Identiv, Inc. (NASDAQ:INVE) today announced financial results
for its fiscal 2016 third quarter ended September 30, 2016. For the
third quarter, total revenues were $15.6 million, GAAP gross profit
margin was 44%, GAAP net loss was $(0.7) million, and adjusted
EBITDA was $1.7 million.
“This quarter demonstrated the results of our hard work over
recent quarters, returning Identiv to positive adjusted EBITDA for
the first time since 2014, and doing so decisively. $1.7M adjusted
EBITDA represents 11% of revenues, demonstrating the potential for
profitability our business can deliver at this scale while also
investing and growing. This is our third consecutive quarter
hitting our targets, increasing operating results while also
reducing expenses, and we’ve held cash stable since the end of Q1.
Compared to last year’s Q3, we have reduced GAAP OpEx from $14.1M
quarterly to $7.1M, and non-GAAP OpEx from $12.5M quarterly a year
ago to $5.5M in the most recent quarter. Most importantly, our
seasonally strongest quarter remained so, showing sequential and
comparative revenue growth of over 20% in our physical access
business and over 15% in our smart card reader business. As a
result, we believe we remain on track to reach our targets, and
confirm our previously communicated guidance for 2016,” said Steven
Humphreys, Identiv CEO. ”These financial metrics are a reflection
of the strength of our business and the industry, the proven
ability of our team to execute, and the credibility of our business
model. In fact, with our market growing about 10%, we’re outpacing
it and gaining share. Achieving this while also managing a major
business re-focus is a testament to these strengths. As we regain
our core business strength, we’re returning to focusing on and
communicating our vision for our expanding business opportunity,
which remains unchanged: We’re providing what we believe are the
most cost-effective, high-performance and convenient solutions to
our Hirsch Velocity customers in the U.S. government on their path
to FICAM compliance, our smart card reader customers and our
partners. As we continue investment to further develop our ICPAM
solution, we are seeing increasing traction through our partnership
with Cisco and its channel partners. Additionally, OEM partners are
leveraging our proven technology smart card reader modules and
chipsets to enable secure authentication on their devices. Our
unifying theme is providing secure, convenient, cost effective
access to all physical resources, known as the Internet of Things
(IoT). We believe with our demonstrated business execution and the
pivotal role commercial markets will play in wide adoption of IoT,
we’re positioned to lead this aspect of the IoT revolution.”
Financial Highlights Review
- Revenues for the third quarter of 2016 were $15.6 million
compared to $13.5 million in the second quarter of 2016 and $17.2
million in the third quarter of fiscal year 2015, reflecting a
sequential increase of 15% and a decline of 10% from the third
quarter of 2015. The sequential increase was driven by higher
revenues in the Physical Access Control Systems (PACS) Segment,
which grew by 31%, and the Identity Segment, which grew 21%. This
is reflective of stronger demand for the Company's physical access
readers and door controllers used with its Hirsch Velocity and
ICPAM access platforms as well as logical access solutions,
including delivery of desktop readers used in a national e-Health
project in Europe and delivery of reader chipsets to OEM partners.
Both areas benefited from higher demand from U.S. Government
customers due to the Government’s fiscal year end in September, as
well as secular market growth and market share gains. Revenue in
the Credentials Segment reflects growth in Transponder sales,
offset by lower revenue with access cards. The comparative decrease
was mainly driven by lower Credentials revenues, reflecting last
year’s sales of RFID inlays for an electronic gaming application in
the comparable quarter, partially offset by year over year PACS
revenue growth of 21% and Identity revenue growth of 13%.
- GAAP gross profit margin was 44% in the third quarter of fiscal
year 2016, compared to 39% in the second quarter of fiscal year
2016 and 44% in the third quarter of 2015. Sequential margin
expansion reflects margin increases in all three major segments as
well as product mix, with a higher proportion of revenue in PACS
and Identity.
- GAAP operating expenses, including research and development
(R&D), sales and marketing (S&M), general and
administrative (G&A), and restructuring and severance charges
were $7.1 million, compared to $7.9 million in the second quarter
of fiscal year 2016 and $14.1 million in the third quarter of 2015,
reflecting a sequential decrease of 10% and a year over year
decrease of 50%. The sequential reduction was primarily driven by a
decrease in G&A expenses by 29% due to lower legal and
accounting professional fees associated with non-core business
activities. The comparative change reflects the implementation of
the Company’s restructuring plan in the first quarter of fiscal
year 2016.
- Non-GAAP operating expenses for the quarter were $5.5 million,
compared to $6.8 million in the second quarter of fiscal year 2016
and $12.5 million in the third quarter of 2015, reflecting a
sequential reduction of 19% and a year over year reduction of 56%.
Non-GAAP operating expenses are in line with the Company’s
previously announced target of less than $6 million quarterly of
business-related operating expenses.
- GAAP net loss was $(0.7) million, or $(0.07) per share in the
third quarter of 2016, compared to $(3.0) million, or $(0.27)
per share in the second quarter of 2016 and GAAP net loss of $(7.2)
million, or $(0.66) per share in the third quarter of 2015. The
third quarter of 2016 included restructuring and severance related
costs of $0.2 million, while the second quarter of 2016 included
restructuring and severance related costs of $0.2 million, and the
third quarter of 2015 included restructuring and severance related
costs of $0.2 million.
- Non-GAAP adjusted EBITDA was $1.7 million in the third quarter
of 2016, compared to $(1.2) million in the second quarter of fiscal
year 2016 and $(4.5) million in the third quarter of 2015. The
improvement predominantly reflects a reduction in operating
expenses following the business refocus in the first quarter of
2016 and reduced non-core professional fees. Sequentially, the
improvement also reflects revenue growth and gross margin
expansion.
- Cash was $9.2 million at September 30, 2016, compared with $9.4
million at June 30, 2016.
“Our discipline, focus and realignment of our resource base has
led us to reach positive adjusted EBITDA and a steep decline in net
loss. We’ve got lots of work to do, but we believe we’re solidly
positioned for continued growth and market share gains in our core
business,” continued Mr. Humphreys. “While we expect to see the
typical seasonality, we believe we have the base for these positive
trends to continue into the next year. In delivering near-term
products and business results, we’re building the platform and
components for our vision of a pervasive, increasingly convenient,
and responsive access control experience as one of the
highest-value aspects of the Internet of Things. Wireless
infrastructure, IP-enabled components throughout the platform,
mobile-enabled systems management, video and sensor integration,
and learning platforms, will enable ever-greater security while
delivering convenience, end-user benefits, and
ease-of-access.”
Webcast and Conference Call InformationIdentiv
will hold an audio webcast and conference call to discuss its
financial results for the second quarter ended September 30, 2016
on Wednesday, November 9, 2016 after close of market at 2:00 PM PT
(5:00 PM ET). The webcast and conference call will be open to all
interested investors. The audio webcast can be accessed at
identiv.com/investors/ir-events. The conference call can be
accessed by dialing +1 847-585-4405 or +1 888-771-4371 (toll-free
within the U.S.) using confirmation number 43679168. For those
unable to join the live webcast, it will be archived following the
event for 30 days at identiv.com/investors/ir-events. A replay of
the call will also be available for one week and can be accessed by
dialing+1 630-652-3042 or +1 888-843-7419 (toll-free within the
U.S.) using passcode 4367 9168#.
About IdentivIdentiv, Inc. is the leading
global player in physical security and secure identification.
Identiv’s products, software, systems, and services address the
markets for physical and logical access control and a wide range of
RFID-enabled applications. Customers in the government, enterprise,
consumer, education, healthcare, and transportation sectors rely on
Identiv’s access and identification solutions. Identiv's mission is
to secure the connected physical world: from perimeter to desktop
access, and from the world of physical things to the Internet of
Everything. Identiv is a publicly traded company and its common
stock is listed on the NASDAQ Capital Market in the U.S. under the
symbol “INVE”. For more information, visit identiv.com.
Non-GAAP Financial Measures (Unaudited)This
press release includes financial information that has not been
prepared in accordance with GAAP, including non-GAAP operating
expenses and adjusted EBITDA. Identiv uses these 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 our ongoing operational performance. We believe that the
use of these non-GAAP financial measures provides an additional
tool for investors to use in evaluating ongoing operating results
and trends. The non-GAAP operating expenses and adjusted
EBITDA discussed above will exclude items that are included
in GAAP net income (loss) and GAAP operating expenses, and excludes
provision (benefit) for income taxes, net income (loss)
attributable to non-controlling interest, interest expense, foreign
currency losses (gains), impairment of goodwill, stock-based
compensation, amortization and depreciation, and restructuring and
severance. The exclusions are detailed in the reconciliation table
included in this earnings releases. 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 InformationThis
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 "anticipates", "believes",
"plans", "will", "intends", "expects", and similar references to
the future. Any statement that is not a historical fact, including
the statements regarding the Company's belief that it is on track
to reach its targets, its expectations regarding future operating
and financial performance, including fiscal year 2016 guidance, the
benefits of the Company’s products, the Company’s beliefs regarding
the strength of its business and that of the industry, traction
within its customer base, market positioning and growth in market
share, the role of commercial markets and IoT, business seasonality
and the Company’s ability to continue order trends into 2017 is a
forward-looking statement. 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 actual impact of
the restructuring on the Company’s business, the Company’s ability
to continue the momentum in its business, the level of customer
orders, the success of its dealer channels, the strength of the IoT
market, and factors discussed in our public reports, including our
Annual Report on Form 10-K for the year ended December 31, 2015 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.
— Financials Follow —
Identiv, Inc. |
|
Consolidated Statements of
Operations |
|
(in thousands, except per share data) |
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
Net
revenue |
|
$ |
15,560 |
|
|
$ |
13,476 |
|
|
$ |
17,196 |
|
|
$ |
41,521 |
|
|
$ |
47,717 |
|
|
Cost of
revenue |
|
|
8,640 |
|
|
|
8,207 |
|
|
|
9,675 |
|
|
|
24,038 |
|
|
|
27,466 |
|
|
Gross profit |
|
|
6,920 |
|
|
|
5,269 |
|
|
|
7,521 |
|
|
|
17,483 |
|
|
|
20,251 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
1,480 |
|
|
|
1,432 |
|
|
|
2,235 |
|
|
|
4,997 |
|
|
|
6,567 |
|
|
Selling and marketing |
|
|
3,312 |
|
|
|
3,279 |
|
|
|
5,236 |
|
|
|
10,807 |
|
|
|
15,698 |
|
|
General and administrative |
|
|
2,115 |
|
|
|
2,982 |
|
|
|
6,456 |
|
|
|
9,674 |
|
|
|
15,057 |
|
|
Impairment of goodwill |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
988 |
|
|
Restructuring and severance |
|
|
160 |
|
|
|
201 |
|
|
|
215 |
|
|
|
3,100 |
|
|
|
408 |
|
|
Total operating expenses |
|
|
7,067 |
|
|
|
7,894 |
|
|
|
14,142 |
|
|
|
28,578 |
|
|
|
38,718 |
|
|
Loss
from operations |
|
|
(147 |
) |
|
|
(2,625 |
) |
|
|
(6,621 |
) |
|
|
(11,095 |
) |
|
|
(18,467 |
) |
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
|
(525 |
) |
|
|
(519 |
) |
|
|
(478 |
) |
|
|
(1,814 |
) |
|
|
(1,367 |
) |
|
Foreign currency gain (loss),
net |
|
|
35 |
|
|
|
45 |
|
|
|
(10 |
) |
|
|
309 |
|
|
|
(186 |
) |
|
Loss
before income taxes and noncontrolling interest |
|
|
(637 |
) |
|
|
(3,099 |
) |
|
|
(7,109 |
) |
|
|
(12,600 |
) |
|
|
(20,020 |
) |
|
Income tax benefit (provision) |
|
|
(105 |
) |
|
|
129 |
|
|
|
(59 |
) |
|
|
(35 |
) |
|
|
(141 |
) |
|
Loss
before noncontrolling interest |
|
|
(742 |
) |
|
|
(2,970 |
) |
|
|
(7,168 |
) |
|
|
(12,635 |
) |
|
|
(20,161 |
) |
|
Less: Loss (income) attributable to
noncontrolling interest |
|
|
(1 |
) |
|
|
7 |
|
|
|
6 |
|
|
|
4 |
|
|
|
72 |
|
|
Net loss
attributable to Identiv, Inc. |
|
$ |
(743 |
) |
|
$ |
(2,963 |
) |
|
$ |
(7,162 |
) |
|
$ |
(12,631 |
) |
|
$ |
(20,089 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per share |
|
$ |
(0.07 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.66 |
) |
|
$ |
(1.16 |
) |
|
$ |
(1.85 |
) |
|
Weighted
average shares used to compute basic and diluted loss per
share |
|
|
11,024 |
|
|
|
10,790 |
|
|
|
10,895 |
|
|
|
10,855 |
|
|
|
10,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identiv,
Inc. |
Consolidated Balance Sheets |
(in thousands) |
|
|
|
|
|
|
|
September 30, |
|
June 30, |
|
December 31, |
|
|
2016 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash |
$ |
9,183 |
|
|
$ |
9,402 |
|
|
$ |
16,667 |
|
Accounts receivable, net of
allowances |
|
9,159 |
|
|
|
8,984 |
|
|
|
7,915 |
|
Inventories |
|
12,140 |
|
|
|
13,823 |
|
|
|
14,726 |
|
Prepaid expenses and other
assets |
|
3,399 |
|
|
|
1,919 |
|
|
|
1,518 |
|
Total current assets |
|
33,881 |
|
|
|
34,128 |
|
|
|
40,826 |
|
Property and equipment,
net |
|
2,672 |
|
|
|
3,103 |
|
|
|
4,218 |
|
Intangible assets,
net |
|
6,183 |
|
|
|
6,547 |
|
|
|
7,275 |
|
Other assets |
|
851 |
|
|
|
897 |
|
|
|
1,129 |
|
Total assets |
$ |
43,587 |
|
|
$ |
44,675 |
|
|
$ |
53,448 |
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS´ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts payable |
$ |
6,369 |
|
|
$ |
7,481 |
|
|
$ |
6,280 |
|
Current portion - payment
obligation |
|
760 |
|
|
|
731 |
|
|
|
681 |
|
Current portion - financial
liabilities |
|
9,625 |
|
|
|
9,722 |
|
|
|
- |
|
Deferred revenue |
|
1,145 |
|
|
|
1,232 |
|
|
|
1,515 |
|
Accrued compensation and related
benefits |
|
1,667 |
|
|
|
1,639 |
|
|
|
1,905 |
|
Other accrued expenses and
liabilities |
|
6,876 |
|
|
|
6,587 |
|
|
|
5,835 |
|
Total current liabilities |
|
26,442 |
|
|
|
27,392 |
|
|
|
16,216 |
|
Long-term payment
obligation |
|
4,209 |
|
|
|
4,457 |
|
|
|
4,878 |
|
Long-term financial
liabilities |
|
8,289 |
|
|
|
8,205 |
|
|
|
17,656 |
|
Other long-term
liabilities |
|
549 |
|
|
|
643 |
|
|
|
508 |
|
Total liabilities |
|
39,489 |
|
|
|
40,697 |
|
|
|
39,258 |
|
Total stockholders´ equity |
|
4,098 |
|
|
|
3,978 |
|
|
|
14,190 |
|
Total liabilities and
stockholders´equity |
$ |
43,587 |
|
|
$ |
44,675 |
|
|
$ |
53,448 |
|
|
|
|
|
|
|
Identiv,
Inc. |
Reconciliation of GAAP and Non-GAAP Financial
Information |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months Ended |
|
September 30, |
|
June 30, |
|
September 30, |
|
September 30, |
|
|
2016 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
Reconciliation of GAAP gross profit margin and non-GAAP
gross profit margin |
|
|
|
|
|
|
|
|
|
GAAP
cost of revenue |
$ |
8,640 |
|
|
$ |
8,207 |
|
|
$ |
9,675 |
|
|
$ |
24,038 |
|
|
$ |
27,466 |
|
Reconciling items included in GAAP cost of revenue: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
(26 |
) |
|
|
(23 |
) |
|
|
(34 |
) |
|
|
(72 |
) |
|
|
(98 |
) |
Amortization and depreciation |
|
(310 |
) |
|
|
(314 |
) |
|
|
(356 |
) |
|
|
(940 |
) |
|
|
(1,032 |
) |
Total reconciling items included in
GAAP cost of revenue |
|
(336 |
) |
|
|
(337 |
) |
|
|
(390 |
) |
|
|
(1,012 |
) |
|
|
(1,130 |
) |
Non-GAAP
cost of revenue |
$ |
8,304 |
|
|
$ |
7,870 |
|
|
$ |
9,285 |
|
|
$ |
23,026 |
|
|
$ |
26,336 |
|
Non-GAAP
gross profit margin |
|
47 |
% |
|
|
42 |
% |
|
|
46 |
% |
|
|
45 |
% |
|
|
45 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP operating expenses and overhead
costs |
|
|
|
|
|
|
|
|
|
GAAP
operating expenses |
$ |
7,067 |
|
|
$ |
7,894 |
|
|
$ |
14,142 |
|
|
$ |
28,578 |
|
|
$ |
38,718 |
|
Stock-based compensation |
|
(837 |
) |
|
|
(422 |
) |
|
|
(1,095 |
) |
|
|
(2,173 |
) |
|
|
(3,602 |
) |
Amortization and depreciation |
|
(535 |
) |
|
|
(430 |
) |
|
|
(379 |
) |
|
|
(1,548 |
) |
|
|
(1,171 |
) |
Impairment of goodwill |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(988 |
) |
Restructuring and severance |
|
(160 |
) |
|
|
(201 |
) |
|
|
(215 |
) |
|
|
(3,100 |
) |
|
|
(490 |
) |
Total reconciling items included in
GAAP operating expenses |
|
(1,532 |
) |
|
|
(1,053 |
) |
|
|
(1,689 |
) |
|
|
(6,821 |
) |
|
|
(6,251 |
) |
Non-GAAP
overhead costs |
$ |
5,535 |
|
|
$ |
6,841 |
|
|
$ |
12,453 |
|
|
$ |
21,757 |
|
|
$ |
32,467 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP net loss to adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
GAAP net
loss attributable to Identiv, Inc. |
$ |
(743 |
) |
|
$ |
(2,963 |
) |
|
$ |
(7,162 |
) |
|
$ |
(12,631 |
) |
|
$ |
(20,089 |
) |
Reconciling items included in GAAP net loss: |
|
|
|
|
|
|
|
|
|
Provision (benefit) for income
taxes |
|
105 |
|
|
|
(129 |
) |
|
|
59 |
|
|
|
35 |
|
|
|
141 |
|
Net income (loss) attributable to
noncontrolling interest |
|
1 |
|
|
|
(7 |
) |
|
|
(6 |
) |
|
|
(4 |
) |
|
|
(72 |
) |
Interest expense, net |
|
525 |
|
|
|
519 |
|
|
|
478 |
|
|
|
1,814 |
|
|
|
1,367 |
|
Foreign currency (gains) losses,
net |
|
(35 |
) |
|
|
(45 |
) |
|
|
10 |
|
|
|
(309 |
) |
|
|
186 |
|
Stock-based compensation |
|
863 |
|
|
|
445 |
|
|
|
1,129 |
|
|
|
2,245 |
|
|
|
3,700 |
|
Amortization and depreciation |
|
845 |
|
|
|
744 |
|
|
|
735 |
|
|
|
2,488 |
|
|
|
2,203 |
|
Impairment of goodwill |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
988 |
|
Restructuring and severance |
|
160 |
|
|
|
201 |
|
|
|
215 |
|
|
|
3,100 |
|
|
|
490 |
|
Total
reconciling items included in GAAP net loss |
|
2,464 |
|
|
|
1,728 |
|
|
|
2,620 |
|
|
|
9,369 |
|
|
|
9,003 |
|
Adjusted
EBITDA |
$ |
1,721 |
|
|
$ |
(1,235 |
) |
|
$ |
(4,542 |
) |
|
$ |
(3,262 |
) |
|
$ |
(11,086 |
) |
|
|
|
|
|
|
|
|
|
|
Investor Relations Contact:
IR@identiv.com
Media Contact:
press@identiv.com
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