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Identiv Reports Second Quarter 2024 Financial Results

Transformative $145 Million Agreement Approved by Stockholders on June 28; On Track to Close in Q3 2024, Subject to Regulatory Approval

IoT Strategic Growth and Go-to-Market Plan Advances; Conclusion Expected in Q4 2024

Thailand Production Facility Earns ISO 9001:2015 and ISO 14001:2015 Certifications

Identiv, Inc. (NASDAQ: INVE), a global digital security and identification leader in the Internet of Things (IoT), today released its financial results for the second quarter ended June 30, 2024.

Status of Asset Sale Transaction

On April 2, 2024, Identiv entered into a definitive asset purchase agreement to sell its physical security, access card, and identity reader operations and assets (the “Physical Security Business”) to a wholly owned subsidiary of Vitaprotech, a security solutions provider. Under the terms of the agreement, Identiv will receive a cash payment of $145 million upon closing of the transaction, subject to customary adjustments. As of August 8, 2024, Identiv has received approval or cleared applicable waiting periods under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, and the United Kingdom National Security and Investment Act 2021. The transaction was approved by Identiv’s stockholders on June 28, 2024, and remains subject to approval by the Committee on Foreign Investment in the United States (CFIUS). Identiv anticipates that the transaction will close in the third quarter of 2024. The proceeds from the sale will significantly strengthen Identiv’s financial position, providing capital to pursue growth opportunities for its specialty IoT solutions business.

Management Commentary

"We achieved significant milestones in the second quarter toward concluding the previously announced asset sale transaction,” said Identiv CEO Steven Humphreys. “This included a highly supportive stockholder vote in favor of the transaction, affirming our decision to focus exclusively on growing our IoT solutions business. At the same time, we made progress expanding RFID production in Thailand and advancing our strategic plan for RFID-enabled IoT applications. We are excited for the future of Identiv and remain on track for an expected close of the asset sale transaction in the third quarter.”

“I am excited to lead the IoT team through this transformational period in Identiv’s history,” said Identiv President, IoT Solutions Kirsten Newquist. “With a clear vision, a comprehensive and disciplined plan, and focused execution, we believe we can capitalize on the opportunity before us.”

GAAP Financial Results for Fiscal Second Quarter 2024

GAAP Earnings for second quarter 2024 reflect the continuing operations of the company, the “IoT Business,” as of June 30, 2024. GAAP earnings do not include revenue and operating expenses from our discontinued operations, the Physical Security Business, due to the pending sale of the assets of this business.

Revenue from continuing operations for the second quarter of 2024 was $6.7 million, compared to $11.5 million in the second quarter of 2023. Second quarter 2024 GAAP gross margin was 9.1% and non-GAAP gross margin was 14.6%, compared to second quarter 2023 GAAP gross margin of 14.2% and non-GAAP gross margin of 16.6%.

GAAP operating expenses from the IoT Business, including research and development, sales, and marketing, and general and administrative, were $7.3 million in the second quarter of 2024, compared to $5.0 million in the second quarter of 2023. Non-GAAP operating expenses from the IoT Business were $4.7 million in the second quarter of 2024, compared to $4.4 million in the second quarter of 2023. Strategic transaction-related costs included in second quarter 2024 GAAP operating expenses totaled $1.6 million. As of June 30, 2024, cumulative strategic transaction-related costs totaled $3.0 million.

GAAP net loss from the IoT Business in the second quarter of 2024 was ($6.9) million, or ($0.31) per basic and diluted share, compared to GAAP net loss of ($3.5) million, or ($0.16) per basic and diluted share, in the second quarter of 2023.

Non-GAAP adjusted EBITDA for the IoT Business in the second quarter of 2024 was ($3.7) million, compared to ($2.6) million in the second quarter of 2023.

Non-GAAP Aggregated Information for Fiscal Second Quarter 2024

In accordance with GAAP, revenue and operating expenses directly related to the Physical Security Business must be removed from their applicable statements of operations captions for continuing operations and reported for all periods presented as net income from discontinued operations in the GAAP financial statements. For this transition quarter, Identiv is presenting non-GAAP aggregated summary data to provide investors with an aggregated view of the entire business, including the Physical Security Business, to facilitate a direct comparison to prior historical results and guidance. A reconciliation of this non-GAAP aggregated information to the most directly comparable GAAP measures is included at the end of this press release.

Total revenue from continuing operations and revenue included in discontinued operations for the second quarter 2024 would have been $24.3 million, compared to GAAP revenue of $29.6 million in the second quarter of 2023. Second quarter 2024 non-GAAP aggregated gross margin would have been 35.0% and adjusted non-GAAP aggregated gross margin would have been 37.3%.

Non-GAAP aggregated operating expenses would have been $14.5 million in the second quarter of 2024, compared to GAAP operating expenses of $11.9 million in the second quarter of 2023. Adjusted non-GAAP aggregated operating expenses would have been $11.1 million in the second quarter of 2024, compared to adjusted non-GAAP operating expenses of $10.6 million in the second quarter of 2023.

Non-GAAP aggregated net loss for the second quarter of 2024 would have been ($6.2) million, or ($0.27) per basic and diluted share, compared to GAAP net loss of ($1.1) million, or ($0.06) per basic and diluted share, in the second quarter of 2023.

Non-GAAP aggregated adjusted EBITDA in the second quarter of 2024 would have been ($2.0) million, compared to non-GAAP adjusted EBITDA $0.7 million in the second quarter of 2023.

Financial Outlook

Identiv provides guidance based on current market conditions and expectations, including macroeconomic conditions and customer demand. For fiscal Q3 2024, management currently expects revenue from continuing operations to be in the range of $5.8 million to $6.1 million. If the asset sale transaction has not closed by the end of the third quarter of 2024 as anticipated, then management expects total revenue from continuing operations and revenue included in discontinued operations to be in the range of $24 million to $26 million.

Conference Call

Identiv management will hold a conference call today, August 8, 2024, at 5:00 p.m. EDT (2:00 p.m. PDT) to discuss the company’s second quarter 2024 financial results. A question-and-answer session will follow management's presentation.

Toll-Free: 888-506-0062

International Number: +1 973-528-0011

Call ID: 242005

Webcast link: Register and Join

The teleconference replay will be available through August 22, 2024, by dialing 877-481-4010 (Toll-Free Replay Number) or +1 919-882-2331 (International Replay Number) and entering passcode 50852.

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. 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 and non-GAAP operating expenses. 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 (benefit), interest expense, net foreign currency gains (losses), net stock-based compensation, amortization and depreciation, restructuring and severance, and strategic review-related costs. Non-GAAP operating expenses exclude stock-based compensation, amortization and depreciation, strategic review-related expenses, and restructuring and severance. In addition, Identiv is providing a non-GAAP aggregated summary to provide an aggregated view of the entire business, including the Physical Security Business, to facilitate a direct comparison by investors to prior historical results and guidance. In accordance with GAAP, revenue and operating expenses directly related to the Physical Security Business must be removed from their applicable statements of operations captions for continuing operations and reported for all periods presented as net income from discontinued operations in the GAAP financial statements. 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 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 expectations regarding future operating and financial outlook and performance, including 2024 third quarter guidance and outlook; Identiv’s strategy, opportunities, focus and goals; Identiv’s belief that the stockholder vote in favor of the proposed asset sale transaction reflects high interest in and support of the company’s strategic direction and focus on its IoT solutions business; the timing of the closing of the transaction; expected amount of proceeds from the transaction; the terms and conditions related to the transaction, including regulatory approvals; Identiv’s expectations with respect to the use of proceeds from the proposed transaction; Identiv’s beliefs regarding access to future capital; and Identiv’s expectations relating to the growth of its IoT business. 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: the risk that the conditions to the closing of the transaction are not satisfied, including the risk that CFIUS approval is not obtained; the occurrence of any event, change or other circumstances that could give rise to the termination of the asset purchase agreement; the failure of the proposed transaction to close for any reason; 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; the timing of closing of the proposed transaction and its effect on third quarter guidance and outlook; risks that the proposed transaction disrupts current business, plans and operations of Identiv or its business prospects; diversion of management’s attention from Identiv’s ongoing business; the ability of Identiv to retain and hire key personnel; the effect of the change in management following the completion of the proposed transaction; competitive responses to the proposed transaction; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the proposed transaction; Identiv’s ability to continue the momentum in its business; Identiv’s ability to successfully execute its business strategy; 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 March 31, 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.

Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net revenue

$

6,741

 

$

11,476

 

$

13,399

 

$

20,365

 

Cost of revenue

 

6,127

 

 

9,844

 

 

12,302

 

 

17,515

 

Gross profit

 

614

 

 

1,632

 

 

1,097

 

 

2,850

 

Operating expenses:
Research and development

 

966

 

 

1,151

 

 

1,863

 

 

2,131

 

Selling and marketing

 

1,828

 

 

1,602

 

 

2,997

 

 

3,121

 

General and administrative

 

4,540

 

 

2,161

 

 

8,020

 

 

4,362

 

Restructuring and severance

 

 

 

45

 

 

 

 

46

 

Total operating expenses

 

7,334

 

 

4,959

 

 

12,880

 

 

9,660

 

Loss from continuing operations

 

(6,720

)

 

(3,327

)

 

(11,783

)

 

(6,810

)

Non-operating income (expense):
Interest expense, net

 

(149

)

 

(90

)

 

(236

)

 

(140

)

Foreign currency gains (losses), net

 

(59

)

 

(34

)

 

(285

)

 

62

 

Loss from continuing operations before income tax benefit (provision)

 

(6,928

)

 

(3,451

)

 

(12,304

)

 

(6,888

)

Income tax benefit (provision)

 

5

 

 

 

 

(1

)

 

(2

)

Net loss from continuing operations

 

(6,923

)

 

(3,451

)

 

(12,305

)

 

(6,890

)

Income from discontinued operations, net of tax

 

707

 

 

2,307

 

 

1,531

 

 

3,027

 

Net loss

 

(6,216

)

 

(1,144

)

 

(10,774

)

 

(3,863

)

Cumulative dividends on Series B convertible preferred stock

 

(232

)

 

(315

)

 

(481

)

 

(628

)

Net loss available to common stockholders

$

(6,448

)

$

(1,459

)

$

(11,255

)

$

(4,491

)

 
Net income (loss) per common share:
Basic and diluted - continuing operations

$

(0.31

)

$

(0.16

)

$

(0.55

)

$

(0.33

)

Basic and diluted - discontinued operations

$

0.03

 

$

0.10

 

$

0.07

 

$

0.13

 

Basic and diluted - net loss

$

(0.27

)

$

(0.06

)

$

(0.48

)

$

(0.20

)

 
Weighted average common shares outstanding:
Basic and diluted

 

23,459

 

 

23,051

 

 

23,413

 

 

22,924

 

Identiv, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 
June 30, December 31,

 

2024

 

2023

 
ASSETS
Current assets:
Cash and cash equivalents

$

18,435

$

23,312

Restricted cash

 

566

 

1,072

Accounts receivable, net of allowances

 

3,716

 

7,404

Inventories

 

11,267

 

13,560

Prepaid expenses and other current assets

 

1,797

 

1,222

Current assets held-for-sale

 

33,600

 

32,916

Total current assets

 

69,381

 

79,486

Property and equipment, net

 

7,669

 

8,472

Operating lease right-of-use assets

 

2,228

 

2,289

Other assets

 

681

 

678

Non-current assets held-for-sale

 

17,801

 

18,798

Total assets

$

97,760

$

109,723

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable

$

2,946

$

4,652

Financial liabilities

 

7,905

 

9,949

Operating lease liabilities

 

815

 

782

Accrued compensation and related benefits

 

1,191

 

1,376

Other accrued expenses and liabilities

 

3,036

 

1,021

Current liabilities held-for-sale

 

12,334

 

13,002

Total current liabilities

 

28,227

 

30,782

Long-term operating lease liabilities

 

1,393

 

1,507

Other long-term liabilities

 

27

 

26

Non-current liabilities held-for-sale

 

3,056

 

3,136

Total liabilities

 

32,703

 

35,451

Total stockholders' equity

 

65,057

 

74,272

Total liabilities and stockholders' equity

$

97,760

$

109,723

Identiv, Inc.
Reconciliation of GAAP to Non-GAAP Financial Information - Continuing Operations
(in thousands)
(unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Reconciliation of GAAP gross margin to non-GAAP gross margin
GAAP gross profit

$

614

 

$

1,632

 

$

1,097

 

$

2,850

 

Reconciling items included in GAAP gross profit:
Stock-based compensation

 

5

 

 

9

 

 

12

 

 

19

 

Amortization and depreciation

 

364

 

 

262

 

 

768

 

 

509

 

Total reconciling items included in GAAP gross profit

 

369

 

 

271

 

 

780

 

 

528

 

Non-GAAP gross profit

$

983

 

$

1,903

 

$

1,877

 

$

3,378

 

Non-GAAP gross margin

 

15

%

 

17

%

 

14

%

 

17

%

 
Reconciliation of GAAP operating expenses to non-GAAP operating expenses
GAAP operating expenses

$

7,334

 

$

4,959

 

$

12,880

 

$

9,660

 

Reconciling items included in GAAP operating expenses:
Stock-based compensation

 

(981

)

 

(498

)

 

(1,492

)

 

(972

)

Amortization and depreciation

 

(65

)

 

(33

)

 

(90

)

 

(80

)

Strategic review-related costs

 

(1,616

)

 

 

 

(2,569

)

 

 

Restructuring and severance

 

 

 

(45

)

 

 

 

(46

)

Total reconciling items included in GAAP operating expenses

 

(2,662

)

 

(576

)

 

(4,151

)

 

(1,098

)

Non-GAAP operating expenses

$

4,672

 

$

4,383

 

$

8,729

 

$

8,562

 

 
Reconciliation of GAAP net loss from continuing operations to non-GAAP adjusted EBITDA
GAAP net loss

$

(6,923

)

$

(3,451

)

$

(12,305

)

$

(6,890

)

Reconciling items included in GAAP net loss:
Income tax provision (benefit)

 

(5

)

 

 

 

1

 

 

2

 

Interest expense, net

 

149

 

 

90

 

 

236

 

 

140

 

Foreign currency gains (losses), net

 

59

 

 

9

 

 

285

 

 

(155

)

Stock-based compensation

 

986

 

 

507

 

 

1,504

 

 

991

 

Amortization and depreciation

 

429

 

 

295

 

 

858

 

 

589

 

Strategic review-related costs

 

1,616

 

 

 

 

2,569

 

 

 

Restructuring and severance

 

 

 

(45

)

 

 

 

(46

)

Total reconciling items included in GAAP net loss from continuing operations

 

3,234

 

 

856

 

 

5,453

 

 

1,521

 

Non-GAAP adjusted EBITDA

$

(3,689

)

$

(2,595

)

$

(6,852

)

$

(5,369

)

Identiv, Inc.
Reconciliation of GAAP Financial Information to Non-GAAP Aggregated View
(in thousands)
(unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net Revenue:
Continuing operations

$

6,741

 

$

11,476

 

$

13,399

 

$

20,365

 

Non-GAAP discontinued operations - Physical Security Business

 

17,592

 

 

18,079

 

 

33,428

 

 

35,187

 

Non-GAAP Total Aggregated

$

24,333

 

$

29,555

 

$

46,827

 

$

55,552

 

 
Gross Profit:
Continuing operations

$

614

 

$

1,632

 

$

1,097

 

$

2,850

 

Non-GAAP discontinued operations - Physical Security Business

 

7,904

 

 

9,216

 

 

15,813

 

 

17,209

 

Non-GAAP Total Aggregated

$

8,518

 

$

10,848

 

$

16,910

 

$

20,059

 

 
Operating Expenses
Continuing operations

$

7,334

 

$

4,959

 

$

12,880

 

$

9,660

 

Non-GAAP discontinued operations - Physical Security Business

 

7,148

 

 

6,919

 

 

14,189

 

 

14,161

 

Non-GAAP Total Aggregated

$

14,482

 

$

11,878

 

$

27,069

 

$

23,821

 

 
Net income (loss):
Continuing operations

$

(6,923

)

$

(3,451

)

$

(12,305

)

$

(6,890

)

Non-GAAP discontinued operations - Physical Security Business

 

707

 

 

2,307

 

 

1,531

 

 

3,027

 

Non-GAAP Total Aggregated

$

(6,216

)

$

(1,144

)

$

(10,774

)

$

(3,863

)

 
Non-GAAP EBITDA:
Continuing operations

$

(3,689

)

$

(2,595

)

$

(6,852

)

$

(5,369

)

Discontinued operations - Physical Security Business

 

1,678

 

 

3,285

 

 

3,425

 

 

5,131

 

Non-GAAP Total Aggregated

$

(2,011

)

$

690

 

$

(3,427

)

$

(238

)

Identiv, Inc.
Reconciliation of GAAP to Adjusted Non-GAAP Financial Information - Non-GAAP Aggregated View
(in thousands)
(unaudited)
 
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Reconciliation of GAAP gross margin to adjusted non-GAAP aggregated gross margin
GAAP gross profit - continuing operations

$

614

 

$

1,632

 

$

1,097

 

$

2,850

 

Non-GAAP gross profit - discontinued operations

 

7,904

 

 

9,216

 

 

15,813

 

 

17,209

 

Non-GAAP Total Aggregated

 

8,518

 

 

10,848

 

 

16,910

 

 

20,059

 

Reconciling items included in non-GAAP gross profit:
Stock-based compensation

 

46

 

 

45

 

 

93

 

 

90

 

Amortization and depreciation

 

505

 

 

403

 

 

1,052

 

 

788

 

Total reconciling items included in non-GAAP aggregated gross profit

 

551

 

 

448

 

 

1,145

 

 

878

 

Adjusted non-GAAP aggregated gross profit

$

9,069

 

$

11,296

 

$

18,055

 

$

20,937

 

Adjusted non-GAAP aggregated gross margin

 

37

%

 

38

%

 

39

%

 

38

%

 
Reconciliation of GAAP operating expenses to adjusted non-GAAP aggregated operating expenses
GAAP operating expenses - continuing operations

$

7,334

 

$

4,959

 

$

12,880

 

$

9,660

 

Non-GAAP operating expenses - discontinued operations

 

7,148

 

 

6,919

 

 

14,189

 

 

14,161

 

Non-GAAP Total Aggregated

 

14,482

 

 

11,878

 

 

27,069

 

 

23,821

 

Reconciling items included in non-GAAP aggregated operating expenses:
Stock-based compensation

 

(1,429

)

 

(949

)

 

(2,401

)

 

(1,894

)

Amortization and depreciation

 

(234

)

 

(242

)

 

(472

)

 

(480

)

Strategic review-related costs

 

(1,616

)

 

 

 

(2,569

)

 

 

Restructuring and severance

 

(123

)

 

(81

)

 

(145

)

 

(272

)

Total reconciling items included in non-GAAP aggregated operating expenses

 

(3,402

)

 

(1,272

)

 

(5,587

)

 

(2,646

)

Adjusted non-GAAP aggregated operating expenses

$

11,080

 

$

10,606

 

$

21,482

 

$

21,175

 

 
Reconciliation of GAAP net loss to non-GAAP adjusted EBITDA
GAAP net loss

 

(6,216

)

 

(1,144

)

 

(10,774

)

 

(3,863

)

Reconciling items included in non-GAAP net loss:
Income tax provision

 

29

 

 

15

 

 

49

 

 

41

 

Interest expense, net

 

149

 

 

90

 

 

236

 

 

140

 

Foreign currency gains (losses), net

 

74

 

 

9

 

 

330

 

 

(80

)

Stock-based compensation

 

1,475

 

 

994

 

 

2,494

 

 

1,984

 

Amortization and depreciation

 

739

 

 

645

 

 

1,524

 

 

1,268

 

Strategic review-related costs

 

1,616

 

 

 

 

2,569

 

 

 

Restructuring and severance

 

123

 

 

81

 

 

145

 

 

272

 

Total reconciling items included in non-GAAP net loss

 

4,205

 

 

1,834

 

 

7,347

 

 

3,625

 

Non-GAAP adjusted EBITDA

$

(2,011

)

$

690

 

$

(3,427

)

$

(238

)

 

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