IMPINJ (PI) Risk Analysis

Our success depends in part upon our ability to obtain, maintain and enforce our patents, copyrights, trade secrets, trademarks and other intellectual property rights and prevent third parties from infringing, misappropriating or circumventing those rights. We have historically focused on filing U.S. patent applications, for many reasons, including the fact that a significant portion of RAIN products are sold for use in the United States. We have only a small number of foreign patents and applications. We also only have registered trademarks and domain names in select countries where we believe filing for such protection is appropriate. By focusing our intellectual property protection on the United States and a small number of foreign countries, we have a limited ability to assert intellectual property rights outside the United States, including in some significant foreign markets such as China or Europe. Moreover, the global manufacturing and distribution systems for tags or labels incorporating our endpoint IC products could complicate our efforts to enforce our U.S. patents. Also, as we increasingly work with third parties, possibly including parties that compete with us to an extent, to advance our technical innovations and solutions offerings, we complicate our efforts to protect our intellectual property. Specifically, we cannot guarantee that: - any of the patents, trademarks, copyrights, trade secrets or other intellectual property rights we presently employ in our business will not lapse or be invalidated, circumvented, challenged or abandoned;- our intellectual property rights will provide competitive advantages to us;- our ability to assert our intellectual property rights against potential competitors or to settle current or future disputes successfully;- any of our pending or future patent applications will issue or have the coverage we originally sought;- our intellectual property rights can or will be enforced, particularly in jurisdictions where competition may be intense or where legal protections may be weak;- we will not lose the ability to assert our intellectual property rights against, or to license our technology to, others and collect royalties or other payments;- we will retain the right to ask for a royalty-bearing license to an industry standard if we fail to file an intellectual property declaration pursuant to the standards process; or - we will have or retain the right or ability to file for patents, trademarks or copyrights in technical or solutions opportunities where we work with third parties. Monitoring and addressing unauthorized use of our intellectual property is difficult and costly, and litigation to enforce our intellectual property rights is time consuming, distracting, expensive and uncertain. Our failure to identify unauthorized use of, or otherwise adequately protect, our intellectual property could adversely affect our business.

Patent litigation is complex and uncertain. 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. 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. Even if we do prevail in patent-related proceedings, verdicts and judgments can be modified or even reversed by trial or appellate courts. License agreements entered in settlement of patent litigation, particularly any entered into with our competition, may not be as effective over the long term in providing us with all the benefits we bargained for when we entered into them. Many companies in our industry, as well as nonpracticing entities, hold patents and other intellectual property rights and may pursue, protect and enforce those intellectual property rights. We receive invitations to license patent and other intellectual property rights to technologies that could be important to our business. We also receive assertions against us, our partners and end users claiming we or they infringe patent or other intellectual property rights. If we decline to accept an invitation to license or if we refute an asserted claim, then the offering or claiming party may pursue litigation against us. 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. 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. We, our partners, suppliers or end users could continue to be involved in intellectual property disputes in the future which could adversely affect our operating results and growth prospects. Many of our agreements require us to indemnify and defend partners and end users from third-party infringement claims and pay damages in the case of adverse rulings. These damages could be sizable and disproportionate to the business we derive from those partners or end users. Moreover, we may not know whether we are infringing a third party's intellectual property rights due to the large number of RAIN-related patents or to other systemic factors. For example, patent applications in the United States are maintained in confidence for up to 18 months after filing or, in some instances, for the entire time prior to patent issuance. Consequently, we may not be able to account for such rights until after a patent issues.

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. 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. 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 participant in developing ISO standards, we agreed to license on a RAND basis those of our patents necessary to practice those standards, subject to us receiving a reciprocal RAND license from the other entity practicing the standard. 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. Further, some GS1 EPCglobal members declined to license their intellectual property on royalty-free terms, instead retaining the right to license their technology on RAND terms. These members may choose to assert their intellectual property, in which case we will need to defend ourselves within the confines of the GS1 and ISO intellectual property policies.

A successful end-user deployment requires not only tags, readers or gateways and operating software, 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, our efforts to foster development and deployment of these tools could fail, and 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. Integrating our products with end-user information systems could prove more difficult or time-consuming than we or they anticipate, which could jeopardize deployments.

End users drive demand for our products but because we sell our products primarily through partners, we are often at least one step removed from those end users and are often unable to directly assess and affect their demand. Our partners may choose to prioritize selling our competitors' products over ours, or they may offer products that compete with our products or limit sales of our products. If our partners do not sell enough of our products or if they choose to decrease their inventories of our products, then our sales to those partners and our revenue will decline.

Our reserve estimates for products stocked by our distributors are based primarily on reports those distributors provide to us, typically monthly. If the inventory and resale information they provide is inaccurate, or if we do not receive it in a timely manner, then we may not have a reliable view of their stock and market demand, which could have a negative impact on our operating results. If they overestimate demand, they may overinvest in stock, which could reduce market prices and negatively affect our selling prices. They may also try, subject to time and quality limitations, to return products or exchange products. If they underestimate demand, we may not be able to satisfy their needs and that of their customers, and adoption might suffer. In either case, our business and operating results could be negatively affected.

We derive, and expect to continue to derive for some time, most of our revenue from our endpoint ICs. If endpoint IC demand declines, if we are unable to meet the demand we have, or if we are unable to raise prices to offset cost increases, then our business and operating results will suffer. In addition, the continued adoption of, and demand for, our endpoint ICs derives in part from us demonstrating their benefits using our platform. 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. We compete aggressively in the endpoint IC market, and we have grown our endpoint IC volumes as the market itself has grown. Whereas we believe the endpoint IC market and our opportunity will continue growing, the fact that our historically largest market segment, retail apparel, is now in mainstream adoption means significant new growth will be increasingly reliant on new market segments or product categories such as SC&L, retail general merchandise and food. Increasing our market share is also key to our endpoint IC volume growth. Our ability to consistently grow our endpoint IC volumes, particularly on a year-over-year basis, is not assured, and any failure to do so could negatively affect our financial results and stock price.

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. 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 offset ASP reductions with increased sales volumes or reduced costs, or if we are unable to introduce new products that command higher prices and better margins, then our financial results could suffer. Though less common, we have also increased prices from time to time, especially during times of increasing wafer and/or post-processing costs. Recently, and significantly due to increasing worldwide semiconductor demand, many of our vendors and subcontractors have either increased prices, signaled future price increases or both. In response, we have notified our customers of modest, impending product price increases. We may be required to raise prices again if economic conditions, including inflation, or other causes, such as geopolitical instability, create additional upward pressure on our product costs. Higher prices could reduce our market share and/or dampen adoption and market growth.

Our overall product gross margins are affected by product mix, which can fluctuate based on supply and demand, competitive pressures and end-user needs and demand. Endpoint IC sales comprise and likely will continue to comprise the majority of our product revenue. For the most part, our endpoint ICs have historically had lower gross margins than our systems products. A shift in sales mix away from our higher margin products to lower margin products, either within our endpoint IC product portfolio or between our systems business and our endpoint ICs, or a change in product costs, could negatively affect our overall gross margins.

We must export and import our products and conduct our business activities in compliance with U.S. export controls and trade and economic sanctions, including the Commerce Department's Export Administration Regulations and economic and trade sanctions established by the Treasury Department's Office of Foreign Assets Controls, as well as similar controls established in the countries in which we do business. For example, the U.S. government has continued restricting the ability to export, re-export and transfer (in country) certain products and technology related to semiconductors and semiconductor manufacturing and certain ICs and products containing those ICs to and within China and additional destinations. In addition, the United States and other countries continue to expand the economic sanctions and export control restrictions in response to global conflicts including in Russia and Ukraine and in the Middle East. We must undertake additional diligence efforts to comply with these and other rules, which may be time-consuming and result in delayed or lost opportunities. We may not always be successful in obtaining necessary export or import licenses, and our failure to obtain required export or import approval for our products or limitations on our ability to export or sell our products may harm our domestic and international sales and negatively affect our revenue. Tariffs could also have a material impact on our product costs and decrease our ability to sell our products to existing or potential customers as well as harm our ability to compete internationally. 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.

We are subject to income taxes in the United States and certain foreign jurisdictions. During the ordinary course of business, we use significant judgment in evaluating our worldwide income tax obligations and we conduct many transactions for which the ultimate tax determination is uncertain. Although we believe our tax determinations are proper, the final determination of any tax audits and any possible litigation could be materially different from our historical income tax provisions and accruals. The results of an audit or litigation could have a material effect on our operating results or cash flows in the period or periods for which that determination is made.

We are subject to tax laws, regulations and policies of several taxing jurisdictions. Changes in tax laws, as well as other factors, could cause us to experience fluctuations in our tax obligations and effective tax rates and otherwise adversely affect our tax positions and results of our operations. Recent examples include the 1% excise tax imposed on stock buybacks and a 15% alternative minimum tax imposed on adjusted financial statement income enacted in 2022, and rules governing the treatment of U.S. and foreign research and development expenditures enacted in 2017 and amended in 2025. We have accounted for these changes in accordance with our understanding of the guidance available as of the date of this filing. The CHIPS and Science Act, enacted August 9, 2022, provides tax credits for semiconductor manufacturing activities within the United States, but because we outsource our semiconductor manufacturing we do not expect to be entitled to these tax credits. Many countries, as well as organizations such as the Organization for Economic Cooperation and Development, or the OECD, have implemented or proposed changes to existing tax laws, including a 15% global minimum tax for multinational companies with annual global revenue exceeding certain thresholds. We continue to monitor these developments, including the impact of the joint statement issued by the G7 in June 2025 related to the interplay between the U.S. international tax system and global rules and a January 2026 agreement to a "side-by-side" safe harbor that would generally exempt U.S. parented multinational groups from certain of the global minimum tax rules. Any of these developments or changes in U.S. federal, state or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. There can be no assurance that our effective tax rates, tax payments or tax credits and incentives will not be adversely affected by these or other developments or changes in law.

Our partners and end users are subject to laws and regulations related to collecting, storing, transmitting and using personal information and personal data, as well as to additional laws and regulations that address privacy and cybersecurity related to RFID in general. Because RAIN is a type of RFID, we believe these laws and regulations apply to RAIN. The European Commission, or the EC, has issued specific guidance to address privacy concerns about RFID. In May 2009, the EC issued a recommendation that retailers in the EU inform their customers when RFID tags are either on or embedded within products. 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. If our products do not comply or enable compliance with the guidelines, then our business may suffer. More generally, the cybersecurity and privacy legislative and regulatory landscape in the United States, EU and other jurisdictions continues to evolve. 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, the EU General Data Protection Regulation and the EU Cyber Resilience Act-remain unclear as of the date of this report and continue evolving, potentially with far-reaching implications. Laws and regulations relating to privacy, data protection and cybersecurity, related industry standards and guidelines, and extensions of these laws, regulations, standards, guidelines, etc. may require us to modify our products, practices and policies. We may not be able to make these modifications on commercially reasonable terms, if at all. Any failure or perceived failure by us to comply with these privacy, data protection or cybersecurity requirements could result in adverse consequences such as claims, litigation, legal and other costs, fines, penalties or other liabilities. Additionally, end users may choose not to use our products. The RAIN radio protocol includes features addressing consumer privacy and authentication, and we have incorporated additional features in our products that further protect consumer privacy. Nevertheless, a third party could still breach these features and, if such breach were to occur, our reputation could be damaged and our business and prospects could suffer.

Persuading end users or partners to design our products into their business processes or products requires educating them about RAIN's and our products' value. They may use other technologies or products and may not be receptive to introducing RAIN into their business processes or products. Even when convinced, they often undertake pilot programs and qualifications prior to placing orders. Those pilot programs and qualifications can be time-consuming and expensive and that may not result in orders for our products, which could adversely affect our business prospects and operating results.

Wafer availability is cyclical and shortfalls can limit sales and cause market-share losses. Our wafer supply is not guaranteed, and we may not receive adequate supply from our foundry partners when industry demand for wafers is high, as it frequently is in the process nodes we use. Our IC supply can also be limited by post-processing constraints, such as in testing, sorting, thinning, bumping, dicing, packaging and quality assurance. We may also experience shortfalls and price increases for components we use in our readers and gateways. Wafer shortfalls can also artificially increase bookings as customers over-order our products and then cause subsequent sales declines as those customers consume their accumulated inventory. Additionally, if our suppliers charge us more but we are unable to raise our prices to cover those higher costs, our gross margins and other financial results could suffer. Any product shortfalls or cost increases will negatively impact our product availability and our financial results will suffer.