Identiv Completes Sale of its Physical Security Business

Rhea-AI Summary

Identiv, Inc. (NASDAQ: INVE) has successfully completed the sale of its Physical Security business to Vitaprotech for approximately $144.2 million in cash, subject to adjustments. This strategic transaction marks a significant shift for Identiv, transforming it into a dedicated IoT solutions provider focused on RFID-enabled solutions. Key developments include:

1. Kirsten Newquist, former President of IoT Solutions, has succeeded Steven Humphreys as CEO.
2. The company plans to accelerate RFID production transition to its Thailand facility.
3. Identiv will focus on developing RFID-enabled IoT applications for high-value segments like healthcare and smart packaging.
4. Management expects Q3 2024 revenue from continuing operations to be between $5.8 million and $6.1 million.

Positive

• Received approximately $144.2 million in cash from the sale of Physical Security business
• Transition to a focused IoT solutions provider with emphasis on RFID-enabled solutions
• Plans to accelerate RFID production transition to Thailand facility for potential cost savings
• Strategic focus on high-value segments like healthcare, smart packaging, and smart home devices

Negative

• Significant reduction in revenue due to sale of Physical Security business
• Q3 2024 revenue from continuing operations expected to be only $5.8-$6.1 million

Insights

Financial Analyst

The sale of Identiv's Physical Security business for $144.2 million is a significant financial event for the company. This cash infusion substantially improves Identiv's balance sheet, providing ample resources for strategic investments in their IoT solutions business. The transaction marks a pivotal shift in Identiv's focus, streamlining operations towards higher-growth IoT markets. However, investors should note the substantial revenue reduction, with Q3 2024 continuing operations expected at only $5.8-6.1 million. This dramatic decrease suggests a major restructuring and potential short-term volatility as the company transitions. The appointment of Kirsten Newquist as CEO further underscores this strategic pivot. While the cash provides a strong foundation, the success of this transformation will hinge on effective execution in the competitive IoT space.

Tech Expert

Identiv's strategic decision to divest its Physical Security business and focus on IoT solutions is a bold move in a rapidly evolving tech landscape. The company's emphasis on RFID-enabled IoT applications for healthcare, smart packaging, smart home devices and specialty retail aligns with high-growth market trends. The accelerated transition of RFID production to Thailand could potentially improve cost efficiency and scalability. However, the challenge lies in successfully developing and commercializing innovative IoT applications in competitive sectors. Identiv's ability to leverage its RFID expertise in these new verticals will be crucial. The reduced revenue base means the company must quickly ramp up its IoT offerings to compensate for the lost Physical Security segment. This transition period may present both opportunities and risks for Identiv as it seeks to establish itself as a dedicated IoT solutions provider.

Market Research Analyst

The sale of Identiv's Physical Security business represents a strategic realignment towards the burgeoning IoT market. This move could position Identiv favorably in high-growth segments like healthcare and smart packaging. However, the drastic revenue reduction from $144.2 million to an expected $5.8-6.1 million in Q3 2024 signals a significant near-term disruption. The market's reaction will likely be mixed, balancing the improved cash position against the revenue contraction. Investors should closely monitor Identiv's ability to rapidly scale its IoT solutions and capture market share in targeted segments. The success of this pivot will depend on Identiv's execution in product development, go-to-market strategies and operational efficiency. While the long-term potential in IoT is promising, the company faces a critical period of transformation that will test its adaptability and innovation capabilities.

SANTA ANA, Calif.--(BUSINESS WIRE)-- Identiv, Inc. (NASDAQ: INVE), a global leader in RFID-enabled solutions for the Internet of Things (IoT), today announced the successful conclusion of its previously announced asset sale transaction with Vitaprotech, a security solutions provider. Upon closing the transaction, Identiv received a cash payment of approximately $144.2 million, subject to further customary adjustments, and Kirsten Newquist, formerly Identiv’s President, IoT Solutions, succeeded Steven Humphreys as the Company’s CEO.

“We are pleased to have brought this strategic transaction to a successful close,” said James Ousley, Chairman of the Board. “The proceeds significantly enhance our financial position and provide us with capital to judiciously invest in the future growth of our IoT solutions business.”

Ousley added, “The Board would also like to extend its gratitude to Steve Humphreys for his many years of exceptional leadership at Identiv and his invaluable contributions to the Board. We wish him and the Physical Security team continued success in their future endeavors.”

The closing of the asset sale transaction marks a pivotal milestone in Identiv’s history. Kirsten Newquist, CEO of Identiv, remarked, “I am excited to lead Identiv through its next phase as the company transitions into a dedicated IoT solutions provider. We are focused on executing the three pillars of our growth strategy, including the accelerated transition of RFID production to our Thailand facility and developing key RFID-enabled IoT applications for high-value segments such as healthcare, smart packaging, smart home devices, and specialty retail. We are committed to maximizing this exceptional opportunity to benefit our investors, customers, partners, and employees.”

As announced on August 8, 2024, management continues to expect fiscal Q3 2024 revenue from continuing operations to be in the range of $5.8 million to $6.1 million. Management will not be providing an update to its previous outlook for total revenue from continuing operations and revenue included in discontinued operations since the asset sale transaction closed prior to the end of fiscal Q3 2024.

Imperial Capital LLC served as financial advisor and Pillsbury Winthrop Shaw Pittman LLP served as legal counsel to Identiv.

About Identiv

Identiv’s full-circle RFID-enabled IoT solutions enable digital identities to physical objects, enhancing global connectivity for businesses, people, and the planet. Built into over 1.5 billion applications worldwide, its IoT solutions are suitable for a multitude of potential applications across a wide range of end markets, including healthcare, consumer electronics, luxury goods, smart packaging, logistics and warehouse tracking. For more information, visit identiv.com.

Note Regarding Forward-Looking Information

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those involving future events and future results that are based on current expectations as well as the current beliefs and assumptions of management of Identiv and can be identified by words such as “anticipate,” “believe,” “continue,” “plan,” “will,” “intend,” “expect,” “outlook,” and similar references to the future. Any statement that is not a historical fact is a forward-looking statement, including statements regarding: Identiv’s strategy, opportunities, focus and goals; expected amount of proceeds from the transaction; Identiv’s expectations with respect to the use of proceeds from the transaction and the potential benefits thereof; Identiv’s beliefs regarding access to future capital; Identiv’s expectations relating to the growth of its IoT business; and Identiv’s expectations regarding future operating and financial outlook and performance, including 2024 third quarter guidance and outlook. Forward-looking statements are only predictions and are subject to a number of risks and uncertainties, many of which are outside Identiv’s control, which could cause actual results to differ materially and adversely from those expressed in any forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: potential litigation relating to the transaction and the effects of any outcome related thereto; any purchase price adjustments to the amount of proceeds from the transaction; risks that the transaction disrupts current business, plans and operations of Identiv or its business prospects; the ability of Identiv to retain and hire key personnel; the effect of the change in management following the completion of the transaction; competitive responses to the transaction; potential adverse reactions or changes to business relationships resulting from the completion of the transaction; Identiv’s ability to continue the momentum in its business; Identiv’s ability to successfully execute its business and growth strategy, including its ability to accelerate the transition of RFID production to its Thailand facility and develop key RFID-enabled IoT applications for high-value segments; Identiv’s ability to maximize potential benefits to stakeholders; Identiv’s ability to capitalize on trends in its business; Identiv’s ability to satisfy customer demand and expectations; the level and timing of customer orders and changes/cancellations; the loss of customers, suppliers or partners; the success of Identiv’s products and strategic partnerships; industry trends and seasonality; the impact of macroeconomic conditions and customer demand, inflation and increases in prices; and the other factors discussed in its periodic reports, including its Annual Report on Form 10-K for the year ended December 31, 2023, Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 and subsequent reports filed with the Securities and Exchange Commission. All forward-looking statements are based on information available to Identiv on the date hereof, and Identiv assumes no obligation to update such statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240909524098/en/

Investor Relations Contact:

IR@identiv.com

Media Contact:

press@identiv.com

Source: Identiv, Inc.

FAQ

What was the sale price of Identiv's Physical Security business?

Identiv (INVE) received approximately $144.2 million in cash for the sale of its Physical Security business to Vitaprotech, subject to customary adjustments.

Who is the new CEO of Identiv (INVE) following the asset sale?

Kirsten Newquist, formerly Identiv's President of IoT Solutions, has succeeded Steven Humphreys as the new CEO of Identiv (INVE) following the completion of the asset sale.

What is Identiv's (INVE) new business focus after selling its Physical Security business?

After selling its Physical Security business, Identiv (INVE) is transitioning into a dedicated IoT solutions provider, focusing on RFID-enabled solutions for the Internet of Things (IoT).

What is Identiv's (INVE) expected revenue for Q3 2024 from continuing operations?

Identiv (INVE) expects its fiscal Q3 2024 revenue from continuing operations to be in the range of $5.8 million to $6.1 million.