Identiv Reports Second Quarter 2023 Business Results

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

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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