Identiv, Inc. (NASDAQ:INVE) today announced financial results for
its fiscal 2017 second quarter ended June 30, 2017. For the second
quarter, total revenues were $14.8 million, GAAP gross margin was
38%, GAAP net loss was $(1.9) million, and adjusted EBITDA was $0.2
million.
“We continued to experience year-over-year organic growth in the
core business, anchored by strong revenue retention within our top
10 customers in all three of our segments. Combined with
operational expense control, the result is positive adjusted EBITDA
for the fourth consecutive quarter. This is the company’s
longest period of consistent positive adjusted EBITDA for the last
several years, which we believe will continue for the foreseeable
future. We continue to solidify our strong operating base,
providing business model leverage as the business continues to
grow,” said Steven Humphreys, Identiv CEO.
“In the second quarter our smart card reader business led our
Identity segment, which grew 39% year-over-year. This
balances well with our RFID segment, which led last quarter at over
40% year-over-year growth. Going into the current quarter, we
expect leading growth from our physical access products as they
benefit from the government’s fiscal year-end. This
combination of balance across segments and strong growth within
each is at the core of our business model. It was
demonstrated again this quarter.
On the physical access side, we recorded our strongest quarter
of sales through the Cisco channel, driven by orders for a
multi-site educational project, reflecting our strength - and
Cisco’s - in the rapidly-adopting education market. Further, our
Hirsch Velocity and TS Reader products position us as the provider
of choice for FICAM-compliant access control across the U.S.
government. Going into the second half of the year, we are
implementing targeted outreach programs to permeate all government
agencies, for whom FICAM is a mandate.”
Second Quarter 2017 Financial Highlights
- Revenues for the second quarter of 2017 were $14.8 million,
compared to $13.4 million in the first quarter of 2017 and $13.5
million in the second quarter of 2016, reflecting a sequential
increase of 11% from the first quarter of 2017, and a
year-over-year increase of 10% from the second quarter of 2016. The
revenue increase in the second quarter of 2017 was mainly driven by
growth in the Identity segment, which grew 31% sequentially and 39%
year-over-year. Second quarter performance in the segment mainly
reflects the delivery of smart card readers for the completion of
an international government project in the APAC region as well as
reader chip sets to OEM partners. Revenues in the Physical Access
Control Systems (PACS) segment grew 9% sequentially and 5%
year-over-year, with growth in the second quarter of 2017 being
mainly driven by a higher demand for ICPAM-related physical access
solutions and physical access controllers through the Cisco
channel, including deliveries for a multi-site educational
deployment. Revenue in the Credentials segment stayed flat
sequentially and grew 2% year-over-year. Year-over-year growth was
mainly driven by continued growth in RFID Transponder sales, which
grew 10%, partially offset by lower access card sales in the
quarter.
- GAAP gross margin was 38% in the second quarter of 2017,
compared to 43% in the first quarter of 2017, and 39% in the second
quarter of 2016. Sequentially, the change in gross margin
predominantly reflects product and channel mix within the PACS and
Credentials segments as well as lower margins on a large volume
order of Identity readers for an international government project.
Within the Credentials segment the quarter included a higher
proportion of transponders and cards used in library and tracking
applications.
- 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 $6.9 million, compared to $6.6 million in the first quarter of
2017 and $7.9 million in the second quarter of 2016, reflecting a
sequential increase of 4% and a year-over-year decrease of
12%.
- Non-GAAP operating expenses for the quarter were $5.8 million,
compared to $5.7 million in the first quarter of 2017 and $6.8
million in the second quarter of 2016, reflecting a sequential
increase of 2% and a year-over-year reduction of 15%. 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 $(1.9) million, or $(0.15) per share,
compared to $(0.7) million, or $(0.06) per share in the first
quarter of 2017, and $(3.0) million, or $(0.27) per share in the
second quarter of 2016. In comparison, the second quarter of 2016
included restructuring and severance related costs of $0.2
million.
- Non-GAAP adjusted EBITDA was $0.2 million in the second quarter
of 2017, compared to $0.3 million in the first quarter of 2017, and
$(1.2) million in the second quarter of 2016.
- Cash was $18.0 million at June 30, 2017, compared to $7.9
million at March 31, 2017, and $9.1 million at December 31,
2016.
On August 7, 2017, the Company’s insurance provider agreed to
reimburse the Company for certain legal fees previously incurred.
As a result, the Company expects to recognize a gain of $0.4M in
the third quarter of 2017.
Outlook and Guidance The Company is confirming
previously announced guidance for fiscal year 2017 of revenue
between $64 million and $68 million and positive adjusted EBITDA
between $4 million and $7 million.
Webcast and Conference Call Information Identiv
will host a conference call and audio webcast to discuss the
results at 2:00 PM PT (5:00 PM ET).The webcast and conference call
will be open to all interested investors. Should time allow,
management will also answer questions sent to ir@identiv.com. 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 45310699.For those unable to join the live webcast, it will
be archived following the event 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 4531 0699#.
About Identiv Identiv, Inc. is a global
provider of 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 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, gain on extinguishment
of debt, foreign currency gains (losses), stock-based compensation,
amortization and depreciation, and restructuring and severance. The
exclusions are detailed in the reconciliation table included in
this earnings 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. Identiv has not provided a
reconciliation of its full-year 2017 adjusted EBITDA outlook to an
expected net income (loss) outlook because certain items that are a
component of net income (loss) cannot be reasonably projected. In
particular, sufficient information is not available to calculate
certain adjustments required for such reconciliations, including
interest expense, income tax expense (benefit), share-based
compensation, and foreign currency (gains) losses. These components
of net income (loss) could significantly impact Identiv’s actual
net income (loss).
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 expectations regarding
future operating and financial performance, including fiscal year
2017 guidance, the benefits and attributes of the Company’s
products, the Company’s beliefs regarding the strength of its
business and trends in the industry, the drivers of growth in its
business, its relationships with customers and traction
within its customer base, market positioning, and business
seasonality 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
Company’s ability to continue the momentum in its business, the
level of customer orders, the success of its products and
partnerships, industry trends, and factors discussed in our public
reports, including our Annual Report on Form 10-K for the year
ended December 31, 2016 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 |
|
Six Months
Ended |
|
|
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
|
|
|
2017 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Net
revenue |
|
$ |
14,840 |
|
|
$ |
13,392 |
|
|
$ |
13,476 |
|
|
$ |
28,232 |
|
|
$ |
25,961 |
|
|
Cost of
revenue |
|
|
9,157 |
|
|
|
7,695 |
|
|
|
8,207 |
|
|
|
16,852 |
|
|
|
15,398 |
|
|
Gross
profit |
|
|
5,683 |
|
|
|
5,697 |
|
|
|
5,269 |
|
|
|
11,380 |
|
|
|
10,563 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research
and development |
|
|
1,511 |
|
|
|
1,477 |
|
|
|
1,432 |
|
|
|
2,988 |
|
|
|
3,517 |
|
|
Selling
and marketing |
|
|
3,315 |
|
|
|
3,379 |
|
|
|
3,279 |
|
|
|
6,694 |
|
|
|
7,495 |
|
|
General
and administrative |
|
|
2,085 |
|
|
|
1,787 |
|
|
|
2,982 |
|
|
|
3,872 |
|
|
|
7,559 |
|
|
Restructuring and severance |
|
|
- |
|
|
|
- |
|
|
|
201 |
|
|
|
- |
|
|
|
2,940 |
|
|
Total operating expenses |
|
|
6,911 |
|
|
|
6,643 |
|
|
|
7,894 |
|
|
|
13,554 |
|
|
|
21,511 |
|
|
Loss
from operations |
|
|
(1,228 |
) |
|
|
(946 |
) |
|
|
(2,625 |
) |
|
|
(2,174 |
) |
|
|
(10,948 |
) |
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
(678 |
) |
|
|
(674 |
) |
|
|
(519 |
) |
|
|
(1,352 |
) |
|
|
(1,289 |
) |
|
Gain on
extinguishment of debt |
|
|
- |
|
|
|
977 |
|
|
|
- |
|
|
|
977 |
|
|
|
- |
|
|
Foreign
currency gain (loss), net |
|
|
1 |
|
|
|
(152 |
) |
|
|
45 |
|
|
|
(151 |
) |
|
|
274 |
|
|
Loss
before income taxes and noncontrolling interest |
|
|
(1,905 |
) |
|
|
(795 |
) |
|
|
(3,099 |
) |
|
|
(2,700 |
) |
|
|
(11,963 |
) |
|
Income
tax benefit (provision) |
|
|
1 |
|
|
|
118 |
|
|
|
129 |
|
|
|
119 |
|
|
|
70 |
|
|
Loss
before noncontrolling interest |
|
|
(1,904 |
) |
|
|
(677 |
) |
|
|
(2,970 |
) |
|
|
(2,581 |
) |
|
|
(11,893 |
) |
|
Less:
Income (loss) attributable to noncontrolling interest |
|
|
- |
|
|
|
(10 |
) |
|
|
7 |
|
|
|
(10 |
) |
|
|
5 |
|
|
Net loss
attributable to Identiv, Inc. |
|
$ |
(1,904 |
) |
|
$ |
(687 |
) |
|
$ |
(2,963 |
) |
|
$ |
(2,591 |
) |
|
$ |
(11,888 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per share |
|
$ |
(0.15 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.22 |
) |
|
$ |
(1.10 |
) |
|
Weighted
average shares used to compute basic and diluted loss per
share |
|
|
12,657 |
|
|
|
11,127 |
|
|
|
10,790 |
|
|
|
12,008 |
|
|
|
10,770 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Identiv,
Inc. |
Consolidated Balance Sheets |
(in thousands) |
|
|
|
|
|
|
|
June 30, |
|
March 31, |
|
December 31, |
|
2017 |
|
2017 |
|
2016 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash |
$ |
17,968 |
|
$ |
7,882 |
|
$ |
9,116 |
Accounts
receivable, net of allowances |
|
10,636 |
|
|
8,797 |
|
|
9,430 |
Inventories |
|
12,520 |
|
|
12,577 |
|
|
11,596 |
Prepaid
expenses and other assets |
|
1,898 |
|
|
1,827 |
|
|
1,510 |
Total
current assets |
|
43,022 |
|
|
31,083 |
|
|
31,652 |
Property and equipment,
net |
|
2,005 |
|
|
2,200 |
|
|
2,416 |
Intangible assets,
net |
|
5,092 |
|
|
5,456 |
|
|
5,820 |
Other assets |
|
725 |
|
|
754 |
|
|
712 |
Total
assets |
$ |
50,844 |
|
$ |
39,493 |
|
$ |
40,600 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS´ EQUITY |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
8,500 |
|
$ |
7,445 |
|
$ |
6,024 |
Current
portion - payment obligation |
|
844 |
|
|
803 |
|
|
786 |
Current
portion - financial liabilities |
|
8,570 |
|
|
7,943 |
|
|
8,119 |
Deferred
revenue |
|
1,137 |
|
|
926 |
|
|
1,085 |
Accrued
compensation and related benefits |
|
1,412 |
|
|
1,724 |
|
|
1,520 |
Other
accrued expenses and liabilities |
|
3,425 |
|
|
4,062 |
|
|
5,032 |
Total
current liabilities |
|
23,888 |
|
|
22,903 |
|
|
22,566 |
Long-term payment
obligation |
|
3,533 |
|
|
3,766 |
|
|
3,987 |
Long-term financial
liabilities |
|
7,047 |
|
|
7,634 |
|
|
9,779 |
Other long-term
liabilities |
|
196 |
|
|
191 |
|
|
335 |
Total
liabilities |
|
34,664 |
|
|
34,494 |
|
|
36,667 |
Total
stockholders´ equity |
|
16,180 |
|
|
4,999 |
|
|
3,933 |
Total
liabilities and stockholders´equity |
$ |
50,844 |
|
$ |
39,493 |
|
$ |
40,600 |
|
|
|
|
|
|
Identiv,
Inc. |
Reconciliation of GAAP and Non-GAAP Financial
Information |
(in thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Six Months Ended |
|
June 30, |
|
March 31, |
|
June 30, |
|
June 30, |
|
|
2017 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
Reconciliation of GAAP gross profit margin and non-GAAP
gross profit margin |
|
|
|
|
|
|
|
|
|
GAAP
cost of revenue |
$ |
9,157 |
|
|
$ |
7,695 |
|
|
$ |
8,207 |
|
|
$ |
16,852 |
|
|
$ |
15,398 |
|
Reconciling items included in GAAP cost of revenue: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
(23 |
) |
|
|
(24 |
) |
|
|
(23 |
) |
|
|
(47 |
) |
|
|
(46 |
) |
Amortization and depreciation |
|
(279 |
) |
|
|
(281 |
) |
|
|
(314 |
) |
|
|
(560 |
) |
|
|
(629 |
) |
Total
reconciling items included in GAAP cost of revenue |
|
(302 |
) |
|
|
(305 |
) |
|
|
(337 |
) |
|
|
(607 |
) |
|
|
(675 |
) |
Non-GAAP cost of revenue |
$ |
8,855 |
|
|
$ |
7,390 |
|
|
$ |
7,870 |
|
|
$ |
16,245 |
|
|
$ |
14,723 |
|
Non-GAAP gross profit margin |
|
40 |
% |
|
|
45 |
% |
|
|
42 |
% |
|
|
42 |
% |
|
|
43 |
% |
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP operating expenses and overhead
costs |
|
|
|
|
|
|
|
|
|
GAAP
operating expenses |
$ |
6,911 |
|
|
$ |
6,643 |
|
|
$ |
7,894 |
|
|
$ |
13,554 |
|
|
$ |
21,511 |
|
Reconciling items included in GAAP operating expenses: |
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
(638 |
) |
|
|
(567 |
) |
|
|
(422 |
) |
|
|
(1,205 |
) |
|
|
(1,336 |
) |
Amortization and depreciation |
|
(467 |
) |
|
|
(349 |
) |
|
|
(434 |
) |
|
|
(816 |
) |
|
|
(1,015 |
) |
Restructuring and severance |
|
- |
|
|
|
- |
|
|
|
(201 |
) |
|
|
- |
|
|
|
(2,940 |
) |
Total
reconciling items included in GAAP operating expenses |
|
(1,105 |
) |
|
|
(916 |
) |
|
|
(1,057 |
) |
|
|
(2,021 |
) |
|
|
(5,291 |
) |
Non-GAAP overhead costs |
$ |
5,806 |
|
|
$ |
5,727 |
|
|
$ |
6,837 |
|
|
$ |
11,533 |
|
|
$ |
16,220 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of GAAP net loss to adjusted
EBITDA |
|
|
|
|
|
|
|
|
|
GAAP
net loss attributable to Identiv, Inc. |
$ |
(1,904 |
) |
|
$ |
(687 |
) |
|
$ |
(2,963 |
) |
|
$ |
(2,591 |
) |
|
$ |
(11,888 |
) |
Reconciling items included in GAAP net loss: |
|
|
|
|
|
|
|
|
|
Provision
(benefit) for income taxes |
|
(1 |
) |
|
|
(118 |
) |
|
|
(129 |
) |
|
|
(119 |
) |
|
|
(70 |
) |
Net
income (loss) attributable to noncontrolling interest |
|
- |
|
|
|
10 |
|
|
|
(7 |
) |
|
|
10 |
|
|
|
(5 |
) |
Interest
expense, net |
|
678 |
|
|
|
674 |
|
|
|
519 |
|
|
|
1,352 |
|
|
|
1,289 |
|
Gain on
extinguishment of debt |
|
- |
|
|
|
(977 |
) |
|
|
- |
|
|
|
(977 |
) |
|
|
- |
|
Foreign
currency (gains) losses, net |
|
(1 |
) |
|
|
152 |
|
|
|
(45 |
) |
|
|
151 |
|
|
|
(274 |
) |
Stock-based compensation |
|
661 |
|
|
|
591 |
|
|
|
445 |
|
|
|
1,252 |
|
|
|
1,382 |
|
Amortization and depreciation |
|
746 |
|
|
|
630 |
|
|
|
748 |
|
|
|
1,376 |
|
|
|
1,644 |
|
Restructuring and severance |
|
- |
|
|
|
- |
|
|
|
201 |
|
|
|
- |
|
|
|
2,940 |
|
Total reconciling items included in GAAP net loss |
|
2,083 |
|
|
|
962 |
|
|
|
1,732 |
|
|
|
3,045 |
|
|
|
6,906 |
|
Adjusted EBITDA |
$ |
179 |
|
|
$ |
275 |
|
|
$ |
(1,231 |
) |
|
$ |
454 |
|
|
$ |
(4,982 |
) |
|
|
|
|
|
|
|
|
|
|
Investor Relations Contact:
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Media Contact:
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