Identiv Reports Second Quarter 2023 Business Results

Rhea-AI Summary

Identiv reports record revenue for Q2 2023, with strong gross margins year-over-year.

Positive

• Second quarter revenue grew 6% YoY to $29.6 million, a fiscal second quarter record.
• Premises revenue grew 8% YoY to $11.9 million; Identity revenue grew 5% YoY to $17.7 million.
• Q2 2023 GAAP gross margin was 36.7%; non-GAAP gross margin grew to 38.2%.

Negative

• None.

Record Revenue for a Fiscal Second Quarter, with Strong Gross Margins Year-over-Year

Generated Net Operating Cash and Non-GAAP Positive Free Cash Flow

RFID Production Facility in Thailand Fully Operational

FREMONT, Calif.--(BUSINESS WIRE)-- Identiv, Inc. (NASDAQ: INVE), a global digital security and identification leader in the Internet of Things (IoT), today reported its financial results for the second quarter ended June 30, 2023.

Recent Financial and Operational Highlights

• Second quarter revenue grew 6% year-over-year to $29.6 million, a fiscal second quarter record.
• Premises revenue grew 8% year-over-year to $11.9 million; Identity revenue grew 5% year-over-year to $17.7 million.
• Q2 2023 GAAP gross margin was 36.7%; non-GAAP gross margin grew to 38.2%.
• Ended Q2 2023 with $22.2 million in cash, cash equivalents and restricted cash.
• Began production at new facility in Bangkok, Thailand, expanding RFID manufacturing capacity and cost competitiveness to meet growing demand for IoT solutions.
• Completed Wiliot’s initial IoT Pixels order and began production of follow-on order.
• Non-recurring engineering (NRE) strong at nearly 60 projects, with more than half focused on medical use cases.
• Introduced the Primis access control suite and EG2 edge gateway, which deliver strong security and reliability to small- and medium-sized organizations via cloud or on-premises.
• Several cloud-based access control and video solutions listed on FedRAMP Marketplace following a rigorous evaluation process, one of only three FedRAMP access control systems.
• Launched IoT Product Advisor, an intuitive search tool that guides customers to the optimal Identiv IoT solution for their specific needs.
• Partnered with Asygn to introduce battery-free metal sensor IoT device, enabling long-range product identification and condition monitoring in adverse industrial environments.

Second Quarter 2023 Financial Summary

Revenue for the second quarter 2023 was $29.6 million, compared to $26.0 million in the prior quarter and $27.9 million in the second quarter of 2022. By segment, Identity revenues were $17.7 million and Premises revenues totaled $11.9 million.

Second quarter 2023 GAAP gross margin was 36.7% and non-GAAP gross margin was 38.2%.

GAAP operating expenses, including research and development, sales, and marketing, and general and administrative were $11.9 million in the second quarter of 2023, compared to $11.9 million in the prior quarter and $10.5 million in the second quarter of 2022. Non-GAAP operating expenses were $10.6 million in the second quarter of 2023, compared to $10.6 million in the prior quarter and $9.2 million in the second quarter of 2022.

GAAP net loss was $1.1 million, or ($0.06) per basic and diluted share, compared to GAAP net loss of $2.7 million, or ($0.13) per basic and diluted share, in the prior quarter and GAAP net loss of $0.3 million, or ($0.02) per basic and diluted share, in the second quarter of 2022.

Non-GAAP adjusted EBITDA in the second quarter of 2023 was $0.7 million, compared to ($0.9) million in the prior quarter and $1.4 million in the second quarter of 2022.

Management Commentary

“Our second quarter results have kept us on track to meet our 2023 financial and operational expectations as we continue to deliver disciplined growth with a strong balance sheet,” said Identiv CEO Steven Humphreys. “In Q2, we strengthened our strategic position in both our IoT and Physical Security businesses while generating positive free cash flow and strong gross margins. In IoT, our Thailand facility is fully operational, and currently producing 5 million units a month. The new facility is on track to produce at an annual rate of 200 million units by the end of the year. Medical and healthcare use cases made steady progress. The Bluetooth-enabled RFID category continues to strengthen. In Q2, we completed Wiliot’s initial IoT Pixels order and began production of the follow-on order, while continuing to support engagements with Bluetooth-enabled RFID solution providers. Chip availability has normalized, and we’ve added IC specialist Asygn as a partner for new sensor-based IoT solutions optimized for industrial applications.

“In Physical Security, demand for our comprehensive end-to-end Velocity platform remains strong, with wins in our major commercial verticals, in addition to our core Federal customer base. Several of our cloud-based access control and video solutions are now available on the FedRAMP marketplace, which we expect to facilitate adoption by Federal agency customers. We recently launched our Primis access control suite and EG2 edge gateway, a secure, affordable, and cloud-ready solution ideal for small- to medium-sized organizations. Our recent investments in people and product have begun delivering results, and when combined with our continued emphasis on working capital and business model efficiency, we are confident in our ability to execute on our 2023 growth strategy.”

Identiv CFO Justin Scarpulla added, “Delivering disciplined growth continues to be our top focus for 2023, and we will continue to support strategic opportunities that drive revenue and margin expansion. We are also committed to strengthening our balance sheet and solidifying our working capital position. Our production facility in Thailand is now operational, and we expect there to be a positive impact on margins once the facility has reached full utilization. As we enter the second half of the fiscal year, with our current visibility we believe we are well-positioned to deliver on our current 2023 outlook.”

Financial Outlook

Identiv provides guidance based on current market conditions and expectations, including macroeconomic conditions and key component availability. Management confirms its fiscal year 2023 revenue outlook, with net revenues in the range of $125 million to $130 million. Normal seasonality is expected to continue.

Conference Call

Identiv management will hold a conference call today, August 3, 2023, at 5:00 p.m. EDT (2:00 p.m. PDT) to discuss the company’s second quarter 2023 financial results. A question-and-answer session will follow management's presentation.

Toll-Free Number: 888-506-0062
International Number: 973-528-0011
Call ID: 546602
Webcast link: Register and Join

The teleconference replay will be available through August 17, 2023, by dialing 877-481-4010 (Toll-Free Replay Number) or 919-882-2331 (International Replay Number) and entering passcode 48665.

If you have any difficulty connecting with the teleconference, please contact Identiv Investor Relations at IR@identiv.com.

About Identiv

Identiv, Inc. is a global leader in digitally securing the physical world. Identiv's platform encompasses RFID and NFC, cybersecurity, and the full spectrum of physical access, video, and audio security. Identiv is a publicly traded company, and its common stock is listed on the NASDAQ Stock Market LLC in the U.S. under the symbol “INVE.” For more information, visit identiv.com.

Non-GAAP Financial Measures

This press release includes financial information that has not been prepared in accordance with GAAP, including non-GAAP adjusted EBITDA, non-GAAP gross margin, non-GAAP operating expenses, and non-GAAP free cash flow. Identiv uses non-GAAP financial measures internally in analyzing its financial results and believes they are useful to investors, as a supplement to GAAP measures, in evaluating ongoing operational performance. Identiv believes that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends. Non-GAAP gross margin excludes stock-based compensation and amortization and depreciation. Non-GAAP adjusted EBITDA excludes items that are included in GAAP net income (loss), GAAP operating expenses, and GAAP gross margin, and excludes income tax provision, interest expense, foreign currency gains (losses), stock-based compensation, amortization and depreciation, restructuring and severance, and gain on investment. Non-GAAP operating expenses exclude stock-based compensation, amortization and depreciation, and restructuring and severance. Non-GAAP free cash flow includes capital expenditures. For historical periods, the exclusions are detailed in the reconciliation table included in this press release. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures as detailed in this press release.

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 the Company’s management 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, including statements regarding the Company’s expectations regarding future operating and financial outlook and performance, including statements regarding 2023 guidance and outlook; the Company’s strategy, focus and plans to accelerate growth; the Company’s beliefs regarding its ability to deliver on its current 2023 outlook and execute on its growth strategy; the Company’s expectation regarding seasonality; expected benefits of the Company’s Thailand production facility, expected production capacity and expected impact on the Company’s margins; the Company’s expectations with respect to demand and customer orders; and the Company’s expectations regarding its products, including expected benefits thereof and timing of deliveries, are forward-looking statements. Forward-looking statements are only predictions and are subject to a number of risks and uncertainties, many of which are outside our 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 the Company’s ability to continue the momentum in its business, its ability to successfully execute its business strategy, its ability to capitalize on trends in its business, its ability to satisfy customer demand and expectations, the level and timing of customer orders and changes/cancellations, the success of its products and strategic partnerships, industry trends and seasonality, the impact of macroeconomic conditions, inflation and increases in prices, the impact of COVID-19, the effects of shortages of semiconductors and other components, and the other factors discussed in its periodic reports, including its Annual Report on Form 10-K for the year ended December 31, 2022, and subsequent reports filed with the U.S. Securities and Exchange Commission. All forward-looking statements are based on information available to us on the date hereof, and we assume no obligation to update such statements.

Identiv, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2023				2023				2022				2023				2022
Net revenue	$	29,555			$	25,997			$	27,857			$	55,552			$	52,918
Cost of revenue		18,707				16,786				17,647				35,493				33,742
Gross profit		10,848				9,211				10,210				20,059				19,176
Operating expenses:
Research and development		3,015				2,707				2,479				5,722				5,008
Selling and marketing		5,879				6,097				5,273				11,976				10,383
General and administrative		2,903				2,948				2,496				5,851				4,984
Restructuring and severance		81				191				223				272				83
Total operating expenses		11,878				11,943				10,471				23,821				20,458
Loss from operations		(1,030	)			(2,732	)			(261	)			(3,762	)			(1,282	)
Non-operating income (expense):
Interest expense, net		(90	)			(50	)			(37	)			(140	)			(62	)
Gain on investment		—				—				6				—				30
Foreign currency gains (losses), net		(9	)			89				95				80				114
Loss before income tax provision		(1,129	)			(2,693	)			(197	)			(3,822	)			(1,200	)
Income tax provision		(15	)			(26	)			(54	)			(41	)			(50	)
Net loss		(1,144	)			(2,719	)			(251	)			(3,863	)			(1,250	)
Cumulative dividends on Series B convertible preferred stock		(315	)			(313	)			(300	)			(628	)			(598	)
Net loss available to common stockholders	$	(1,459	)		$	(3,032	)		$	(551	)		$	(4,491	)		$	(1,848	)
Net loss per common share:
Basic	$	(0.06	)		$	(0.13	)		$	(0.02	)		$	(0.20	)		$	(0.08	)
Diluted	$	(0.06	)		$	(0.13	)		$	(0.02	)		$	(0.20	)		$	(0.08	)
Weighted average shares used in computing net loss per common share:
Basic		23,051				22,794				22,639				22,924				22,606
Diluted		23,051				22,794				22,639				22,924				22,606

Identiv, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
	June 30,				March 31,				December 31,
	2023				2023				2022
ASSETS
Current assets:
Cash and cash equivalents	$	21,905			$	20,804			$	16,650
Restricted cash		300				363				487
Accounts receivable, net of allowances		22,911				21,136				24,826
Inventories		31,092				30,609				28,958
Prepaid expenses and other current assets		5,136				4,361				4,177
Total current assets		81,344				77,273				75,098
Property and equipment, net		8,237				7,595				6,719
Operating lease right-of-use assets		5,952				4,344				4,373
Intangible assets, net		4,760				4,999				5,265
Goodwill		10,218				10,192				10,190
Other assets		1,186				1,148				1,120
Total assets	$	111,697			$	105,551			$	102,765
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	12,827			$	9,926			$	14,760
Financial liabilities		9,951				9,941				—
Operating lease liabilities		1,695				1,199				1,190
Deferred revenue		2,428				1,798				2,068
Accrued compensation and related benefits		2,538				2,395				2,757
Other accrued expenses and liabilities		2,746				2,648				2,618
Total current liabilities		32,185				27,907				23,393
Long-term operating lease liabilities		4,481				3,371				3,366
Long-term deferred revenue		711				647				587
Other long-term liabilities		25				25				25
Total liabilities		37,402				31,950				27,371
Total stockholders' equity		74,295				73,601				75,394
Total liabilities and stockholders' equity	$	111,697			$	105,551			$	102,765

Identiv, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information
(in thousands)
(unaudited)
	Three Months Ended												Six Months Ended
	June 30,				March 31,				June 30,				June 30,				June 30,
	2023				2023				2022				2023				2022
Reconciliation of GAAP gross margin to non-GAAP gross margin
GAAP gross profit	$	10,848			$	9,211			$	10,210			$	20,059			$	19,176
Reconciling items included in GAAP gross profit:
Stock-based compensation		45				45				44				90				100
Amortization and depreciation		403				385				344				788				614
Total reconciling items included in GAAP gross profit		448				430				388				878				714
Non-GAAP gross profit	$	11,296			$	9,641			$	10,598			$	20,937			$	19,890
Non-GAAP gross margin		38%				37%				38%				38%				38%
Reconciliation of GAAP operating expenses to non-GAAP operating expenses
GAAP operating expenses	$	11,878			$	11,943			$	10,471			$	23,821			$	20,458
Reconciling items included in GAAP operating expenses:
Stock-based compensation		(949	)			(945	)			(774	)			(1,894	)			(1,613	)
Amortization and depreciation		(242	)			(238	)			(232	)			(480	)			(471	)
Restructuring and severance		(81	)			(191	)			(223	)			(272	)			(83	)
Total reconciling items included in GAAP operating expenses		(1,272	)			(1,374	)			(1,229	)			(2,646	)			(2,167	)
Non-GAAP operating expenses	$	10,606			$	10,569			$	9,242			$	21,175			$	18,291
Reconciliation of GAAP net loss to non-GAAP adjusted EBITDA
GAAP net loss	$	(1,144	)		$	(2,719	)		$	(251	)		$	(3,863	)		$	(1,250	)
Reconciling items included in GAAP net loss:
Income tax provision		15				26				54				41				50
Interest expense, net		90				50				37				140				62
Gain on investment		—				—				(6	)			—				(30	)
Foreign currency gains (losses), net		9				(89	)			(95	)			(80	)			(114	)
Stock-based compensation		994				990				818				1,984				1,713
Amortization and depreciation		645				623				576				1,268				1,085
Restructuring and severance		81				191				223				272				83
Total reconciling items included in GAAP net loss		1,834				1,791				1,607				3,625				2,849
Non-GAAP adjusted EBITDA	$	690			$	(928	)		$	1,356			$	(238	)		$	1,599
Reconciliation of GAAP net cash provided by (used in) operating activities to non-GAAP free cash flow
GAAP net cash provided by (used in) operating activities	$	1,406			$	(4,698	)		$	(865	)		$	(3,292	)		$	(899	)
Capital expenditures		(1,203	)			(1,225	)			(1,132	)			(2,428	)			(1,642	)
Non-GAAP free cash flow	$	203			$	(5,923	)		$	(1,997	)		$	(5,720	)		$	(2,541	)

 

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Investor Relations Contact:

IR@identiv.com

Media Contact:

press@identiv.com

Source: Identiv, Inc.