However, PI's outlook for Q3 -- and its cautious commentary regarding some deployment delays -- have over-shadowed the Q2 results and have investors heading for the exits. It's also worth pointing out that PI has gained nearly 160% vs. its IPO opening price, so, many investors are sitting on sizable gains. With the disappointing outlook, those investors are now looking to secure some of those gains.
Looking at the report, PI reported EPS of $0.06, good for a $0.04 beat, on revenue of $34.1 million, also edging out the $33.4 million Capital IQ Consensus. This marked the fifth straight quarter in which PI exceeded both the top and bottom line estimates. In fact, it has never missed since it went public back in July 2016. Revenue is also still growing at a solid 31% clip, but, that was its slowest growth rate over the past five quarters. What has largely been driving PI's growth is the ongoing adoption of RFID technology, which is illustrated by the growth in endpoint IC (integrated circuit) volume, which grew roughly 70% in 2016.
As noted above, what is slamming the stock lower today is its Q3 guidance and its commentary regarding order delays from some large customers. Specifically, it guided for EPS of ($0.08)-($0.01) vs. the $0.08 Capital IQ consensus, on revenue of $31.75-$33.25 million vs. the $37.7 million consensus. So, it did miss expectations by a decent margin.
During the conference call last night, management discussed how last year, it benefited from several very large customer roll-outs, driving endpoint IC volumes up 70%. But that, it sees a different scenario currently playing out as some customers overseas are delaying expansions. However, these are not order cancellations -- they are delays, according to PI. Management stated last night that the goals of its customers haven't changed and that they still anticipate large-scale roll outs. But, the schedules have been pushed out due to internal scheduling slips. Unfortunately, no concrete time table was given in terms of how long these delays will last.
PI also offered some perspective on this outlook last night, noting that some potential future end point users may have up to 100 billion ICs. Last night, PI took down its 2017 forecast for IC deployments to 7.0-7.2 billion units, down from 7.8-8.0 billion units. So, that provides some idea of just how large the global opportunity is.
To conclude, last night's report shows just how unpredictable an earlier-stage technology can be. RFID is only in the early innings of its growth curve. The downside guidance was undoubtedly disappointing, but, for longer term investors that can stomach the volatility, PI may look intriguing on this steep pull-back.