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What changed in IMPINJ INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of IMPINJ INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+325 added−297 removedSource: 10-K (2026-02-09) vs 10-K (2025-02-10)

Top changes in IMPINJ INC's 2025 10-K

325 paragraphs added · 297 removed · 251 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

47 edited+5 added−2 removed48 unchanged
Biggest changeOur gateways integrate our readers with beamforming antennas to electrically steer a radio beam like a radar, locating and tracking items in one or two dimensions. Our readers and gateways are easy to deploy and use, can be powered via power-over-Ethernet, or PoE, and are certified for operation in more than 40 countries.
Biggest changeOur readers and gateways are easy to deploy and use, can be powered via power-over-Ethernet, or PoE, and are certified for operation in more than 40 countries. They wirelessly provide power to, and communicate bidirectionally with, endpoint ICs on host items. They also read, write, authenticate and engage the endpoint ICs on those items.
As our inlay partners focus on embedding RAIN tags directly into items, we focus on key innovations like our patented Protected Mode that allows a tag to require a PIN for post-point-of-sale readability, enabling loss-prevention solutions to focus on unsold 7 Table of Contents items while satisfying General Data Protection Regulation, or GDPR, and similar consumer privacy requirements.
As our inlay partners focus on embedding RAIN tags directly into items, we focus on key innovations like our patented Protected Mode that allows a tag to require a 7 Table of Contents PIN for post-point-of-sale readability, enabling loss-prevention solutions to focus on unsold items while satisfying General Data Protection Regulation, or GDPR, and similar consumer privacy requirements.
Taiwan Semiconductor Manufacturing Company Limited, or TSMC, manufactures our endpoint IC wafers primarily in Taiwan and has been our supplier since 2003. We order endpoint IC wafers on a 9 Table of Contents purchase-order basis and do not have a long-term supply agreement with TSMC. We test the wafers primarily in Asia.
Taiwan Semiconductor Manufacturing Company Limited, or TSMC, manufactures our endpoint IC wafers primarily in Taiwan and has been our supplier since 2003. We order endpoint IC wafers on a purchase-order basis and do not have a long-term supply agreement with TSMC. We test the wafers 9 Table of Contents primarily in Asia.
Supply Chain and Logistics SC&L includes shipping companies, third-party logistics providers, postal organizations, captive distribution and other organizations that transport products worldwide. SC&L organizations are increasingly demanding real-time shipping data to virtualize, analyze and optimize their operations. SC&L companies can obtain these benefits using our platform: • Shipment Verification and Parcel Tracking.
Supply Chain and Logistics SC&L includes shipping companies, third-party logistics providers, postal organizations, captive distribution capabilities and other organizations that transport products worldwide. SC&L organizations are increasingly demanding real-time shipping data to virtualize, analyze and optimize their operations. SC&L companies can obtain these benefits using our platform: • Shipment Verification and Parcel Tracking.
We believe the Boundless IoT we are enabling will, in the not-too-distant future, give people ubiquitous access to cloud-based digital twins of every item, each storing the item’s history and linked information and helping people explore and learn about the item. We believe that that connectivity will transform the world.
We believe the Boundless IoT we are enabling will, in the not-too-distant future, give people ubiquitous access to cloud-based digital twins of every item, each storing the item’s history, location and linked information and helping people explore and learn about the item. We believe that that connectivity will transform the world.
Our platform incorporates enhanced functionalities, including extensions to the RAIN air-interface, that we believe improve solution performance, capabilities, reliability and ease-of-use and allow us to surpass mix-and-match solutions built from competitor components. • Market Leadership .
Our platform incorporates enhanced functionalities, including our Gen2X extensions to the RAIN air-interface, that we believe improve solution performance, capabilities, reliability and ease-of-use and allow us to surpass mix-and-match solutions built from competitor components. • Market Leadership .
In addition to the above and other licenses, we as well entered into a broad patent cross-license agreement as a part of a legal settlement. For further information on this agreement, see note 12 of our consolidated financial statements included elsewhere in this report.
In addition to the above and other licenses, we also entered into a broad patent cross-license agreement as a part of a legal settlement. For further information on this agreement, see note 12 of our consolidated financial statements included elsewhere in this report.
Banks use our endpoint ICs for money bundles and to track information-technology assets. • Datacenters . Datacenters use our platform for asset tracking. • Food . Our reader ICs track syrup cartridges for replenishment in soda fountains. Our endpoint ICs track meat, fish and fresh produce for freshness as well as inventory visibility. • Healthcare.
Banks use our endpoint ICs for money bundles and to track information-technology assets. • Datacenters . Datacenters use our platform for asset tracking. • Food . Our reader ICs track syrup cartridges for replenishment in soda fountains. Our endpoint ICs track bakery items, meat, fish and fresh produce for freshness as well as inventory visibility. • Healthcare.
We own several trademarks and develop names for our new products and secure trademark protection for them, including domain name registration, in relevant jurisdictions. Alliances and Standardization Our platform uses the RAIN technology we pioneered. We spearheaded developing the RAIN radio standard, lobbied governments to allocate frequency spectrum and, along with Google, Intel and Smartrac, cofounded the RAIN Alliance.
We own several trademarks and develop names for our new products and secure trademark protection for them, including domain name registration, in relevant jurisdictions. Alliances and Standardization Our platform uses the RAIN technology we pioneered. We spearheaded developing the RAIN air-interface standard, lobbied governments to allocate frequency spectrum and, along with Google, Intel and Smartrac, cofounded the RAIN Alliance.
Our reader IC product family comprises multiple products, tiered by performance and functionality, that our OEM and ODM partners use in their mobile or handheld readers, fixed readers, gateways, appliances and other edge devices. We offer easy-to-use application programming interfaces, or APIs, development environments, sample code, drivers and libraries to facilitate partner reader development.
Our reader IC product family comprises multiple ICs, tiered by performance and functionality, that our OEM and ODM partners use in their mobile or handheld readers, embedded readers, fixed readers, gateways, appliances and other edge devices. We offer easy-to-use application programming interfaces, or APIs, development environments, sample code and drivers and libraries to facilitate partner reader development.
Our platform delivers accurate and timely data about a retailer’s product inventory, allowing retailers to reduce inventory and increase same-store sales by ensuring each store is properly stocked and allowing staff to focus on customers rather than on inventorying or finding items. • Omnichannel Fulfillment . The cornerstone of successful omnichannel fulfillment is inventory visibility in stores and warehouses.
Our platform delivers accurate and timely data about a retailer’s product inventory, enabling a retailer to reduce inventory and increase same-store sales by ensuring each store is properly stocked and allowing staff to focus on customers rather than on inventorying or finding items. • Omnichannel Fulfillment . The cornerstone of successful omnichannel fulfillment is inventory visibility in stores and warehouses.
A member of our management team is currently a RAIN Alliance Director. The Alliance is a global organization promoting the universal adoption of RAIN technology and solutions, with more than 150 members as of December 31, 2024.
A member of our management team is currently a RAIN Alliance Director. The Alliance is a global organization promoting the universal adoption of RAIN technology and solutions, with more than 150 members as of December 31, 2025.
Our principles underpin that culture and guide everything we do, from hiring to business relationships to our work ethic. They embody our core objective of making the world a better place. More information on our principles is available at www.impinj.com/about-us/our-principles. As of December 31, 2024, we had 451 employees in the Americas, Europe and Asia Pacific.
Our principles underpin that culture and guide everything we do, from hiring to business relationships to our work ethic. They embody our core objective of making the world a better place. More information on our principles is available at www.impinj.com/about-us/our-principles. As of December 31, 2025, we had 457 employees in the Americas, Europe and Asia Pacific.
As another example, by participating in developing GS1 EPCglobal protocols, such as the RAIN radio protocol, we agreed to license those of our patents necessary to practice those protocols on a royalty-free basis to other GS1 EPCglobal members, subject to reciprocal royalty-free rights from those members.
As another example, by participating in developing GS1 EPCglobal protocols, such as the RAIN air-interface protocol, we agreed to license those of our patents necessary to practice those protocols on a royalty-free basis to other GS1 EPCglobal members, subject to reciprocal royalty-free rights from those members.
We believe our 5 Table of Contents success derives from the capabilities and performance of our enterprise solutions, and the visibility those solutions give enterprise to items they manufacture, transport and sell. RAIN market adoption has historically been slower than we and industry sources have anticipated.
We believe our success derives from the capabilities and performance of our enterprise solutions, and the visibility those solutions give enterprise to items they manufacture, transport and sell. RAIN market adoption has historically been slower than we and industry sources have anticipated.
By participating in GS1 EPCglobal, which produced Gen2, and ISO, which ratified 18000-63, as well as in other standards bodies, we agreed to license certain necessary patents as described in the section captioned “Intellectual Property.” Government Regulations Government regulations require us to certify our readers and gateways in jurisdictions where they operate.
By participating in GS1 EPCglobal, which produced the Gen2 protocol, and ISO, which ratified 18000-63 as a standard, as well as in other certification and standards bodies, we agreed to license certain necessary patents as described in the section captioned “Intellectual Property.” Government Regulations Government regulations require us to certify our readers and gateways in jurisdictions where they operate.
We are today focused on extending item connectivity from tens of billions to trillions of items, and delivering item data not just to enterprises but to people, so they too can derive value from their connected items.
We are today focused on extending item connectivity from tens of billions to trillions of items, and delivering item data not just to enterprises but to people, so they too can benefit from their connected items.
As of December 31, 2024, we had 241 employees in research and development. We regularly review our technology, products and market development opportunities and reallocate our spending and resources accordingly. Intellectual Property We protect our technologies by filing patent applications, retaining trade secrets and defending and enforcing our intellectual property rights where appropriate.
As of December 31, 2025, we had 255 employees in research and development. We regularly review our technology, products and market development opportunities and reallocate our spending and resources accordingly. Intellectual Property We protect our technologies by filing patent applications, retaining trade secrets and defending and enforcing our intellectual property rights where appropriate.
Manufacturing We outsource most of our product manufacturing to third parties that build our products to our specifications, manufacturing only a small portion of our products, principally some of our test and measurement solutions, ourselves. This capital-efficient operating model scales efficiently with volume, allowing us to focus our resources on developing new products and solutions.
Manufacturing We outsource most of our product manufacturing to third parties that build our products to our specifications, manufacturing only a small portion of our products, principally some of our tag production systems ourselves. This capital-efficient operating model scales efficiently with volume, allowing us to focus our resources on developing new products and solutions.
Our chief executive officer is a recognized industry thought leader, a prior director of the RAIN Alliance and prior editor of the RAIN radio standard. • Partner Ecosystem .
Our chief executive officer is a recognized industry thought leader, a prior director of the RAIN Alliance and prior editor of the RAIN air-interface standard. • Partner Ecosystem .
The following table presents revenue concentration from our major customers representing 10% or more of total revenue for the periods presented: Year Ended December 31, 2024 2023 2022 Revenue: Customer A 28 % 33 % 28 % Customer B 17 11 10 Customer C 15 * * 60 % 44 % 38 % * Customer accounted for less than 10% of total revenue in the period.
The following table presents revenue concentration from our major customers representing 10% or more of total revenue for the periods presented: Year Ended December 31, 2025 2024 2023 Revenue: Customer A 34 % 28 % 33 % Customer B 15 15 * Customer C 12 17 11 61 % 60 % 44 % * Customer accounted for less than 10% of total revenue in the period.
We have enabled connectivity for more than 120 billion items to date, delivering item visibility and improving operational efficiencies for retailers, supply chain and logistics, or SC&L providers, restaurants and food-service providers, airlines, automobile manufacturers, healthcare companies and many more.
We have enabled connectivity for more than 150 billion items to date, delivering item visibility, traceability and improved operational efficiencies for retailers, supply chain and logistics, or SC&L providers, restaurants and food-service providers, airlines, automobile manufacturers, healthcare companies and many more.
We believe we are the only company with an integrated platform spanning endpoint ICs, reader ICs, readers and gateways, test and measurement solutions and software and cloud services. • Technology Leadership . Our singular RAIN focus has enabled us to regularly be first-to-market with innovative, high-performing products.
We believe we are the only company with an integrated platform spanning endpoint ICs, reader ICs, readers and gateways, tag production systems and software and cloud services. • Technology Leadership . Our singular RAIN focus has enabled us to regularly be first-to-market with innovative, high-performing products.
We primarily sell through our global ecosystem of hundreds of partners as follows: • Endpoint ICs: Directly to inlay and tag OEMs. • Solutions: Directly to a small number of lighthouse enterprises, servicing the rest of the market with and through partners. • Reader ICs : Through distribution to handheld- and fixed-reader OEMs and ODMs. • Readers and gateways: Through distribution to solutions providers, VARs and SIs. • Test and measurement solutions: Directly to inlay and tag OEMs, certification bodies and enterprises. • Cloud services: Access-based services.
We primarily sell through our global ecosystem of hundreds of partners as follows: • Endpoint ICs: Directly to inlay and tag OEMs. • Solutions: Directly to a small number of lighthouse enterprises, servicing the rest of the market with and through partners. • Reader ICs : Through distribution to handheld- and fixed-reader OEMs and ODMs. • Readers and gateways: Through distribution to solutions providers, VARs and SIs. • Test production systems: Directly to inlay and tag OEMs, certification bodies and enterprises.
We are a leader in the RAIN market. We spearheaded developing the RAIN air-interface standard, lobbied governments to allocate radio spectrum and cofounded the RAIN industry alliance that today has more than 150 member companies. Our industry uses free spectrum in 81 countries encompassing roughly 95% of the world’s GDP.
We spearheaded developing the RAIN air-interface standard, lobbied governments to allocate radio spectrum and cofounded the RAIN industry alliance that today has 5 Table of Contents more than 150 member companies. Our industry uses free spectrum in 81 countries encompassing roughly 95% of the world’s GDP.
Those readers may also protect an item or consumer, for example by authenticating the item as genuine or privatizing the item by rendering the endpoint IC unresponsive without the consumer first providing a password. Our manufacturing, test and encoding systems enable partner products and facilitate enterprise deployments. Our reading systems comprise high-performance finished readers and gateways for autonomous reading solutions.
Those readers may also protect an item or consumer, for example by authenticating the item as genuine or privatizing the item by rendering the endpoint IC unresponsive without the consumer first providing a password. Our reading systems comprise high-performance finished readers and gateways used primarily in autonomous reading solutions. Our tag production systems enable partner products and facilitate enterprise deployments.
Our industry uses the RAIN radio protocol nearly exclusively. In 2024, we introduced enhancements to the radio and logical layers of the RAIN radio protocol that speed inventory, increase tag read range, declutter the tag environment, protect consumers, inhibit label and item counterfeiting and reduce solution cost. We call these enhancements Gen2X.
In 2024, we introduced enhancements to the radio and logical layers of the RAIN air-interface protocol that speed inventory, increase tag read range, declutter the tag environment, protect consumers, inhibit label and item counterfeiting and reduce solution cost. We call these enhancements Gen2X.
The first are endpoint ICs that store a serialized number to wirelessly identify an item. Our partners embed endpoint ICs into an item or its packaging. The ICs may also contain a cryptographic key to authenticate the item. The second are reader ICs that our partners use in finished readers to wirelessly discover, inventory and engage the endpoint ICs.
Our partners embed endpoint ICs into an item or its packaging. These ICs may also contain a cryptographic key to authenticate the item. The second are reader ICs that our partners use in embedded or finished readers to wirelessly discover, inventory and engage the endpoint ICs.
When a consumer purchases an item, a store or supplier will typically procure another item to sell, including another endpoint IC. We believe endpoint ICs represent the first market for consumable silicon and are a reoccurring revenue source for us. Systems Our systems comprise our reader ICs; manufacturing, test, encoding and reading systems; and software and cloud services.
When a consumer purchases an item, a store or supplier will typically procure another item to sell, including another endpoint IC. We believe endpoint ICs represent the first market for consumable silicon and are a reoccurring revenue source for us. Systems Our systems comprise our finished readers, reader ICs; software and services; and tag production systems.
Our primary competition includes: • Endpoint ICs: NXP B.V., or NXP, EM Microelectronic, Kiloway, Quanray, Shanghai Fudan Microelectronics Group, Alibaba and Alien Technology Corporation, or Alien. • Reader ICs: Phychips Inc, Shanghai Fudan Microelectronics Group and MagicRF. • Readers and gateways: Most major reader and gateway suppliers leverage, or have a stated intent to leverage, our platform. • Test and measurement solutions: CISC Semiconductor GmbH, or CISC.
Our primary competition includes: • Endpoint ICs: NXP B.V., or NXP, Kiloway, Quanray, Shanghai Fudan Microelectronics Group, Alibaba and Alien Technology Corporation, or Alien. • Reader ICs: Phychips Inc and Shanghai Fudan Microelectronics Group. • Readers and gateways: Most major reader and gateway suppliers leverage, or have a stated intent to leverage, our platform. • Tag and production systems: CISC Semiconductor GmbH, or CISC.
As we mature those solutions, we will focus on solutions repeatability with top-tier partners. • RAIN silicon: We will continue investing in endpoint IC and reader IC performance, differentiated features, cost reduction and platform integration to win opportunities across markets and geographies. • Platform preference: We will continue investing in differentiated product capabilities, cloud services, solutions software and algorithms, and test and measurement solutions to enhance our platform’s reach and breadth and enable new use cases and recurring-revenue opportunities.
As we mature those solutions, we will focus on solutions repeatability with top-tier partners. • RAIN silicon: We will continue investing in endpoint IC and reader IC performance, differentiated features, cost reduction and platform integration to win opportunities across markets and geographies. • Platform preference: We will continue investing in differentiated product capabilities, services, solutions software, cloud services for item authentication and device and solution management and tag production systems to enhance our platform’s reach and breadth and enable new use cases and recurring-revenue opportunities.
Sales and Marketing We have a worldwide sales team with expertise in enterprise solutions, endpoint ICs, reader ICs, readers and gateways, and test and measurement solutions.
Sales and Marketing We have a worldwide sales team with expertise in enterprise solutions, endpoint ICs, reader ICs, readers, gateways and tag production systems.
Our radios follow the RAIN industry’s air-interface standard for their core reading functionality. We create partner and enterprise preference for our radios and solutions by adding differentiated features into our products, supporting those features across our platform and licensing them where appropriate, to deliver solutions capabilities and performance that surpasses mix-and-match solutions built from competitor products.
We create partner and enterprise preference for our radios and solutions by adding differentiated features into them, supporting those features across our platform and licensing them where appropriate, to deliver solutions capabilities and performance that surpasses mix-and-match solutions built from competitor products.
Growth Strategies 8 Table of Contents To continue growing our business and our opportunities, we plan to focus on the following strategic areas: • Enterprise Solutions: We will continue developing solutions to previously unsolved enterprise business problems.
Fueling stations use vehicle windshield tags to enable automatic and cashless fueling. 8 Table of Contents Growth Strategies To continue growing our business and our opportunities, we plan to focus on the following strategic areas: • Enterprise Solutions: We will continue developing solutions to previously unsolved enterprise business problems.
As of December 31, 2024, our portfolio included 294 issued and allowed U.S. patents, six issued international patents, 18 pending U.S. patent applications and 13 pending international patent applications. Industry Use Cases The following use cases are representative of RAIN deployments we serve today.
As of December 31, 2025, our portfolio included 285 issued and allowed U.S. patents, nine issued international patents, 20 pending U.S. patent applications and 19 pending international patent applications. Industry Use Cases The following use cases are representative of RAIN deployments we serve today.
We and our partners engineer solutions that typically include several of our systems products and endpoint ICs, and often our entire platform. We and they sell those solutions to enterprise end users.
We and our partners create solutions that typically combine several of these products with endpoint ICs, and often use our entire platform. We and they sell those solutions to enterprise end users.
We strengthen who we are and what we can achieve by fostering a diverse and inclusive culture built on respect, equity and collaboration. Our Diversity, Equity and Inclusion, or DEI, program focuses on making DEI part of our DNA.
We strengthen who we are and what we can achieve by fostering a diverse and inclusive culture built on respect, equity and collaboration. Our Diversity, Equity and Inclusion, or DEI, program focuses on making DEI part of our DNA. We cultivate an environment where everyone can belong, contribute, be their authentic selves and succeed.
We continually work to educate ourselves, learn from others, identify issues, improve our recruiting practices, engage in respectful and constructive dialogue and advance community initiatives. We do not tolerate discrimination, harassment or impropriety of any kind.
All employees complete training on the importance of diversity, equity, inclusion and avoiding bias, and on recognizing and preventing harassment and discrimination. We continually work to educate ourselves, learn from others, identify issues, improve our recruiting practices, engage in respectful and constructive dialogue and advance community initiatives. We do not tolerate discrimination, harassment or impropriety of any kind.
We, our enterprise end users, partners and competitors developed the RAIN radio protocol, whose technical name is EPC™ Radio-Frequency Identity Protocols Generation-2 UHF RFID (standardized as ISO/IEC 18000-63 and known colloquially as Gen2) in 2004, with us as editor. Our community delivered backward-compatible updates to this protocol in 2013 and in 2024, both times again with us as editor.
We, our enterprise end users, partners and competitors developed the RAIN air-interface protocol, whose technical name is EPC™ Radio-Frequency Identity Protocols Generation-2 UHF RFID (developed by GS1 EPCglobal; standardized by ISO as ISO/IEC 18000-63; known colloquially as Gen2) in 2004, with us as editor.
Golf venues score participants’ shots via our endpoint ICs inside golf balls. • Travel . Driver licenses in some states in the United States include our endpoint ICs to speed border crossings. Fueling stations use vehicle windshield tags to enable automatic and cashless fueling.
Golf venues score participants’ shots via our endpoint ICs inside golf balls. • Travel . Driver licenses in some states in the United States and Global Entry cards include our endpoint ICs to speed border crossings.
As of December 31, 2024, our intellectual property portfolio includes 294 issued and allowed U.S. patents, six issued international patents, 18 pending U.S. patent applications and 13 pending international patent applications. Of our 284 utility patents, 16 will expire in 2025 and of our four design patents, none will expire in 2025.
As of December 31, 2025, our intellectual property portfolio includes 285 issued and allowed U.S. patents, nine issued international patents, 20 pending U.S. patent applications and 19 pending international patent applications. Of our 278 utility patents, 11 will expire in 2026 and of our four design patents, none will expire in 2026.
We leverage our solutions learnings to continually improve the firmware in our reader ICs. We sell our reader ICs for tens of dollars. Our reader product family comprises multiple finished products tiered by performance and functionality.
We leverage our solutions learnings to continually improve the firmware in our reader ICs. We sell our reader ICs for tens of dollars. Our reader product family comprises multiple finished readers tiered by performance and functionality. Our gateways integrate our readers with beamforming antennas to electrically steer a radio beam like a radar, locating and tracking items.
We manufacture our test and measurement solutions in Finland, at Voyantic Oy, which we acquired in April 2023. This acquisition added label design, manufacturing and test systems to our platform offering. Research and Development We built our company on a foundation of technology leadership, innovation and best-in-class products.
We manufacture our tag production systems in Finland, at Voyantic Oy, which we acquired in April 2023. This acquisition extended our platform’s reach to tag production systems for both our and competitors’ endpoint ICs. Research and Development We built our company on a foundation of technology leadership, innovation and best-in-class products.
Impinj Platform We and our partner ecosystem build item-visibility solutions using products that we design and either sell or license, including silicon RAIN radios; manufacturing, test, encoding and reading systems; and software and cloud services that encapsulate our solutions know-how. We sell two types of silicon integrated circuit, or IC, radios.
Impinj Platform We and our partner ecosystem build item-visibility solutions using products that we design and either sell or license, including silicon radios; reading systems; tag design, manufacturing, test, encoding and commissioning systems, or collectively “tag production systems”; and intellectual property.
With our acquisition of Voyantic Oy, we sell test and measurement solutions. Finally, we also offer a cloud service to authenticate items. Competitive Advantages 6 Table of Contents We believe we can extend our RAIN market leadership by leveraging our competitive strengths, including: • Platform .
Our Voyantic Oy entity is a leading provider of tag production systems and sells those systems primarily to our inlay partners. 6 Table of Contents Competitive Advantages We believe we can extend our RAIN market leadership by leveraging our competitive strengths, including: • Platform .
Our software and cloud services focus on solutions enablement. We sell our products, individually or as a whole platform offering primarily with or through our partner ecosystem. That ecosystem comprises original equipment manufacturers, or OEMs, tag service bureaus, original device manufacturers, or ODMs, systems integrators, or SIs, value-added resellers, or VARs, independent software vendors, or ISVs, and other solution partners.
That ecosystem comprises original equipment manufacturers, or OEMs, tag service bureaus, original device manufacturers, or ODMs, systems integrators, or SIs, value-added resellers, or VARs, independent software vendors, or ISVs, and other solution partners. Our radios follow the RAIN industry’s air-interface standard for their core reading functionality.
Our software and algorithms run either on our readers and gateways or partly on them and partly on partner devices. We also sell readers and software to encode endpoint ICs. We sell our readers and gateways through distributors, SIs, VARs and solution providers for hundreds to thousands of dollars.
We sell our readers and gateways through distributors, SIs, VARs and solution providers for hundreds to thousands of dollars. We provide and sell software, either bundled with our readers or standalone, that allows us and our partners to solve enterprise business problems such as package sortation, dock door ingress/egress and retail self-checkout and loss prevention.
Removed
They wirelessly provide power to, and communicate bidirectionally with, endpoint ICs on host items. They also read, write, authenticate and engage the endpoint ICs on those items. Our readers and gateways include software and algorithms that allow us and our partners to solve enterprise business problems such as retail self-checkout and loss prevention.
Added
We also offer software and cloud services, and while nascent from a standalone revenue perspective, they enable our other product offerings and we intend to expand them as a part of our growth strategy. We sell two types of silicon radios. The first are endpoint ICs that store a serialized number to wirelessly identify an item.
Removed
We build and empower underrepresented populations across our workforce and cultivate an environment where everyone can belong, contribute and be their authentic selves. All employees complete training on the importance of diversity, equity, inclusion and avoiding bias, and on recognizing and preventing harassment and discrimination.
Added
Our software and cloud service offerings focus on solutions enablement, particularly at enterprises with whom we have a close business relationship We sell our products, individually or as a whole platform offering, primarily with or through our partner ecosystem.
Added
We have also introduced a set of compatible extensions to the RAIN industry’s air-interface standard, which we call Gen2X, that enhance the performance and protection of our solutions. The RAIN industry, on both the reader and solutions side, has broadly embraced Gen2X. We are a leader in the RAIN market.
Added
Our software runs either on our readers and gateways or partly on them and partly on host devices or in the cloud. We also offer cloud services for item resolution and label authentication.
Added
Our community delivered backward-compatible updates to this protocol in 2013 and in 2024, both times again with us as editor. Our industry uses the RAIN air-interface standard nearly exclusively.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTo materially grow our licensing program and revenue, we will need to maintain and grow our intellectual property portfolio and continue to research and develop RAIN innovations that will generate and maintain demand for licenses to our technology and features.
Biggest changeThese risks and uncertainties include our ability to maintain and grow our intellectual property portfolio and to research and develop RAIN innovations that will generate and maintain demand for licenses to our technology and features, and our ability to monitor infringement of our intellectual property rights by others and possibly seek enforcement action against those who attempt to infringe our intellectual property rights. 18 Table of Contents Our licensing program is also not singly focused on generating licensing revenue.
The average selling prices of our products could fluctuate substantially. The average selling price, or ASP, of our products has historically decreased with time or to meet end-user demands, encourage adoption, address macroeconomic conditions or respond to competitive pressure.
Average selling prices of our products could fluctuate substantially. The average selling price, or ASP, of our products has historically decreased with time or to meet end-user demands, encourage adoption, address macroeconomic conditions or respond to competitive pressure.
Among other things, our certificate of incorporation and bylaws: • permit our board of directors to issue up to 5,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate; • provide that the authorized number of directors may be changed only by resolution of the board of directors; • provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • restrict the forum for certain litigation against us to Delaware; • require that any action taken by our stockholders be effected at a duly called annual or special meeting of stockholders and not by written consent; • provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a stockholder’s notice; 35 Table of Contents • do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any uncontested election of directors to elect all of the directors standing for election, if they should so choose); and • provide 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.
Among other things, our certificate of incorporation and bylaws: • permit our board of directors to issue up to 5,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate; • provide that the authorized number of directors may be changed only by resolution of the board of directors; • provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; 35 Table of Contents • restrict the forum for certain litigation against us to Delaware; • require that any action taken by our stockholders be effected at a duly called annual or special meeting of stockholders and not by written consent; • provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a stockholder’s notice; • do not provide for cumulative voting rights (therefore allowing the holders of a majority of the shares of common stock entitled to vote in any uncontested election of directors to elect all of the directors standing for election, if they should so choose); and • provide 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.
The following factors, in addition to general risks and other risks described in this report, may have a material effect on the trading price of our common stock: • price and volume fluctuations in the overall stock market; • changes in operating performance, stock market valuations and volatility in the market prices of other technology companies generally, and of those in our industry in particular; • actual or anticipated quarterly variations in our results of operations or those of our competitors; • actual or anticipated changes in our growth rate relative to our competitors; • delays in end-user deployments of RAIN solutions; • announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments; • supply interruptions, including semiconductor wafer or other product or component shortfalls; • developments relating to intellectual property rights or in disputes relating to those rights; • our ability to develop and market new and enhanced products on a timely basis; • commencement of, or our involvement in, litigation; • changes in our board of directors or management; • changes in governmental regulations or in the status of our regulatory approvals; • unstable political and economic conditions, including instability resulting from wars and other armed conflicts, such as those in Ukraine and the Gaza Strip, or geopolitical tensions, such as those between the United States, China and Taiwan; • the trading volume of our stock; • actual or perceived security breaches or incidents; 33 Table of Contents • limited public float; • any future sales of our common stock or other securities; • financial analysts dropping or reducing their coverage of us; changes in financial estimates by analysts who do cover us; or our failure to meet analyst estimates or investor expectations; • fluctuations in the values of companies that investors perceive to be comparable to us; • the financial projections we may provide to the public, as well as any changes in those projections or our failure to meet those projections; and • general economic conditions and slow or negative growth in the markets in which we operate.
The following factors, in addition to general risks and other risks described in this report, may have a material effect on the trading price of our common stock: • price and volume fluctuations in the overall stock market; • changes in operating performance, stock market valuations and volatility in the market prices of other technology companies generally, and of those in our industry in particular; • actual or anticipated quarterly variations in our results of operations or those of our competitors; • actual or anticipated changes in our growth rate relative to our competitors; • delays in end-user deployments of RAIN solutions; • announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments; • supply interruptions, including semiconductor wafer or other product or component shortfalls; • developments relating to intellectual property rights or in disputes relating to those rights; • our ability to develop and market new and enhanced products on a timely basis; • commencement of, or our involvement in, litigation; • changes in our board of directors or management; • changes in governmental regulations or in the status of our regulatory approvals; • unstable political and economic conditions, including instability resulting from tariffs and trade wars, wars and other armed conflicts, such as those in Ukraine and the Gaza Strip, or geopolitical tensions, such as those between the United States, China and Taiwan; • the trading volume of our stock; • actual or perceived security breaches or incidents; • limited public float; • any future sales of our common stock or other securities; • financial analysts dropping or reducing their coverage of us; changes in financial estimates by analysts who do cover us; or our failure to meet analyst estimates or investor expectations; 33 Table of Contents • fluctuations in the values of companies that investors perceive to be comparable to us; • the financial projections we may provide to the public, as well as any changes in those projections or our failure to meet those projections; and • general economic conditions and slow or negative growth in the markets in which we operate.
For example, it could: • make it more difficult for us to satisfy our debt obligations, including the 2021 Notes; • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the cash available to run our business; • limit our flexibility in planning for, or reacting to, changes in our business or in our industry; • restrict us from exploiting business opportunities; • place us at a competitive disadvantage compared to our competitors that have less indebtedness; and • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, executing our business strategy or for other purposes.
For example, it could: • make it more difficult for us to satisfy our debt obligations, including the 2021 Notes and the 2025 Notes; • increase our vulnerability to general adverse economic and industry conditions; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the cash available to run our business; • limit our flexibility in planning for, or reacting to, changes in our business or in our industry; • restrict us from exploiting business opportunities; • place us at a competitive disadvantage compared to our competitors that have less indebtedness; and • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, executing our business strategy or for other purposes.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance any current or future indebtedness, including the 2021 Notes, or to make cash payments in connection with any conversion of the 2021 Notes or upon any fundamental change if holders require us to repurchase their 2021 Notes for cash, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance any current or future indebtedness, including the 2021 Notes and the 2025 Notes, or to make cash payments in connection with any conversion of the 2021 Notes or the 2025 Notes or upon any fundamental change if holders require us to repurchase their 2021 Notes or 2025 Notes for cash, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Our financial performance depends on the pace of end-user RAIN adoption in key markets, such as retail apparel (our largest market) retail general merchandise and SC&L. Although RAIN has been adopted to some degree by end users in those markets, those end users as well as the markets themselves are subject to business cycles and macroeconomic trends.
Our financial performance depends on the pace of end-user RAIN adoption in key markets, such as retail apparel (our largest market), retail general merchandise, SC&L and food. Although RAIN has been adopted to some degree by end users in those markets, those end users as well as the markets themselves are subject to business cycles and macroeconomic trends.
Our ability to refinance any of our indebtedness, including the 2021 Notes, will depend on the capital markets and our financial condition at that time. We may not be able to pursue these alternatives on favorable terms or at all, which could result in us defaulting on our debt obligations.
Our ability to refinance any of our indebtedness, including the 2021 Notes and the 2025 Notes, will depend on the capital markets and our financial condition at that time. We may not be able to pursue these alternatives on favorable terms or at all, which could result in us defaulting on our debt obligations.
In addition, the continued adoption of, and demand for, our endpoint ICs, derives in part from us demonstrating the benefits of using our systems. If we fail to establish those benefits then we may be unsuccessful in countering competitive endpoint IC price pressures and our business and operating results could be adversely affected.
In addition, the continued adoption of, and demand for, our endpoint ICs derives in part from us demonstrating their benefits using our systems. If we fail to establish those benefits then we may be unsuccessful in countering competitive endpoint IC price pressures and our business and operating results could be adversely affected.
When we introduce new products and services, our success in ramping adoption depends, in part, on us making those products and services easy for our partners and end users to deploy and use. For example, when we launched our M800-family endpoint ICs, we supported our inlay partners in producing high-performing, high-quality M800-based inlays.
When we introduce new products, services and solutions, our success in ramping adoption depends, in part, on us making those products, services and solutions easy for our partners and end users to deploy and use. For example, when we launched our M800-family endpoint ICs, we supported our inlay partners in producing high-performing, high-quality M800-based inlays.
Similarly, some of our partners use our readers to build and sell gateways that compete with our gateways. If we fail to manage such conflicts successfully, then our business and operating results could be negatively affected. Our licensing program is nascent.
Similarly, some of our partners use our readers to build and sell gateways that compete with our gateways. If we fail to manage such conflicts successfully, then our business and operating results could be negatively affected. Our licensing program is nascent and limited.
Material factors that contribute to fluctuations in our operating results include: • macroeconomic conditions, including inflation, recession or economic slowdown, and their impact on our business and that of our suppliers, partners and end users; • fluctuations or delays in RAIN adoption and deployment by end users; • changes in the pace or direction of major deployments, whether due to macroeconomic conditions or enterprise-specific events or circumstances, and our, or our partners', ability to win business from these deployments; • fluctuations in demand for our products or platform, including by tag OEMs and other significant partners and end users on whom we rely for a substantial portion of our revenue; 30 Table of Contents • fluctuations in the pricing and availability or supply of our products or key elements or components of those products, especially semiconductor wafers; • degradations in product quality, whether due to us or our suppliers, including quality claims or product returns; • delays in new-product introductions and in the maturity of our new-product technologies; • decreases in selling prices for our products; • delays in our product-shipment timing, customer or end-user sales or deployment cycles, or work performed under development contracts; • intellectual property disputes involving us, our partners, end users or other participants in our industry , or the timing of license payments for our intellectual property ; • adverse outcomes of litigation or governmental proceedings; • timing variability in product introductions, enhancements, services and technologies by us and our competitors as well as market acceptance of new or enhanced products, services and technologies; • unanticipated excess or obsolete inventory as a result of significant demand fluctuations, supply-chain mismanagement, new-product introduction, quality issues or otherwise; • changes in the amount and timing of our operating costs, including those related to expanding our business, operations and infrastructure; • changes in business cycles or seasonal fluctuations that affect the markets in which we sell; • changes in industry standards or specifications, or changes in government regulations, relating to our products or our platform; • late, delayed or cancelled payments from our partners or end users; and • unanticipated impairment of long-lived assets and goodwill.
Material factors that contribute to fluctuations in our operating results include: • macroeconomic conditions, including tariffs and trade wars, inflation, recession or economic slowdown, and their impact on our business and that of our suppliers, partners and end users; • fluctuations or delays in RAIN adoption and deployment by end users; • changes in the pace or direction of major deployments, whether due to macroeconomic conditions or enterprise-specific events or circumstances, and our, or our partners ’ , ability to win business from these deployments; • fluctuations in demand for our products or platform, including by tag OEMs and other significant partners and end users on whom we rely for a substantial portion of our revenue; • fluctuations in the pricing and availability or supply of our products or key elements or components of those products, especially semiconductor wafers; • degradations in product quality, whether due to us or our suppliers, including quality claims or product returns; • delays in new-product introductions and in the maturity of our new-product technologies; • decreases in selling prices for our products; • delays in our product-shipment timing, customer or end-user sales or deployment cycles, or work performed under development contracts; • intellectual property disputes involving us, our partners, end users or other participants in our industry, or the timing of license payments for our intellectual property; • adverse outcomes of litigation or governmental proceedings; 30 Table of Contents • timing variability in product introductions, enhancements, services and technologies by us and our competitors as well as market acceptance of new or enhanced products, services and technologies; • unanticipated excess or obsolete inventory as a result of significant demand fluctuations, supply-chain mismanagement, new-product introduction, quality issues or otherwise; • changes in the amount and timing of our operating costs, including those related to expanding our business, operations and infrastructure; • changes in business cycles or seasonal fluctuations that affect the markets in which we sell; • changes in industry standards or specifications, or changes in government regulations, relating to our products or our platform; • late, delayed or cancelled payments from our partners or end users; and • unanticipated impairment of long-lived assets and goodwill.
When participating in GS1, ISO, RAIN and other industry-standards organizations, it is a general policy that those who participate in developing a protocol or standard must license, either royalty-free or under reasonable and nondiscriminatory, or RAND, terms, intellectual property that is necessary to implement all or part of the protocol or standard.
When participating in GS1, ISO, RAIN and other industry-standards organizations, it has been a general policy that those who participate in developing a protocol or standard must license, either royalty-free or under reasonable and nondiscriminatory, or RAND, terms, intellectual property that is necessary to implement all or part of the protocol or standard.
Our efforts to foster third-party development and deployment of these tools could fail. In addition, our guidance to business-analytics providers for integrating our products with their tools could prove ineffective. Solution providers and SIs are essential to the RAIN market. They provide deployment know-how to enable end users to successfully deploy RAIN solutions.
Our efforts to foster development and deployment of these tools could fail. In addition, our guidance to business-analytics providers for integrating our products with their tools could prove ineffective. Solution providers and SIs are essential to the RAIN market. They provide deployment know-how to enable end users to successfully deploy RAIN solutions.
If the inventory and resale information our partners and distributors provide is inaccurate, or if we do not receive it in a timely manner, then we may not have a reliable view of products expected to be sold to end users which could ultimately have a negative impact on our operating results.
If the inventory and resale information our partners and distributors provide is inaccurate, or if we do not receive it in a timely manner, then we may not have a reliable view of products we expect to be sold to end users which could ultimately have a negative impact on our operating results.
We anticipate growing our business, in part, by growing our international operations, which presents a variety of risks, including: • changes, some unexpected or unanticipated, in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions; • lack of established, clear or fairly implemented standards or regulations with which our products must comply; • greater difficulty in enforcing contracts, judgments and arbitration awards in international courts, and in collecting accounts receivable as well as longer payment and collection periods; • limited or unfavorable intellectual property protection; • misappropriation of our intellectual property; • inflation and fluctuations in foreign currency exchange and interest rates; • restrictions, or changes thereof, on foreign trade or investment, including currency-exchange controls, including as a result of sanctions against Russia; • changes in a country’s or region’s political, regulatory, legal or economic conditions, including, for example, global and regional economic disruptions caused by any future public health outbreaks or pandemics, including a resurgence of Covid-19; • political, social and economic instability abroad; wars and other armed conflicts, such as those in Ukraine; geopolitical tensions, such as those between the United States, China and Taiwan; and terrorist attacks and security concerns in general; • differing regulations with regard to maintaining operations, products and public information; • inequities or difficulties obtaining or maintaining export and import licenses; • differing labor regulations, including where labor laws may be more advantageous to employees than in the United States; • restrictions on earnings repatriation; • corrupt or unethical practices in foreign jurisdictions that may subject us to exposure under applicable anti-corruption and anti-bribery laws such as the U.S.
We anticipate growing our business, in part, by growing our international operations, which presents a variety of risks, including: • changes, some unexpected or unanticipated, in regulatory requirements, taxes, trade laws, tariffs, export quotas, custom duties or other trade restrictions; • lack of established, clear or fairly implemented standards or regulations with which our products must comply; • greater difficulty in enforcing contracts, judgments and arbitration awards in international courts, and in collecting accounts receivable as well as longer payment and collection periods; • limited or unfavorable intellectual property protection; • misappropriation of our intellectual property; • inflation and fluctuations in foreign currency exchange and interest rates; 21 Table of Contents • restrictions, or changes thereof, on foreign trade or investment, including trade wars and currency-exchange controls, including as a result of sanctions against Russia; • changes in a country’s or region’s political, regulatory, legal or economic conditions, including, for example, global and regional economic disruptions caused by any future public health outbreaks or pandemics; • political, social and economic instability abroad; wars and other armed conflicts, such as those in Ukraine; geopolitical tensions, such as those between the United States, China and Taiwan; and terrorist attacks and security concerns in general; • differing regulations with regard to maintaining operations, products and public information; • inequities or difficulties obtaining or maintaining export and import licenses; • differing labor regulations, including where labor laws may be more advantageous to employees outside the United States; • restrictions on earnings repatriation; • corrupt or unethical practices in foreign jurisdictions that may subject us to exposure under applicable anti-corruption and anti-bribery laws such as the U.S.
Further, the Chinese government has made development of the Chinese semiconductor industry a priority, potentially increasing competition for us globally while possibly restricting our ability to participate in the Chinese market. RAIN adoption is concentrated in key markets and the extent and pace of RAIN market adoption beyond those markets is uncertain.
Further, the Chinese government has made developing the Chinese semiconductor industry a priority, potentially increasing competition for us globally while possibly restricting our ability to participate in the Chinese market. RAIN adoption is concentrated in key markets and the extent and pace of RAIN market adoption beyond those markets is uncertain.
If any of our stockholders were to sue us, the defense and disposition of the lawsuit could be costly and divert the time and attention of our management, harm our operating results and negatively impact the trading price of our common stock. Transactions relating to the 2021 Notes may affect our stock’s value.
If any of our stockholders were to sue us, the defense and disposition of the lawsuit could be costly and divert the time and attention of our management, harm our operating results and negatively impact the trading price of our common stock. Transactions relating to the 2021 or the 2025 Notes may affect our stock’s value.
If any pending or future proceedings result in an adverse outcome, our intellectual property rights could be weakened and we could be required to: 26 Table of Contents • cease manufacturing, using or selling the infringing products, processes or technology; • pay substantial damages for infringement; • expend significant resources to develop noninfringing products, processes or technology; • license technology from the party claiming infringement, which license may not be available on commercially reasonable terms or at all; • cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; or • pay substantial damages to our partners or end users for them to discontinue using, or replace, infringing products with noninfringing products.
If any pending or future proceedings result in an adverse outcome, our intellectual property rights could be weakened and we could be required to: • cease manufacturing, using or selling the infringing products, processes or technology; • pay substantial damages for infringement; • expend significant resources to develop noninfringing products, processes or technology; • license technology from the party claiming infringement, which license may not be available on commercially reasonable terms or at all; • cross-license our technology to a competitor to resolve an infringement claim, which could weaken our ability to compete with that competitor; or • pay substantial damages to our partners or end users for them to discontinue using, or replace, infringing products with noninfringing products.
From time to time, the financial counterparties to the capped calls may modify their hedge positions by entering into or unwinding various derivative transactions involving our stock or by purchasing or selling our stock or other securities of ours in secondary market transactions prior to the maturity of the capped calls.
From time to time, the financial counterparties to the capped call transactions may modify their hedge positions by entering into or unwinding various derivative transactions involving our stock or by purchasing or selling our stock or other securities of ours in secondary market transactions prior to the maturity of the capped call transactions.
We face risks of security breaches and incidents from a variety of sources including viruses, ransomware, hacking, malicious code, supply-chain attacks as well as social engineering or other employee or contractor negligence, malfeasance or unintentional acts.
We face risks of security breaches and other security incidents from a variety of sources including viruses, ransomware, hacking, malicious code, technological errors, supply-chain attacks as well as social engineering or other employee or contractor negligence, malfeasance or unintentional acts.
As a participant in developing GS1 EPCglobal UHF Gen2, UHF Gen2 V2, UHF Gen2 V3, tag data standards, low-level reader protocol and other GS1 EPCglobal protocols, we agreed to license to other GS1 EPCglobal members, on a royalty-free basis, those of our patents necessary to practice those protocols, subject to us receiving reciprocal royalty-free rights from the other GS1 EPCglobal member 27 Table of Contents practicing the protocol.
As a participant in developing GS1 EPCglobal UHF Gen2, UHF Gen2 V2, UHF Gen2 V3, tag data standards, low-level reader protocol and other GS1 EPCglobal protocols, we agreed to license to other GS1 EPCglobal members, on a royalty-free basis, those of our patents necessary to practice those protocols, subject to us receiving reciprocal royalty-free rights from the other GS1 EPCglobal member practicing the protocol.
As a result, we may be 14 Table of Contents unable to accurately forecast our future operating results including revenue, gross margins, cash flows and profitability, any or all of which could negatively impact our financial performance. We must introduce new products, product enhancements and services to compete effectively.
As a result, we may be unable to accurately forecast our future operating results including revenue, gross margins, cash flows and profitability, any or all of which could negatively impact our financial performance. 14 Table of Contents We must introduce new products, services and solutions to compete effectively.
The cost of developing and maintaining these partner relationships may go unrecovered and our efforts may not generate a corresponding revenue increase. Occasionally we also engage directly with end users, often at their request, to help them develop solutions for challenging use cases.
The cost of developing and maintaining these partner relationships may go unrecovered and our efforts may not generate a corresponding revenue increase. 24 Table of Contents Occasionally we also engage directly with end users, often at their request, to help them develop solutions for challenging use cases.
Foreign acquisitions involve additional risks beyond those above, including those related to integrating operations across different cultures and languages, currency risks and the economic, political and regulatory risks associated with other countries. Also, the anticipated benefit of any acquisition, domestic or foreign, may not materialize.
Foreign acquisitions involve additional risks beyond those above, including those related to integrating operations across different cultures and languages, currency risks and the economic, political and regulatory risks associated with other countries. Also, the anticipated benefit of any acquisition, 20 Table of Contents domestic or foreign, may not materialize.
If we do not build our enterprise solutions platform and our partner network to deliver these solutions effectively, our business prospects will suffer. We rely on endpoint IC sales to generate most of our revenue. 15 Table of Contents We derive, and expect to continue to derive, most of our revenue from our endpoint ICs.
If we do not build our enterprise solutions platform and our partner network to deliver these solutions effectively, our business prospects will suffer. 15 Table of Contents We rely on endpoint IC sales to generate most of our revenue. We derive, and expect to continue to derive for some time, most of our revenue from our endpoint ICs.
Technology stocks like ours have experienced extreme price and volume fluctuations, often unrelated or disproportionate to the company’s underlying operating performance. Stock price volatility can cause stockholders to institute securities class-action litigation or stockholder derivative litigation, as occurred to us between 2018 and 2020.
Technology stocks like ours have experienced extreme price and volume fluctuations, often unrelated or disproportionate to our underlying operating performance. Stock price volatility can cause stockholders to institute securities class-action litigation or stockholder derivative litigation, as occurred to us between 2018 and 2020.
Risks Relating to Our Financial Position and Capital Needs We 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. Until 2024, we have incurred losses each year since our inception in 2000.
Risks Relating to Our Financial Position and Capital Needs We 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. We incurred losses each year from our inception in 2000 to 2024.
Internal Revenue Code, or the Code, a corporation that experiences a more-than 50% ownership change by one or more stockholders or groups of stockholders who own at least 5% of a company's stock over a three-year testing period is limited in its ability to use its pre-change NOLs and other tax assets to offset future taxable income or income taxes.
Internal Revenue Code, or the Code, a corporation that experiences a more-than 50% ownership change by one or more stockholders or groups of stockholders who own at least 5% of a company ’ s stock over a three-year testing period is limited in its ability to use its pre-change NOLs and other tax assets to offset future taxable income or income taxes.
If we are unable to replace project-based revenue with new revenue streams, or if end users with large projects change or delay those projects without providing us with adequate notice, then our sales could decline from period to period and harm our stock price.
If we are unable to replace project-based revenue with new revenue streams, or if end users with large projects change or delay those projects without providing us with adequate notice, then our sales could decline from period to period and negatively affect our stock price.
If we raise additional capital but do not deploy it effectively then our business, financial condition, results of operations and prospects could be harmed and the market price of our common stock could suffer. 31 Table of Contents Risks Relating to U.S.
If we raise additional capital but do not deploy it effectively then our business, financial condition, results of operations and prospects could be harmed and the market price of our common stock could suffer. Risks Relating to U.S.
In the short term, our partners might purchase more of our products than they need, increasing their inventory and reducing 24 Table of Contents our future sales to them, and distributors may, subject to time and quality limitations, seek to return products in exchange for other products.
In the short term, our partners might purchase more of our products than they need, increasing their inventory and reducing our future sales to them, and distributors may, subject to time and quality limitations, seek to return products in exchange for other products.
The standards body may require that the license be granted to members, as in the case of GS1, or to all parties, as in the case of ISO, that implement the protocol or standard.
The standards body could require that the license be granted to members, as in the case of GS1, or to all parties, as in the case of ISO, that implement the protocol or standard.
Our insurance may not adequately cover claims relating to an actual or perceived security breach or incident and any breach or incident may increase our insurance costs as well as reduce or eliminate the future availability of such insurance, harming our business and reputation.
Our insurance may not adequately cover claims 29 Table of Contents relating to an actual or perceived security breach or incident and any breach or incident may increase our insurance costs as well as reduce or eliminate the future availability of such insurance, harming our business and reputation.
Without this support, M800 adoption would have been delayed, and our operating results would have suffered. We cannot guarantee that we will be able to provide sufficient support for future products, in which case our operating results could suffer. Our ability to deliver enterprise solutions at scale are nascent.
Without this support, M800 adoption would have been delayed and our operating results would have suffered. We cannot guarantee we will be able to provide sufficient support for future products, in which case our operating results could suffer. Our ability to deliver enterprise solutions at scale is nascent. We are still developing our ability to deliver enterprise solutions.
This ownership concentration could also prevent attempts by our stockholders to replace or remove our board of directors or management. 34 Table of Contents We 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.
This ownership concentration could also prevent attempts by our stockholders to replace or remove our board of directors or management. We may not have sufficient cash flow or access to cash necessary to satisfy our obligations under the 2021 Notes and the 2025 Notes, and our current and future indebtedness may restrict our business.
We may also 25 Table of Contents face challenges with government regulators and our customers and suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free. Risks Relating to Our Intellectual Property If we are unable to protect and enforce our intellectual property then our business could be adversely affected.
We may also face challenges with government regulators and our customers and suppliers if we are unable to sufficiently verify that the metals used in our products are conflict free. Risks Relating to Our Intellectual Property If we are unable to protect and enforce our intellectual property, then our business could be adversely affected.
Subsequent litigation, including our patent litigation against NXP between 2019 and early 2024, may not have had as pronounced effects on demand as the Round Rock litigation, but could have dampened RAIN growth particularly in categories beyond those where RAIN is already established such as retail apparel.
Subsequent litigation, including our patent litigation against NXP between 2019 and early 2024, may not have had as pronounced effects on demand as the Round Rock litigation, but could have dampened RAIN growth particularly in categories beyond those where RAIN use is already established.
If NXP were to breach its license payment obligations, or if NXP were to design around our intellectual property rights and exercise its right to terminate our license before the end of the agreement's 10-year term, our licensing revenue would decline and our overall results of operations and cash flows would suffer.
If NXP were to breach its license payment obligations, or if NXP were to design around our intellectual property rights and exercise its right to terminate our license before the end of the agreement ’ s 10-year term, our licensing revenue would decline and our overall results of operations and cash flows would suffer.
Aspects of key privacy laws and regulations—including the California Consumer Privacy Act of 2018, the California Privacy Rights Act, similar privacy laws enacted in other states and the EU General Data Protection Regulation—remain unclear as of the date of this report and continue evolving, potentially with far-reaching implications.
Aspects of key laws and regulations addressing data security and privacy—including, for example, the California Consumer Privacy Act of 2018, the California Privacy Rights Act, similar laws enacted in other states and the EU General Data Protection Regulation—remain unclear as of the date of this report and continue evolving, potentially with far-reaching implications.
The consequences of loss, unavailability, misuse, corruption or other unauthorized processing of confidential, personal or proprietary information could include, among other things, unfavorable 29 Table of Contents publicity, reputational damage, difficulty marketing or selling our products, customer allegations of breach of contract, loss or theft of intellectual property, claims and litigation, governmental and regulatory investigations and other proceedings and fines, penalties and other damages and liabilities.
The consequences of actual or perceived loss, unavailability, misuse, corruption or other unauthorized processing of confidential, personal or proprietary information could include, among other things, unfavorable publicity, reputational damage, difficulty marketing or selling our products, customer allegations of breach of contract, loss or theft of intellectual property, claims and litigation, governmental and regulatory investigations and other proceedings and fines, penalties and other damages and liabilities.
In April 2011, the EC signed a voluntary agreement with private and public entities to develop privacy guidelines for companies using RFID in the EU. Whereas compliance is voluntary, our partners and end users that do business in the EU prefer products that comply with the guidelines.
In April 2011, the EC signed a voluntary agreement with private and public entities to develop privacy guidelines for companies using RFID in the EU. Whereas compliance is voluntary, our partners and end users that do business in the EU prefer 28 Table of Contents products that comply with the guidelines.
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 Table of Contents Likewise, new technologies may enable lower-cost ICs than our products.
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. Likewise, new technologies may enable lower-cost ICs than our products.
Although the policies themselves seek to advance protocol or standards development, disputes can arise because it may not be clear whether certain intellectual property is necessary to practice a protocol or standard. Such uncertainty could complicate us asserting our not-necessary patents against others, or to use those patents in our own defense, thereby devaluing our intellectual property.
Although the policies themselves seek to advance protocol or standards development, disputes can arise because it may not be clear whether certain intellectual property is covered. Such uncertainty could complicate us asserting our patents against others, or to use those patents in our own defense, thereby devaluing our intellectual property.
To pay for their proposed system, NextNav also asked to be able to license certain spectral bands, including parts of the Lower 900 MHz Band, to others to deliver 5G broadband services. If approved as proposed, this ISM band reconfiguration could interfere with our RAIN radio transmissions and negatively impact us and our industry.
To pay for their proposed system, NextNav also asked to be able to license certain spectral bands, including parts of the Lower 900 MHz Band, to others to deliver 5G broadband services. If approved as proposed, this ISM band reconfiguration could negatively impact us and our industry.
Moreover, if we encounter product quality issues, then we may be required to incur significant time and costs to diagnose, test and fix the issues. There can be no assurance that such remediation efforts would be successful.
Moreover, if we encounter product quality issues, then we may be required to incur significant time and costs to diagnose, test and fix the issues. There can be no assurance that such remediation efforts 16 Table of Contents would be successful.
As a result, our executive officers, directors and principal stockholders may be able to significantly influence, in their capacity as stockholders, matters requiring approval by our stockholders, including electing directors and approving mergers, acquisitions or other transactions.
As a result, our executive officers, directors and principal stockholders may be able to significantly influence, in their capacity as stockholders, matters requiring approval by our stockholders, including electing directors and 34 Table of Contents approving mergers, acquisitions or other transactions.
We and our partners may be unable to successfully acquire customers for our enterprise solutions, or to successfully address our market opportunity. Delivering enterprise solutions requires a network of partner products and services that complement our own and that together address enterprise needs.
We and our partners may be unable to successfully acquire customers for our enterprise solutions, or to successfully address our market opportunity. Delivering enterprise solutions requires a partner products and services network that complements our own and that together addresses enterprise needs.
We may or may not prevail in patent-related proceedings and such proceedings may result in increased legal expenses, additional demands on our management's time and attention, and negative effects on our relationships with partners or end users.
We may or may not prevail in patent-related proceedings and such proceedings may result in increased legal expenses, additional demands on our management ’ s time and attention, and negative effects on our relationships with partners or end users.
Our success developing the technologies, processes or capabilities necessary or desired for new or enhanced products and services, or licensing or otherwise acquiring them from third parties, and our ability to introduce new or enhanced products and services before our competition, depends on many factors, including: • our ability to identify new product capabilities or services that end users will widely adopt; • our timely and efficient completion of the design process; • our timely and efficient implementation of manufacturing, assembly and testing procedures; • our attainment of appropriate product or service performance levels and product certifications; • partnering successfully with others to deliver complementary products or services; • the quality, reliability and selling price of our product or service; and • the effectiveness of our marketing, sales and support.
Our success developing the technologies, processes or capabilities necessary or desired for new or enhanced products, services and solutions, or licensing or otherwise acquiring them from third parties, and our ability to introduce new or enhanced products, services and solutions before our competition, depends on many factors, including: • our ability to identify new product capabilities, services or solutions that end users will widely adopt; • timely and efficiently completing the design process; • timely and efficiently implementing manufacturing, assembly and testing procedures; • attaining appropriate performance levels and certifications; • partnering successfully with others to deliver complementary products or services; • the quality, reliability and selling price of our products, services or solutions; and • marketing, sales and support effectiveness.
We outsource our manufacturing and production to suppliers in a small number of Asian jurisdictions including Thailand, Malaysia, Taiwan and China. Some of these jurisdictions experienced significant restrictions during the Covid-19 pandemic. These jurisdictions have also experienced significant changes in political, social, business or economic conditions in the past and may experience them in the future.
We outsource our manufacturing and production to suppliers in a small number of Asian jurisdictions including Thailand, Malaysia, Taiwan and China. These jurisdictions have also experienced significant changes in political, social, business or economic conditions in the past and may experience them in the future.
Convincing enterprises to partner with us to solve their business problems — including evaluation, design, deployment, operations and services, as well as integrating RAIN data into the enterprise's information systems — requires tight coordination among our and our partners' sales, marketing, operations and engineering teams.
Convincing enterprises to partner with us to solve their business problems—including evaluation, design, deployment, operations and services, as well as integrating RAIN data into the enterprise ’ s information systems—requires tight coordination among our and our partners ’ sales, marketing, operations and engineering teams.
Anticipated future conversions of the 2021 Notes into stock could also decrease our stock price, as could short selling by holders of the 2021 Notes to hedge their positions. In December 2019, we issued the 2019 Notes.
Anticipated future conversions of the 2021 Notes or the 2025 Notes into stock could also decrease our stock price, as could short selling by holders of the 2021 Notes or the 2025 Notes to hedge their positions. In December 2019 and in September 2025, we issued the 2019 and 2025 Notes, respectively.
As of December 31, 2024, we had federal U.S. net operating loss carryforwards, or NOLs, of $190.3 million and U.S. federal research and development credit carryforwards of $38.7 million, which we may use to reduce future taxable income or income taxes. We have established a valuation allowance against the carrying value of these deferred tax assets.
As of December 31, 2025, we had federal U.S. net operating loss carryforwards, or NOLs, of $275.8 million and U.S. federal research and development credit carryforwards of $43.7 million, which we may use to reduce future taxable income or income taxes. We have established a valuation allowance against the carrying value of these deferred tax assets.
Our partners, including our OEMs, ODMs, distributors, SIs, VARs and solution partners, may choose to compete with us rather than purchase our products, which would not only reduce our customer base but also increase competition in the market. Companies in adjacent markets or newly formed companies may decide to enter our market, particularly as RAIN adoption grows.
Our partners, including our OEMs, ODMs, distributors, SIs, VARs and solution partners, may compete with us rather than purchase our products, which could reduce our customer base and increase competition. Companies in adjacent markets or newly formed companies may decide to enter our market, particularly as RAIN adoption grows.
RAIN adoption, as well as adoption of our platform and products, depends on many factors, including the extent to which end users understand and embrace the benefits that RAIN offers; whether the benefits of RAIN adoption outweigh the cost and time to replace or modify end users’ existing systems and processes; and whether RAIN products and applications meet end users’ current or anticipated needs.
RAIN adoption, as well as adoption of our platform and products, including our Gen2X features, depends on many factors, including the extent to which end users understand and embrace the benefits that RAIN and our platforms and products offer; whether their benefits outweigh the cost and time to replace or modify end users’ existing systems and processes; and whether they meet end users’ current or anticipated needs.
Significant changes in RAIN standards bodies, standards or qualification processes could impede our ability to sell our products and services. We have historically taken a leadership position in developing RAIN industry standards, including with GS1 and ISO, and have designed our products to comply with those standards.
Significant changes in RAIN standards bodies, standards or qualification processes, or their failure to meet or to keep up with RAIN market needs, could impede our ability to sell our products and services. We have historically taken a leadership position in developing RAIN industry standards, including with GS1 and ISO, and have designed our products to comply with those standards.
Increasing attention to environmental, social and governance and regulatory matters may cause us to incur additional costs or expose us to additional risks. Investors, governmental and nongovernmental organizations, partners and end users are increasingly focusing on environmental, social and governance, or ESG, practices.
Increasing attention to environmental, social and governance and regulatory matters may cause us to incur additional costs or expose us to additional risks. Investors, governmental and nongovernmental organizations, partners and end users monitor our environmental, social and governance, or ESG, practices.
Certain jurisdictions may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future, including as a result of a change in law. Such tax assessments, penalties and interest or future requirements may negatively affect our operating results.
Certain jurisdictions may assert that such taxes are applicable, which could result in tax assessments, penalties and interest, and we may be required to collect such taxes in the future, including as a result of a change in law.
Our primary competitors are: • Endpoint ICs: NXP, EM Microelectronic, Kiloway, Quanray, Shanghai Fudan Microelectronics Group, Alibaba and Alien. • Reader ICs: Phychips Inc, Shanghai Fudan Microelectronics Group, MagicRF and NationRFID. • Readers and gateways: Most major reader and gateway suppliers leverage, or have a stated intent to leverage, our platform. • Test and measurement systems: CISC.
Our primary competitors are: • Endpoint ICs: NXP, Kiloway, Quanray, Shanghai Fudan Microelectronics Group, Alibaba and Alien. • Reader ICs: Phychips Inc and Shanghai Fudan Microelectronics Group. • Readers and gateways: Most major reader and gateway suppliers leverage, or have a stated intent to leverage, our platform. • Tag production systems: CISC.
Our ability to attain or sustain profitability depends on numerous factors, many of which are out of our control, including continued RAIN industry adoption and us maintaining or growing our market share.
Our ability to achieve or sustain profitability depends on numerous factors, many of which are not entirely in our control, including continued RAIN industry adoption and us maintaining or growing our market share.
We typically order products from our suppliers based on partner forecasts before we receive purchase orders. However, many of our partners have difficulty accurately forecasting their demand and the timing of that demand, and sometimes cancel orders or reschedule product shipments, in some cases with little or no advance notice to us.
We typically order products from our suppliers based on sales forecasts before we receive purchase orders. Many of our partners have difficulty accurately forecasting the amount and timing of their sales, and sometimes cancel orders or reschedule product shipments with little or no advance notice to us.
We 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. We maintain inventory to meet customer demand.
We bear inventory risks because our products have relatively long lead times, demand for them is hard to accurately forecast, and we rely on partners to sell and distribute them.
For more information, see “Changes in global trade policies could have a material adverse effect on us.” Any changes in our product or in export or import regulations or legislation; shifts or changes in enforcement; or changes in the countries, persons or technologies targeted by these regulations could delay us introducing new products in international markets, decrease use of our products by, or decrease our ability to export or sell our products to, existing or potential customers with international operations, adversely affecting our business and results of operations.
For more information, see “Changes in global trade policies could have a material adverse effect on us.” Any changes in our product or in export or import regulations or legislation; shifts or changes in enforcement; or changes in the countries, persons or technologies targeted by these regulations could delay us introducing new products in international markets, decrease use of our products by, or decrease our ability to export or sell our products to, existing or potential customers with international operations, adversely affecting our business and results of operations. 22 Table of Contents Instability or deterioration in the political, legal, social, business or economic conditions in the U.S. or in key jurisdictions could harm our business.
If we fail to increase our revenue or manage our expenses, or if our investments in growing the market or our share of it fail, then we may not attain or sustain profitability. We have a history of significant fluctuations in our quarterly and annual operating results. Our history shows significant sales volatility and a limited ability to forecast sales.
If we fail to increase our revenue or manage our expenses, or if our investment in growing the market or our market share fail, we may not remain profitable. We have a history of significant fluctuations in our quarterly and annual operating results. Our history shows significant sales volatility and a limited ability to forecast sales.
Intellectual property disputes have adversely affected RAIN adoption in the past and could disrupt growth prospects in the future. In 2011, Round Rock Research filed lawsuits against 11 end users, including Walmart and Macy’s, for RAIN-related patent infringement. Despite the subsequent availability of an industry-wide license, we believe those lawsuits adversely affected demand for our products from 2011 to 2019.
In 2011, Round Rock Research filed lawsuits against 11 end users, including Walmart and Macy’s, for RAIN-related patent infringement. Despite the subsequent availability of an industry-wide license, we believe those lawsuits adversely affected demand for our products from 2011 to 2019.
This activity could cause a decrease in our stock price. For more information on the 2019 Notes, the 2021 Notes and the capped-call transactions, see Note 8 of our consolidated financial statements included elsewhere in this report.
This activity could cause a decrease in our stock price. For more information on the 2019 Notes, the 2021 Notes, the 2025 Notes and the capped call transactions, see Note 8 of our consolidated financial statements included elsewhere in this report. We are subject to counterparty risk with respect to the capped call transactions.
However, to fully capitalize on our platform's potential, we must make our current offerings repeatable across multiple enterprises and in a variety of market segments. We must also develop relationships with top-tier solution partners to gain access to and address challenging new use cases.
However, to fully capitalize on our platform ’ s potential, we must make our current offerings repeatable across multiple enterprises and in various market segments. We must also develop relationships with top-tier solution partners to gain access to and address challenging new use cases, such as in food.
Our costs to support operations, product development and business and personnel expansion in sales, engineering and marketing are significant and are likely to increase as we invest to grow the market and our share of it, reduce our costs and improve our operations.
Our costs of operations, product development and business and personnel expansion in sales, engineering and marketing are significant and are likely to increase as we invest in growing the market and our market share, reducing our costs and improving operations.
Partners will also sometimes give us soft commitments for large orders that do not materialize. We have additional uncertainty arising from competition and from unanticipated external events, such as macroeconomic trends or events and changes in regulatory standards, all of which can adversely affect demand and consequently our inventory levels, sales and operating results.
Partners will also sometimes give us soft commitments for large orders that do not materialize. Competition and unanticipated external events, such as macroeconomic or regulatory changes, can also adversely affect demand and consequently our inventory levels, sales and operating results.
When we did so, we entered into privately negotiated capped-call transactions with financial counterparties to mitigate the dilutive impact on the Company above a given stock price. We left those capped-call transactions intact after we acquired the remainder of the outstanding 2019 Notes in June 2022.
At the time of each issuance, we entered into privately negotiated capped call transactions with financial counterparties to mitigate the dilutive impact above a given stock price. We left the capped call transactions related to the 2019 Notes issuance intact after we acquired the remainder of the outstanding 2019 Notes in June 2022.
Our 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.
Poor product quality could result in significant costs to us and impair our ability to sell our products. Our 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.
A successful end-user deployment requires not only tags and readers or gateways, but RAIN integration with information systems and applications that create business value from the RAIN data. Unless third parties continue developing and advancing business analytics tools, and end users enhance their information systems to use these tools, RAIN deployments could stall.
A successful end-user deployment requires not only tags and readers or gateways, but RAIN integration with information systems and applications that create business value from the RAIN data. Unless end users have access to effective analytical tools that extract business value, and enable their information systems to use these tools, RAIN deployments could stall.
The cybersecurity threat environment continues evolving, especially with heightened activity by state-sponsored actors. If we, our platform, or any of the third parties on which we rely suffers or is believed to have suffered a security breach or incident, vulnerability, error, ransomware or malicious event, then we could face increased costs, claims, liability, reduced revenue and harm to our reputation.
If we, our platform, or any of the third parties on which we rely suffers or is believed to have suffered a security breach or other security incident, vulnerability, error, outage, ransomware or malicious event, then we could face increased costs, claims, liability, reduced revenue and harm to our reputation.
Notably, China has refused to renounce the use of military force against Taiwan, and there can be no assurance that relations between China and Taiwan will not deteriorate further, particularly in light of ongoing tensions between the United States and China.
Notably, China has refused to renounce the use of military force against Taiwan, and there can be no assurance that relations between China and Taiwan will not deteriorate further, particularly in light of ongoing tensions between the United States and China. Any such developments could materially and adversely affect our business, financial condition and results of operations.
Our 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. We engage directly with some end users.
Any such interference could impair or delay our product sales or increase our cost of sales. We engage directly with some end users.
As demand for older products declines, or as competition from competitors with lower product costs or lower profitability expectations increases, or during times of oversupply, ASPs may decline quickly. To compete profitably, we must continually improve our technology and processes, reduce unit costs in line with lower selling prices, and introduce new, higher margin products.
ASPs can decline quickly for a number of reasons such as demand for older products declining, competition increasing, or during times of oversupply or overcapacity. To compete profitably, we must continually improve our technology and processes, reduce unit costs in line with lower selling prices, and introduce new, higher margin products.
If we are unable to identify or correct errors, defects, incompatibilities or other problems in our products, we could experience: • loss of customer orders or customers; • lost or delayed market acceptance (either of our products and solutions or RAIN generally); • lost or delayed sales; 16 Table of Contents • loss of market share; • damage to our brand and reputation; • impaired ability to attract new customers; • diversion of development resources; • increased service and warranty costs; • replacement costs; • legal actions by our partners or end users; and • increased insurance costs.
If we are unable to identify or correct errors, defects, incompatibilities or other problems in our products, we could experience a number of negative consequences, including lost or delayed sales or market acceptance (either of our products and solutions or RAIN generally), loss of market share and damage to our brand and reputation, increased service, warranty and replacement costs and legal actions by our partners or end users.
Integrating an acquired company, business or technology may create unforeseen operating difficulties and expenditures.
We have limited experience executing acquisitions. Integrating an acquired company, business or technology may create unforeseen operating difficulties and expenditures.
We do not collect sales and use, value-added or similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are either not applicable or an exemption from such taxes 32 Table of Contents applies.
Taxing authorities may successfully assert that we should have collected or in the future should collect sales and use, value-added or similar taxes. We do not collect sales and use, value-added or similar taxes in all jurisdictions in which we have sales, based on our belief that such taxes are either not applicable or an exemption from such taxes applies.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+1 added−0 removed11 unchanged
Biggest changeWe conduct periodic risk assessments to identify cybersecurity threats, as well as assessments when there is a material change in our business practices that we believe could affect information systems that are vulnerable to cybersecurity threats. These risk assessments include identifying reasonably foreseeable internal and external risks and the potential harm if the risks were to materialize.
Biggest changeWe conduct periodic risk assessments to identify cybersecurity threats, as well as assessments when there is a material change in our business 36 Table of Contents practices that we believe could affect information systems that are vulnerable to cybersecurity threats.
We devote significant resources and designate members of our management, including our VP, IT and Facilities, or VP IT, who reports to 36 Table of Contents our Chief Financial Officer, and our Senior Information Security Manager, or Senior ISM, to manage the risk assessment and mitigation process.
We devote significant resources and designate members of our management, including our VP, IT and Facilities, or VP IT, who reports to our Chief Financial Officer, and our Senior Information Security Manager, or Senior ISM, to manage the risk assessment and mitigation process.
In addition, our policies for managing and responding to cybersecurity incidents include procedures for appropriate escalations to our Chief Compliance Officer and to our audit committee chair.
In addition, our policies for managing and responding to cybersecurity incidents include procedures for appropriate escalations to our Chief Compliance Officer and to our audit committee chair. 37 Table of Contents
We conduct these risk assessments directly and also engage third parties to support these processes. Following these risk assessments, we evaluate how to appropriately implement and maintain reasonable safeguards to mitigate identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
Following these risk assessments, we evaluate how to appropriately implement and maintain reasonable safeguards to mitigate identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
Added
These risk assessments include identifying reasonably foreseeable internal and external risks and the potential harm if the risks were to materialize. We conduct these risk assessments directly and also engage third parties to support these processes.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed0 unchanged
Biggest changeLocation Purpose Approximate Square Feet Principal Lease Expiration Dates Seattle, Washington Corporate headquarters 70,000 2026 Seattle, Washington Design laboratory 29,000 2029 Shanghai, China General office space 4,000 2025 Helsinki, Finland Voyantic office space 7,000 2027 In addition, we lease offices in Thailand, Malaysia, Brazil and San Diego, California.
Biggest changeLocation Purpose Approximate Square Feet Principal Lease Expiration Dates Seattle, Washington Corporate headquarters 70,000 2038 Seattle, Washington Design laboratory 29,000 2029 San Diego, California General office space 7,000 2030 Helsinki, Finland Voyantic office space 7,000 2027 Taipei, Taiwan General office space 1,000 2028 In addition, we lease offices in Thailand, Malaysia, Brazil, Japan and China.
Item 2. Pr operties We have several operating leases for office space, summarized as of December 31, 2024 in the table below. We believe that our facilities are adequate for our current needs.
Item 2. Pr operties We have several operating leases for office space, summarized as of December 31, 2025 in the table below. We believe that our facilities are adequate for our current needs.
For more information about our lease commitments, please refer to Note 11 to our consolidated financial statements included elsewhere in this report. 37 Table of Contents
For more information about our lease commitments, please refer to Note 11 to our consolidated financial statements included elsewhere in this report.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures 38 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39 Item 6. Reserved 40 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 50 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 38 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 39 Item 6. Reserved 40 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 41 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 51 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+0 added−0 removed7 unchanged
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has traded on The Nasdaq Global Select Market under the symbol “PI” since July 21, 2016. Holders of Record As of January 31, 2025, there were 28 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock has traded on The Nasdaq Global Select Market under the symbol “PI” since July 21, 2016. Holders of Record As of January 30, 2026, there were 25 holders of record of our common stock.
The following performance graph compares the cumulative total stockholder return of our common stock versus the NASDAQ Composite Index and the Philadelphia Semiconductor Index. This graph assumes that the investment in our common stock and in each index was $100 on December 31, 2019, and assumes dividend reinvestment, if any.
The following performance graph compares the cumulative total stockholder return of our common stock versus the NASDAQ Composite Index and the Philadelphia Semiconductor Index. This graph assumes that the investment in our common stock and in each index was $100 on December 31, 2020, and assumes dividend reinvestment, if any.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

57 edited+31 added−13 removed40 unchanged
Biggest changeQuarter-to-quarter revenue variability due to macroeconomic conditions and program-launch timing may impact these seasonal trends in the future. 42 Table of Contents Results of Operations Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands, except percentages) 2024 2023 2022 Change Change Revenue $ 366,087 $ 307,539 $ 257,800 $ 58,548 $ 49,739 Gross profit $ 188,855 $ 151,982 $ 137,884 $ 36,873 $ 14,098 Gross margin 51.6 % 49.4 % 53.5 % 2.2 % (4.1 )% Loss from operations $ (7,069 ) $ (43,484 ) $ (19,479 ) $ 36,415 $ (24,005 ) Revenue and gross profit increased, due primarily to higher endpoint IC and partially offset by lower systems revenue.
Biggest changeResults of Operations Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands, except percentages) 2025 2024 2023 Change Change Revenue $ 361,075 $ 366,087 $ 307,539 $ (5,012 ) $ 58,548 Gross profit $ 189,677 $ 188,855 $ 151,982 $ 822 $ 36,873 Gross margin 52.5 % 51.6 % 49.4 % 0.9 % 2.2 % Loss from operations $ (737 ) $ (7,069 ) $ (43,484 ) $ 6,332 $ 36,415 Revenue decreased, due primarily to lower endpoint IC revenue partially offset by higher systems revenue.
We believe the Boundless IoT we are enabling will, in the not-too-distant future, give people ubiquitous access to cloud-based digital twins of every item, each storing the item’s history and linked information and helping people explore and learn about the item. We believe that that connectivity will transform the world.
We believe the Boundless IoT we are enabling will, in the not-too-distant future, give people ubiquitous access to cloud-based digital twins of every item, each storing the item’s history, location and linked information and helping people explore and learn about the item. We believe that that connectivity will transform the world.
The 2021 Notes are our senior unsecured obligation, bearing interest at a fixed rate of 1.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on May 15, 2022.
The 2021 Notes are our senior unsecured obligation, bearing interest at a fixed rate of 1.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year.
We evaluate the likelihood of our ability to realize deferred tax assets in future periods on a quarterly basis, and if evidence indicates we will be able to realize some or all of our deferred tax assets then we will revise our valuation allowance accordingly. 49 Table of Contents We use a two-step approach for evaluating uncertain tax positions.
We evaluate the likelihood of our ability to realize deferred tax assets in future periods on a quarterly basis, and if evidence indicates we will be able to realize some or all of our deferred tax assets then we will revise our valuation allowance accordingly. We use a two-step approach for evaluating uncertain tax positions.
As a result, we sometimes experience inventory overages or shortages. Inventory overages can increase expenses, expose us to product obsolescence and/or increased reserves and negatively affect our business. Inventory shortages can cause long lead times, missed opportunities, market-share losses and/or damaged customer relationships, also negatively affecting our business.
We also sometimes experience inventory overages or shortages. Inventory overages can increase expenses, expose us to product obsolescence and/or increased reserves and negatively affect our business. Inventory shortages can cause long lead times, missed opportunities, market-share losses and/or damaged customer relationships, also negatively affecting our business.
In the past, this negotiation typically resulted in reduced revenue and gross margins in the first quarter compared to prior periods, which then normalized in subsequent quarters as we reduced costs and adjust product mix by migrating those OEMs and end users to newer, lower-cost products.
In the past, this negotiation typically resulted in reduced revenue and 42 Table of Contents gross margins in the first quarter compared to prior periods, which then normalized in subsequent quarters as we reduced costs and adjust product mix by migrating those OEMs and end users to newer, lower-cost products.
We are today focused on extending item connectivity from tens of billions to trillions of items, and delivering item data not just to enterprises but to people, so they too can derive value from their connected items.
We are today focused on extending item connectivity from tens of billions to trillions of items and delivering item data not just to enterprises but to people, so they too can benefit from their connected items.
We can provide no assurance that any additional financing will be available to us on acceptable terms. 2021 Notes In November 2021, we issued convertible notes due in 2027 in an aggregate principal amount of $287.5 million, which we refer to as the 2021 Notes.
We can provide no assurance that any additional financing will be available to us on acceptable terms. 2021 Notes In November 2021, we issued convertible notes due in 2027 in an aggregate principal amount of $287.5 million, or the 2021 Notes.
Liquidity and Capital Resources As of December 31, 2024, we had cash, cash equivalents and short-term investments of $164.7 million, comprising cash deposits held at major financial institutions and short-term investments in a variety of securities, including U.S. government securities, treasury bills, corporate notes and bonds, commercial paper and money market funds.
Liquidity and Capital Resources As of December 31, 2025, we had cash, cash equivalents and short-term investments of $175.3 million, comprising cash deposits held at major financial institutions and short-term investments in a variety of securities, including U.S. government securities, treasury bills, corporate notes and bonds, commercial paper and money market funds.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 12, 2024 which is incorporated by reference herein.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the SEC on February 10, 2025 which is incorporated by reference herein.
We have enabled connectivity for more than 120 billion items to date, delivering item visibility and improving operational efficiencies for retailers, supply chain and logistics, or SC&L providers, restaurants and food-service providers, airlines, automobile manufacturers, healthcare companies and many more.
We have enabled connectivity for more than 150 billion items to date, delivering item visibility, traceability and improved operational efficiencies for retailers, supply chain and logistics, or SC&L providers, restaurants and food-service providers, airlines, automobile manufacturers, healthcare companies and many more.
We sell our endpoint ICs and test and measurement solutions primarily to inlay manufacturers; our reader ICs primarily to OEMs and ODMs through distributors; and our readers and gateways to solutions providers, VARs and SIs, also primarily through distributors. We expect endpoint IC sales to represent the majority of our revenue for the foreseeable future.
We sell our endpoint ICs and tag production systems primarily to inlay manufacturers; our reader ICs primarily to OEMs and ODMs through distributors; and our readers and gateways to solutions providers, VARs and SIs, also primarily through distributors. We expect endpoint IC sales to represent the majority of our revenue for the foreseeable future.
Income From Settlement of Litigation Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Income from settlement of litigation $ 45,000 $ — $ — $ 45,000 $ — The increase in income from settlement of litigation relates to the Settlement Agreement with NXP on March 13, 2024.
Income From Settlement of Litigation Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Income from settlement of litigation $ — $ 45,000 $ — $ (45,000 ) $ 45,000 The decrease in income from settlement of litigation relates to the Settlement Agreement with NXP on March 13, 2024.
From 2010 to 2024, our overall endpoint IC sales volumes increased at a 27% compounded annual growth rate; however, we have experienced declines in endpoint IC sales volumes during various periods.
From 2010 to 2025, our overall endpoint IC sales volumes increased at a 26% compounded annual growth rate; however, we have experienced declines in endpoint IC sales volumes during various periods.
General and Administrative Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change General and administrative $ 51,802 $ 60,828 $ 45,465 $ (9,026 ) $ 15,363 General and administrative expense comprises primarily personnel expenses (salaries, benefits and other employee related costs) and stock-based compensation expense for our executive, finance, human resources and information technology personnel; legal, accounting and other professional service fees; travel and insurance expense; and an allocated portion of infrastructure costs which include occupancy, depreciation and software costs.
General and Administrative Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change General and administrative $ 49,192 $ 51,802 $ 60,828 $ (2,610 ) $ (9,026 ) General and administrative expense comprises primarily personnel expenses (salaries, benefits and other employee related costs) and stock-based compensation expense for our executive, finance, human resources and information technology personnel; legal, accounting and other professional service fees; travel and insurance expense; and an allocated portion of infrastructure costs which include occupancy, depreciation and software costs.
Those readers may also protect an item or consumer, for example by authenticating the item as genuine or privatizing the item by rendering the endpoint IC unresponsive without the consumer first providing a password. Our manufacturing, test and encoding systems enable partner products and facilitate enterprise deployments. Our reading systems comprise high-performance finished readers and gateways for autonomous reading solutions.
Those readers may also protect an item or consumer, for example by authenticating the item as genuine or privatizing the item by rendering the endpoint IC unresponsive without the consumer first providing a password. Our reading systems comprise high-performance finished readers and gateways used primarily in autonomous reading solutions. Our tag production systems enable partner products and facilitate enterprise deployments.
Operating Expenses Research and Development Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Research and development $ 98,829 $ 88,562 $ 74,106 $ 10,267 $ 14,456 Research and development expense comprises primarily personnel expenses (salaries, benefits and other employee related costs) and stock-based compensation expense for our product-development personnel; product development costs which include external consulting and service costs, prototype materials and other new-product development costs; and an allocated portion of infrastructure costs which include occupancy, depreciation and software costs.
Operating Expenses Research and Development Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Research and development $ 102,615 $ 98,829 $ 88,562 $ 3,786 $ 10,267 Research and development expense comprises primarily personnel expenses (salaries, benefits and other employee related costs) and stock-based compensation expense for our product-development personnel; product development costs which include external consulting and service costs, prototype materials and other new-product development costs; and an allocated portion of infrastructure costs which include occupancy, depreciation and software costs.
Sales and Marketing Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Sales and marketing $ 40,579 $ 41,123 $ 37,894 $ (544 ) $ 3,229 Sales and marketing expense comprises primarily personnel expenses (salaries, incentive sales compensation, or commission, benefits and other employee-related costs) and stock-based compensation expense for our sales and marketing personnel; travel, advertising and promotional expenses; and an allocated portion of infrastructure costs which include occupancy, depreciation and software costs.
Sales and Marketing Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Sales and marketing $ 36,530 $ 40,579 $ 41,123 $ (4,049 ) $ (544 ) Sales and marketing expense comprises primarily personnel expenses (salaries, incentive sales compensation, or commission, benefits and other employee-related costs) and stock-based compensation expense for our sales and marketing personnel; travel, advertising and promotional expenses; and an allocated portion of infrastructure costs which include occupancy, depreciation and software costs.
Income Tax Expense Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Income tax expense (benefit) $ 157 $ (322 ) $ 184 $ 479 $ (506 ) We are subject to federal and state income taxes in the United States and foreign jurisdictions.
Income Tax Expense Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Income tax benefit (expense) $ (69 ) $ 157 $ (322 ) $ (226 ) $ 479 We are subject to federal and state income taxes in the United States and foreign jurisdictions.
We record these costs within sales and marketing expenses. We do not disclose the value of unsatisfied performance obligations for (1) contracts with an original expected length of one year or less and (2) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
We do not disclose the value of unsatisfied performance obligations for (1) contracts with an original expected length of one year or less and (2) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
Amortization of Intangibles Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Amortization of intangibles $ 2,902 $ 4,953 $ — $ (2,051 ) $ 4,953 Amortization of intangibles decreased by $2.1 million. The decrease relates to the intangibles acquired as part of our April 3, 2023 acquisition of Voyantic Oy.
Amortization of Intangibles Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Amortization of intangibles $ 2,077 $ 2,902 $ 4,953 $ (825 ) $ (2,051 ) Amortization of intangibles decreased by $0.8 million. The decrease relates to the intangibles acquired as part of our April 3, 2023 acquisition of Voyantic Oy.
The first are endpoint ICs that store a serialized number to wirelessly identify an item. Our partners embed endpoint ICs into an item or its packaging. The ICs may also contain a cryptographic key to authenticate the item. The second are reader ICs that our partners use in finished readers to wirelessly discover, inventory and engage the endpoint ICs.
Our partners embed endpoint ICs into an item or its packaging. These ICs may also contain a cryptographic key to authenticate the item. The second are reader ICs that our partners use in embedded or finished readers to wirelessly discover, inventory and engage the endpoint ICs.
For our discussion of our fiscal 2023 results compared to fiscal 2022 for both our results of operations and our liquidity and capital resources sections, refer to "Item 7.
For our discussion of our fiscal 2024 results compared to fiscal 2023 for both our results of operations and our liquidity and capital resources sections, refer to “Item 7.
Restructuring Costs Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Restructuring costs $ 1,812 $ — $ (102 ) $ 1,812 $ 102 The increase in restructuring costs relates to the restructuring we initiated on February 7, 2024.
Restructuring Costs Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Restructuring costs $ — $ 1,812 $ — $ (1,812 ) $ 1,812 The decrease in restructuring costs relates to the restructuring we initiated on February 7, 2024.
(2) Purchase commitments comprise primarily noncancelable commitments to purchase $24.6 million of inventory as of December 31, 2024, noncancelable software license agreements with vendors and equipment purchases.
(2) Purchase commitments comprise primarily noncancelable commitments to purchase $28.2 million of inventory as of December 31, 2025, noncancelable software license agreements with vendors and equipment purchases.
We allocate the transaction price to the separate performance obligations on a relative standalone selling-price basis. In instances where the standalone selling price is not directly observable, such as when we do not sell the product or service separately, we determine the standalone selling price using one, or a combination of, the adjusted market assessment or expected cost-plus margin.
In instances where the standalone selling price is not directly observable, such as when we do not sell the product or service separately, we determine the standalone selling price using one, or a combination of, the adjusted market assessment or expected cost-plus margin.
Although we continue generating project-based revenue, we have not seen it at a comparable scale in 2022, 2023 or in 2024. Seasonality and Pricing We typically negotiate pricing with most of our endpoint IC OEMs with an effective date of the first quarter of the calendar year.
While we continue generating project-based revenue, we did not see it at a comparable scale in 2022 to 2025. Seasonality and Pricing We typically negotiate pricing with most of our endpoint IC OEMs with an effective date of the first quarter of the calendar year.
Historical Cash Flow Trends The following table shows a summary of our cash flows for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 2022 Net cash provided by (used in) operating activities $ 128,310 $ (49,382 ) $ 641 Net cash provided by (used in) investing activities (192,570 ) 115,808 (102,799 ) Net cash provided by (used in) financing activities 15,679 8,736 (2,148 ) Operating Cash Flows For the year ended December 31, 2024, we generated $128.3 million of net cash from operating activities.
Historical Cash Flow Trends 47 Table of Contents The following table shows a summary of our cash flows for the periods indicated: Year Ended December 31, (in thousands) 2025 2024 2023 Net cash provided by (used in) operating activities $ 58,746 $ 128,310 $ (49,382 ) Net cash provided by (used in) investing activities (48,015 ) (192,570 ) 115,808 Net cash provided by (used in) financing activities (8,928 ) 15,679 8,736 Operating Cash Flows For the year ended December 31, 2025, we generated $58.7 million of net cash from operating activities.
This process involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and financial reporting purposes. If actual results differ from our estimates, then our net operating loss and credit carryforwards could be materially impacted.
This process involves estimating our actual current tax exposure, including assessing the risks associated with tax audits, together with assessing temporary differences resulting from the different treatment of items for tax and financial reporting purposes.
We account for the hardware and embedded software as a single performance obligation and recognize revenue when control is transferred. 48 Table of Contents Our customer contracts with multiple performance obligations generally include a combination of hardware products, extended warranty, enhanced maintenance and support services. For these contracts, we account for individual performance obligations separately if they are distinct.
Our reader and gateway products are highly dependent on embedded software and cannot function without this embedded software. We account for the hardware and embedded software as a single performance obligation and recognize revenue when control is transferred. Our customer contracts with multiple performance obligations generally include a combination of hardware products, extended warranty, enhanced maintenance and support services.
Us realizing the benefits of the NOLs and credit carryforwards depends on sufficient taxable income in future years. We have established a valuation allowance against the carrying value of our deferred tax assets, as it is currently more likely than not we will be unable to realize these deferred tax assets.
We have established a valuation allowance against the carrying value of our deferred tax assets, as it is currently more likely than not we will be unable to realize these deferred tax assets.
The 2021 Notes are convertible into cash, shares of our common stock or a combination thereof, at our election, and will mature on May 15, 2027 unless earlier repurchased, redeemed or converted in accordance with the indenture terms. 46 Table of Contents The net proceeds from the 2021 Notes were approximately $278.4 million after initial debt issuance costs, fees and expenses.
The 2021 Notes are convertible into cash, shares of our common stock or a combination thereof, at our election, and will mature on May 15, 2027 unless earlier repurchased, redeemed or converted in accordance with the terms of the terms of the Indenture governing the 2021 Notes.
Our gross margin varies from period to period based on the mix of endpoint IC and systems; underlying product margins driven by changes in mix, ASPs or costs; as well as from inventory excess and obsolescence charges. 43 Table of Contents Gross profit increased $36.9 million, due primarily to increased endpoint IC revenue partially offset by decreased systems revenue.
Cost of revenue also includes charges for excess and obsolescence and warranty costs. Our gross margin varies from period to period based on the mix of endpoint IC and systems; underlying product margins driven by changes in mix, ASPs or costs; as well as from inventory excess and obsolescence charges.
We create partner and enterprise preference for our radios and solutions by adding differentiated features into our products, including our Gen2X functionality, supporting those features across our platform and licensing them where appropriate, to deliver solutions capabilities and performance that surpasses mix-and-match solutions built from competitor products. 41 Table of Contents Factors Affecting Our Performance Inventory Supply Most of our revenue derives from endpoint ICs that our partners embed into or onto enterprise items and is therefore affected by macroeconomic trends.
We create partner and enterprise preference for our radios and solutions by adding differentiated features into them, supporting those features across our platform and licensing them where appropriate, to deliver solutions capabilities and performance that surpasses mix-and-match solutions built from competitor 41 Table of Contents products.
Interest Expense Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Interest expense $ 4,873 $ 4,848 $ 4,923 $ 25 $ (75 ) 45 Table of Contents Interest expense comprises primarily cash interest, amortization of debt issuance costs and debt discount. Interest expense remained comparable to the prior period.
Interest Expense Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Interest expense $ 4,367 $ 4,873 $ 4,848 $ (506 ) $ 25 Interest expense comprises primarily cash interest, amortization of debt issuance costs and debt discount.
Revenue Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Endpoint ICs $ 305,915 $ 234,426 $ 191,532 $ 71,489 $ 42,894 Systems 60,172 73,113 66,268 (12,941 ) 6,845 Total revenue $ 366,087 $ 307,539 $ 257,800 $ 58,548 $ 49,739 We currently derive substantially all our revenue from sales of endpoint ICs, reader ICs, readers, gateways, test and measurement solutions and licensing.
Revenue Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Endpoint ICs $ 299,806 $ 305,915 $ 234,426 $ (6,109 ) $ 71,489 Systems 61,269 60,172 73,113 1,097 (12,941 ) Total revenue $ 361,075 $ 366,087 $ 307,539 $ (5,012 ) $ 58,548 We currently derive substantially all our revenue from sales of endpoint ICs, reader ICs, readers, gateways, tag production systems and licensing.
Research and development expense increased $10.3 million, due primarily to increases of $8.5 million in personnel expenses primarily from higher bonus achievement and to a lesser extent increased headcount, $4.4 million in stock-based compensation expense related primarily to increased outstanding equity grants, and $1.5 million in infrastructure costs primarily from increased depreciation and software costs, partially offset by a decrease of $4.1 million in product development costs.
Research and development expense increased $3.8 million, due primarily to increases of $4.0 million in product development costs due to timing; $2.4 million in infrastructure costs primarily from increased depreciation and software costs; and $1.3 million in stock-based compensation expense related primarily to increased outstanding equity grants.
We recognize revenue from licensing the right to use functional intellectual property at the point in time the control of the license transfers to the customer, which is generally upon delivery, or as usage occurs.
We recognize revenue from licensing the right to use functional intellectual property at the point in time the control of the license transfers to the customer, which is generally upon delivery, or as usage occurs. 49 Table of Contents If a customer pays consideration before we transfer a good or service under the contract, then we classify those amounts as contract liabilities, or deferred revenue.
General and administrative expense decreased $9.0 million, due primarily to a decrease of $18.0 million in professional services related to legal fees and transaction expenses, partially offset by increases of $5.2 million personnel expenses from higher bonus achievement, higher headcount and higher payroll 44 Table of Contents taxes, and $3.5 million in stock-based compensation expense related primarily to increased outstanding equity grants.
General and administrative expense decreased $2.6 million, due primarily to a decrease $3.0 million in personnel expenses related to lower bonus achievement compared to the prior-year period and a decrease of $1.7 million in professional services related to legal fees, partially offset by an increase of $1.5 million in stock-based compensation expense related primarily to increased outstanding equity grants.
Off-Balance-Sheet Arrangements Since inception, we have not had any relationships with unconsolidated entities, such as entities often referred to as structured finance or special-purpose entities, or financial partnerships that would have been established for the purpose of facilitating off-balance-sheet arrangements or for another contractually narrow or limited purpose.
Off-Balance-Sheet Arrangements Since inception, we have not had any relationships with unconsolidated entities, such as entities often referred to as structured finance or special-purpose entities, or financial partnerships that would have been established for the purpose of facilitating off-balance-sheet arrangements or for another contractually narrow or limited purpose. 48 Table of Contents Critical Accounting Policies and Significant Estimates Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements which we have prepared in accordance with GAAP.
Gross Profit and Gross Margin Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands, except percentages) 2024 2023 2022 Change Change Cost of revenue $ 177,232 $ 155,557 $ 119,916 $ 21,675 $ 35,641 Gross profit 188,855 151,982 137,884 36,873 14,098 Gross margin 51.6 % 49.4 % 53.5 % 2.2 % (4.1 )% Cost of revenue includes costs associated with manufacturing our endpoint ICs, reader ICs, readers, gateways and test and measurement solutions, including direct materials and outsourced manufacturing costs as well as associated overhead costs such as logistics, quality control, planning and procurement.
Reader revenue increased by $8.3 million offset by decreases of $3.4 million and $4.1 million from gateway and reader IC revenue, respectively. 43 Table of Contents Gross Profit and Gross Margin Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands, except percentages) 2025 2024 2023 Change Change Cost of revenue $ 171,398 $ 177,232 $ 155,557 $ (5,834 ) $ 21,675 Gross profit 189,677 188,855 151,982 822 36,873 Gross margin 52.5 % 51.6 % 49.4 % 0.9 % 2.2 % Cost of revenue includes costs associated with manufacturing our endpoint ICs, reader ICs, readers, gateways and tag production systems, including direct materials and outsourced manufacturing costs as well as associated overhead costs such as logistics, quality control, planning and procurement.
We and our partner ecosystem build item-visibility solutions using products that we design and either sell or license, including silicon RAIN radios; manufacturing, test, encoding and reading systems, software and cloud services that encapsulate our solutions know-how and intellectual property. We sell two types of silicon IC radios.
We and our partner ecosystem build item-visibility solutions using products that we design and either sell or license, including silicon radios, reading systems, tag production systems and intellectual property.
Further, we sell most of our products, both endpoint ICs and systems, through partners and distributors, limiting our visibility to enterprise demand. We work closely with those partners and distributors to gain as accurate a view as possible, however, correctly forecasting demand for our products and identifying market shifts in a timely manner remains a challenge.
Although we work closely with those partners and distributors to gain as accurate a view as possible, correctly forecasting demand for our products and identifying market shifts in a timely manner remains a challenge. This challenge can be exacerbated when major end users adjust the mix of inlay providers from which they procure inlays incorporating our endpoint ICs.
We present revenue net of sales tax in our consolidated statements of operations. We include shipping charges billed to customers in revenue and the related shipping costs in cost of revenue. Practical Expedients and Exemptions: We expense sales commissions when incurred because we expect the amortization period to be one year or less.
Practical Expedients and Exemptions: We expense sales commissions when incurred because we expect the amortization period to be one year or less. We record these costs within sales and marketing expenses.
Investing Cash Flows For the year ended December 31, 2024, we used $192.6 million of net cash from investing activities. This net cash usage was due primarily to purchases of investment of $202.1 million and property and equipment purchases of $17.1 million, partially offset by proceeds from maturities of investments of $26.6 million.
This net cash usage was due primarily to purchases of investments of $202.8 million and property and equipment purchases of $12.9 million, partially offset by proceeds from maturities of investments of $154.7 million and proceeds from sales of investments of $12.9 million.
Our software and cloud services focus on solutions enablement. We sell our products, individually or as a whole platform offering primarily with or through our partner ecosystem. That ecosystem comprises original equipment manufacturers, or OEMs, tag service bureaus, original device manufacturers, or ODMs, systems integrators, or SIs, value-added resellers, or VARs, independent software vendors, or ISVs, and other solution partners.
That ecosystem comprises original equipment manufacturers, or OEMs, tag service bureaus, original device manufacturers, or ODMs, systems integrators, or SIs, value-added resellers, or VARs, independent software vendors, or ISVs, and other solution partners. Our radios follow the RAIN industry’s air-interface standard for their core reading functionality.
See Note 12, Commitments and Contingencies for further details. Other Income, Net Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Other income, net $ 7,937 $ 4,644 $ 2,517 $ 3,293 $ 2,127 Other income, net, comprises primarily interest income on our short-term investments.
Other Income, Net Year Ended December 31, 2025 vs 2024 2024 vs 2023 (in thousands) 2025 2024 2023 Change Change Other income, net $ 9,214 $ 7,937 $ 4,644 $ 1,277 $ 3,293 Other income, net, comprises primarily interest income on our short-term investments. 45 Table of Contents Other income, net, increased $1.3 million, due to increased interest income given higher invested balances.
If a customer pays consideration before we transfer a good or service under the contract, then we classify those amounts as contract liabilities, or deferred revenue. We recognize contract liabilities as revenue when we transfer control of the promised goods or services to our customers. Payment terms typically range from 30 to 120 days.
We recognize contract liabilities as revenue when we transfer control of the promised goods or services to our customers. Payment terms typically range from 30 to 120 days. We present revenue net of sales tax in our consolidated statements of operations. We include shipping charges billed to customers in revenue and the related shipping costs in cost of revenue.
These net cash proceeds were due to $112.3 million of net income adjusted for non-cash items and $16.0 million of working capital proceeds due primarily to higher accrued compensation and employee related benefits and accounts payable, partially offset by lower operating lease liabilities, acquisition related contingent consideration liability and higher inventory.
These net cash proceeds comprised $73.5 million of net income adjusted for non-cash items, partially offset by a $14.8 million decrease in working capital due primarily to lower accrued compensation and employee related benefits and accounts payable. Investing Cash Flows For the year ended December 31, 2025, we used $48.0 million of net cash from investing activities.
We will use the rest of the net proceeds for general corporate purposes. For further information on the terms of this debt, please refer to Note 8 to our consolidated financial statements included elsewhere in this report.
In addition, we used approximately $11.2 million of cash on hand to pay the cost of the capped call transactions entered into in connection with issuing the 2025 Notes. For further information on the terms of this debt, please refer to Note 8 to our consolidated financial statements included elsewhere in this report.
The endpoint IC revenue increase was driven primarily by higher shipment volumes and licensing revenue partially offset by lower average ASP due to mix and short-term pricing incentives on legacy products, and the systems revenue decrease was due primarily to lower shipment volumes.
The endpoint IC revenue decrease was driven primarily by lower ASP due to mix and new pricing that went into effect at the beginning of the year, and the systems revenue increase was due primarily to higher shipment volumes. Gross profit increased, despite lower revenue, due to lower endpoint IC costs from product mix.
This decrease was partially offset by an increase in cash and short-term investments. Historically, we have funded our operations primarily through cash generated from operations and by issuing equity securities, convertible-debt offerings and/or borrowing under our prior senior credit facility.
The increase is due to a decrease in the balance of the 2021 Notes, which was driven by a privately negotiated exchange of $190.0 million principal amount of the 2021 Convertible Notes, or the 2021 Note Exchange (refer to Note 8, Long-term debt, in our consolidated financial statements included elsewhere in this report for further information). 46 Table of Contents Historically, we have funded our operations primarily through cash generated from operations and by issuing equity securities, convertible-debt offerings and/or borrowing under our prior senior credit facility.
Contractual Obligations The following table reflects a summary of our contractual obligations as of December 31, 2024: Payments Due By Period Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years (in thousands) Convertible senior notes (1) $ 295,586 $ 3,234 $ 292,352 $ — $ — Operating lease obligations Operating lease obligations 10,248 4,101 4,956 1,191 — Purchase commitments (2) 35,021 35,021 — — — Total $ 340,855 $ 42,356 $ 297,308 $ 1,191 $ — 47 Table of Contents (1) The 2021 Notes include $8.1 million in interest payments.
Contractual Obligations The following table reflects a summary of our contractual obligations as of December 31, 2025: Payments Due By Period Total Less Than 1 Year 1-3 Years 3-5 Years More Than 5 Years (in thousands) Convertible senior notes (1) $ 289,143 $ 1,097 $ 98,046 $ 190,000 $ — Operating lease obligations Operating lease obligations 43,276 2,878 7,722 7,065 25,611 Purchase commitments (2) 34,919 32,666 2,253 — — Total $ 367,338 $ 36,641 $ 108,021 $ 197,065 $ 25,611 (1) The convertible senior notes include $1.6 million in interest payments.
Endpoint IC revenue increased $71.5 million, due primarily to a $79.7 million increase from higher shipment volumes and $15.0 million from licensing revenue that did not occur in the prior year, partially offset by a $23.2 million decrease due to lower average ASP, the latter due primarily to product mix shift, and to a lesser extent, short-term pricing incentives on legacy products.
Endpoint IC revenue decreased $6.1 million, due to a $32.3 million decrease from lower ASP due to product mix and new pricing that went into effect at the beginning of the year, partially offset by a $25.1 million increase due to higher shipment volumes and a $1.0 million increase in licensing revenue.
Sales and marketing expense decreased $0.5 million, due primarily to decreases of $0.5 million in marketing related spend and $0.4 million in personnel expenses resulting from lower headcount, partially offset by higher bonus achievement and commissions. These decreases were partially offset by an increase of $0.5 million in stock-based compensation expense related primarily to increased outstanding equity grants.
Sales and marketing expense decreased $4.0 million, due primarily to decreases of $4.1 million in stock-based compensation expense, driven by forfeitures related to the retirement of our Chief Revenue 44 Table of Contents Officer in the first quarter of fiscal year 2025 and the resulting lower ongoing expense and a decrease of $0.7 million in personnel expenses related to lower bonus achievement compared to the prior-year period.
Gross margin increased due primarily to high-margin licensing revenue recognized in the year that did not occur in the prior year. Loss from operations decreased due primarily to increased gross profit.
Gross margin increased due primarily to higher endpoint IC gross margin, the result of product mix, and lower indirect costs in the current year compared to the prior year. Loss from operations decreased due primarily to decreased operating expenses.
We used approximately $183.6 million of the net proceeds to repurchase approximately $76.4 million aggregate principal amount of convertible notes due 2026, or the 2019 Notes through individual privately negotiated transactions concurrent with the 2021 Notes offering.
We used the net proceeds and cash on hand to exchange $190.0 million aggregate principal amount of the 2021 Notes for approximately $190.0 million in cash, representing the principal amount exchanged, and approximately 811,000 shares of our common stock, representing the exchange value in excess thereof, and also paid accrued and unpaid interest thereon, in individual privately negotiated transactions concurrent with the 2025 Notes offering.
Removed
Our radios follow the RAIN industry’s air-interface standard for their core reading functionality.
Added
We also offer software and cloud services, and while nascent from a standalone revenue perspective, they enable our other product offerings and we intend to expand them as a part of our growth strategy. We sell two types of silicon radios. The first are endpoint ICs that store a serialized number to wirelessly identify an item.
Removed
We did not see these seasonal trends in 2022 or 2023 but began to see them in the second half of 2024.
Added
Our software and cloud service offerings focus on solutions enablement, particularly at enterprises with whom we have a close business relationship. We sell our products, individually or as a whole platform offering, primarily with or through our partner ecosystem.
Removed
Systems revenue decreased $12.9 million due primarily to a decrease in shipment volumes. Reader and gateway revenue decreased $5.8 million and $8.6 million, respectively. These decreases were partially offset by an increase of $3.1 million from test and measurement solutions revenue.
Added
We have also introduced a set of compatible extensions to the RAIN industry’s air-interface standard, which we call Gen2X, that enhance the performance and protection of our solutions. The RAIN industry, on both the reader and solutions side, has broadly embraced Gen2X.
Removed
Cost of revenue also includes charges for excess and obsolescence and warranty costs.
Added
Factors Affecting Our Performance Macroeconomic Factors We are subject to impacts from the evolving macroeconomic environment, including uncertainty and volatility in trade measures and tariffs.
Removed
Gross margin increased, due primarily to high-margin licensing revenue recognized in the year that did not occur in the prior year.
Added
Because most of our revenue derives from endpoint ICs that our partners embed into or onto items, to the extent that those items are impacted, positively or negatively, by trade measure and tariffs, we are impacted as well.
Removed
Other income, net, increased $3.3 million, due to increased interest income given higher invested balances and higher interest rates.
Added
While the impact that recent trade measures will have on our business and financial results is difficult to predict, they could negatively affect our business and financial results. We continue to monitor the broader impacts of these measures on our business, our supply chain and our results of operations.
Removed
Induced Conversion Expense Year Ended December 31, 2024 vs 2023 2023 vs 2022 (in thousands) 2024 2023 2022 Change Change Induced conversion expense $ — $ — $ 2,232 $ — $ (2,232 ) There was no induced conversion expense for the years ended December 31, 2024 and 2023.
Added
See risk factor “Changes in global trade policies could have a material adverse effect on us.” in Item 1A. of this report for further information. Inventory Supply We sell most of our products, both endpoint ICs and systems, through partners and distributors, limiting our visibility to actual enterprise demand.
Removed
Income tax expense increased by $0.5 million due to changes in our estimated effective tax rate.
Added
We did not see these seasonal trends in 2023 but began to see them in second-half 2024 and in 2025. We do expect continued quarter-to-quarter revenue and gross margin variability due to macroeconomic conditions, program-launch timing and our ability to migrate OEMs and end users to newer, lower cost products. These factors, among others, may impact seasonal trends.
Removed
As of December 31, 2024, we had working capital of $(4.8) million, down from $238.8 million as of December 31, 2023. The decrease was driven by the reclassification of our convertible debt from long-term to current, due to certain conditions being met (refer to Note 8 our consolidated financial statements included elsewhere in this report for further information).
Added
Systems revenue increased $1.1 million due to an increase in shipment volumes.
Removed
We used $17.6 million to repurchase the remaining $9.85 million aggregate principal of the 2019 Notes through individual privately negotiated transactions in June 2022. Please refer to the section “ Repurchase of the Convertible Senior Notes – 2019 ” as described in Note 8 to our consolidated financial statements included elsewhere in this report.
Added
Gross profit increased $0.8 million, despite a decrease in revenue, due primarily to decreased costs from endpoint IC due to product mix. Gross margin increased, due primarily to higher endpoint IC gross margin due to product mix and lower indirect costs in the current year compared to the prior year.
Removed
Financing Cash Flows For the year ended December 31, 2024, we generated $15.7 million of net cash from financing activities. These net cash proceeds were due to $20.3 million from stock-option exercises and our employee stock purchase plan, or ESPP, partially offset by $4.6 million of cash paid for the earnout payment related to the Voyantic Oy acquisition.
Added
These increases were partially offset by a decrease of $4.2 million in personnel expenses related to lower bonus achievement compared to the prior-year period.
Removed
Critical Accounting Policies and Significant Estimates Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements which we have prepared in accordance with GAAP.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe do not enter into investments for trading or speculative purposes. 50 Table of Contents We had cash, cash equivalents and short-term investments of $164.7 million and $113.2 million as of December 31, 2024 and 2023, respectively.
Biggest changeWe do not enter into investments for trading or speculative purposes. We had cash, cash equivalents and short-term investments of $175.3 million and $164.7 million as of December 31, 2025 and 2024, respectively. Our investments are exposed to market risk due to fluctuations in prevailing interest rates, which may reduce the yield on our investments or their fair value.
For any of the periods presented, we did not have material impact from exposure to foreign currency fluctuation. As we grow our operations, our exposure to foreign currency risk will likely become more significant. 51 Table of Contents
For any of the periods presented, we did not have material impact from exposure to foreign currency fluctuation. As we grow our operations, our exposure to foreign currency risk will likely become more significant. 52 Table of Contents
Our convertible notes have fixed interest rates, thus a hypothetical 100 basis point increase in interest rates would not impact interest expense. Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
Our convertible notes have fixed interest rates, thus a hypothetical 100 basis point increase in interest rates would not impact interest expense. 51 Table of Contents Inflation Risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations.
Removed
Our investments are exposed to market risk due to fluctuations in prevailing interest rates, which may reduce the yield on our investments or their fair value.

Other PI 10-K year-over-year comparisons