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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Investor Relations Contact: IR@identiv.com
Media Contact: press@identiv.com
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