Good afternoon and welcome to the Impinj Second Quarter 2016 Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Maria Riley, Investor Relations for Impinj. Please go ahead.

Thank you operator and thank you all for joining us to discuss Impinj second quarter 2016 financial results. On today’s call, Chris Diorio, Impinj's Founder and Chief Executive Officer will provide a brief overview of our performance in our market. Evan Fein, Impinj's Chief Financial Officer, will follow with a detailed review of financial results and the outlook for the remainder of the quarter. We will then open the call up for questions. Impinj’s President and COO Eric Brodersen is on the call and join Chris and Evan in the Q&A session. Before we start, notice that we may make certain statements during this call that are not historical facts including those regarding our plans, objectives and expected performance. To the extent we make such statements, they are forward-looking within the meaning at the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements represent our outlook only as of the date of this conference call. While we believe any forward looking statements we make are reasonable, our actual results could differ materially because any statements based on current expectation are subject to risk and uncertainty. We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statement. Whether as a result of new information, future events or otherwise except as required by applicable law. Also during today’s call, all statement of operations result to the exception of revenue or where we exclusively state otherwise our non-GAAP financial measure. Balance sheet metrics and cash flow metrics are on a GAAP basis. I will now turn the call to Chris Diorio, Impinj’s Founder and Chief Executive Officer. Sir?

Thank you Maria, and thank you all for joining the call. I am delighted to be here today on Impinj’s first earnings call as a public company. To recap our initial public offering, we’ve priced on July 20th and raised $69.2 million in net proceeds. Turning now to the second quarter, we delivered strong results. Revenue grew 36% year-over-year to reach a record $26.0 million. Demand for our endpoint ICs was a primary driver behind that revenue growth which we believe is also an indication of market growth. We enable connectivity for 3.8 billion items in the 12 months ended March 31st of this year and that growth is accelerating, as Evan will highlight in his revised estimate for overall 2016 endpoint IC volumes. In a few minutes, I will share with you some recent examples of our successes and the progress we are making it to capitalize on the accelerating market growth. But because this is our first earnings calls, I’d like to first review some key effects of our vision, platform and growth strategy. Impinj’s vision is digital life for everyday items. Our mission is to wirelessly connect those everyday items and deliver to the digital world each item unique’s identity, location and authenticity. Our platform is the backbone of that connectivity and information delivery. We are literally extending the reach of the internet by factor of a 100 from today’s powered electronic devices to everyday items like retail apparel, airline luggage, pharmaceuticals, automotive parts, food, really everything. We are the only RAIN RFID company with an integrated platform spanning endpoints, connectivity and software. This platform which we built on 16 years and more than $116 million of investments in innovation and development is integrated, easy to deploy and use, versatile, and applicable to nearly any used case…

Thanks Chris. Before I review our second quarter 2016 financial results, I want to remind you that with the exception of revenue, or in less explicitly stated otherwise, today’s statement of operations is on a non-GAAP basis. All balance sheet and cash flow metrics are on a GAAP basis. Please see the investor relations portion of our website for how we define non-GAAP metrics and a reconciliation of each non-GAAP metric to the nearest GAAP metric. As Chris mentioned, our second quarter results were strong. We achieved revenue of $26.0 million representing 36% growth over the second quarter of 2015 and 20% growth over the prior quarter. Our growth this quarter was driven by continued increasing demand for endpoint ICs. Our gross margin for the second quarter was 53.4% compared with 52.6% in the prior quarter and 54.4% in the second quarter of 2015. Depending on product mix, gross margin can fluctuate from quarter-to-quarter and in this case up 70 basis points compared to the prior quarter. Total operating expense in the quarter was $12.6 million or 48.3% of revenue compared with $12.2 million or $56.4% of revenue in the prior quarter. R&D expense was $5.4 million or 21% of revenues. Sales and marketing expense was $5.0 million or 19% of revenue. G&A expense was $2.3 million or 9% of revenue. We ended the quarter with 224 employees, compared with 208 at the end of last quarter. GAAP net loss for the quarter was $254,000. On a non-GAAP basis, we achieved net income of $868,000 or $0.06 per share using a weighted average diluted share count of 13.9 million shares. Adjusted EBITDA was $1.3 million or 5% of revenue. Turning to the balance sheet, we ended the quarter with cash and cash equivalent of $14.4 million. Accounts receivables increased approximately…

We will now begin the Question-And-Answer Session. [Operator Instructions] The first quarter comes from Mitch Steves with RBC Capital Markets. Please go ahead.

Great quarter overall. So I just had two quick questions on the guide. First from just a modeling perspective, it looks like revenues are going to be up sequentially about 8% at the midpoint, but it looks like EBITDA is maybe down a tad or at least flattish. So just from a modeling perspective, is that due to a little bit of a lower gross profit margin or is that more higher OpEx?

Thanks Mitch, I will ask Eric to take that question.

Thank you Mitch, the company’s data strategy to invest our incremental gross margin dollars into our strategic initiative and so the margin that we gave, the guidance margin we gave reflects those investments.

Got it, that's helpful. And then secondly, it looks like, at least according to the press release, the upside was on the Monza chip side, at least for the June quarter which is good because the margins went up. So I'm just wondering what was the difference between March and June in terms of the business mix since the margins were up about 60 basis points or so?

Sure, Mitch this is Evan. The gross margin can fluctuate on a quarter-to-quarter basis based primarily on product mix even within the family and that’s what drove the margin increase from Q1 to Q2.

Got it. Thank you very much.

Thank you Mitch.

The next question comes from Brad Erickson with Pacific Crest Securities. Please go ahead.

Hello there, thanks for taking my questions. First, I guess just competitively, particularly for your retail end markets, what specifically has been driving the tag IC acceleration you're seeing right now? Is it performance, you're more competitive on price, or just any color there of the recent market dynamics would be helpful?

Brad this is Chris. Really what we’re seeing is sort of broad based growth and its accelerating adoption. We’re seeing adoption in the core retail market segment and healthcare market segment but really broad based across many industry verticals, as an example Delta Airlines recently announced that they are going to be connecting all airline luggage, they managed 120 million bags per year, so broad based growth is really the driver in the industry.

Got it. And then can you just quickly talk about where you are or how you're feeling about inventory levels in the channel and your visibility heading into the back half of the year there? Thanks.

So again this is Chris. In terms of inventory levels in the channel, we maintain and work on maintaining visibility into our channel partners and we don’t see any unusual activity in inventory levels, in fact we see normal growth and normal business activities going forward.

Got it. And then one more if I could. Just wanted to touch on if you're seeing any uptick in terms of the fixed reader adoption versus the historically stronger, I think mobile handheld. And just how we should be thinking about that relative to your opportunities to hopefully at some point down the road drive better adoption of the item sense software. Thank you.

Eric will you mind taking that question?

Thanks. As you highlighted our significant growth on the endpoint side of the business but I can just comment on the platform based, solutions selling motion. We feel great about the traction of the sales organization and their performance in driving pipeline and businesses that the platform in region and software side. So we feel very comfortable and are pleased with our progress.

Great. Thanks for taking my questions.

Thank you Brad.

The next question comes from Troy Jensen with Piper Jaffray. Please go ahead.

Congrats on a really solid quarter, gentlemen.

Brad this is Chris.

Chris, I would love to hear how this IPO has worked as a branding event for the Company.

Can you repeat the question again? I am sorry.

Yes, sure. How has the IPO worked as a branding event for the Company? Have you seen an acceleration of hits on your website, or conversations with customers now that your public versus private?

So, from me personally and from my engagements with the sales team, and talking to folks on the field the idea was really elevated our brand and our visibility out in the market with our partners and within the customers with some of the larger end customer opportunities we’re seeing an uptick in the overall opportunity and that I think is both I believe representative of the overall growth in the market as well as our presence in the market. And the idea was really as we’re pointing to has accelerated and made us better known out there in the marketplace. Not only in terms of who we are as a company but in terms of the vision that we’re driving. The vision that is giving digital life to everyday items.

And just to follow up on Brad's question, one of the big concerns on the IPO was your visibility and your customers. And not as much the inlay Partners but the end customers beyond them. So I'd just be curious to know what you guys are doing to get visibility and how much inventory they hold? And my sense is there's really no big concentration at the end, but if you could just touch on that, that would be helpful.

Eric would you like to take that one?

Sure. So a couple of things. From a model standpoint, know that our sales teams whether they work to make sure they’ve got three levels of visibility and to overall inventory. Specifically I think as you said in that endpoint IC portion of the business. Not only do we work to stay very close to the operational support of our inlay and tag and labeling customers but we also work with that same OEM sales organizations to stay connected at the end user level, creating affinity for our endpoint ICs at the end user levels. So we have the ability to track endpoint ICs that are project basis from a customer level but then also through the tagging ecosystem. So that’s the key point, but then also remember our platform team is out setting and selling the full platform and creating to get more visibility for us on end customer projects. And then I think I would just characterize, I’ll go back again to our uplifting guidance on endpoint ICs, we see the market accelerating and this is really about us making sure that we’re prepared to support our customers as they see that same growth. So from an inventory visibility standpoint, we’re very consistent with what we expect.

Alright. Perfect, guys. Keep up the good work.

Thank you, Troy.

[Operator Instructions] The next question comes from Jim Ricchiuti with Needham & Company. Please go ahead.

Hello, thanks, good afternoon. Wanted to just go back to the guidance in terms of full-year endpoint ICs, a fairly significant increase. And I know you talked about it coming from being fairly broad based. But just given the amount of exposure in retail, what are you seeing or hearing either from your the end users or maybe the inlay customers? Are you seeing a broader deployment from existing customers, or are there some new programs that have come on or potentially some new retail customers? Just trying to get a sense within retail what might be driving the endpoint IC growth.

So Jim I think the answer to your question really is both. We’re seeing increased adoption within existing end users as they expand new categories and get enhanced usage models at the categories that are tagging and we also see adoption with new retailers. So we see kind of broad based growth existing and new across retail but it’s not just retail, we’re seeing the same thing in other markets as well. And as among the ones I mentioned everything from healthcare to data centers to automotive. Just seeing broad based adoption with existing end customers as well as with new.

Chris, is that adoption the strength in the market, is it -- are you seeing anything in any particular geography, or is this fairly broad based again by region, geographic region?

Although we don’t report geographic results, what we see today is sort of a typical trend where we provide our products primarily to the point of manufacturing that being again primarily although not exclusively into Asia and as those products, the endpoint ICs, the reader ICs and to answer those products get deployed into end customers in Europe and North America and then we see our connectivity layer, our Readers and Gateways and our ItemSense software getting deployed primarily at the end customers being again primarily although not exclusively in Europe and North America.

One final question from me just on the competitive landscape. It's early, but I'm just wondering if you're seeing any repercussions from the AMS, the acquisition of the AMS reader IC business by STMicro?

So, we haven’t seen any immediate repercussions as you can imagine, we faced competition on a regular basis and we have continued in investing in all layers on our platform including the Reader IC and we have number one marketshare and we see a significant growth and opportunities out in that business. So we’re going to continue to competing and we feel good about our market position today.

Okay. Thanks a lot. Congrats on the quarter.

Thank you very much.

Our last question comes from the line of Mike Walkey with Cannacord Genuity. Please go ahead. Mr. Walkley your line is open. Is it possible your own phone is on mute.

Can you hear me now?

Yes, we can hear you.

Okay, sorry, I'm not sure what happened on that. Just a follow-up question for me. First, congrats on the strong guidance. With the endpoints really driving strong results now, did you look at your increased sales effort? You maybe could talk about how you see this business mix changing over say a one to three year horizon in terms of going after these customers using your endpoints and how that might pull through more readers gateways and even the software? So how should we think about that mix changing over the next two years?

Evan, would you like taking that one?

Yeah, good question Mike. So the endpoint layer is growing rapidly. As you know, we sell a platform and in fact when you sell endpoints you sell more products in the connectivity layer and when we sell products in the connectivity layer, we also sell more endpoints. On a long-term model basis, we continue to think endpoints will represent greater than 50% of our revenue and the connectivity layer will represent greater than 30% of our revenues.

Great, thanks. And, Evan, is there any seasonality where you see maybe a greater mix of endpoints as retailers build inventory in Q3 for the holiday season and then maybe more of the readers gateways are stronger in other quarters? Is there anything to think about in the seasonal mix? And then also just while I'm on the seasonal mix, are you seeing anything with strong pull in early ahead of retail? And should you think that your business could be up again in the December quarter given how strong your last two quarters are from June to September?

Yeah, Mike this is Evan. So from a seasonality perspective, there may have been seasonality in our business as we look backwards but as we look forward with regards to both your questions, kind of is there a mix of more on one quarter or another and if we’re seeing more endpoint IC sales in a given quarter, we think that seasonality is not a material portion of our business because we’re so early in adoption phase and its growing so fast in many other verticals.

Okay, great. So as we look at business trends, you feel like it's normal demand with just overall adoption and you should continue to see a strong close to year end with your updated endpoint guidance?

That definitely expects Mike.

Okay, great. And then, Chris, just a follow-up question for you on the big picture. Could you just update us on some of the projects you're working on in terms of end customers and feedback on your end-to-end solutions and some of the new solutions you talked about on the call, just how those are being received and those pilots are going?

I’m going to say a few words and then I’m going to hand it over to Eric. So we see as I said before continued broad based adoption for all layers of our platform and our platform as a whole, we have now paying ItemSense customers as well as more than 50 active PFCs for ItemSense and we feel that their growth in that layer is critically important but again we see broad based growth across all layers of the platform. With that, I think I’ll hand it over to Eric.

Yeah, I think do you think you know particularly about the solutions that we’ve launched, that as we outlined over 12 in the last nine months. The key for those solutions is really to provide tight linkages and partnerships for us with our ISV partners to solve strategic and important end customer problems and gain efficient end customer access for our sales organization as they sell us part of the ecosystem. And so I’d say that while it’s a relatively new selling motion for us, we feel great about our progress, our POC traction from ItemSense to the connectivity layer all the way down to endpoints, that population of POCs and traction for the full platform, we feel very, very good about it.

Okay, great. Well congrats again, and thanks for taking my questions.

Thank you, Mike.

Our last question is a follow-up from Mitch Steves with RBC Capital Markets. Please go ahead.

Just a quick technical question or more value proposition. Since McDonald's is mentioned as a material customer, can you just walk us through what they gain by using the Impinj product line just from a high level, and how it could potentially be used for other restaurants in the future as well?

Eric, can you take that one?

Sure. So McDonald’s is utilizing our platform for direct to table food service. So it allows an end customer to order at a kiosk, take their receipt or card and go to their seats and then be located by our platform in the McDonald’s point of sale application and allows them to bring meal directly to you at your seat. So that’s the use case that they are utilizing. From a progress standpoint, rollout continues, good progress there and so we think it’s just another example of how a platform is solving the live range of new faces and key problems for our end customers.

Got it. Thank you very much.

Thank you, Mitch.

This concludes our question-and-answer session. I would like to turn the conference back over to Chris Diorio for any closing remarks.

I would like to thank everybody for joining the call today in our first call as a public company. We are excited by our progress today and again thank you for joining us and I hope everybody has a great rest of the week and a great weekend.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.