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Impinj Hopes to Raise $60M From IPO
The RFID chip, reader and software provider's second attempt to go public is more conservative—and better timed—than its previous offering.
Impinj sells its tag ICs primarily to original equipment manufacturers (OEMs) and original design manufacturers (ODMs) of inlays and tags. In 2015, sales to Avery Dennison, Shang Yang RFID Technology Yangzhou Co. Ltd. and Smartrac accounted for 23 percent, 22 percent and 20 percent of tag IC revenue, respectively, and 16 percent, 15 percent and 14 percent of total revenue. Impinj also sells its reader ICs primarily to reader OEMs and ODMs.
The majority of growth in RFID adoption, the company wrote in its filing, takes place outside of the United States, where the greatest demand for RFID tags and other hardware may be occurring, such as in Asia. In 2015, 73 percent of Impinj's revenue resulted from sales outside the United States. The company—which opened an office in Shanghai, China, in 2011—says it anticipates continuing to expand its international operations. The two largest markets, according to the company, are in retail and health care.
Impinj's recent average annual revenue growth rate of 20 to 25 percent (ranging from 15 percent to 30 percent, depending on the year) is slightly ahead of the growth rate of the overall RFID industry, McBeath says, and is a sign of good health. "It's not a breakout hyper-growth star on the level of a Facebook or Google or Amazon, but its growth has been solid."
For companies that go public, McBeath says, the results can be a mixed blessing. On the one hand, he explains, "the relentless public scrutiny of profitability can constrain the executive leader's flexibility when it comes to making longer-term investments," since stockholders may be resistant to investments that reduce profitability in the short term. But on the flip side, he adds, "The access to capital," if $60 million is gained, "can be used for investment to grow the company."
While one of Impinj's competitors, NXP, is also a public company, Alien Technology is not. However, McBeath speculates, Impinj's public offering is likely to have less influence over Alien or NXP than each firm's market and product strategy and execution would. "I'm not sure this is as important as the competition around overall product direction, functionality and other factors," he says.
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