Impinj Inc (PI) 2017 Q1 法說會逐字稿

Good afternoon and welcome to Impinj's first-quarter 2017 earnings conference call.

(Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Maria Riley with investor relations.

Please go ahead.

Thank you, operator, and thank you all for joining us to discuss Impinj's first-quarter 2017 results.

On today's call, Chris Diorio, Impinj's Co-founder and Chief Executive Officer, will provide a brief overview of our performance and market.

Evan Fein, Impinj's Chief Financial Officer, will follow with a detailed review of our first-quarter 2017 financial results and second-quarter 2017 outlook.

We will then open the call for questions.

Impinj's President and COO Eric Brodersen is also on the call and will join Chris and Evan in the Q&A session.

Please note that management's prepared remarks along with quarterly financial data for the last eight quarters are available on the Company's website.

Also, we will consider questions received via email prior to the call and will address some of these questions in the Q&A session on this call.

Before we start, note that we will 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 of 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 expectations are subject to risks and uncertainties.

Please see the risk factors section in the annual and quarterly reports we file with the SEC for additional information about these risks.

We do not undertake and expressly disclaim any obligation to update or alter our forward-looking statements, 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 operation results with the exception of revenue or where we explicitly state otherwise are non-GAAP financial measures.

Balance sheet metrics and cash flow metrics are on a GAAP basis.

I will now turn the call to Chris Diorio, Impinj Co-founder and Chief Executive Officer.

Chris?

Thank you, Maria, and thank you all for joining the call.

I'm delighted to be here with you today.

We delivered a strong first quarter, with revenue growing 47% year over year to $31.7 million, just above the top end of our guidance.

All layers of our platform delivered solid results.

Importantly, the momentum we see in our business today is strong.

I will begin this call by briefly reviewing Impinj's vision and mission.

I will then discuss that strong momentum, starting with the themes that provide context for it.

I will close by reviewing Impinj's platform strategy, which I firmly believe positions us to win this enormous market opportunity.

Impinj's vision is digital life for everyday items.

Our mission is to wirelessly connect those items to applications.

We are literally extending the reach of the Internet by a factor of 100 to everyday items and delivering to the digital world each item's unique identity, location, and authenticity, which we call Item Intelligence.

Our platform enables that connectivity and delivers that Item Intelligence to a broad and diverse range of business and consumer applications.

My view of the RAIN market today is strong growth with enormous potential.

Starting with that strong growth, recall on our last earnings call we guided our 2017 Endpoint IC volumes to be between 7.8 billion and 8 billion units, 32% growth over 2016 at the midpoint.

Roughly equivalent to one IC for every person on the planet.

That prior guidance, which represents growth of nearly 2 billion units over 2016, remains unchanged.

I will touch on the drivers of that growth next, then I will turn to that enormous potential, which to me paints a picture of a very bright future.

Starting with today's strong growth, retail apparel has been an important driver, both for us and for the entire RAIN industry.

As example is Decathlon, which hosted the recent RAIN meeting in France, said they want to drive tagging to 100% and extract more value from those tagged items by expanding the reading infrastructure.

Macy's announced its plans to have 100% of its merchandise connected by the end of 2017.

At the RAIN meeting in Japan last year, I visited Uniqlo and GU stores, both fast retailing brands, and saw large numbers of connected apparel items.

These growth points, which we see at other retailers as well, deliver today's IC revenue.

They also engender fixed reading opportunities for us, which we believe will be one driver of that enormous potential I mentioned previously and will turn to now.

When a retailer reaches 100% item connectivity, they typically begin complementing handheld readers with fixed reading to enable additional use cases.

For example, Decathlon's flagship store, which we toured at the RAIN event, has RAIN-enabled point-of-sale and theft detection readers.

I bought an item at that store to experience these use cases in action.

I also tried the RAIN-enabled self-checkout terminals in a GU store in Japan.

And I'm excited about a joint solution that Impinj and our partner Retail Reload deployed at [Etown], a French retailer, which gives shoppers an in-sort experience that is online-like but delivers the item in-store within seconds.

Or delivers it to your home within two hours.

The result: a 9.8% uplift in same-store sales and a 40% improvement in checkout productivity.

These retail examples mark a trend towards supplementing manual handheld reading with fixed reading, which doesn't have labor costs and delivers RAIN data in real-time.

In logistics and healthcare, which have a compelling need for item visibility, fixed reading is really the only option.

We envisioned and helped enable the shift from manual to fixed reading via the connectivity and software layers of our platform, and we are well positioned to benefit from it.

Consider logistics -- any company that transports items needs real-time visibility into those items' location and movement.

Impinj's platform delivers that visibility.

In the first quarter, we enabled a deployment at scale with UBI Solutions at Viapost, the e-commerce fulfillment and logistics arm of the French postal company, La Poste.

Their need: in under two hours receive billions of magazines or newspapers from publishing houses and ship them to end customers across France.

The solution: our xSpan gateways and ItemSense operating system software monitor inbound and outbound shipments through dock doors.

We introduced a similar joint solution with Smart Label Solutions in the United States to monitor inbound and outbound shipments through dock doors.

And other examples abound.

For example at LogiMAT, the big logistics show in Stuttgart in March, Impinj's partner [SIC, Cataran, and Villant] showed RAIN-enabled dock door and logistics applications.

Turning now to healthcare, at the HIMSS conference in February, I introduced a discussion among panelists from the Memorial Sloan-Kettering Cancer Center, the Medical University of South Carolina, Inova Fairfax Hospital, and the Veterans Administration.

The panelists shared their experiences and avid enthusiasm for how RAIN and the Impinj platform had improved their hospital operations.

For example, Will Hammond, supply chain director at Memorial Sloan-Kettering Cancer Center said MSKCC with 50 operating rooms spends $30 million a year on perioperative supplies.

Prior to the RAIN deployment, hospital staff performed replenishment cycle counts every week, and still, usage data didn't match purchasing.

Our partner Arc Healthcare closed that gap, allowing MSKCC to rightsize inventory, improve chart capture, find inventory.

And, in Will's words, the amount of time and headaches it saves is absolutely incredible.

Another example, Arpit Mehta, the pharmacy operations manager at Inova Fairfax, discussed the benefits of the Impinj platform in stocking crash carts, which contain medicine trays and supplies.

Impinj and our partner METS cut five minutes of pharmacist time restocking each tray to 90 seconds for 300 trays per month with improved accuracy and better patient care.

And, in Arpit's words: if a medication is recalled, which does happen quite a bit, now we know exactly where the medication is, who received it, which tray it was in, and we can track it back to our patients.

Healthcare is one of our enormous opportunities, as I'll illustrate with three closing examples.

In Denmark, the new university super hospital is deploying Impinj readers to locate beds, wheelchairs, and surgical tools.

Our win built on our platform's enterprise class reliability and performance is a competitive takeout for Impinj.

As a second example, with our partner Teletracking, we introduced a hospital patient flow solution built on the Impinj platform that alerts hospital staff to patient discharges in real-time, accelerating a hospital bed turnover to reduce lost bed time and increase revenue.

Both of these healthcare deployments use fixed reading in the healthcare facility.

As final example, in February, we announced a partnership with STANLEY Healthcare, a leading provider of visibility solutions and analytics for the healthcare industry.

STANLEY Healthcare will integrate Impinj's platform with its mobile view real-time location system software platform.

And offer the Impinj STANLEY solution as part of its extensive portfolio, enabling STANLEY Healthcare to operate Impinj-based solutions for real-time asset tracking and patient workflow management.

I will close my discussion of the enormous market potential and bright future with a few final points.

Kaiser Permanente just joined the RAIN Alliance.

In Japan, 7-Eleven and four other convenience stores, which together sell 100 billion items a year, plan to introduce self-checkout registers to read RAIN-tagged items in a basket with Lawson already piloting the registers in Osaka.

H&M in their full-year report said they intend to invest in technology, quote, such as RFID and automated warehouses, end quote.

And Amazon just took a seat on the RAIN Alliance Board of Directors.

On our last earnings call, I said that going forward, we anticipate the portion of our revenue attributable to connectivity and software to increase.

Examples I just cited highlight that trend, which we saw in the first quarter and expect to continue over time.

Our platform strategy is aligned with that momentum towards fixed reading, and we stand to benefit significantly from it.

Further we are and will continue competing aggressively to drive every layer of our platform into the market, relentlessly competing to win share at every opportunity.

Today I remain ever more confident in our plan to invest in, lead, and win this enormous market opportunity that spans retail, logistics, healthcare, and so many other verticals.

In summary, I'm proud of the Impinj team's execution this quarter and our continued progress toward our vision of digital life for everyday items.

We delivered a strong Q1 and I believe our results are a testament to our continued leadership in the market.

We grew to 261 employees and continue investing in our technology, products, platform, and team.

We exited the quarter with about 210 issued and allowed patents, an increase of 6 since January 1.

We added three joint solutions to our portfolio.

We received a Frost & Sullivan award for customer value and leadership for our RFID solutions in healthcare.

And I'm thrilled to welcome two new members to our executive team: Jenny Armstrong Owen as our Vice President of People, Environments, and Culture; and Jeff Dossett as our Senior Vice President of Marketing and Business Development.

Jenny and Jeff are both seasoned leaders and I couldn't be more excited about the talent they bring to our team.

As I noted in my opening comments, the momentum we feel today is strong.

In closing, I will again note that Impinj and Amazon are cohosting the RAIN Alliance meeting July 18 to 20 in Seattle, with July 20 an open day when nonmembers are welcome to attend.

I will now turn the call over to Evan to give you a detailed look at our first-quarter financial results and our outlook for the second quarter.

Evan?

Thanks, Chris.

Before I review our first-quarter 2017 financial results, I want to remind you that with the exception of revenue or unless 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.

A reconciliation between our non-GAAP and GAAP measures as well as how we define our non-GAAP measures is included in our earnings release available on our website.

As Chris mentioned, we delivered a strong first quarter, with revenue of $31.7 million, representing 47% growth over the first quarter of 2016.

That growth was driven primarily by the team's strong execution and the market's continued adoption of our platform.

Our gross margin for the first quarter was 54.2% compared with 52.6% in the first quarter of 2016.

This 160-basis-point year-over-year improvement reflects continued adoption of our newest Monza R6 Endpoint IC family.

Total operating expense in the quarter was $17.0 million or 53.4% of revenue compared with $16.3 million or 48.5% of revenue in the prior quarter.

R&D expense was $6.6 million or 20.7% of revenue.

Sales and marketing expense was $6.6 million or 20.8% of revenue.

G&A expense was $3.8 million or 11.9% of revenue.

We ended the quarter with 261 employees and 42 open positions compared with 245 employees at the end of last quarter.

We delivered $246,000 in adjusted EBITDA in the quarter or 0.8% of revenue.

As a reminder, in 2017, we plan to maintain our EBITDA margin in low-single-digit percentages, as we increased our investments to enhance our leadership position and capitalize on the enormous and diverse market opportunity that Chris just talked about.

GAAP net loss for the quarter was $2.2 million.

On a non-GAAP basis, we achieved first-quarter net income of $129,000 or earnings of $0.01 per share using a weighted average diluted share count of 21.7 million shares.

Turning to the balance sheet, we ended the quarter with cash and cash equivalent and short-term investments of $83.5 million.

Accounts receivable balance was $21.1 million, up $3.6 million from last quarter.

Consistent with our plan, we continued increasing inventory levels to meet market demands, reduce lead times, and support our growth.

We increased inventory by $11.5 million over the prior quarter, bringing the balance to $39.2 million.

We plan to continue investing in our inventory balance in Q2, expanding our finished goods buffer to be responsive to market opportunities.

And then we will moderate the expansion on a dollar basis for the remainder of the year.

Turning now to our outlook, we expect second-quarter 2017 revenue to be in the range of $32.4 million to $33.9 million, reflecting 28% year-over-year growth at the midpoint.

We expect adjusted EBITDA to be in the range of a loss of $0.6 million to income of $0.9 million.

On the bottom line, we expect non-GAAP earning to be in the range of a loss of $0.5 million to income of $1.0 million.

And non-GAAP EPS to be between a loss of $0.02 and income of $0.05 per share based on a weighted average diluted share count in the range of 21 million to 22 million shares.

As Chris already noted, we are maintaining our 2017 Endpoint IC volume estimate between 7.8 billion and 8.0 billion units, representing 32% growth over 2016 at the midpoint and a 2010 to 2017 volume CAGR of 36%.

With that, I will turn to call over to the operator to open the question-and-answer session.

(Operator Instructions) Brad Erickson, Pacific Crest Securities.

First, thanks for taking my questions.

First, to start out on the guidance, obviously the growth rate in Q2 being little bit below the Endpoint IC guidance, can you help us dimensionalize that in the year within the context of your comments around faster connectivity growth in tag ICs this year?

Eric, can you take that one?

Sure.

Thanks, Brad.

Let me just highlight and continue to emphasize Chris's points about our momentum across multiple markets and solid growth across all layers of the platform.

I break down guidance really two ways.

First, when you think about our Q2 revenue guidance, it's really right in line with our overall annualized guidance for the year.

And second, I think regarding the comparison versus year ago, recall that we've discussed previously how the 2016 growth rates at the Endpoint layer were accelerated by several step function changes in demand.

And Q2 last year was really the period that some of those events really began to impact our business.

So in our guidance, we are seeing strong growth even up against that strong year-ago comparison.

We feel like we're right on track and driving forward across all layers of the platform.

Got it.

And then there's obviously been a lot of reports of retail store closures here recently.

Evan, you made some nice comments earlier on the balance sheet and how you're thinking about inventory levels.

How do you feel about inventory, and specifically your visibility of inventory, with your inlay providers?

And maybe just talk about where you stand today on that?

Evan, can you take that one?

Yes.

Hi, Brad.

So as you know, we have an array of Endpoint IC customers that we keep in regular contact with.

We have relationships at all levels of those customers, meaning both executive and kind of in the line and managerial level.

And based on those checks, we feel very good about the inventory levels at those places.

Got it.

And then one last one, if I could.

We all saw Apple's patent filing a few days ago.

Curious to get your take on that.

So I guess kind of two fronts -- one, could that be -- could that kind of deal be competitive or complementary?

How you are viewing that?

And then just maybe if you could provide any update on any partnerships or progress you are working on with smartphone vendors, of the view of someday having reader ICs in our phones?

Thanks.

Okay.

Brad, this is Chris.

I'll take that one.

So I'll just start with the patents.

We think the fact that large companies like Apple -- and you'll note that there are a set of others who have been patenting as well -- those patent applications and especially where they are targeting them in terms of the application space are a further indication of our market opportunity.

And really a validation of the direction we're heading to connect every item in your everyday world.

We believe that patenting is a good sign for the business and it's a sign of a healthy market.

And then your second part of your question was just about our drive towards ubiquitous connectivity and enabling really reading to be part of the infrastructure, part of our environment.

As you know, ubiquitous reading is one of our key focus areas and we continue our developments in that area, in terms of our partnerships, in terms of the products we're developing to bring to market.

And you should expect us to be really pushing on ubiquitous connectivity going forward.

Got it.

And then maybe one last one, if I could squeeze it in.

Just related to the Japanese retailers you called out in the prepared remarks.

Can you talk about sort of what your go-to-market is there?

If it varies -- if it's different at all from what you're doing here in North America?

And then relative to an average retail customer here in the US, how should we think about timing and the size of some of those new wins coming into the model?

Thank you.

Specifically in regards to Japan, we've had a Japan presence for a long period of time.

I note that I've been visiting Japan multiple times a year for probably the past 10 years.

And we do have a sales team located in Japan.

We view those opportunities as -- specifically the Japan convenience store opportunities as being in line with other opportunities we see for connecting items.

In this particular case, connecting food items, and we've mentioned food previously.

If you look at the announcement from the Japanese government as well as some of the other parts of the announcement as well, the timeline for that deployment to ramp to 100 billion items, at least what they cite in those announcements, is fully rolled out by 2025.

I can't speak to whether that's going to happen or not or the pace at which they will go, but the announcement specifically talks about RFID tagging of items.

And he puts a timeline for it and also cites a value proposition for it.

And we view those kinds of announcements as a further validation of our vision.

Got it.

That's great.

I'll jump back in the queue.

Thanks.

Craig Hettenbach, Morgan Stanley.

Yes, thanks.

Just on the topic of the 32% Endpoint growth and really the backdrop, Chris, of your comment, very strong momentum across the business.

So can you talk about maybe some puts and takes that could have the Endpoint IC growth being on either side of that 32% as you go through the year?

So I'm going to start by saying we feel good about our guidance, that 32% unit growth at the midpoint.

And as I noted in my comments, we are more excited about business today than really at any time in the past.

And so we feel good about those numbers.

As I mentioned on the last call, last year we saw some fairly significant step-function opportunities that came in as a consequence of large end customers starting to deploy.

And I noted at that time that those opportunities may happen again in 2017.

And so some of the puts there -- what we see as opportunities going forward if some of those big events happen.

We're not counting on them, but if they come, it could be upside to our forecast or to our guidance.

Got it.

And then as a follow-up, can you give an update on just what you're seeing in terms of ItemSense from a momentum?

Any anecdotes you can provide in terms of impact on sales and margins as well?

Eric, would you mind taking that one?

Sure.

So I think I would just continue to emphasize that, along with that momentum in logistics and retail that Chris highlighted, what we see in those is that this value proposition for our distributed OS ItemSense, it really is transformational.

And it is more compelling and more important to our go-to-market notion and our business than ever before.

Qualitatively, I would tell you that our pipeline and POCs are increasing in quality and quantity.

And our sales motion has really shifted from several quarters ago, where we may have been more in the market creation or evangelization stage.

Now it's all about improved targeting and qualification.

So the maturation of our sales motion and our ability to drive at repeatable use cases we feel great about.

I would still emphasize: this -- we're still in the early stage of ItemSense and the overall operating system itself.

But we're continuing to innovate with our partners, as we said.

We are launching new solutions and very pleased with the progress.

Got it.

Thanks for all the color.

Mike Walkley, Canaccord Genuity.

Thank you.

Chris, just building on some of your comments, have you seen any changes across any layers of your platform in terms of new competitive threats or change from your competitors?

Thanks, Mike.

Really what we see across the market is competition at all layers of our platform, but no one competing against the entirety of our platform.

And we're seeing a little bit of stiffened competition as the market heats up, as you might expect.

The market is getting bigger and the opportunities are out there.

But in terms of any significant material change compared to where we were a while back, there's nothing that I could really point out or note specifically.

Okay.

Great.

And just building on some of your other comments, just with the strong Endpoint growth and the movement you think in the market more to fixed readers, can you just talk about kind of the visibility you're seeing in that market?

Should we see the strong Endpoint growth over the last year as kind of a leading indicator to a move towards more fixed readers, which would certainly play into your business model?

I think you should view the Endpoint growth as a leader and as an indicator of overall market adoption, as we've cited previously.

And because the Endpoint ICs go on the items and that number of items being tagged is a good indicator.

But you should also expect that as more verticals adopt -- and I mentioned specifically logistics and healthcare, but there are others out there.

As more of those verticals adopt, the opportunities for fixed infrastructure really increase.

If you think about retail, it's sort of natural for a retail store employee to be using a handheld reader to inventory because they have historically done so with barcode readers.

But as we move to logistics, healthcare, automotive, airlines, and other verticals, there is not really such an opportunity for those handheld readers.

And fixed infrastructure will become more and more the norm to get data in real-time about items that a company transport, manufactures, or sells.

Great.

Thanks.

And then Evan, just a question for you on just Endpoint.

Any change in pricing trends?

And how should we think maybe about pricing in 2017 versus 2016 in terms of your product portfolio?

Thank you.

Sure.

As you know, Mike, the Endpoint IC prices do decline annually.

Most of that happens when we negotiate the year-long agreements that we have with our major Endpoint IC customers.

And so kind of the single-digit price declines are consistent with what we've seen from the last several years.

Great.

Thank you.

That's it for me.

Thank you.

Mitch Steves, RBC Capital Markets.

So I just had two quick ones from me.

So first, on the inventory side, it looks like that's building pretty rapidly here.

It looks like you're at $39 million for March, but then you are talking about potentially this being one of the best setups you've seen in years.

So is this just essentially a backlog of demand building or why is the inventory up another $12 million or so?

Sure, Mitch.

Good question.

Before we even IPO'd, we identified one of the needs to do the IPO as an investment in working capital and specifically inventory.

2016 was a year where we were not able to adequately meet customer demand because our inventory position was too low.

And we are in the process of correcting for that so that we can have an inventory position that meets demands of our market, the timing needs of our customer, and so forth.

And we're not quite there yet.

The $39.2 million is a step in that direction.

But as I said, the momentum and the demands are so great, we're going to invest even more in inventory in the second quarter.

And then that growth in inventory will slow a bit on an absolute basis that will continue to rise.

But the expansion will moderate.

Got it.

And then a second question.

So overall, you guys are continuing to execute into your plan.

So revenue growth is higher than you guys expect.

But if I look at the kind of overall OpEx line, how do we think about the sales guys you guys are hiring and ramping?

When do we kind of see the inflection point on the margin line?

Is it going to improve through 2017 or is the entirety of 2017 essentially an investment year?

Sure.

Mitch, this is Evan.

Consistent with our previous guidance, we view 2017 as an investment year.

Those investments include both the go-to-market investments that you are talking about and R&D investments on the platform.

There's been no change to the places we're investing or the level of investment.

The consequence of that is low-single-digit EBITDA margins as a percent of sales in 2017 and then some bend in the model in 2018.

So there's been no change to kind of our plan in that area.

Got it.

And then just one small one for the software side.

Is it still kind of around 1%?

Because I remember there was a big uptick in December, and is that going to continue through 2017?

Mitch, we haven't quantified the software revenues on a quarterly basis.

But there's no change to our guidance of software being 5% of the revenues in that 2019 to 2020 model.

Perfect.

Thank you.

(Operator Instructions) Jim Ricchiuti, Needham.

Thank you.

Good afternoon.

You've spent a good amount of the prepared remarks talking about opportunities in the fixed reader market.

I'm wondering if you are doing anything differently in terms of pursuing this market, which seems like it's, if anything, accelerating.

So are there some areas either on the R&D side that you are spending more or are you beefing up sales and marketing to go after this?

If you could just elaborate on this opportunity and whether you are changing your strategy about going after it?

So, Jim, thanks for the question.

This is Chris.

I'll start with the answer and then I'm going to hand off to Eric to provide some additional color.

To your question about whether we're changing, the answer to that question is really no.

We've always envisioned fixed infrastructure as kind of the next step for RAIN RFID and for our platform to deliver visibility into items.

We've talked about expansion into other verticals, about ubiquitous connectivity.

And we've really envisioned the future as readers as part of the environment.

And that getting information from tagged items, from connected items, in real-time as being our vision.

And that's where we've been investing and driving towards.

So for us, it's a no change.

In terms of what we're seeing out in the market, I'll hand it off to Eric.

Jim, you were probing on any adjustments in the way that we're resourcing or driving the go-to-market motion.

I'd tell you, we continue -- I made one comment earlier about this idea that we're no longer evangelizing.

We're actually refining, targeting, and driving against use cases where we know we're going to be successful.

That's a big improvement.

And when you step into that phase of development, it's logical that we're investing in SE -- so presales engineers and channel resources to help scale that business.

So from a fixed infrastructure standpoint and investment, those are the places where you are seeing us add additional talent.

Okay.

And Chris, I wanted to go back to an earlier comment you made about last year.

How there was some large opportunities that you either had in your pipeline, had a line of sight to, and you never quite know if those are going to materialize or not.

I'm just trying to get a sense: do you have a line of sight into some of these opportunities this year?

Do you normally have visibility to those or do they tend to come up more opportunistically?

So Jim, I guess I'm going to answer the question in this way, which is by saying we have a lot of end-customer engagements.

We've got a lot of partner engagements.

And those engagements are the reason I talk about this enormous opportunity and painting a bright picture of the future.

However, the bigger the opportunity is, the less certainty often we have about when it is going to hit.

And in many cases -- I might even say in most cases -- a lot of the decisions for a big company to deploy are made at a very high level at the company, often sometimes at a Board level.

And when that company decides to go forward and when the priority for going forward is high enough for them to invest in it and really to push forward compared to other things they have to do at the company, we typically don't know exactly when it is going to hit.

And often the people we're working with at the company don't know when it's going to hit.

So we see opportunities out there, we see the promise for the future, we see a lot of them.

But citing when any particular -- as we call them, the whales -- when they are going to land is very difficult for us to predict.

And certainly don't want to be forecasting or giving you guidance on something that might happen in any near term in the future.

But our bright picture of the future is about all the things we see out there.

Okay.

And last question for me is just outside of the traditional brick-and-mortar retailers who are doing all sorts of things to stimulate demand via omnichannel strategies and what not, I'm wondering if you're seeing increased opportunities in what are considered maybe more pure play e-commerce companies?

Jim, I think the -- you're absolutely right.

We like retail.

It's going to continue to be a strong vertical for us.

And regardless of how this combination of brick-and-mortar and e-commerce converge for the new model, we do believe we are foundational, really strategic, to how retailers are going to go to market.

And so I can't comment on specific mixes between online and on-prem, but just know that when you think about the expenses that we are seeing, there's really a convergence.

You are seeing online retailers moving to fixed infrastructure stores or brick-and-mortar stores and vice versa.

So we think the trends are very observable.

As Macy's rightsizes their store count, they are extending tagging to more departments.

And as they reach higher percentages of tagging, they are extending to new use cases and more penetration opportunities for fixed infrastructure and our full platform.

That Etown example that Chris highlighted is an excellent e-commerce, omnichannel, in-store experience example that's driving revenue growth.

So we think those value propositions resonate whether you are a pure e-tailer, which as I said I think is actually blending into the brick-and-mortar world, or whether you are a traditional brick-and-mortar store.

Thanks a lot.

Troy Jensen, Piper Jaffray.

Congrats on the nice results, gentlemen.

I think my first question here is going to be for Chris.

Could you just give us a little bit more detail about this July RAIN RFID event that you're cohosting with Amazon?

Any idea on whether or not they are going to be showing off best practices or demos?

Or any color would be helpful.

Yes, so thanks for the question, Troy.

So the RAIN Alliance holds three meetings a year: typically one in the US, one in Europe, and one in Asia.

This happens to be the one in the US.

As I noted, it's cohosted by Impinj and Amazon.

The agenda is not fully fleshed out and so I can't speak yet as to whether there's going to be any particular demos or anything along those lines.

But the meeting will follow the typical meeting agenda that we've had for all the other meetings, which is that there will be two days of members-only sessions.

And then the final third day will be open to nonmembers, and of course, you are welcome to attend that nonmembers day.

But in terms of whether there's going to be demos or other things, I can't speak to it at this time.

I honestly don't know.

And I think you should keep your eye on the RAIN Alliance webpage and the agenda will get posted.

Perfect.

Thank you.

And then just maybe a last question for me.

Just maybe an update on Delta Airline vertical?

How far along is the Delta deployment?

Have you seen other carriers move?

I don't think we can speak to anything about Delta, other than it's been in the press and there was an announcement a couple of months ago.

And I believe that's the most recent announcement that's out there.

Other than that, it's just anecdotal things: going on flights and using the Delta app.

And seeing people tracking their flights on airplanes, which to me is incredibly exciting.

It's kind of rewarding when I see people on their phone in a boarding line actually checking to see if their bags made it on the plane.

But in terms of actual announcements, I don't think there have been any public announcements, at least none that I'm aware of subsequent to the one a couple of months ago.

Chris, I think only you would find that exciting.

But congrats and keep up the good work.

Thank you.

Craig Hettenbach, Morgan Stanley.

Thanks.

Chris, you mentioned you continue to compete aggressively for this big opportunity.

Any update on just kind of how you feel from a market share and some of the momentum and business opportunities for 2017?

We feel good.

We grew 47% over first quarter 2016, which we feel is healthy growth.

In terms of actual share at any layer of our platform, the data come out -- the analyst data come out at the end of the year, so I can't update you on market share.

But we feel good about our position in the market, good about our competitive positioning.

And we intend to continue competing aggressively.

Our real goal here is to win this market opportunity and maintain and gain share.

Got it.

Thanks.

This concludes our question-and-answer session.

I would like to turn the conference back over to Chris Diorio for any closing remarks.

I'd like to thank everybody for joining the call today.

I'd like to thank our investors for being on and supporting us over the past year since our IPO.

And we'll look forward to talking with you again next quarter.

Thank you.

Thank you, sir.

The conference has now concluded.

Thank you for attending today's presentation.

You may now disconnect.