What Happened: Shares of RFID maker Impinj (NASDAQ:PI) jumped 18.4% in morning trading after the company reported first-quarter results with significantly improved inventory levels. Its revenue and earnings per share also beat Wall Street estimates during the quarter. Revenue was driven by strong demand in the endpoint chip segment, with sales up 14% sequentially, beating analysts’ expectations and offsetting weak performance in the systems segment. Adding to the good news were guidance that came in well above expectations for revenue and earnings per share.
Notably, Impinj also provided some information about its recent licensing agreement with NHP Semiconductors (NASDAQ:).
In brief, on February 9, 2024, Impinj announced that it had successfully resolved its patent disputes with NXP Semiconductors through a new settlement agreement and cross-patent licensing, ending ongoing litigation and releasing each other from patent infringement claims.
First, as part of the agreement, NXP paid a one-time compensation of $45 million in the first quarter. Looking ahead, Impinj expects NXP to pay an annual license fee every April for up to 10 years, “unless they develop IP and take advantage of the early termination provision.”
Earlier this month, Impinj noted that it received $15 million for the period from April 1, 2024 to March 31, 2025. The Company plans to recognize the full cost of this payment as endpoint IC revenue for the second quarter, which will be included in the second quarter. quarterly forecast at almost 100% gross profit.
Overall, we think it was a really good quarter, which should please shareholders.
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What the market tells us: Impinj shares are quite volatile and have risen above 5% 26 times in the last year. But such big moves are very rare even for Impinj, which indicates to us that this news has had a significant impact on the market’s perception of the business.
The biggest move we’ve written about in the last year came 12 months ago, when shares fell 28.5% on news that the company reported first-quarter revenue that slightly beat analysts’ estimates, but its earnings per share turned out to be below expectations. In addition, sales and earnings per share forecasts for the next quarter missed consensus estimates. Stocks are generally reacting negatively to weak earnings and guidance, so earnings this quarter should lead to a downward revision of the company’s financial forecasts.
Impinj shares are up 68.8% year to date. Investors who bought $1,000 worth of Impinj shares 5 years ago would now be looking at an investment worth $6,870.