Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information contained elsewhere in this prospectus and is qualified in its entirety by the more detailed information and financial statements included elsewhere in this prospectus. It does not contain all of the information that may be important to you and your investment decision. You should carefully read this entire prospectus, including the matters set forth under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes.IMPINJ, INC.
Overview
Impinj is the leading provider of UHF RFID solutions for identifying, locating and authenticating items. We believe our technology platform, known as GrandPrix, is the most comprehensive and widely adopted in our industry. GrandPrix’s key elements are Monza tag ICs, Indy reader ICs and Speedway readers and subsystems. RFID systems built on GrandPrix deliver real-time information about tagged items, thereby enabling applications and analytics designed to improve business decisions and enhance consumer experience. Leading retail, apparel, pharmaceutical, food and beverage, technology and logistics companies as well as government agencies rely on our GrandPrix platform. We are the technology leader in our industry, with 90 issued and allowed U.S. patents and 77 pending U.S. patent applications as of April 15, 2011. We have sold over two billion Monza tag ICs since its introduction in 2005, including 940 million in 2010 alone.
We focus exclusively on ultra-high frequency, or UHF, radio-frequency identification, or RFID, solutions. UHF RFID enables writing individualized information to and reading information from tagged items without line of sight and at longer range, higher speed, lower cost and with more automation than any competing technology. We embrace the global industry standard for UHF RFID, called UHF Gen2, which we extend through our leadership in the standards-setting process and enhance with our proprietary technologies and deep domain expertise. UHF Gen2 is the fastest growing segment of the RFID market. UHF Gen2 systems are ideally suited for high-volume, item-level applications that require low-cost consumable tags, such as retail inventory management, pharmaceutical authentication and airline baggage tracking. VDC Research Group, or VDC, projects the number of UHF Gen2 ICs shipped will grow from 1.6 billion in 2010 to 41.0 billion in 2015, a compound annual growth rate, or CAGR, of 92.2%.
From 2009 to 2010 unit sales of our Monza UHF Gen2 tag ICs increased by 279%. We believe that Impinj leads the market in UHF Gen2 tag ICs, reader ICs and stationary readers with estimated 60%, 86% and 25% share, respectively. We estimate that Impinj enables more than 70% of the UHF Gen2 reader market when we combine the share of our Speedway reader with that of other readers based on our Indy reader ICs. We believe that end users’ return on investment, or ROI, from UHF Gen2 systems and our market leadership position are driving our rapid growth.
We sell to a broad and well-established ecosystem of more than 450 inlay manufacturers, reader original equipment manufacturers, or OEMs, distributors, system integrators, value-added resellers, or VARs, and other technology companies, as well as to end users. Our ecosystem relies on the elements of our GrandPrix platform to deliver UHF Gen2 solutions to end users in wide-ranging markets, such as Walmart and Banana Republic for apparel inventory management, Coca-Cola for product authentication in next-generation beverage dispensers and LS Industrial Systems for tracking and authenticating pharmaceuticals.
We believe current applications of UHF Gen2 represent the tip of the iceberg for this technology. We envision a future when a broad array of everyday items is linked to networked information systems, thereby -1- enabling significantly improved visibility, understanding and analysis of those items’ location and attributes. This global network of connected objects is often referred to as the “Internet of Things.” We believe that UHF Gen2 technology, powered by Impinj, is helping to make that vision a reality.
We use third-party foundries and subcontractors to produce our ICs and contract manufacturers to assemble our readers and subsystems. This capital-efficient operating model is designed to scale efficiently as our volume grows, allowing us to focus our resources on developing new products and solutions while continuing to build our reputation as the UHF Gen2 leader. For 2009, 2010 and the three months ended March 31, 2011, our revenue was $20.8 million, $31.8 million and $12.3 million, respectively, and our net losses from continuing operations were $9.9 million, $11.4 million and $1.8 million, respectively.
The RFID Industry
RFID technology has been employed for decades. Legacy RFID technologies, such as those that operate in the low frequency, or LF, and high frequency, or HF, bands have been employed for years in specialized applications such as animal tagging and in security applications such as access cards. More recently, the market for UHF systems has grown rapidly as companies deploy enterprise-wide UHF RFID systems to realize the ROI those systems deliver.
UHF Gen2 RFID
The development of the UHF Gen2 standard was, and continues to be, driven by end-user requirements. A critical end-user requirement is that UHF Gen2 be the single worldwide standard for retail RFID. In contrast, technology providers have typically driven specifications for other RFID standards, often leading to competing standards that end users are reluctant to adopt. GS1 EPCglobal, a nonprofit industry association, created the UHF Gen2 standard and a corresponding electronic product code, or EPC, numbering system to assign unique numbers to UHF Gen2-tagged items. GS1 EPCglobal also created other standards and guidelines related to data storing, data sharing, reader operations and tag applications. As of March 31, 2011, GS1 EPCglobal had over 950 end-user members, including many of the world’s leading retail, apparel, logistics and pharmaceutical companies. With their lower power requirements, superior performance, lower cost and single industry standard, UHF Gen2 systems are ideally suited for item-level, high-volume applications. These applications generally require ongoing purchases of consumable tags that uniquely identify items.
We believe that apparel retailers are adopting UHF Gen2 systems because of demonstrable ROI. For example, UHF Gen2 systems can identify every tagged garment in a stack in a fraction of a second, enabling daily store-floor inventorying, even while customers remain in the store. Item-level, real-time inventory visibility allows retailers to reduce out-of-stocks and overstocks, carry less inventory, better meet consumers’ needs and make better business decisions. University of Arkansas studies demonstrate that RFID item tagging significantly improves store-floor inventory accuracy.
We believe demand for UHF Gen2 systems will grow both by further penetration into existing applications such as apparel tagging and by expansion into myriad other high-volume tagging applications. In consumer retail, UHF Gen2 growth prospects include tagging of consumer electronics, cosmetics and jewelry. A number of governments have mandated UHF Gen2-based tagging of automobiles, pharmaceuticals and liquor. Manufacturing logistics, postal applications and food safety exhibit great promise. These examples represent just some of the applications that we believe will contribute to sustained market growth.
Unlike other semiconductor-based products, we believe the consumable nature of UHF Gen2 tags will drive sustained volume growth. Furthermore, we expect that a number of trends, including ubiquitous connectivity, internet-enabled commerce and the need to identify, authenticate and track items in increasingly complex -2- business environments will accelerate broader adoption of UHF Gen2 systems. VDC projects the number of UHF Gen2 ICs shipped will grow from 1.6 billion in 2010 to 41.0 billion in 2015, a CAGR of 92.2%.
Our GrandPrix Platform
We believe that Impinj has the only UHF RFID technology platform, industry-leading product performance and leading market share in each of our product lines. Our GrandPrix platform tightly integrates numerous elements, including Monza tag ICs, reference tag antenna designs, reader antennas, Indy reader ICs, Speedway readers and subsystems, OEM reader reference designs, software-development kits, or SDKs, application-programming interfaces, or APIs, application software and services. Our ecosystem partners develop GrandPrix-based UHF Gen2 systems and deploy them at leading retail, apparel, pharmaceutical, food and beverage, technology and logistics enterprises. GrandPrix provides superior performance, proprietary system enhancements and a comprehensive development environment. Our integrated GrandPrix platform offers numerous benefits to our ecosystem partners and end users, including:
Our Competitive Strengths
We are the leading provider of UHF Gen2 solutions and believe we can maintain this position by leveraging our competitive strengths, including:
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Gen2 system design, tag ICs, reader ICs, readers, software, firmware and antenna designs.
Our Strategy
We strive to accelerate UHF Gen2 market adoption and extend our GrandPrix platform’s leadership while growing revenue profitably. Key elements of our strategy are to:
Risks Associated with Our Business
Our business and our ability to execute our strategy are subject to many risks that you should be aware of before you decide to buy our common stock. These risks are discussed more fully in “Risk Factors” beginning on page 10 and include, among others:
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Corporate Information
We were incorporated in Delaware in April 2000. Our principal executive office is located at 701 North 34th Street, Suite 300, Seattle, Washington 98103. Our telephone number is (206) 517-5300. Our website address is www.impinj.com. Information contained in, or that can be accessed through, our website is not a part of, and is not incorporated into, this prospectus.
Unless the context indicates otherwise, as used in this prospectus, the terms “Impinj,” “we,” “us” and “our” refer to Impinj, Inc. We use Impinj®, the Impinj logo, the Powered by Impinj® shield logo, GrandPrix™, Monza®, Indy®, Speedway®, the checkered flag logo and other marks as trademarks in the United States and other countries. This prospectus contains references to our trademarks and service marks and to those belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other entities’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other entity.
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