A Bet on Impinj Is a Bet on RFID

By Mark Roberti

The company's IPO of stock will be successful if investors understand that radio frequency identification is just beginning to take off.

Earlier this month, Impinj, the Seattle-based maker of passive ultrahigh-frequency (UHF) tags and reader chips, registered plans with the U.S. Securities and Exchange Commission (SEC) to hold an initial public offering (IPO), in an effort to raise $60 million (Impinj Hopes to Raise $60M From IPO). This is the firm's second attempt to go public. Impinj filed for an IPO in April 2011 (see Impinj Files for Initial Public Offering), but pulled it roughly 15 months later. This time, the company has a better chance to succeed, because the market for radio frequency identification products is much more mature.

In 2011, I wrote that Impinj was unlikely to be able to sustain the explosive growth it saw when several major retailers, including Walmart, JCPenney and Macy's, began RFID-tagging apparel. I thought growth in sales of passive UHF chips would be uneven—which, along with uncertain economic prospects (we were just three years removed from the financial meltdown), made the changes of success uncertain.

Today, Impinj and the RFID industry (and, perhaps, the economy) are in a better state. More retailers are deploying passive UHF RFID, and many other sectors are realizing that the technology can be used to solve their issues. Impinj's revenue is double what it was in April 2011.

The preliminary prospectus that Impinj filed with the SEC indicates that the company holds, by its own estimates, a 65 percent market share for passive UHF RFID tag chips compliant with the EPC Gen 2 RFID standard, which Impinj refers to as the RAIN standard. The document also states that the company believes approximately 70 percent of unit volume of fixed readers use its reader chips, as do "the majority of handheld readers."

Impinj also states in its prospectus: "Our ability to increase or sustain profitability depends on numerous factors, many of which are out of our control.… We expect significant expenditures to support operations, product development, and business and headcount expansion in sales, engineering, and marketing as a public company. If we fail to increase our revenue or manage our expenses, we may not increase or sustain profitability in the future."

I see fairly steady growth in adoption, particularly within retail, during the next two to five years. An economic recession could cause companies to delay RFID projects, which would hurt Impinj's sales in the short term. But at some point within the next five years, adoption is going to accelerate dramatically, first in retail and then in other sectors. So in my mind, an investment in Impinj is an investment in the future of RFID. Impinj hasn't put a price on its shares, but if you believe, as I do, that the future of RFID is bright and the technology is just beginning to take off, then this is likely to be a good investment.

Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.