Are we rolling? Okay. Okay. Great. All right. Well, thanks, everybody, and welcome to the Evercore annual TMT Conference. Our first inaugural conference here in San Francisco. My name is Mark Lipacis. I'm the senior semiconductor analyst at Evercore ISI. I'm very excited to have Cary Baker, who is the CFO of Impinj. I'm going to run through some questions, but I think most of you probably know that Impinj is a leader in RAIN RFID, providing the whole stack, the endpoint ICs, the readers, and support in the cloud and the software stack as well. With that, Cary, welcome. Thanks for joining us. Yeah, Mark, thanks for having us. Did you want to start off with any introductory comments or you just want to go right to Q&A? Let's go right to Q&A. Okay, great. All right. If we just start with the endpoint ICs, which are about 80% of your revenues, the bookings hit an all-time high in the first quarter. On your earnings call, you mentioned that you had some concerns or uncertainty going into the second half of the year due to the macro conditions, and I wonder if your concerns have gotten worse or better as you've gone through the quarter. Yeah. How do you think about macro now? Yeah. There were several factors contributing to the strong bookings in Q1. First, we were ramping the customer ASIC for our second North American supply chain logistics company. We also saw, after a pretty disappointing 2025, the retail apparel market begin to rebuy. They weren't necessarily rebuilding inventory, but they weren't taking it down any lower, which is the trend that we saw most of last year. A micro trend within that, we saw our inlay partners move from the lower end of standard lead times to probably the higher end of standard lead times, but still with orders matching demand. The question that we had and that was causing the uncertainty was exactly what you highlighted as the macro. I don't know that I have an update today on that. We continue watching for the impacts of the tariff war and inflationary pressures on all of our markets, but in particular in retail apparel. Will the strength that we began to see in our order flow continue into the second half of the year? Until we get better visibility to that, I think you should expect us to continue to view second half with a prudent approach and wait till we have the visibility that we need to call it like that. Okay, fair enough. I think one of the most interesting things about last year, despite it being challenging, was that you gained 17 points or 1,700 basis points of market share in 2025 in endpoint ICs. How did you do that, and is that sustainable? Our strategy is to leverage both ends of the radio link to deliver solutions to our customers, especially our enterprise and our lighthouse customers that were previously unsolvable. We think our knowhow on both ends of the radio link is our competitive advantage, and that's why we can deliver those solutions. You're seeing us bring those solutions to market in a couple different ways. First, with Gen2X, which is an embrace and extension of the current standard communication protocol. Think of this as driving greater efficiencies and read range or read accuracy in the ICs by working more closely with the read points, the reader ICs or the readers and gateways. Also think of this strategy manifesting in our platform solutions, whether that be loss prevention for a visionary European retailer or the custom ASIC and custom reading environment for our second-largest supply chain and logistics strategy. Our objective with this strategy is to gain more share, and that's why we're delivering those solutions, because we think we're the only ones that will be able to do that. If I look at 2025 to 2026, there is one other factor that I think is worth highlighting. In 2025, we think there was a material amount of competitor ICs that were burned down. Excess channel inventory that came out of the system. We'll watch that sell in versus sell through dynamic in 2026, but it's another factor that we're looking at in the very near term. Okay. All right, good. I want to ask you about the custom ASIC business at your second-largest North American supply chain logistics company. It seems to be a near-term catalyst of the volumes, I think, are expected to double in the second quarter. What is the implication of making an ASIC? Normally, when you think about a standard RAIN RFID as a standard, you would imagine that your customers may want to have an opportunity to source from a lot of different suppliers. What does this mean? What should investors think about when they think about you making an ASIC for one of your customers? Think of this as a byproduct of our annual, semi-annual technology summits we have with this end customer, where we talk about their RAIN RFID deployment, what's going well, what's not going well, what is the art of possible. In this most recent summit, last year's summit, actually, early 2024, they highlighted a couple challenges that we thought we could solve with a custom ASIC. We took the M800 platform. We pulled out what they didn't need and added features that they did need. One example would be countering fraudulent labels that enter their ecosystem that get shipped without ever being billed for. We're able to solve that, not only in the custom ASIC, but working together with the read points that are throughout their infrastructure to counteract that counterfeit activity. There are other examples of technology and features that we've put into it, but think of it as tuning it to their solution. Now the real exciting piece of this is this customer has done an amazing job of driving efficiencies throughout their organization. They're now looking to take that knowhow to their customers and deliver a supply chain solution to their customers. The opportunity for us is to help facilitate that with anything spanning reader ICs and readers, to software, to also extending the footprint of our custom ASIC. It's been a very exciting opportunity at multiple levels for us. How does this impact your business model from a profitability standpoint? Think of it as part of the M800 platform, which will contribute the 300 basis points of gross margin accretion that we've been talking about for some time. Got you. Is this something that investors should expect to see more of? Is there a way to unpack the contribution from the ASIC business versus the standard products business? Are there more opportunities for you to do that? Would you expect to do more ASICs for different customers? It's too early to unpack at this stage. We would definitely be open to leveraging our knowhow to build custom ASIC. It has to be a unique opportunity, right? You think about this logistics provider, we have a deep technological relationship with them. Our engineers work hand-in-hand in bringing the solutions to life. We would need that type of engagement. It would have to be that type of an opportunity for us to do additional custom ASICs, but it's certainly something in our arsenal. I think you can't have a conversation about your business without talking about Walmart, just because they're so important i n validating for your technology. Can you just give us an update, like where is that program today? I think Avery Dennison mentioned that Walmart was the biggest part of their intelligent label segment, and with a significant ramp expected in the second half of the year. I think you had mentioned that there's a phase III that should be announced sometime this year. Where are we in the ramp here? Yeah. Can you give us an update? Yeah. think of Walmart as rolling out three major categories, some of which are rolled out in phases. The first major category was launched in late 2019, early 2020, and that was retail apparel. Today, retail apparel is fully deployed at Walmart. The next category that they rolled out was general merchandise across two phases so far. These phases covered home goods, electronics, toys, stationery, a variety of other categories. Phases one and two got off to somewhat of a slow start, first due to supplier tagging readiness, and then due to the tariff whipsaws that we saw last year and in 2024. Phases one and two are not fully deployed yet, so there's still room to grow in phases one and two, which we expect to see some of that in 2026. Beyond that, there's a lot of work in the ecosystem going on around standing up a phase 3, which we continue to expect at some point this year. Now, we'll wait for Walmart to announce the timing and the categories that are included in that phase III, but we're very excited about the next potential phase of general merchandise. The final category that Walmart is working on is food. Think of this as items that are prepared and packaged inside the store. Walmart team is actually doing the work. This is bakery, proteins, and deli. A lot of work going on here. At this point, it's still in the multi-store pilot stage, and we're waiting for them to announce the timing of when they want to roll that out broadly. Okay. that, hopefully it's on the come- Yes later on. Got you. All right. when we talk about food, I think when we originally did the estimates of the TAM, and I think you guys may be the only pure play on a multi-trillion unit- Yeah TAM, at least that we cover. It seems like food would be an important contributor to that kind of a TAM. I think you mentioned a European grocery opportunity as the first meaningful full store here, where you potentially are tagging every item with a consumer at checkout. Can you talk about this opportunity? When would you expect to see revenue contribution? Could you talk about the challenges with ramping this kind of an opportunity? Yeah. Food is far and away the largest opportunity in front of us. Logistics, as just by comparison, we think of as a 400 billion unit opportunity per year. Just packaged goods and food are measured in the trillions, the multiple trillions of opportunity. It's on a very different scale. Where most of the work today in food is kind of where Walmart and Kroger are focused. Where they control the supply chain, they're packaging, producing, labeling everything inside the store. When I say bakery, it's not full bakery. It's not the bag of Wonder Bread that comes in, it's the loaf of French bread that the store makes behind the counter. It's a subset of that category. The grocer opportunity that you referenced as a full store is a completely different opportunity in terms of size. This grocer wants to go straight from the perishability all the way to self-checkout. In order to do self-checkout, every item in the store needs to be tagged. Not just the loaf of French bread that you made, not just the bag of Wonder Bread, but also the box of cereal that's in the middle of the store, and the can of beans that are in the middle of the store. In terms of size, the opportunity is significantly larger. Now, why this grocer can go to that point is they are heavy mix of private label. They control their supply chain, so they don't need to go negotiate with the big CPGs to put a tag on a box of cereal. They have their own brand of that cereal and can make that decision for the supply chain. Much different opportunity in terms of size and scope. Now, where we are today in front of this massive opportunity is still very early days. Most of the work that's been done to date has been in the lab, developing the proof of concept. The customer set up readability targets that we and our ecosystem partners needed to achieve in order to move forward. Only recently, we were able to not only achieve but to exceed those readability categories. Now, the next step for this program is to go into a single store pilot, and planning has begun for that. Presuming success in a single store pilot, it will likely go to a multi-store pilot before we start talking about a broad rollout. A lot of work left to do against this opportunity. If we're able to solve it here, to solve self-checkout at a grocery store where every item needs to be able to be tagged, to be able to solve how to tag a box of cereal, how to tag a can of beans, we can take that and replicate it with every grocer across the globe or across our markets at least. If we can do that, then we stop talking about the tens of billions of items that we ship today, and we can start talking about that trillion item opportunity that's in front of us. I have to say, on two dimensions it's remarkable. Can you talk first about the economics for your customer here? What is the perishability? What is the potential that you can save your customer in this? Can you talk about operationally, how do you get everything tagged to realize what comes out on the checkout side? Yeah. In terms of the ROI, it's measured in multiple different vectors. It's measured in just food waste. It's measured in revenue because you know what's on the shelf, what's not on the shelf, what's getting ready to expire that can be marked down and moved to the end cap with an orange sticker. I don't have the quantitative metrics yet because it's just not available at this point. One example of ROI that I heard at NRF this year was when one of the Kroger executives was talking about their food deployment, and he highlighted that in just the bakery department, at the beginning of every day, the bakery employees had to go out and inventory the items on the store floor to help inform what the production cycle was going to be for that morning, and that was a process that took multiple hours. He said with RFID, they were able to take it down to a couple of minutes to inventory all that store. Just a massive labor savings and efficiency. That's from an ROI perspective. With self-checkout, I think there's going to be a huge customer experience benefit as well. We've all been to grocery stores to do today's version of self-checkout, where you have to find the barcode, or you have to look up the code for the garlic and then weigh the garlic and then put it into your bag. The self-checkout that we're envisioning today looks much more like a Uniqlo self-checkout, where you walk up, you drop your items on a bin. In this case, it'll probably be a conveyor that goes through a tunnel, but the items are immediately scanned. The screen is populated. You hit the green button to purchase your items, you bag them, and you walk out. A much more efficient and seamless customer experience at self-checkout that most of us just can't imagine today. No, it seems like a remarkable opportunity, but a huge effort to get that to happen. It is. You've talked about, we can't talk about to a semiconductor company without talking about the cycle. You talked about confidence that the restocking has started and that your supply chain is lean. Can you talk about that a little bit? What gives you confidence that is where we are in the cycle? I don't think restocking has happened just yet. I think rebuying has happened. The distinction being over the last multiple quarters, we've seen retailers bring their inventory levels down. We are now seeing rebuy where they're not bringing their inventories down any further, but we haven't started rebuilding their inventories yet. At the end customer level, that's the behavior that we see going on. If we look at our channel, the first layer of inventory, we entered the year with excess channel inventory mostly planning around our logistics provider. We corrected that coming out of the first quarter and entered Q2 healthy. When we look at our channel inventory and we look at our order patterns right now, we think that the orders are matching demand. We don't think we're building inventory within the channel. This is obviously something that's been a challenge for us in the past. Most recently, in the last couple of years, it's been related to a single customer. It hasn't been broad-based. It is something that we continue to watch via our monthly channel inventory reports, via our planning with our end customers, via our channel checks with the service bureaus. Gotcha. When we think about you guys, we think about you have a big announcement with a big customer, and then you ramp and you go to a next level in revenues, and then you announce another customer, you go to the next level in revenues. Appreciate that you have more stages on Walmart to ramp, but can you talk about the pipeline more broadly? How many different opportunities are you prosecuting? Where are they in the pipeline? When could we expect to see another kind of big announcement or deployment happen for you? Yeah. I think the bulk of the activity in our pipeline right now is focused on logistics, it's focused on food, and it's focused on general merchandise. There are new retail deployments that get announced every quarter. For handheld inventory visibility in the retail space, we typically don't get very involved. The partner ecosystem can handle that and set those up on their own. When we start moving into fixed or autonomous reading, that's where we're starting to lean in, or we continue to lean in to help our customers. It's really hard to predict what a program goes from the lab to a pilot and then to a multi-store pilot and then to a broad rollout. What we have historically seen is that cycle is long. When a customer makes a decision, the broad rollout takes time. The first 20% takes a long time because the customer's learning how to do things for the first time. Their employees are learning how to use an RFID reader, which looks an awful lot like a barcode reader, but it's still a different motion. You no longer have to basically touch each item. You can just walk up and down the aisles. There's infrastructure that needs to be rolled out. It takes some time. Going from 20%-80% of a deployment goes really fast. You've got the foundation, you can move forward. That final 20% is really when you get to the edge cases, right? We haven't solved this tagging for this item or this part of the store needs better readability. How do we solve for that? Those just takes a little bit to get it over the finish line. Got you. The ROI seems to be not the challenge, it's the changing of the business process. That's right. The ROI begins very early in that process, and even a partial deployment will generate an ROI. That helps alleviate some of the customer pain of going through that first 20% is because every increment that they make, they are earning an ROI. I think that will have to be the last word. Cary, thanks for joining us in San Francisco this year. Appreciate the participation and support. Yeah. Thank you, Mark. Thanks for the opportunity. Thanks.