Impinj (PI) risk factors, FY2024 10-K

Risks Relating to Our Platform, Products and Technologies

1. 01We operate in a very competitive market
2. 02Test and measurement systems: CISC
3. 03RAIN adoption is concentrated in key markets and the extent and pace of RAIN market adoption beyond those markets is uncertain
4. 04We must introduce new products, product enhancements and services to compete effectively
5. 05the effectiveness of our marketing, sales and support
6. 06We believe we are still at a very early stage in our ability to deliver enterprise solutions. If we do not succeed in identifying, developing, selling and deploying enterprise solutions with top-tier partners and end users across a range of markets and use cases, then our business prospects will suffer
7. 07We rely on endpoint IC sales to generate most of our revenue
8. 08The average selling prices of our products could fluctuate substantially
9. 09Pricing commitments and other restrictive provisions in our customer agreements could adversely affect our operating results
10. 10Changes in our product mix could adversely affect our overall gross margin
11. 11Our products must meet increasingly demanding specifications for quality, reliability and performance. Our products are both highly technical and deployed in large, complex systems in which errors, defects or incompatibilities can be problematic for our partners and end users
12. 12increased insurance costs
13. 13End users and partners must design our products into their products and business processes
14. 14Our visibility into the length of the sales and deployment cycles for our products is limited
15. 15An inability or limited ability of end user systems to exploit RAIN information may adversely affect the market for our products
16. 16Technology developments may affect our business negatively. Breakthroughs in legacy RFID technologies or markets, including those using low frequency or high frequency RFID technology, or in other radio technologies, could adversely affect RAIN market growth and demand for our products
17. 17Significant changes in RAIN standards bodies, standards or qualification processes could impede our ability to sell our products and services
18. 18Our readers and gateways are collectively certified for use in more than 40 countries worldwide, including the United States, Canada, Mexico, China, Japan, South Korea and every country in the European Union, or the EU
19. 19Sales of some of our products could cannibalize revenue from other products
20. 20Our licensing program is nascent

Risks Relating to Our Personnel and Business Operations

1. 21We obtain the products we sell through a limited number of third parties with whom we do not have long-term supply contracts
2. 22Some products have long lead times, and we place orders for them many months before our anticipated delivery dates to our customers. If we inaccurately forecast customer demand, then we may be unable to meet our customers’ delivery requirements or we may accumulate excess inventory, increasing our costs
3. 23Shortages of silicon wafers, IC post-processing capacity or components used in our readers and gateways may adversely affect our ability to meet demand for our products and adversely affect our revenue and/or gross margins
4. 24We bear inventory risks because our products have relatively long lead times, demand for our products are hard to accurately forecast, and we rely on partners to sell and distribute our products
5. 25We regularly evaluate potential strategic transactions, and we may pursue them if complementary to our business. For example, in April 2023 we completed our acquisition of Voyantic Oy, a global provider of RFID (primarily RAIN and NFC) inlay and label design, manufacturing and test systems
6. 26unanticipated or unknown liabilities relating to the acquired business
7. 27Changes in U.S. and foreign laws and policies governing international trade, export controls, manufacturing, development and investment in the jurisdictions where we currently develop and sell products, and any negative consequences resulting from such changes, could materially affect our business
8. 28We are subject to risks inherent in operating abroad and may not be able to successfully maintain or expand our international operations
9. 29We are subject to governmental export and import controls, and trade and economic sanctions that could impair our ability to compete in international markets and subject us to liability if we fail to comply
10. 30Instability or deterioration in the political, social, business or economic conditions in key jurisdictions could harm our supply or development of products
11. 31We could be forced to transfer our manufacturing, testing and post-processing activities to more stable, and potentially more costly, regions or find alternative suppliers
12. 32Our business operations could be adversely affected by natural disasters or public health outbreaks and pandemics

Risks Relating to Our Relationships with Partners and End Users

1. 33We rely on a small number of customers for a large share of our revenue
2. 34Our competitors’ relationships with, or acquisitions of, these partners or distributors could interfere with our relationships with them. Any such interference could impair or delay our product sales or increase our cost of sales
3. 35Our ability to affect or determine end-user demand is limited in part because we sell and fulfill primarily through partners and rarely directly to end users
4. 36Our partners may not properly forecast end users’ demand for our products
5. 37Our growth strategy depends in part on the success of strategic relationships with third parties and their continued performance and alignment
6. 38If we fail to maintain or enhance our brand recognition or reputation on which our business depends, then our business could be harmed
7. 39managing both positive and negative publicity
8. 40Increasing attention to environmental, social and governance and regulatory matters may cause us to incur additional costs or expose us to additional risks

Risks Relating to Our Intellectual Property

1. 41If we are unable to protect and enforce our intellectual property then our business could be adversely affected
2. 42As we increasingly work with third parties, possibly including parties that compete with us to an extent, to advance our technical innovations and features, we cannot guarantee that our efforts to protect our intellectual property will be completely effective
3. 43we will retain the right to ask for a royalty-bearing license to an industry standard if we fail to file an intellectual property declaration pursuant to the standards process
4. 44We have been and may in the future be party to intellectual property disputes which could be time consuming and costly to prosecute, defend or settle, result in the loss of significant rights, and adversely affect RAIN adoption or adoption of our products or platform
5. 45pay substantial damages to our partners or end users for them to discontinue using, or replace, infringing products with noninfringing products
6. 46Intellectual property policies of industry standards organizations in whose working groups we participate could require us to provide royalty-free licenses of some to our intellectual property
7. 47practicing the protocol. As a participant in developing ISO standards, we agreed to license on a RAND basis those of our patents necessary to practice those standards, subject to us receiving a reciprocal RAND license from the other entity practicing the standard
8. 48We rely on third-party license agreements which, if impaired or terminated, could cause production or shipment delays that could harm our business
9. 49Our use of open-source software may expose us to additional risks and weaken our intellectual property rights

Risks Relating to Privacy and Cybersecurity

1. 50Privacy and security concerns relating to RAIN could damage our reputation and deter current or potential customers from using our products
2. 51We cannot be sure that any limitation-of-liability provisions in our agreements with customers, contracts with third-party vendors and service providers or other contracts will protect us from liabilities or damages against claims relating to a security breach or other privacy- or security-related issue
3. 52Additionally, if we fail to develop products that meet end-user privacy requirements, then end users may choose not to use our products
4. 53A breach of security or other security incident impacting our systems or others used in our business could have an adverse effect on our business

Risks Relating to Our Financial Position and Capital Needs

1. 54We have a history of losses and have only achieved profitability periodically. We cannot be certain that we will attain or sustain profitability in the future
2. 55We have a history of significant fluctuations in our quarterly and annual operating results
3. 56unanticipated impairment of long-lived assets and goodwill
4. 57Debt financing, if available, may include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, expending capital or declaring dividends, or may impose financial covenants that limit our ability to achieve our business objectives

Risks Relating to U.S. Federal Income Tax

1. 58Our ability to use net operating losses and research and development credits to offset future taxable income and income taxes may be limited
2. 59We could be subject to additional income tax liabilities
3. 60Changes in tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions
4. 61The CHIPS and Science Act, enacted August 9, 2022, provides tax credits for semiconductor manufacturing activities within the United States, but because we outsource our semiconductor manufacturing we do not expect to be entitled to these tax credits

Risks Relating to Our Financial Reporting and Disclosure

1. 62Any failure to maintain an effective system of disclosure and internal controls over financial reporting, or our ability to produce timely and accurate financial statements, could adversely affect investor confidence in us
2. 63As a public company, we must maintain effective disclosure controls and procedures and internal control over financial reporting. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud

Risks Relating to Owning or Trading Our Securities

1. 64The market price of our common stock has been and will likely continue to be volatile, and the value of your investment could decline significantly
2. 65general economic conditions and slow or negative growth in the markets in which we operate
3. 66Transactions relating to the 2021 Notes may affect our stock’s value
4. 67Our principal stockholders and management own a significant percentage of our stock and are able to exercise significant influence over matters subject to stockholder approval
5. 68We may not have sufficient cash flow or access to cash necessary to satisfy our obligations under the 2021 Notes, and our current and future indebtedness may restrict our business
6. 69Anti-takeover provisions in our charter documents and under Delaware or Washington law could prevent, delay or impede an acquisition of us and constrain our stock price
7. 70provide that special meetings of our stockholders may be called only by the chair of the board, our chief executive officer or the board of directors
8. 71Our bylaws include provisions that could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees