Signed Transformative $145 Million Agreement on
April 2, 2024; Expected Closing in Q3 FY 2024, Subject to
Approvals
New President, IoT Solutions Joins Identiv;
Will Become CEO Post-Close of Transaction
Gross Margins Expand to Highest Levels since Q3
2021
Identiv, Inc. (NASDAQ: INVE), a global digital
security and identification leader in the Internet of Things (IoT),
today released its financial results for the first quarter ended
March 31, 2024.
Recent Financial and Operational Highlights
- Concluded strategic review with announcement of $145 million
asset purchase agreement (APA) transaction with security solutions
provider Vitaprotech; transaction expected to close in Q3 2024,
subject to regulatory and stockholder approvals and other customary
closing conditions.
- Welcomed Kirsten Newquist as President, IoT Solutions; Ms.
Newquist will become CEO at the close of asset sale.
- First quarter GAAP and non-GAAP gross margins were 37.3% and
39.9%, respectively, their highest levels since Q3 2021.
- Software, services, and recurring revenues grew to 27.4% of
Premises segment revenues in Q1 2024.
- Ended Q1 2024 with $22.4 million in cash, cash equivalents and
restricted cash.
- Continued the development of Thailand RFID production facility,
reflected by 40% of Q1 RFID volume being produced in Thailand.
- Shipped the majority of a previously announced $2 million
reader application order for a global online retailer.
- Secured 2-year contract with IoT customer for smart home
application.
- Showcased broad specialty IoT solutions portfolio at RFID
Journal Live trade show.
- Demonstrated Scramble Factor reader with multi-factor
authentication at ISC West trade show in Las Vegas.
- Joined Axia Institute at Michigan State University, a research
center focused on the transformation of today’s supply chains
across multiple industries, including healthcare.
- Expanded sales and pipeline of FIDO (Fast Identity Online)
dual-factor security keys, with new projects in Europe.
Asset Sale Transaction Summary
As previously announced, 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 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. The transaction is expected to
close in the third quarter of 2024, subject to stockholder approval
and other customary closing conditions. The transaction is also
subject to review and approval by the Committee on Foreign
Investment in the United States (CFIUS) and the Federal Trade
Commission under the Hart-Scott-Rodino (HSR) Act. The proceeds from
the sale will significantly strengthen Identiv’s financial
position, generating capital to fund the future growth of its
specialty IoT solutions business.
First Quarter 2024 Financial Summary
Revenue for the first quarter 2024 was $22.5 million, compared
to $29.0 million in the prior quarter and $26.0 million in the
first quarter of 2023. By segment, Identity revenues were $12.8
million and Premises revenues totaled $9.7 million.
First quarter 2024 GAAP gross margin was 37.3% and non-GAAP
gross margin was 39.9%.
GAAP operating expenses, including research and development,
sales, and marketing, and general and administrative, were $12.6
million in the first quarter of 2024, compared to $11.8 million in
the prior quarter and $11.9 million in the first quarter of 2023.
Non-GAAP operating expenses were $10.4 million in the first quarter
of 2024, compared to $9.8 million in the prior quarter and $10.6
million in the first quarter of 2023. Strategic transaction-related
costs excluded from first quarter 2024 non-GAAP operating expenses
totaled $1.0 million and excluded from fourth quarter 2023 non-GAAP
operating expenses totaled $0.4 million.
GAAP net loss for the first quarter 2024 was ($4.6) million, or
($0.21) per basic and diluted share, compared to GAAP net loss of
($1.6) million, or ($0.08) per basic and diluted share, in the
prior quarter and GAAP net loss of ($2.7) million, or ($0.13) per
basic and diluted share, in the first quarter of 2023.
Non-GAAP adjusted EBITDA in the first quarter of 2024 was ($1.4)
million, compared to $0.9 million in the prior quarter and ($0.9)
million in the first quarter of 2023.
Management Commentary
"In the first quarter, our total business net revenue was within
our guidance range, and we delivered our highest GAAP and non-GAAP
gross margins in ten quarters,” said Identiv CEO Steven Humphreys.
“We also brought in a world-class business leader, Kirsten
Newquist, who has the ideal profile to lead our IoT business. Our
previously announced strategic review culminated in a definitive
agreement signed on April 2. We believe this transaction positions
Identiv with a strong balance sheet to invest in the future growth
of our specialty IoT solutions business and look forward to its
expected close in the third quarter.”
Financial Outlook
Identiv provides guidance based on current market conditions and
expectations, including macroeconomic conditions and customer
demand. For fiscal Q2 2024, management currently expects total
company net revenues in the range of $23 million to $25 million,
with normal seasonality expected to continue.
Conference Call
Identiv management will hold a conference call today, May 8,
2024, at 5:00 p.m. EDT (2:00 p.m. PDT) to discuss the company’s
first quarter 2024 financial results. A question-and-answer session
will follow management's presentation.
Toll-Free: 877-545-0523 International Number: +1 973-528-0016
Call ID: 243006 Webcast link: Register and Join
The teleconference replay will be available through May 22,
2024, by dialing 877-481-4010 (Toll-Free Replay Number) or
919-882-2331 (International Replay Number) and entering passcode
50510.
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, interest
expense, net foreign currency gains (losses), net stock-based
compensation, amortization and depreciation, restructuring and
severance, gain on investment, and strategic review-related costs.
Non-GAAP operating expenses exclude stock-based compensation,
amortization and depreciation, and restructuring and severance. 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
second quarter guidance and outlook; Identiv’s strategy,
opportunities, focus and goals; Identiv’s expectations regarding
seasonality; expected benefits of Identiv’s production facility in
Thailand; expectations with respect to management and management
following the completion of the proposed transaction; Identiv’s
expectations with respect to the use of proceeds from the proposed
transaction; Identiv’s beliefs regarding access to future capital;
Identiv’s expectations relating to the growth of its IoT business;
and Identiv’s expectations with respect to demand and customer
orders. 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 failure of the proposed
transaction to close for any reason; 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, preliminary proxy
statement filed with the U.S. Securities and Exchange Commission
(the “SEC”) on April 30, 2024 and subsequent reports filed with the
SEC. All forward-looking statements are based on information
available to Identiv on the date hereof, and Identiv assumes no
obligation to update such statements.
Additional Information and Where to
Find It
On April 2, 2024, Identiv entered into a Stock and Asset
Purchase Agreement with Hawk Acquisition, Inc. (“Buyer”), whereby
Identiv agreed to sell its physical security business to Buyer (the
“Transaction”). Identiv has filed a preliminary proxy statement on
Schedule 14A with the SEC, in connection with its solicitation of
proxies for approval of the Transaction (the “Proxy Statement”).
The Proxy Statement is in preliminary form and Identiv intends to
file a definitive proxy statement. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT (INCLUDING ANY
AMENDMENTS OR SUPPLEMENTS THERETO) FILED BY IDENTIV AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE
CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT ANY SOLICITATION. Investors and security holders
may obtain copies of these documents and other documents filed with
the SEC by Identiv free of charge through the website maintained by
the SEC at www.sec.gov. Copies of the documents filed by Identiv
are also available free of charge in the “Investors—Financials”
section of Identiv’s website at
identiv.com/investors/financials.
Participants in the
Solicitation
Identiv, its directors, director nominees, certain of its
officers, and other members of management and employees (as set
forth below) are or may be deemed to be “participants” (each a
“Participant” and collectively, the “Participants”) in the
solicitation of proxies from stockholders of Identiv in connection
with the Transaction. Information about Identiv’s executive
officers and directors, including compensation, is set forth in the
sections entitled “Directors,” “Executive Officers,” “Compensation
of Directors,” and “Executive Compensation,” of Identiv’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2023, as
amended by Amendment No. 1 to the Annual Report on Form 10-K/A
filed with the SEC on April 29, 2024 (as amended, the “Annual
Report”), as well as Item 5.02 of its Current Reports on Form 8-K
filed with the SEC on April 3, 2024 and April 18, 2024. Information
about the ownership of common stock by Identiv’s executive officers
and directors is set forth in the section entitled “Security
Ownership of Certain Beneficial Owners and Management” of the
Annual Report. To the extent holdings by the directors and
executive officers of Identiv securities reported in the Annual
Report change, such changes will be reflected in Forms 3, 4 or 5 to
be filed with the SEC, as well as the section entitled “Security
Ownership of Certain Beneficial Owners and Management” of Identiv’s
definitive proxy statement, and other materials to be filed with
the SEC. All of these documents are or will be available free of
charge at the SEC’s website at www.sec.gov and in the
“Investors—Financials” section of Identiv’s website at
identiv.com/investors/financials. Each of Hawk Acquisition, Inc.
and Seven2 SAS (together, Vitaprotech) is or may be deemed to be a
Participant in the solicitation of proxies from stockholders of
Identiv in connection with the Transaction. Information about the
ownership of securities of Vitaprotech is set forth in the Schedule
13D filed by Vitaprotech on April 12, 2024. In addition, each of
Bleichroeder LP and Bleichroeder Holdings LLC (together,
“Bleichroeder”) is or may be deemed to be a Participant in the
solicitation of proxies from stockholders of Identiv in connection
with the Transaction. Information about the ownership of securities
of Bleichroeder is set forth in the section entitled “Security
Ownership of Certain Beneficial Owners and Management” of the
Annual Report and Amendment No. 2 to the Schedule 13D filed by
Bleichroeder on April 4, 2024. Any further changes will be
reflected in the section entitled “Security Ownership of Certain
Beneficial Owners and Management” of Identiv’s definitive proxy
statement, and other materials to be filed with the SEC.
Identiv, Inc. Condensed Consolidated Statements of
Operations (in thousands, except per share data) (unaudited)
Three Months Ended March 31, December
31, March 31,
2024
2023
2023
Net revenue
$
22,494
$
28,985
$
25,997
Cost of revenue
14,102
18,821
16,786
Gross profit
8,392
10,164
9,211
Operating expenses: Research and development
3,011
2,952
2,707
Selling and marketing
5,302
4,938
6,097
General and administrative
4,252
3,570
2,948
Restructuring and severance
22
338
191
Total operating expenses
12,587
11,798
11,943
Loss from operations
(4,195
)
(1,634
)
(2,732
)
Non-operating income (expense): Interest expense, net
(87
)
(76
)
(50
)
Foreign currency gains (losses), net
(256
)
209
89
Loss before income tax provision
(4,538
)
(1,501
)
(2,693
)
Income tax provision
(20
)
(103
)
(26
)
Net loss
(4,558
)
(1,604
)
(2,719
)
Cumulative dividends on Series B convertible preferred stock
(248
)
(319
)
(313
)
Net loss available to common stockholders
$
(4,806
)
$
(1,923
)
$
(3,032
)
Net loss per common share: Basic
$
(0.21
)
$
(0.08
)
$
(0.13
)
Diluted
$
(0.21
)
$
(0.08
)
$
(0.13
)
Weighted average shares used in computing net loss per
common share: Basic
23,368
23,248
22,794
Diluted
23,368
23,248
22,794
Identiv, Inc. Condensed Consolidated Balance Sheets
(in thousands) (unaudited)
March 31, December
31,
2024
2023
ASSETS Current assets: Cash and cash equivalents
$
21,623
$
23,312
Restricted cash
811
1,072
Accounts receivable, net of allowances
17,811
21,969
Inventories
28,460
28,712
Prepaid expenses and other current assets
4,159
4,421
Total current assets
72,864
79,486
Property and equipment, net
8,832
9,320
Operating lease right-of-use assets
4,756
5,214
Intangible assets, net
3,995
4,251
Goodwill
10,192
10,218
Other assets
1,150
1,234
Total assets
$
101,789
$
109,723
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities: Accounts payable
$
9,564
$
12,250
Financial liabilities
9,894
9,949
Operating lease liabilities
1,655
1,714
Deferred revenue
1,744
2,341
Accrued compensation and related benefits
2,099
2,334
Other accrued expenses and liabilities
2,351
2,194
Total current liabilities
27,307
30,782
Long-term operating lease liabilities
3,309
3,716
Long-term deferred revenue
981
927
Other long-term liabilities
26
26
Total liabilities
31,623
35,451
Total stockholders' equity
70,166
74,272
Total liabilities and stockholders' equity
$
101,789
$
109,723
Identiv, Inc. Reconciliation of GAAP to Non-GAAP
Financial Information (in thousands) (unaudited)
Three Months Ended March 31, December 31,
March 31,
2024
2023
2023
Reconciliation of GAAP gross margin to non-GAAP gross margin
GAAP gross profit
$
8,392
$
10,164
$
9,211
Reconciling items included in GAAP gross profit: Stock-based
compensation
47
60
45
Amortization and depreciation
547
491
385
Total reconciling items included in GAAP gross profit
594
551
430
Non-GAAP gross profit
$
8,986
$
10,715
$
9,641
Non-GAAP gross margin
40
%
37
%
37
%
Reconciliation of GAAP operating expenses to non-GAAP
operating expenses GAAP operating expenses
$
12,587
$
11,798
$
11,943
Reconciling items included in GAAP operating expenses: Stock-based
compensation
(972
)
(938
)
(945
)
Amortization and depreciation
(238
)
(241
)
(238
)
Strategic review-related costs
(953
)
(435
)
—
Restructuring and severance
(22
)
(338
)
(191
)
Total reconciling items included in GAAP operating expenses
(2,185
)
(1,952
)
(1,374
)
Non-GAAP operating expenses
$
10,402
$
9,846
$
10,569
Reconciliation of GAAP net income (loss) to non-GAAP
adjusted EBITDA GAAP net loss
$
(4,558
)
$
(1,604
)
$
(2,719
)
Reconciling items included in GAAP net loss: Income tax provision
20
103
26
Interest expense, net
87
76
50
Foreign currency gains (losses), net
256
(209
)
(89
)
Stock-based compensation
1,019
998
990
Amortization and depreciation
785
732
623
Strategic review-related costs
953
435
—
Restructuring and severance
22
338
191
Total reconciling items included in GAAP net loss
3,142
2,473
1,791
Non-GAAP adjusted EBITDA
$
(1,416
)
$
869
$
(928
)
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Investor Relations Contact: IR@identiv.com
Media Contact: press@identiv.com
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