, Chris. Just real quickly on the retailers expanding into new categories, are you seeing new logos in specialty retail categories, or is that existing retailer customers that are expanding into new categories within the same customer? Chris, we were primarily referring to existing retailers expanding into new categories like beyond retail apparel. We've seen some pretty significant expansion at existing enterprises into those new categories and multiple of those enterprises. That's not to say that there isn't ongoing acceleration in retail deployments, and in fact, you know, new enterprises continue to adopt. At least in the context of those comments, we're referring to expansion beyond retail apparel to other categories at retailers that were already deployed in retail apparel. Terrific. Thanks. Just with respect to the system supply catching up with demand, what levers do you have to ensure that or to give you visibility into catching that demand by the end of the year? That's a little bit more nuanced question to answer. For our readers and gateways, which are finished boxes, we do have the ability to do redesign, you know, circuit board redesign if there's difficult-to-get components. We do have the ability to kind of flex in terms of purchasing those components. Unlike an IC where you're fabricating wafers with a foundry partner and you don't quickly move, and in many cases, you have a long-term relationship with that foundry partner. When you're building a systems component, you do have more flexibility in terms of component availability. We look to that component availability, things we can do from an engineering perspective to improve our supply, again, slight modifications and other things like that, buying parts in the open market, as well as enhancing our test capacity, for example, for our reader ICs, having our older generation Indy reader ICs and our new generation of E Family ICs and flexing there. When you put all the pieces together, we feel that we will be able to significantly catch up to systems demand by the end of the year. Great. Thank you very much. Thank you, Chris. This concludes the question-and-answer session. I would like to turn the conference back over to Chris Diorio, Co-Founder and CEO, for any closing remarks. Thank you, operator. I'd 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 very much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.