PI Q2 Deep Dive: Product Mix and Emerging End Markets Drive Guidance Upside

RFID manufacturer Impinj (NASDAQ:PI) announced better-than-expected revenue in Q2 CY2025, but sales fell by 4.5% year on year to $97.89 million. On top of that, next quarter’s revenue guidance ($92.5 million at the midpoint) was surprisingly good and 7.4% above what analysts were expecting. Its non-GAAP profit of $0.80 per share was 13.6% above analysts’ consensus estimates.

Is now the time to buy PI? Find out in our full research report (it’s free).

StockStory’s Take

Impinj’s second quarter was marked by stronger-than-anticipated financial results, with management attributing the outperformance to broad-based demand across endpoint ICs, reader ICs, and gateway products, as well as a richer product mix favoring its M800 chip. CEO Chris Diorio emphasized that new use cases with major apparel and logistics customers, along with expansion into food tracking, offset macroeconomic headwinds and supply chain disruptions. Management noted that the solutions-oriented strategy, particularly the adoption of Gen2X extensions, helped drive sequential growth in core product categories.

Looking ahead, Impinj’s forward guidance reflects confidence in continued momentum across key verticals, with management citing growing adoption of its M800 chip and Gen2X protocol among enterprise customers. CFO Cary Baker highlighted anticipated margin improvements driven by a higher M800 mix and lower wafer costs, while CEO Diorio pointed to ongoing pilots in food and supply chain markets as avenues for future expansion. As Diorio stated, “We expect the same demand drivers to deliver sequential revenue growth in the third quarter.”

Key Insights from Management’s Remarks

Impinj’s management credited the quarter’s results to new enterprise deployments, product mix improvements, and progress in high-growth verticals, which also shaped their above-consensus guidance.

• Enterprise solution wins: Management highlighted multiple new deployments, including a leading apparel retailer using overhead reading and a European retailer expanding into additional use cases, which drove meaningful reader and endpoint IC revenue.
• Gen2X protocol adoption: The Gen2X protocol, an enhancement to the industry-standard RFID radio protocol, improved read range and inventory counting speed, strengthening Impinj’s value proposition and fueling customer demand for both endpoint ICs and readers.
• M800 chip momentum: The M800 chip saw increased inlay certifications and sequential unit volume growth, supporting gross margin expansion as higher-margin products became a larger portion of sales.
• Supply chain and food sector pilots: Impinj reported growing interest in food use cases, with pilots for item-level tracking in categories like bakery and proteins. Management described the food category as being in an early phase but noted an encouraging pace of pilot activity.
• Channel inventory management: Despite expectations for a modest channel inventory build, partner inventory levels declined, which management viewed as a sign of healthy end-market demand and effective supply chain execution.

Drivers of Future Performance

Impinj’s outlook is shaped by ongoing growth in enterprise deployments, new use cases in logistics and food, and a focus on product mix and cost efficiency to support margin expansion.

• End-market expansion: Management expects continued growth from logistics, supply chain, and food tracking pilots, with a particular emphasis on item-level deployments in perishable categories where expiration date management is critical.
• Product mix and cost benefits: A higher proportion of M800 chip sales and the transition to lower-cost wafers are anticipated to further improve gross margins and profitability in the coming quarters, according to CFO Cary Baker.
• Macro and channel risks: While guidance assumes minimal incremental 'turns' orders due to ongoing tariff and macroeconomic uncertainty, management noted the company’s ability to flexibly respond to evolving demand and supply chain dynamics.

Catalysts in Upcoming Quarters

In the coming quarters, our team will track (1) the pace and breadth of enterprise adoption in logistics and food markets, (2) the continued ramp of M800 chip sales and related margin benefits, and (3) the evolution of channel inventory levels as a sign of end-market health. Additional focus will be on the transition of food pilots into commercial deployments and the impact of Gen2X upgrades on customer adoption.

Impinj currently trades at $160.10, up from $122.46 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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