EX-99.1 2 pi-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

Impinj Reports Third Quarter 2024 Financial Results

SEATTLE, WA, October 23, 2024– Impinj, Inc. (NASDAQ: PI), a leading RAIN RFID provider and Internet of Things pioneer, today released its financial results for the third quarter ended September 30, 2024.

“Our third-quarter results were strong, with revenue and profitability well above our guidance,” said Chris Diorio, Impinj co-founder and CEO. “These results again demonstrate the leverage in our operating model. As we continue driving our bold vision to connect every item in our everyday world, I remain confident in our market position and energized by the opportunities ahead.”

Third Quarter 2024 Financial Summary

•
Revenue of $95.2 million
•
GAAP gross margin of 50.0%; non-GAAP gross margin of 52.4%
•
GAAP net income of $0.2 million, or income of $0.01 per diluted share using 29.7 million shares
•
Adjusted EBITDA of $17.3 million
•
Non-GAAP net income of $16.9 million, or income of $0.56 per diluted share using 32.3 million shares

A reconciliation between GAAP and non-GAAP information is contained in the tables below. Additionally, descriptions of these non-GAAP financial measures are provided in the “Non-GAAP Financial Measures” sections below.

Fourth Quarter 2024 Financial Outlook

Impinj provides guidance based on current market conditions and expectations; actual results may differ materially. Please refer to the comments below regarding forward-looking statements. The following table presents Impinj’s financial outlook for the fourth quarter of 2024 (in millions, except per share data):

 

 

 

Three Months Ending

 

 

December 31, 2024

Revenue

 

$91.0 to $94.0

GAAP Net loss

 

($3.8 ) to ($2.3 )

Adjusted EBITDA income

 

$13.6 to $15.1

GAAP Weighted-average shares — basic and diluted

 

28.4 to 28.6

GAAP Net loss per share — basic and diluted

 

($0.14) to ($0.08)

Non-GAAP Net income

 

$13.4 to $14.9

Non-GAAP Weighted-average shares — diluted(1)

 

32.6 to 32.8

Non-GAAP Net income per share — diluted(1)

 

$0.45 to $0.49

(1) Non-GAAP diluted net income per share includes the impact of our convertible debt using the if-converted method, which assumes full share settlement. Interest expense is added back to net income and weighted average shares includes total shares issuable at conversion of 2.6 million.

A reconciliation between GAAP and non-GAAP financial measures is provided in the "Non-GAAP Financial Measures" section below.

Conference Call Information

Impinj will host a conference call today, October 23, 2024 at 5:00 p.m. ET / 2:00 p.m. PT to discuss its third-quarter 2024 results, as well as its outlook for its fourth-quarter 2024. Interested parties may access the call by dialing +1-412-317-1863. A live webcast and replay will also be available on the company’s website at investor.impinj.com. Following the call, a telephonic replay will be available for five business days and may be accessed by dialing +1-412-317-0088 and entering passcode 1320694.

Management’s prepared written remarks, along with quarterly financial data, will be made available on Impinj’s website at investor.impinj.com along with this release.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our strategy, investment plans and prospects, statements regarding conditions in the markets in which we compete as well as the broader economy, and our financial guidance and considerations for the fourth quarter of 2024 and future periods.

 

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.

The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those risks and uncertainties included under the caption "Risk Factors" and elsewhere in our annual report on Form 10-K and quarterly reports on Form 10-Q filed with the U.S. Securities and Exchange Commission. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update this information unless required by law.

 

About Impinj

Impinj (NASDAQ: PI) helps businesses and people analyze, optimize, and innovate by wirelessly connecting billions of everyday things — such as apparel, automobile parts, luggage, and shipments — to the Internet. The Impinj platform uses RAIN RFID to deliver timely data about these everyday things to business and consumer applications, enabling a boundless Internet of Things. www.impinj.com

 

Impinj is a registered trademark of Impinj, Inc. All other trademarks are the property of their owners.

###

 

For more information, contact:

Investor Relations

Andy Cobb, CFA

Vice President, Strategic Finance

+1-206-315-4470

ir@impinj.com

 

 

Media Relations
Jill West
Vice President, Strategic Communications
+1 206-834-1110
jwest@impinj.com

 

IMPINJ, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value, unaudited)

 

 

September 30, 2024

 

 

December 31, 2023

 

Assets:

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

73,704

 

 

$

94,793

 

Short-term investments

 

96,551

 

 

 

18,440

 

Accounts receivable, net

 

64,378

 

 

 

54,919

 

Inventory

 

88,357

 

 

 

97,172

 

Prepaid expenses and other current assets

 

6,097

 

 

 

4,372

 

Total current assets

 

329,087

 

 

 

269,696

 

Long-term investments

 

57,122

 

 

 

—

 

Property and equipment, net

 

49,908

 

 

 

44,891

 

Intangible assets, net

 

11,563

 

 

 

13,913

 

Operating lease right-of-use assets

 

7,817

 

 

 

9,735

 

Other non-current assets

 

1,117

 

 

 

1,478

 

Goodwill

 

19,833

 

 

 

19,696

 

Total assets

$

476,447

 

 

$

359,409

 

Liabilities and stockholders' equity:

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

20,504

 

 

$

8,661

 

Accrued compensation and employee related benefits

 

18,043

 

 

 

8,519

 

Accrued and other current liabilities

 

3,702

 

 

 

8,614

 

Current portion of operating lease liabilities

 

3,534

 

 

 

3,373

 

Current portion of long-term debt

 

283,081

 

 

 

—

 

Current portion of deferred revenue

 

2,231

 

 

 

1,713

 

Total current liabilities

 

331,095

 

 

 

30,880

 

Long-term debt

 

—

 

 

 

281,855

 

Operating lease liabilities, net of current portion

 

6,660

 

 

 

9,360

 

Deferred tax liabilities, net

 

2,454

 

 

 

2,911

 

Deferred revenue, net of current portion

 

139

 

 

 

272

 

Total liabilities

 

340,348

 

 

 

325,278

 

Stockholders' equity:

 

 

 

 

 

Common stock, $0.001 par value

 

28

 

 

 

27

 

Additional paid-in capital

 

522,100

 

 

 

463,900

 

Accumulated other comprehensive income

 

594

 

 

 

355

 

Accumulated deficit

 

(386,623

)

 

 

(430,151

)

Total stockholders' equity

 

136,099

 

 

 

34,131

 

Total liabilities and stockholders' equity

$

476,447

 

 

$

359,409

 

 

 

 

 

 

 

 

 

 

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data, unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30,

 

 

September 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

Revenue

 

$

95,198

 

 

$

65,005

 

 

$

274,518

 

 

$

236,888

 

 

Cost of revenue

 

 

47,629

 

 

 

34,237

 

 

 

131,885

 

 

 

118,776

 

 

Gross profit

 

 

47,569

 

 

 

30,768

 

 

 

142,633

 

 

 

118,112

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

25,492

 

 

 

21,588

 

 

 

72,935

 

 

 

67,426

 

 

Sales and marketing

 

 

9,888

 

 

 

10,073

 

 

 

29,891

 

 

 

30,678

 

 

General and administrative

 

 

12,452

 

 

 

13,532

 

 

 

39,040

 

 

 

45,098

 

 

Amortization of intangibles

 

 

506

 

 

 

1,409

 

 

 

2,411

 

 

 

3,555

 

 

Restructuring costs

 

 

—

 

 

 

—

 

 

 

1,812

 

 

 

—

 

 

Total operating expenses

 

 

48,338

 

 

 

46,602

 

 

 

146,089

 

 

 

146,757

 

 

Income (loss) from operations

 

 

(769

)

 

 

(15,834

)

 

 

(3,456

)

 

 

(28,645

)

 

Other income, net

 

 

2,416

 

 

 

1,090

 

 

 

5,830

 

 

 

3,620

 

 

Income from settlement of litigation

 

 

—

 

 

 

—

 

 

 

45,000

 

 

 

—

 

 

Interest expense

 

 

(1,219

)

 

 

(1,213

)

 

 

(3,652

)

 

 

(3,633

)

 

Income (loss) before income taxes

 

 

428

 

 

 

(15,957

)

 

 

43,722

 

 

 

(28,658

)

 

Income tax benefit (expense)

 

 

(207

)

 

 

195

 

 

 

(194

)

 

 

472

 

 

Net income (loss) per share attributable to common stockholders:

 

$

221

 

 

$

(15,762

)

 

$

43,528

 

 

$

(28,186

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share — basic

 

$

0.01

 

 

$

(0.59

)

 

$

1.57

 

 

$

(1.06

)

 

Net income (loss) per share — diluted

 

$

0.01

 

 

$

(0.59

)

 

$

1.48

 

(1)

$

(1.06

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares outstanding — basic

 

 

28,168

 

 

 

26,920

 

 

 

27,805

 

 

 

26,639

 

 

Weighted-average shares outstanding — diluted

 

 

29,727

 

 

 

26,920

 

 

 

31,918

 

(1)

 

26,639

 

 

(1) Diluted net income per share includes the impact of our convertible debt using the if-converted method, which assumes full share settlement. Interest expense is added back to net income and weighted average shares includes total shares issuable at conversion of 2.6 million.

 

IMPINJ, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2024

 

 

2023

 

Operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

43,528

 

 

$

(28,186

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

10,155

 

 

 

9,733

 

Stock-based compensation

 

 

41,336

 

 

 

35,679

 

Restructuring equity modification expense

 

 

366

 

 

 

—

 

Accretion of discount or amortization of premium on investments

 

 

(247

)

 

 

(1,600

)

Amortization of debt issuance costs

 

 

1,226

 

 

 

1,206

 

Deferred tax expense

 

 

(471

)

 

 

(662

)

Revaluation of acquisition-related contingent consideration liability

 

 

986

 

 

 

—

 

Changes in operating assets and liabilities, net of amounts acquired:

 

 

 

 

 

 

Accounts receivable

 

 

(9,438

)

 

 

2,683

 

Inventory

 

 

8,825

 

 

 

(59,239

)

Prepaid expenses and other assets

 

 

(610

)

 

 

1,407

 

Accounts payable

 

 

12,056

 

 

 

(10,054

)

Accrued compensation and employee related benefits

 

 

9,515

 

 

 

(1,904

)

Accrued and other liabilities

 

 

1,268

 

 

 

1,677

 

Acquisition-related contingent consideration liability

 

 

(2,556

)

 

 

—

 

Operating lease right-of-use assets

 

 

1,921

 

 

 

1,990

 

Operating lease liabilities

 

 

(2,542

)

 

 

(2,501

)

Deferred revenue

 

 

369

 

 

 

(1,038

)

Net cash provided by (used in) operating activities

 

 

115,687

 

 

 

(50,809

)

Investing activities:

 

 

 

 

 

 

Purchases of investments

 

 

(154,331

)

 

 

—

 

Proceeds from sales of investments

 

 

—

 

 

 

13,372

 

Proceeds from maturities of investments

 

 

18,605

 

 

 

127,449

 

Business acquisitions, net of cash acquired

 

 

—

 

 

 

(23,357

)

Purchases of intangible assets

 

 

—

 

 

 

(250

)

Proceeds from sale of property and equipment

 

 

—

 

 

 

234

 

Purchases of property and equipment

 

 

(12,979

)

 

 

(15,968

)

Net cash provided by (used in) investing activities

 

 

(148,705

)

 

 

101,480

 

Financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options and employee stock purchase plan

 

 

16,499

 

 

 

7,890

 

Payment of acquisition-related contingent consideration

 

 

(4,602

)

 

 

—

 

Net cash provided by financing activities

 

 

11,897

 

 

 

7,890

 

Effect of exchange rate changes on cash and cash equivalents

 

 

32

 

 

 

(58

)

Net increase (decrease) in cash and cash equivalents

 

 

(21,089

)

 

 

58,503

 

Cash and cash equivalents

 

 

 

 

 

 

Beginning of period

 

 

94,793

 

 

 

19,597

 

End of period

 

$

73,704

 

 

$

78,100

 

 

 

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, our key non-GAAP performance measures include adjusted EBITDA, non-GAAP net income (loss), free cash flow and adjusted free cash flow as defined below. We use adjusted EBITDA and non-GAAP net income (loss) as key measures to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget and to develop short- and long-term operating plans. We use free cash flow and adjusted free cash flow as key measures when assessing our sources of liquidity, capital resources, and quality of earnings. We believe these measures provide useful information for period-to-period comparisons of our business to allow investors and others to understand and evaluate our operating results in the same manner as our management and board of directors. Our presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP, and our non-GAAP measures may be different from similarly termed non-GAAP measures used by other companies.

 

Adjusted EBITDA

We define adjusted EBITDA as net income (loss) determined in accordance with GAAP, excluding, if applicable for the periods presented, the effects of stock-based compensation; depreciation and amortization; restructuring costs; settlement income and related costs; induced conversion expense; other income, net; interest expense; acquisition related expense and related purchase accounting adjustments; and income tax benefit (expense). During the year ended December 31, 2023, we revised our definition of adjusted EBITDA to exclude acquisition related expenses, related purchase accounting adjustments, and amortization of intangibles in connection with our Voyantic Oy acquisition. During the three months ended March 31, 2024, we further revised our definition of adjusted EBITDA to exclude settlement income. We have excluded these items because we do not believe they reflect our core operations and us excluding them enables more consistent evaluation of our operating performance. The revision to our definition of adjusted EBITDA did not impact adjusted EBITDA for any previously reported periods because there was no impact of a similar nature in such prior periods affecting comparability.

 

 

Non-GAAP Net Income (Loss)

We define non-GAAP net income as net income (loss), excluding, if applicable for the periods presented, the effects of stock-based compensation; depreciation and amortization; restructuring costs; settlement income and related costs; induced conversion expense; acquisition related expense and related purchase accounting adjustments; and the corresponding income tax impacts of adjustments to net income (loss).

During the year ended December 31, 2023, we revised our definition of non-GAAP net income to adjust for acquisition related expenses, related purchase accounting adjustments, and amortization of intangibles in connection with our Voyantic Oy acquisition. During the three months ended March 31, 2024, we further revised our definition of non-GAAP net income to exclude settlement income. The revisions to our definition of non-GAAP net income did not impact non-GAAP net income for any previously reported periods because there was no impact of a similar nature in such prior periods affecting comparability.

Additionally, during the year ended December 31, 2023, we revised our definition of non-GAAP net income (loss) to adjust for income tax effects of adjustments to net income (loss), calculated at the statutory rate for current and historical periods. We have revised the prior period amounts to conform to our current period presentation.

Free cash flow

We define free cash flow as net cash provided by (used in) operating activities, determined in accordance with GAAP, less purchases of property and equipment. We define adjusted free cash flow as free cash flow less cash received from gain on litigation settlement.

 

 

 

 

 

IMPINJ, INC.

RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

(in thousands, except percentages, unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Gross margin

 

 

50.0

%

 

 

47.3

%

 

 

52.0

%

 

 

49.9

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1.9

%

 

 

2.2

%

 

 

1.8

%

 

 

1.5

%

Purchase accounting adjustments

 

 

0.0

%

 

 

0.2

%

 

 

0.0

%

 

 

0.2

%

Stock-based compensation

 

 

0.5

%

 

 

0.8

%

 

 

0.5

%

 

 

0.6

%

Non-GAAP Gross margin

 

 

52.4

%

 

 

50.5

%

 

 

54.3

%

 

 

52.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income (loss)

 

$

221

 

 

$

(15,762

)

 

$

43,528

 

 

$

(28,186

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,247

 

 

 

3,668

 

 

 

10,155

 

 

 

9,734

 

Stock-based compensation

 

 

14,841

 

 

 

12,307

 

 

 

41,336

 

 

 

35,679

 

Restructuring costs

 

 

—

 

 

 

—

 

 

 

1,812

 

 

 

—

 

Acquisition related expenses

 

 

—

 

 

 

4

 

 

 

986

 

 

 

1,676

 

Purchase accounting adjustments

 

 

—

 

 

 

112

 

 

 

—

 

 

 

388

 

Other income, net

 

 

(2,416

)

 

 

(1,090

)

 

 

(5,830

)

 

 

(3,620

)

Income from settlement of litigation

 

 

—

 

 

 

—

 

 

 

(45,000

)

 

 

—

 

Interest expense

 

 

1,219

 

 

 

1,213

 

 

 

3,652

 

 

 

3,633

 

Income tax expense (benefit)

 

 

207

 

 

 

(195

)

 

 

194

 

 

 

(472

)

Adjusted EBITDA

 

$

17,319

 

 

$

257

 

 

$

50,833

 

 

$

18,832

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income (loss)

 

$

221

 

 

$

(15,762

)

 

$

43,528

 

 

$

(28,186

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,247

 

 

 

3,668

 

 

 

10,155

 

 

 

9,734

 

Stock-based compensation

 

 

14,841

 

 

 

12,307

 

 

 

41,336

 

 

 

35,679

 

Restructuring costs

 

 

—

 

 

 

—

 

 

 

1,812

 

 

 

—

 

Acquisition transaction expenses

 

 

—

 

 

 

4

 

 

 

986

 

 

 

1,676

 

Purchase accounting adjustments

 

 

—

 

 

 

112

 

 

 

—

 

 

 

388

 

Income from settlement of litigation

 

 

—

 

 

 

—

 

 

 

(45,000

)

 

 

—

 

Income tax effects of adjustments (1)

 

 

(1,410

)

 

 

(207

)

 

 

(4,434

)

 

 

(1,990

)

Non-GAAP Net income

 

$

16,899

 

 

$

122

 

 

$

48,383

 

 

$

17,301

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net income per share — diluted

 

$

0.56

 

(2)

$

0.00

 

 

$

1.63

 

(2)

$

0.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Weighted-average shares — diluted

 

 

29,727

 

 

 

26,920

 

 

 

31,918

 

(3)

 

26,639

 

Dilutive shares from stock plans

 

 

—

 

 

 

1,196

 

 

 

—

 

 

 

1,758

 

Dilutive shares from convertible debt

 

 

2,589

 

 

 

—

 

 

 

—

 

 

 

—

 

Non-GAAP Weighted-average shares — diluted

 

 

32,316

 

(2)

 

28,116

 

 

 

31,918

 

(2)

 

28,397

 

(1) The tax effects of the adjustments are calculated using the statutory rate, taking into consideration the nature of the item and relevant taxing jurisdictions.

 

(2) Diluted net income per share includes the impact of our convertible debt using the if-converted method, which assumes full share settlement. Interest expense is added back to net income and weighted average shares includes total shares issuable at conversion of 2.6 million.

 

(3) GAAP weighted average shares — diluted includes the dilutive effect of convertible debt.

 

 

 

 

 

IMPINJ, INC.

RECONCILIATIONS OF GAAP FINANCIAL MEASURES TO NON-GAAP FINANCIAL MEASURES

(in thousands, except percentages, unaudited)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

GAAP Net cash provided by (used in) operating activities

 

$

10,068

 

 

$

(1,705

)

 

$

115,687

 

 

$

(50,809

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(5,411

)

 

 

(2,770

)

 

 

(12,979

)

 

 

(15,968

)

Free cash flow

 

$

4,657

 

 

$

(4,475

)

 

$

102,708

 

 

$

(66,777

)

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Income from settlement of litigation

 

 

—

 

 

 

—

 

 

 

(45,000

)

 

 

—

 

Adjusted free cash flow

 

$

4,657

 

 

$

(4,475

)

 

$

57,708

 

 

$

(66,777

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IMPINJ, INC.

RECONCILIATIONS OF GAAP FINANCIAL OUTLOOK TO NON-GAAP FINANCIAL OUTLOOK

(in thousands, except per share data, unaudited – calculated at the midpoint of the outlook range)

 

 

 

Three Months Ending

 

 

 

December 31,

 

 

 

2024

 

GAAP Net loss

 

$

(3,178

)

Adjustments:

 

 

 

Forecasted Depreciation and amortization

 

 

3,388

 

Forecasted Stock-based compensation

 

 

15,175

 

Forecasted Interest expense

 

 

1,215

 

Forecasted Other income, net

 

 

(2,400

)

Forecasted Income tax expense

 

 

100

 

Adjusted EBITDA

 

$

14,300

 

 

 

 

 

GAAP Net loss

 

$

(3,178

)

Adjustments:

 

 

 

Forecasted Depreciation and amortization

 

 

3,388

 

Forecasted Stock-based compensation

 

 

15,175

 

Forecasted Income tax effects of adjustments

 

 

(1,252

)

Non-GAAP Net income

 

$

14,133

 

 

 

 

 

GAAP Net loss per share — basic and diluted

 

$

(0.11

)

Non-GAAP Net income per share — diluted(1)

 

$

0.47

 

 

 

 

 

GAAP weighted-average shares — basic and diluted

 

 

28,500

 

Dilutive shares

 

 

4,200

 

Non-GAAP weighted-average shares — diluted(1)

 

 

32,700

 

(1) Non-GAAP diluted net income per share includes the impact of our convertible debt using the if-converted method, which assumes full share settlement. Interest expense is added back to net income and weighted average shares includes total shares issuable at conversion of 2.6 million.