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Why Impinj Stock Slumped Today

What happened

Shares of radio-frequency identification solutions provider Impinj (NASDAQ: PI) slumped on Thursday following the company's fourth-quarter report. While Impinj beat analyst estimates for both revenue and earnings, the company's guidance was weaker than expected. The stock was down about 5% at 11:10 a.m. EST after being down as much as 14.5% earlier in the day.

So what

Impinj reported fourth-quarter revenue of $34.6 million, up 28.8% year over year and $2.6 million above the average analyst estimate. Impinj returned to growth in the third quarter after three quarters of double-digit revenue declines thanks to a channel inventory correction, and that growth accelerated in the fourth quarter.

Image source: Getty Images.

Non-GAAP earnings per share came in at a loss of $0.09, up from a loss of $0.28 in the prior-year period and $0.05 higher than analysts were expecting. While non-GAAP gross margin dropped by 1.5 percentage points to 49%, higher revenue and flat operating costs pushed up the bottom line.

"I'm proud of our team's execution in fourth quarter 2018 and feel we have strong momentum heading into 2019. We delivered our second consecutive quarter of record revenue and record systems sales," said Impinj CEO Chris Diorio.

Now what

Impinj expects to produce first-quarter revenue between $30.0 million and $32.0 million, up 23.5% from the first quarter of 2018 and in line with analyst expectations. But the bottom line will be weaker than expected. Non-GAAP EPS is expected to be a loss between $0.22 and $0.29, well below the average analyst estimate of a $0.16 loss.

While Impinj's inventory correction nightmare is officially over, the market didn't react well to the lackluster earnings guidance.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool recommends Impinj. The Motley Fool has a disclosure policy.

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