What happened
Shares of Impinj (PI 2.14%) took a dive last month after the stock reported first-quarter earnings. While the maker of radio-frequency identification (RFID) chips actually beat estimates in the report, investors seemed disappointed by its guidance, which called for a sequential decline in revenue. Impinj is also being constrained by the global semiconductor shortage.
According to data from S&P Global Market Intelligence, the stock finished April down 17%. As you can see from the chart below, shares tumbled sharply at the end of the month after the report came out.
PI data by YCharts.
So what
Revenue in the quarter slipped 5.4% to $45.2 million, ahead of estimates at $42.1 million. The company did show margin improvements, with gross margin increasing from 45.7% to 48.6%, though adjusted EBITDA fell from $3 million to $880,000. On the bottom line, it posted adjusted earnings per share of $0.01, down from $0.13 in the quarter a year ago, though it beat estimates of a per-share loss of $0.12.
An RFID chip. Image source: Getty Images.
Management noted that the company delivered record bookings in the quarter, but strong demand driven by the digital transformation that was accelerated by the pandemic was causing wafer shortages. Management said it will stretch its inventory over the year since it simply doesn't have enough supply to fulfill demand.
Now what
While demand exhausting supply sounds like a good problem to have, it's still a problem, and that explains why the company sees second-quarter revenue declining sequentially to a range of $41.5 million to $43.5 million. It also expects an adjusted loss per share of anywhere from $0.02 to $0.08.
Impinj stock surged at the end of last year on enthusiasm for the recovery, but those gains seem to have made the tech stock vulnerable to a pullback like the one that followed the first-quarter earnings report. Still, the increase in demand bodes well for the company over the long term.
