Welcome to the Impinj Q3 2024 F inancial Results 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 your telephone keypad. 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, Gary. Thank you. Good afternoon, and thank you all for joining us to discuss Impinj's third quarter twenty twenty-four 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 third quarter financial results and fourth quarter outlook. We will then open the call for questions. Hussein Mecklai, Impinj's COO, will join us for the Q&A. You can find management's prepared remarks, plus trended financial data on the company's investor relations website. We will make statements in this call about financial performance and future expectations that are based on our outlook as of today. Any such statements are forward-looking under the Private Securities Litigation Reform Act of 1995. Whereas we believe we have a reasonable basis for making these forward-looking statements, our actual results could differ materially because any such statements 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 law. On today's call, all financial metrics, except for revenue or where we explicitly state otherwise, are non-GAAP. All balance sheet and cash flow metrics, except for Free Cash Flow, are GAAP. 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 Baird 2024 Global Industrial Conference on November thirteenth in Chicago, and the UBS Global Technology Conference on December fourth in Scottsdale. We look forward to connecting with many of you there. I will now turn the call over to Chris. Thank you, Andy, and thank you all for joining the call. Our third quarter results were strong, with revenue and profitability well above our guidance. Excluding last quarter, with its $15 million licensing revenue, third quarter revenue and Adjusted EBITDA both set new records. Strengthened supply chain and logistics, steady growth in retail general merchandise, and continued secular growth in both apparel and long-tail applications drove these strong financial results. As Cary will highlight, these results again demonstrate the leverage in our operating model. Starting with silicon, third quarter Endpoint IC product revenue exceeded our expectations. Unit volumes set a new quarterly record as parcel shippers and retailers prepared for the holiday season, and for the third consecutive quarter, M800 shipments more than doubled. Looking to the fourth quarter, we expect Endpoint IC revenue to decline modestly versus third quarter, with typical seasonal trends partially offset by market strength. We also expect continued M800 adoption as more M800-based inlays achieve market qualification. Turning to Reader ICs, third quarter volumes exceeded our expectations, driven by stronger than anticipated demand for both Indy and E-Family ICs. Looking to fourth quarter, project timing at the large supply chain and logistics end user will push E-family revenue lower. Longer term, as we wind down our legacy Indy ICs, we see continued E-family adoption across the broad range market. On solutions, we expect the current phase of the visionary European retailer's ongoing rollout of our self-checkout and loss prevention solution to spike in the fourth quarter, driving strong fourth quarter gateway revenue and growing endpoint IC volumes. At the large North American retailer, IC volumes continue ramping, driven by expanding general merchandise tagging, and we see the second large North American supply chain and logistics end user increasing label consumption this year and next. These very public enterprise successes are driving additional Fortune 500 enterprises to us, both in existing markets like retail general merchandise and new ones like perishable foods, and with them, endpoint IC volumes. Our enterprise account pipeline is much larger today than our current base. Expect us to continue investing in enterprise solutions, including software and cloud services that we believe are key to our long-term success. Touching now on the broader market, our conviction in food tagging continues, buoyed by multiple supply chain and quick serve restaurant rollouts, as well as grocery pilots. While we are still in the early days, the endpoint IC opportunity is at least an order of magnitude larger than any of today's markets. In retail general merchandise, we continue seeing retailers piggyback on the pioneering rollout at the large North American retailer. And Qualcomm's statement about RAIN reading and mobile devices galvanized expectations of RAIN as a Digital Product Passport data carrier. It also piqued retailer interest in engaging consumers through their connected items. At the recent RAIN Alliance meeting in Florence, I highlighted one potential use case, which is consumers crowdsourcing the location of items in our everyday world. Think Bluetooth trackers, at no additional cost, and with 10,000 times today's footprint. With overall RAIN penetration still less than 1% of the total connectable market, we remain laser-focused on winning the race to connect everything. In closing, we delivered a very strong third quarter. Our solutions focus continues paying dividends, and I am personally heartened by the consumer opportunity, which I've been touting for what feels like ages, finally seeming within reach. Looking ahead, we see continued secular endpoint IC growth, category expansion, and burgeoning solutions opportunities. As we continue driving our bold vision, I remain confident in our market position and energized by the opportunities ahead. Before I turn the call over to Cary for our financial review and fourth quarter outlook, I'd like to again thank every member of the Impinj for your tireless effort. As always, I feel honored by my incredible good fortune to work with you. Cary? Thank you, Chris, and good afternoon, everyone. Third quarter revenue was $95.2 million, down 7% sequentially from $102.5 million in second quarter 2024, and up 46% year over year from $65 million in third quarter 2023. Third quarter Endpoint IC revenue was $81 million, down 9% sequentially from $89.4 million in second quarter 2024, and up 67% year over year from $48.6 million in third quarter 2023. Excluding the $15 million second quarter licensing revenue, Endpoint IC revenue grew 9% sequentially. Looking forward, we expect fourth quarter Endpoint IC revenue to decline, but on the favorable side of normal seasonality. Third quarter Systems Revenue was $14.2 million, up 9% sequentially from $13.1 million in second quarter 2024, and down 13% year over year from $16.4 million in third quarter 2023. Systems Revenue exceeded our expectations, driven by strength in both test and measurement and reader IC sales. Looking forward, we expect fourth quarter Systems Revenue to increase sequentially. Third quarter Gross Margin was 52.4%, compared with 58.2% in second quarter 2024, and 50.5% in third quarter 2023. The year-over-year increase was due primarily to less excess and obsolescence charges in the current year. The sequential decrease was due primarily to second quarter licensing revenue. Excluding the licensing revenue, third quarter product Gross Margin increased 140 basis points sequentially, driven primarily by Endpoint IC product mix, including fewer 200 millimeter wafers. Looking forward, we expect fourth quarter Gross Margin to increase sequentially. Total third quarter operating expense was $32.5 million, compared with $32.8 million in second quarter 2024, and $32.6 million in third quarter 2023. Operating expense was below expectations, driven by engineering program timing. Research and development expense was $17.9 million. Sales and marketing expense was $7.1 million. General and administrative expense was $7.6 million. Looking forward, we expect fourth quarter operating expense to increase sequentially. Third quarter Adjusted EBITDA was $17.3 million, compared with $26.8 million in second quarter 2024, and $300,000 in third quarter 2023. Third quarter adjusted EBITDA margin was 18.2%. Third quarter GAAP net income was $200,000. Third quarter Non-GAAP Net Income was $16.9 million, or $0.56 per share on a fully diluted basis. Turning to the balance sheet, we ended the third quarter with cash, cash equivalents, and investments of $227.4 million, compared with $220.2 million in second quarter 2024, and $113.2 million in third quarter 2023. Inventory totaled $88.4 million, up $7.6 million from the prior quarter. Third quarter capital expenditures totaled $5.4 million. Free Cash Flow was $4.7 million. Before turning to our guidance, I want to highlight three items specific to our results and outlook. First, we expect fourth quarter Gross Margins to increase sequentially, driven by lower 200 millimeter endpoint IC volume, a larger mix of Systems Revenue, and endpoint IC replenishments into Asia-based authenticity pilots. Second, as we signaled last quarter, we increased our second half 2024 wafer purchases. We will move some of those wafers to inventory ahead of 2025 growth and the remainder to fulfill stronger than anticipated second half 2024 demand. Finally, with the additional revenue and disciplined investment in third quarter, our adjusted EBITDA margins are approaching the long-term range we presented at our 2023 Investor Day. As our revenue scales, we anticipate incremental leverage and cash flow generation. Turning to our outlook, we expect fourth quarter revenue between $91 million and $94 million, compared with $70.7 million in fourth quarter 2023, a 31% increase at the midpoint. We expect Adjusted EBITDA between $13.6 million and $15.1 million. On the bottom line, we expect Non-GAAP Net Income between $13.4 million and $14.9 million, reflecting non-GAAP fully diluted earnings per share between $0.45 and $0.49. In closing, I want to thank the 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. Gary? We will now begin the question and answer session. To ask a question, you may press Star, then One on your telephone keypad. 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 re-queue, and we will take as many questions as time allows. At this time, we will pause momentarily to assemble our roster. Our first question is from Jim Ricchiuti with Needham & Company. Please go ahead. Hi, thanks. Good afternoon. Wanted to go back to some of the commentary that you had about the systems business. I'm trying to reconcile some of the comments that you made. You're talking, I think, about the current phase of your European retailer, this visionary retailer you talked about, and talking about thinking that in the text of your transcript, you're talking about solutions spiking in Q4. Now, normally, Q4 is a better quarter seasonally, right, in the systems business. So are you anticipating, you know, a stronger systems quarter as a result of some of the factors I just mentioned? Hi, Jim. Yeah, this is Cary. Thanks for the question, and you've interpreted things correctly. So, we are expecting fourth quarter Systems Revenue to increase sequentially due to a few factors, and you've highlighted a couple. First, and just as a matter of baselining, Q4 has historically been a seasonally stronger quarter for the systems business, as our customers typically look to deploy capital ahead of the end of their fiscal years. And then specific to this fourth quarter, we're seeing the benefits from the visionary European retailers' ongoing self-checkout and loss prevention rollout. And that deployment will spike in terms of volume and therefore revenue in Q4 before normalizing in Q1. And then finally, the Indy reader IC end-of-life process has elongated a little bit. We anticipated last time shipments in the second quarter, though some of those have moved into Q3 and to Q4, and as a result, that's adding a little bit of a tailwind to Q4 Systems Revenue as well. Okay. Thanks, Cary. Follow-up question, actually unrelated. Your large inlay customer earlier today was talking about the adoption that they're seeing, RAIN RFID in grocery stores, and particularly, I think bakery being one of the early use cases. You know, I'm wondering, and maybe Chris, this is a question for you, if you could frame the opportunity, what - how that might look like for the industry. You've obviously been getting more positive about the opportunity in food, both in the grocery and QSR. I'm just wondering if you could talk a little bit to that. Yeah, Jim. Thank you. So, I've been talking about food on the past couple earnings calls, if you recall. It's a little bit slow in coming to the table here to talk about food because it's such a big opportunity. I didn't-- I wanted to give it some time to see how things would play out. But what we're really seeing right now is exactly what you said. We're seeing opportunities in quick serve restaurants, in the food supply chain, and now in individual grocers. We feel very well-positioned in these opportunities. And although, given the size of these enterprises, the overall size of the twenty twenty-five food volumes will not be as, you know, will be just a start down this gigantic path, and we still think there'll be some meaningful volumes in twenty twenty-five. We're excited by the food opportunity. We're excited by the announcement that you just saw, and there are more opportunities out there in the market today. Okay. Thanks very much. Thank you. The next question is from Harsh Kumar with Piper Sandler. Please go ahead. Yeah. Hey, guys. First of all, congratulations on very strong results to the whole team. I had two, maybe the first one for Chris. Chris, you had quite a bit of outperformance in your September quarter results. I mean, I wanted to ask the question if there was one thing that stood out, but it seems like it's very broad-based. However, if I was to ask you that question, if there was, you think, one driver that stands greater than the rest in driving the September quarter results, what would that—which one would that be? Thanks, Harsh, for the question. You know, one driver. You know, Harsh, I don't think I can give you one, and I'm gonna apologize for that, but we're seeing supply chain and logistics strength, steady growth in retail, general, and merchandise, secular growth in apparel, and long-tail applications. We're seeing our solutions efforts paying dividends and across the solutions that we're driving into. I feel that we as a company are pushing hard in several areas, the areas that I just said. We see the market overall pushing hard in those areas, and we just are now really in the thick of broad-based industry adoption, not market adoption, not any one particular market, but broad-based industry adoption. And if you look at the food announcement, and we're kind of where we've been talking about food, that broad-based industry adoption is poised to continue. So I feel, you know, I'd hope my prepared remark conveyed my enthusiasm about the market overall, and I really, I truly feel that enthusiasm. So I'm sorry I can't point to one. I gave you four, but they're all meaningful. Hey, thank you. This is very good color. I was trying to pin you down, but it seems like you are seeing broad adoption. I had a follow-up- Yeah ... maybe a two-part question. I'm cheating here a little bit. You mentioned in the logistics segment, your second customer will increase adoption in 2024 and then again in 2025. I was curious if you could give us some idea of where they are, how much are you penetrated into that customer? And then part two, separate question is, I've gotten this from a client already, seems like your logistics systems business will be down, but you'll see a spike in Europe from your visionary European customer, and it seems like the balance is positive. But I was curious if you could give us an interplay between those two. What is happening with the logistics customer to come down? Is it just the end of life of, you know, one thing versus the other, or something else going on there? Okay. Going back to the first question, you know, Harsh, I can't really cite volumes of where they are. We obviously have a very good relationship with that customer, but I think you need to listen to their remarks. What I can say is, their execution has been very strong. I think I've used the word before, and I mean this in the most positive way, that they're a machine, and they're executing like a machine, and I mean that very positively. Execution's been strong. They're not fully deployed. Obviously, they wouldn't be fully deployed if I said things are gonna pick up next year or increase next year. But if you listen to their public statements, I think they give the best picture in terms of where they are overall. Okay. In terms of the go forward, you know, endpoint IC volumes, we expect to increase next year. Our reader IC, there'll be some project timing-related items. As I noted, we see Reader ICs down in fourth quarter due to that project timing. But you shouldn't read anything really meaningful into that. It just. It truly is project timing, and the projects they've got going on right now continue to move at pace. I wish I could give you more specific answers, but obviously, you know, I can't say anything more specific at this point in time, but I think the customer speaks a lot for themselves. Very helpful, Chris. Congratulations again. Thank you. Thank you very much. The next question is from Troy Jensen with Cantor Fitzgerald. Please go ahead. Hey, gentlemen. I also want to say, congrats on another, great quarter here. Thank you. Maybe my, You're very welcome. Maybe first question here for Chris. Could you just talk a little bit more about the Qualcomm partnership? You know, what are the implications and the timing, and, you know, is this at all related to RFID getting into tablets and iPhones and just, you know, excuse me, you know, iWatches and whatnot, but, just an update there would be great. Yeah, Troy. So, I might go a little bit long on this one, but, I kinda wanna set the stage a little bit. I'm gonna start by saying that we Impinj, and the overall RAIN industry are very thankful to Qualcomm for them coming out with a public statement about RAIN and mobile devices. 'Cause that public statement has dramatically helped advance the position of RAIN as a data carrier for the digital product passport in the EU. Combination of that statement and push from major retailers in Europe has essentially moved the ball forward such that RAIN is no longer questioned within the standards bodies in Europe as whether it's gonna be part of DPP, but now exactly what the implementation is. As we project forward, you know, Qualcomm statement and, and in some of the follow-up that's happened, particularly at the RAIN Alliance meeting in Florence, the first opportunities are going to be in enterprise mobile. Qualcomm declined to cite a timeline for consumer mobile, other than to say it's following the enterprise mobile. I actually, myself, don't believe that it's gonna be the implementation in the phones that's going to be pacing us in consumer mobile, but it's gonna be the readiness of the entire community in terms of, item data resolution, in terms of the back-end services and other stuff that has to all get prepared, in advance of consumers being able to engage with those connected items. So you shouldn't be thinking in months or quarters. It's gonna take a bit longer than that to build up the entire back end. But I'm personally incredibly excited, because when was the last new significant radio incorporated into a mobile device? Maybe there have been some minor introductions, but think back, when was the last big one? And I firmly think that RAIN is gonna be a big one. We're gonna have to get it right. We're gonna focus on getting it right, but I'm super excited. So I, I did my best to answer your question. I didn't give you an exact date, but that's the best I can do. No, that was great. Let me ask, you said the first implementation into enterprise mobile applications, would that specifically be? Yeah ... under logistics? Would it be under the logistics, I guess, is my question? Not necessarily. No, it's gonna be. It will be broad-based because those enterprise mobile devices, mobile devices that employees carry around in stores, they carry around in supply chain or logistics centers. They're basically, you know, they're kind of the broad base of enterprise mobile devices. But those chipsets that go into those enterprise devices are essentially the same chipsets that go into mobile phones. So that's why I said it's not. The implementation is not gonna be, you know, phone implementation is not gonna be what paces the adoption. It's gonna be the readiness. And so we all, all of us, not just NXP, but the entire community, needs to work on that readiness for consumers to connect to items. Yeah. Awesome. Love the excitement. How about a follow-up and quick for Cary? Always welcome you to kind of give us a little bit more incremental Gross Margin guidance and thoughts on, you know, kind of how much does it spike here in Q4, and, you know, is there any roll-through in the next year, or just, you know, any insight would be helpful. Yeah, sure, Troy. So if you unpack our guidance, you could reasonably get to a Q4 Gross Margin, you know, around 53%. Now understand that there's a couple benefits in Q4 that we're calling out. First, with the strength that we already talked about in systems, we see a richer systems mix on the revenue profile. And then we're also shipping some high-margin authenticity endpoint ICs into those Asia-based pilots, which they're small quantity, but those are a little bit higher IC, therefore, higher margin products for us. So that provides a little bit of a tailwind into the fourth quarter Gross Margin. As you look over the long term, clearly, M800 plays a role in our Gross Margin accretion, and what I would say is that we remain confident in the Gross Margin targets that we outlined at our 2023 Investor Day. Okay, perfect. All right, guys, keep up the amazing work. Thank you, Troy. Thanks, Troy. The next question is from Christopher Rolland with Susquehanna. Please go ahead. Hey, guys. Just following up on that Qualcomm topic as well. Are there any ways to monetize the reader IC in the mobile device, or does Qualcomm provide that? Like, just on the mobile device side, maybe you can talk about if there are any economics there, either IP or hardware, or is this really just a driver of endpoints and more general adoption for you guys? Yeah, Chris, thanks for the question. I'm pausing a little bit here. Without saying anything specific, I think you really should think about it, number one, as a driver of broad-based industry adoption, and number two, as a driver for differentiation and advancement in the market. That differentiation and advancement in the market is around authentication, privacy, sustainability, security. The differentiation in the market is cloud services that support not only those protection features, but also consumers. Think about it as the opportunity for enterprises to engage consumers through their connected items, and in that engagement, rely on the prior two things I just spoke to. So you think of it first and foremost as a broad endpoint IC opportunity, and perhaps, perhaps equally important as a broad ecosystem play, and much less so as an opportunity for the ICs and clouds. Understood. I was just wondering if you're sharing any economics in the reader at all. Yeah, I told you what the prices are. I can't answer that question directly. We haven't said anything publicly on that front. But I think it kind of gave you our thought process in terms of what we see as the prize. And the prize are the things that by a huge amount, the prizes are the things that I just highlighted, and those are our focus areas. It's the endpoint ICs and the ecosystem opportunity at large, which gets monetized by those endpoint ICs, cloud services, software, just a bunch of stuff. Excellent. And then, for a second question, Chris, you know, I think you talked about food and order of magnitude bigger than general merchandise. That, that's pretty incredible, if I, if I understood that correctly. As these products are attached to lower and lower priced products and, of course, higher volumes with those, is there any point at which these tags, which could be, call it 5-10 cents each, could be reused, by, by your customers, or do you fully expect them to be disposable? Thanks. Yeah. So, a couple of points there, Chris. Number one, I think you should be thinking about lower price points even straight out the gate. It's not 5%-10%, $0.10, it's well under that. Number two, you should be thinking about we've spoken a lot about the elasticity of demand, and that is the label price point comes down, it drives new opportunities, and you should view the food opportunity as getting to the point where we can hit the price points needed by the food market to actually tag individual everyday items. And number three, I don't see much, if any, opportunity for reusably tagged food items. The packaging is disposable. In fact, it would be hard to even think of a scenario where the FDA would allow reusing a tag or any part of packaging associated with an item. So the price points of the additional labels that go on food items need to be such that the tag itself can be discarded. The price point that I believe will allow gigantic industry adoption is probably best set by METI in Japan. A couple of years ago, they did an analysis and said, basically, if you can get down to about $0.015 incremental cost for the wireless digital identifier, it makes sense to tag every item in Japanese convenience stores, and the average selling price for those items was between $1 and $1.50. So that'll kind of give you a benchmark of where we need to get to in order for broad, super broad adoption to happen. That's great. That's a great piece of data. Thanks, thanks, Chris. Appreciate it, guys. Okay, thank you. Thank you, thank you. The next question is from Guy Hardwick with Freedom Capital Markets. Please go ahead. Hi, good afternoon. Good afternoon. Congratulations on the results, tremendous. Thank you. Could you update us on the M800 certification? How many more inlay partners have been certified, and maybe you could give us some, you know, bit of color around that and the sort of continued ramp of the M800 chip, please. Hi, Guy, this is Hussein. I'll field that question. Thank you for the question. So far we've heard that two of our major inlay partners have gotten certification for the M800, are in the process of designing multiple inlays and multiple products to service their enterprises. And we believe that behind them, there are additional major customers that are on the verge of getting their certification. We expect to see. In general, we're seeing the logjam break, and we're expecting to see multiple customers coming out fairly soon with products in the space. So right now, the M800 ramp is looking very promising. It's going as we had expected and hoped. It's a healthy ramp, and it looks like customers are pleased with the product, and they're getting their certifications to be able to launch it to the market. Okay, and just as a follow-up on the systems, you've guided to sequential growth and Systems Revenue, is there a percentage kind of number you can put behind that for us? This is Cary, Guy. Maybe the way I would think about it is do look at our guide in context of endpoint ICs and systems. So we have guided endpoint ICs to be down sequentially based on normal seasonality. And the reason we have down seasonality in Q4 is we ship in front of the holiday season for both retailers and logistics providers. Normal seasonality in Q4 for endpoint ICs is down 5%-10%, and I signal that we'd be on the more favorable side of that. So if you use that as an anchor point and our overall guide, you can back into where we think our systems business is. Thank you. The next question is from- Thank you, Guy. Excuse me. The next question is from Scott Searle with Roth Capital. Please go ahead. Hey, good afternoon. Congrats on the quarter, and thanks for taking the questions. Hey, Chris, just a quick clarification first off on DPP. I just want to make sure I heard this correctly. It sounds like there's been a lot of advancement since the original RAIN Alliance blog post, and momentum with Qualcomm, but is RAIN certified at the current time, and/or do you still expect it to be a multimodal technology in terms of DPP implementation? And then maybe, Carrie, seasonality into the March quarter. I know it's a little bit early, but historically, it's, in recent years, it's kind of been all over the place. So I was wondering if you could remind us about how things are starting to shape up at this point in time, and if pricing discounts, right? We used to, we typically had the annual price decline kick in in the March quarter. Is that something that's coming back into play in 2025? So thanks, Scott, and I'll take the first question. So RAIN is not yet an approved data carrier for DPP, but that doesn't really say anything because nothing's an approved data carrier for DPP, because the standards aren't done yet. So what's happened now is the dialogue has changed. Previously, the dialogue was, you know, barcodes and QR codes could be an approved data carrier, NFC could be an approved data carrier, but RAIN is this new thing. It's, you know, how are consumers going to get access to information? With Qualcomm statement and a major push from significant enterprise end users, not just, as I said, in the retail space before, but it goes beyond the retail space. It includes automotive and tires and others. Significant push. The dialogue has fundamentally changed. It's now really no longer about whether RAIN is going to be an approved data carrier, but how we get the standards getting done and everything approved. You should expect multimodal adoption approvals, given the strength of the end user commitments that they signaled in those standards meetings in Europe. If you want me to place my bet, and of course, I'm biased, but if you want me to place my bet, RAIN will be the carrier everybody goes the data carrier everybody goes forward with, because it's already in the supply chain. It will extend it to consumers, and the opportunity is huge. That doesn't mean the other stuff's going to get locked out, but I think we've moved from a question mark to being in a pole position. Okay, Scott, and then I can take the second part of your question. So from an endpoint, I see pricing negotiation, those conversations are just now getting underway, so stay tuned. We'll keep you apprised of that. To your question regarding Q1 seasonality, you're right, it's been all over the place. I would say historically, we saw seasonality being flat to slightly down. More recently, we've seen it as flat to slightly up. So we kind of think of it right now as flattish for endpoint ICs. I'm speaking specifically to endpoint ICs here. And I think that's where I'd leave it. You know our philosophy, we guide one quarter at a time, and then we go out and execute against that. ... Gotcha. Very helpful. And maybe we could just quickly on the systems front, look, that's a lead indicator. I know there's. It seems like there's a lot of activity in the pipeline, but I'm wondering if you could help us understand either pilots or other activity to be that lead indicator as we get into twenty twenty-five. You know, you start to talk about food service. It sounds like other big box guys are being pulled in by the conditioning of the Walmart supply chain. I'm wondering if you could just leave us a few more breadcrumbs in terms of how that is shaping up as we go into twenty twenty-five. Thank you. Okay, I'm gonna start, Cary, Phil, and Hussein, feel free to jump in. So you know, Scott, we're putting a very significant effort into solutions, and the systems that enable those solutions, including our fixed readers, our Reader ICs, and software and cloud services. We typically don't cite anything publicly until the end customers themselves cite, says something publicly. You know, but as I noted in my prepared remarks, the pipeline is fairly large. Our pipeline is additional Fortune 500 and Fortune 100 enterprises who are coming to us with unsolved or unmet business needs. Those business needs can be around inventory, parcel sortation, dock doors, food, just many, many use cases. I can't give you a number. We didn't cite a number. I can't tell you how soon we're gonna be able to go public. What I can say is that given the size of those enterprises, you know, adoption doesn't happen overnight. But given the enthusiasm I'm conveying, I feel really good about the solution space. And I, I'll say one more thing, and then I'll see if the other gentlemen want to add anything in. I said multiple times in over the past years that in our industry, really what it takes for an industry to move forward is to have one giant end user take the lead. So we had, in the early days in retail apparel, that's how we got off the ground with Decathlon, Marks & Spencer, and Macy's. In later years, the second largest North American supply chain and logistics end user is pulling supply chain and logistics across the line. The large North American enterprise, that's for general merchandise is pulling back forward. Now we've got a very large grocer, very, very large grocer stepping in. And that's my experience. It takes one big one to galvanize an industry moving. So I am incredibly so excited about the solutions opportunities in front of us today, and just stay tuned. Yeah. And, and Scott, this is Cary. To your question on system seasonality, it is a little more variable, just given project timing. But generally, what we see is Q4 is the strongest for the reasons I mentioned previously, and then Q1's down in the 10%-20% range. Hey, thanks so much, guys, and congrats on the quarter. Thank you. Thank you. The next question is from Mark Lipacis with Evercore. Please go ahead. Hi, thanks for taking my question. Chris, when you mentioned earlier in the script, and I forgot the exact language you used, that other retailers are piggybacking on the large retailer, can you just give a sense of what that means? Maybe talk about the design cycle, to, you know, to win a big program. Like, what are the steps? And, you know, does this mean that, you know, you got a bunch of companies on the sidelines just watching and, you know, doing check-ins, or they start to do working on designing their systems or business processes with you? If you could provide, maybe color on that or the design cycle and where some of these guys are, I think that'd be helpful. Thank you. Yeah. Thanks, Mark, and I'm happy to. You know, it's actually fairly simple. So, at least for retail store inventory, inventory is driven by handheld counting. You know, the store employee carries a handheld around, they can read 100 items per second or even faster, and they do quick inventory, and the store is mapped, let's call it twice a week. And so the difference between retail apparel and retail general merchandise is you send somebody over to the general merchandise category. What's difficult or what was-- what has historically been difficult is getting the tags on the items because there wasn't the infrastructure to put tags on this whole gigantic range of items, everything from stationery to toys, to, you know, to car batteries and all these things. And so that's where the real work effort is. How do you put a tag on a car battery? How do you put it on a small stationery item without, you know, degrading the look of the stationery item? How do you, how do you put it on a box, like, think of a box that the toy's in, where there's no other stickers on the box? The large North American retailer has cracked a lot of those nuts, and the tags are going on items today. So what we're seeing now is other general merchandise retailers, basically as they place RFQs for products in the coming year, they're just saying, "The products need to come tagged." And it's nothing more than that. They're just placing RFQs and send this category of products with tags on. And then they go and do the inventory and expand the inventory in their stores. So that piggybacking is actually a very fast piggyback. Does that help, or is there... You know, did I answer it well enough? Yes. Yeah, and if I may just have a follow-up on that, because that was- Sure ... very helpful. So they place RFQs to their suppliers that the products need to be tagged, but it seems like there's also a process of making the decision to flip the switch, and what does that involve? I mean, I imagine that they need to redesign business processes, and that takes, you know, some kind of effort also. So if you could just help us understand how that next step plays out. ... Thank you. Yeah, so think about it this way: if you've got an enterprise that sells to people, customers, and they are already using tagged apparel items, then they already have the business processes in place. So they just say, "Okay, we were doing first apparel, then we moved to footwear, and we just added categories, and now we're adding this other category and this other category and this other category." So flipping the switch, it's not instantaneous, but it's way faster than anything, you know, than kind of opening or creating a whole new market or something like that, because they already know the processes for apparel and footwear, so they just add some additional categories there, and they already have the employees in the store, the employees with handhelds in the stores. So essentially, the ability to leverage those tags is already built out, and so it is a quick process to add additional items if you're already using tags on apparel and footwear. Gotcha. All right, that's very helpful. Thank you. Okay, thank you, Mark. Again, if you have a question, please press star, then one. The next question is a follow-up from Harsh Kumar with Piper Sandler. Please go ahead. Hey, guys. Thanks for letting me ask the follow-up. Chris and Cary, I want-- I did wanna ask about, you mentioned that you had... you will have some authentication type opportunity come through for you in the fourth quarter related to Asia. Could you just talk about, is this the start of something big that you've been talking about last year, or you think this is just one time in nature? How should we look at this opportunity? So, Harsh, we've had this Asia opportunity for a while, and what we're seeing now is some replenishments into that opportunity, and so we're happy to see those replenishments. I will say two things about our authentication opportunity. Number one is I believe it's critically important going forward to not just to us, but to the market overall. In fact, I'd say it's essential. As you think about RAIN going into consumer mobile devices, today, tags just expose a number, and they send it to plain text, and there's no protection around it. I don't know of any other wireless technology in a mobile device that doesn't have protection and security built into it, so I firmly believe that the authentication is absolutely necessary, and that's why we introduced our product line and our cloud service associated with it. That said, the pace of adoption has been slower than we had it originally hoped for, and we will be redoubling our efforts going forward, to ramp authentication and additional security efforts around, to drive adoption, so that we are ready for that consumer opportunity from a consumer perspective as it comes. Understood. Thank you so much. Thank you, Harsh. This concludes our question and answer session. I would like to turn the conference back over to Chris Diorio for any closing remarks. Thank you, Gary. I'd like to thank all of you for joining our call today, and thank you for your ongoing support. Bye-bye. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.