Personal Finance

Why Impinj Delayed Its Earnings Report

The Impinj logo.

Radio-frequency identification (RFID) solutions provider Impinj (NASDAQ: PI) was scheduled to report its second-quarter results on Aug. 6. But an investigation by the audit committee of Impinj's board of directors related to a complaint filed by a former employee has gummed up the works. Impinj has delayed its earnings release, and it won't be able to file its quarterly report until the investigation is complete.

The company did provide some preliminary second-quarter numbers, though, and CEO Chris Diorio had some optimistic things to say about the company's turnaround.

The Impinj logo.

Image source: Impinj.

The inventory correction is mostly over

Impinj's revenue began to tumble in the fourth quarter of last year thanks to inventory drawdowns at its partners. While IC endpoint consumption was still expected to grow in 2018, partners reducing their inventories took a bite out of Impinj's sales. In both the fourth quarter of 2017 and the first quarter of 2018 , revenue fell by more than 20% on a year-over-year basis.

Impinj's revenue declined again in the second quarter, with the company reporting preliminary revenue of $28.5 million. That's down about 16% from the second quarter of 2017 . That revenue was above the high end of Impinj's guidance range, but it marks the third straight quarter of slumping sales.

While Impinj's partners continued to reduce inventory in the second quarter, Diorio believes the endpoint inventory correction is now "mostly resolved." The first half of 2018 is viewed by management as the turning point for the business, so a return to growth could be coming later this year.

Impinj also managed to reduce its own inventory by $1.4 million during the quarter, and it expects further improvements in the second half. The company believes it will beat its guidance for revenue, earnings per share, adjusted EBITDA , and inventory when it reports its full second-quarter results. Unfortunately, investors may be waiting a while.

Throwing a wrench in the turnaround

Impinj provided few details about the ongoing investigation. The company said that it was unable to determine at this time whether it would need to restate its results for the first half of 2018 or for any other period. It provided no timeline on when the investigation would be complete.

The investigation is serious enough to derail the second-quarter report, so investors should certainly be concerned. This may turn out to be a minor issue with no real impact on the business or on the previously reported numbers. Or it could result in substantial restatements that change the story for investors. At this point, it's impossible to tell.

These types of investigations can sometimes drag on for multiple quarters, delaying additional quarterly reports and leaving investors in the dark for a long time. Going too long without filing reports could get the stock delisted from the Nasdaq.

Shares of Impinj are down nearly 50% in the past year, and they've lost more than two-thirds of their value since peaking in mid-2017. While shares could rebound if the company returns to growth, this investigation adds a layer of uncertainty that makes it tough to bet on the stock.

10 stocks we like better than Impinj

When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Impinj wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of August 6, 2018

Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Personal Finance Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More