Impinj Files for an IPO

A successful listing of its shares would be a boon to the RFID industry.
Published: April 28, 2011

Apr. 28, 2011—The news that Impinj, a provider of ultrahigh-frequency (UHF) RFID chips (or integrated circuits), had filed documents with the U.S. Securities and Exchange Commission for an initial public offering (IPO) of its stock created quite a stir (see Impinj Files for Initial Public Offering). A successful IPO could be very good news for the RFID industry.

In 2003 and 2004, when radio frequency identification was still in its hype phase, there was a lot of interest among venture capitalists. When the technology failed to take off as quickly as expected, investment in startups quickly dried up (some established RFID companies have since received additional rounds of funding). If Impinj is able to list its shares on a public stock exchange (the S-1 filing didn’t specify which exchange), it would likely encourage additional VCs to look at RFID companies.

What are the prospects for a successful offering? It’s difficult to say. Impinj is clearly betting that its recent explosive growth will attract investors. From 2009 to 2010, the firm reported that sales of its Monza UHF Gen 2 tag ICs—the company’s largest source of revenue—grew by 279 percent. The S-1 filing indicates the company has sold two billion Monza tag ICs since the product’s 2005 introduction, with 940 million of those sales taking place last year. A billion tag ICs is a large number, indicating that RFID is clearly across the chasm, at least in certain industries, such as retail apparel.

But IPOs often fail or succeed for reasons outside a company’s control, or that have nothing to do with its performance. If the global economy dips back into recession, or if there is a second financial crisis triggered by the U.S. government’s inability to bring down its rising deficit, that could curtail investor enthusiasm for technology startups.

It’s also unclear to me whether the recent explosive growth that Impinj has experienced will be sustainable in the near term. The company, of course, has visibility into its own future sales, whereas I do not—but I wonder whether retailers such as Walmart Stores, JCPenney, Banana Republic, Macy’s and others that have been reported to be using RFID for tracking clothing items will continue to roll out aggressively, or whether there will be a period of expansion followed by pauses, enabling these retailers to adjust to changes in both business processes and business systems.

My guess is that growth will be uneven over the next two or three years. Retailers will add new categories, which will lead to the consumption of potentially hundreds of millions of transponders, but that might be followed by a year with little or no expansion.

That said, I think the market for RFID technology is close to entering a period of rapid growth. I believe the apparel sector will enter the tornado phase, in which it will suddenly be adopted en masse, within two to five years (see The [RFID] World According to Moore). That will spur adoption of RFID in many other areas—footwear, accessories, jewelry, sporting goods and so forth. From there, it will spread to many other industries as well, as costs come down, the technology gets easier to deploy and software is developed to turn RFID data into useful information.

Personally, I would love to see an Impinj IPO oversubscribed many times. I think it would result in an inflow of investment dollars in the industry that would benefit RFID companies, and ultimately the end users that purchase their products. There are many great RFID firms that have created excellent products by bootstrapping their operations over the past few years. The market is now starting to pick up, so some of these companies will survive and prosper without outside investment. But additional funds would make future product development and marketing easier.

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.