Identiv Reports Third Quarter 2019 Results

FREMONT, Calif., Nov. 07, 2019 (GLOBE NEWSWIRE) — Identiv, Inc. (NASDAQ: INVE), a global provider of physical security and secure identification, reported financial results for the third quarter ended September 30, 2019. 

Recent Financial and Operational Highlights

Third Quarter 2019 Financial Results

Revenue for the third quarter of 2019 was $23.0 million, an increase of 15% from $20.0 million in the third quarter of 2018 and an increase of 4% from $22.2 million in the second quarter of 2019.

Revenue in the Premises segment increased 38% from the third quarter of 2018 and increased 22% from the prior quarter to $12.9 million. Revenue in the Identity segment decreased 5% from the third quarter of 2018 and decreased 13% from the prior quarter to $10.1 million. The year-over-year increase in the Premises segment was mainly driven by strong demand for physical access security solutions, video analytics software, and strong federal government sales. The year-over-year decrease in the Identity segment primarily reflects higher RFID sales which grew 11% year-over-year, offset by delays in Thursby software sales to the DoD and a planned reduction in identity card sales towards higher margin, higher security identities.

GAAP gross margin was 46% in the third quarter of 2019, an increase of 334 basis points compared to 42% in the third quarter of 2018 and an increase from 44% in the second quarter of 2019. The year-over-year gross margin improvement is primarily attributable to the change in product mix, including a higher percentage of software and services sales compared to the prior year.

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 $9.3 million in the third quarter of 2019, compared to $8.6 million in the third quarter of 2018, an increase in fair value of earnout liability, and $9.1 million in the second quarter of 2019, reflecting a year-over-year increase of 7% and a sequential increase of 2%, respectively.

Non-GAAP operating expenses (adjusted to exclude restructuring and severance costs and certain non-cash charges, such as stock-based compensation, depreciation and amortization as well as other non-GAAP items consisting of acquisition-related transaction costs) for the third quarter of 2019 were $7.9 million, compared to $7.2 million in the third quarter of 2018 and $7.8 million in the second quarter of 2019.

GAAP net income attributable to Identiv, Inc. was $1.1 million in the third quarter of 2019, compared to a net loss of $(0.3) million in the third quarter of 2018, and net income of $0.4 million in the second quarter of 2019.

GAAP net income attributable to common stockholders per share (EPS) was $0.05 in the third quarter of 2019, compared to a net loss of $(0.02) per share in the third quarter of 2018 and net income of $0.01 per share in the second quarter of 2019. GAAP net income attributable to common stockholders in the third quarter of 2019 includes the accretion of dividends on the Series B preferred stock, which the Company accrues quarterly beginning 2019.  

Non-GAAP adjusted EBITDA in the third quarter of 2019 was $3.0 million, an increase of approximately 81% compared to $1.7 million in the third quarter of 2018, and $2.4 million in the second quarter of 2019. The year-over-year increase reflects higher revenues as well as higher gross margins, which were offset slightly by higher operating expenses.

Cash was $11.1 million at September 30, 2019, compared to $14.2 million at September 30, 2018, and $11.1 million at June 30, 2019. 

Financial Outlook

For the fiscal year ending December 31, 2019, the Company now expects revenue of $88 million to $90 million (previously $92 million to $95 million), representing an increase of 14% at the midpoint compared to fiscal 2018. The Company has increased the midpoint of its adjusted EBITDA guidance to $8.5 million and $9.0 million (previously $7.0 million to $9.0 million) and increased its net income attributable to Identiv, Inc. guidance to $1.0 million to $1.2 million (previously a loss of $0.5 million to a gain of $1.0 million) and earnings per basic share of $0.00 to $0.01.

The Company also introduced guidance for fiscal 2020, ending December 31, 2020. The Company expects growth in the mid-teens (14-16%), resulting in expected revenue of $100 million to $104 million, non-GAAP adjusted EBITDA of $12 million to $14 million, net income attributable to Identiv, Inc. of $4.5 million to $6.5 million and earnings per basic share of $0.20 to $0.31.

Management Commentary

“The third quarter continued our momentum from the first half of the year, particularly our expanded profitability. The 38% Premises growth demonstrates the strength of our Total Solution strategy, and the net income expansion ahead of projections validates the leverage within our business model. As we grow, a substantial portion of incremental revenues contributes to the bottom line. The return of our RFID business to 11% year-over-year growth reflects the strength across our segments. Particularly important is the 8% of revenues which were recurring revenues, and the 42% growth in software and services, both of which contribute to our expanding profitability. In the market, we had an exceptionally well-received presence at GSX, where our Total Solution proved to be both unique and attractive to a wide range of customers. Our range of mobile and web apps expanded to nearly a dozen, and our channel-friendly cloud services pilots have been very strongly embraced. These all contribute to our confidence in the higher growth rates and profitability that we’re projecting for 2020.” 

Sandra Wallach, Identiv CFO, added: “During Q3, we grew revenue 15% and achieved positive GAAP net income attributable to common stockholders and positive EPS for the second consecutive quarter. We also achieved our 13th consecutive quarter of positive adjusted EBITDA. The fact that we achieved these results despite greater than anticipated fluctuations in our Identity business due almost exclusively to some variance in Thursby indicate that we are not only effectively managing costs but continue to be well positioned for even greater leverage going forward. We remain confident that executing on our key initiatives will ultimately result in greater scale, operating expense leverage, higher margins, and improving profitability.”

Conference Call

Identiv management will hold a conference call today (November 7, 2019) at 5 PM ET (2 PM PT) to discuss these financial results. A question and answer session will follow management‘s presentation.

Toll-Free Number:
International Number:
Call ID: 10007879
Webcast link:

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please Gateway Investor Relations at +.

The conference call will be broadcast simultaneously and available for replay .

The replay of the call will be available after 8:00 p.m. Eastern time on the same day through December 7, 2019 under + (Toll-Free Replay Number) and + (International Replay Number) with Replay ID: 10007879.

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, video analytics and a wide range of RFID-enabled applications. Customers in the government, enterprise, consumer, education, healthcare, banking, retail, 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 .

Non-GAAP Financial Measures (Unaudited)

This press release includes financial information that has not been prepared in accordance with GAAP, including non-GAAP adjusted EBITDA, 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 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 adjusted EBITDA discussed above exclude items that are included in GAAP net income (loss), GAAP operating expenses, and GAAP gross margin, and excludes provision for income taxes, net income attributable to noncontrolling interest, interest expense, foreign currency (gains) losses, stock-based compensation, amortization and depreciation, increase in fair value of earnout liability, acquisition related transaction costs, and restructuring and severance. Non-GAAP operating expenses exclude stock-based compensation, amortization and depreciation, increase in fair value of earnout liability, acquisition related transaction costs 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 “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 2019 and 2020 guidance, the Company’s beliefs regarding the benefits of its acquisitions, the Company’s beliefs regarding its ability to achieve its business and strategic objectives and expected benefits thereof, the drivers of momentum in its business, the Company’s belief that by continuing to execute on its key initiatives, it will realize greater scale, operating expense leverage, higher margins and improving profitability, the Company’s belief that it is continuing to manage costs efficiently, and the Company’s beliefs regarding the benefits and attributes of its platform and products, and its status in the market and with customers 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, actual results for fiscal 2019 and beyond, the Company’s ability to continue the momentum in its business, its ability to successfully execute its business strategy, the actual benefits achieved through acquisitions, the level and timing of customer orders, the success of its products and partnerships, industry trends and seasonality, and factors discussed in its public reports, including its Annual Report on Form 10-K for the year ended December 31, 2018 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.

Investor Relations :
Matt Glover and Charlie Schumacher
Gateway Investor Relations

IR

Media :
press

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, September 30,   2019   2019   2018   2019   2018  Net revenue$23,026  $22,237  $20,022  $64,785  $56,844  Cost of revenue 12,500   12,354   11,538   35,672   33,699  Gross profit 10,526   9,883   8,484   29,113   23,145  Operating expenses:          Research and development 2,125   2,078   1,860   6,229   5,384  Selling and marketing 4,470   4,721   3,915   13,689   12,176  General and administrative 2,591   2,279   2,641   7,492   7,952  Increase in fair value of earnout liability 175   —   —   175   —  Restructuring and severance (87)  (2)  223   (101)  591    Total operating expenses 9,274   9,076   8,639   27,484   26,103  Income (loss) from operations 1,252   807   (155)  1,629   (2,958) Non-operating income (expense):          Interest expense, net (246)  (241)  (291)  (766)  (1,239) Loss on extinguishment of debt —   —   —   —   (1,369) Foreign currency gains (losses), net 168   (70)  200   96   354  Income (loss) before income taxes and noncontrolling interest 1,174   496   (246)  959   (5,212) Income tax provision (105)  (80)  (41)  (289)  (121) Net income (loss) 1,069   416   (287)  670   (5,333) Less: Income attributable to noncontrolling interest —   —   —   —   (5) Net income (loss) attributable to Identiv, Inc. 1,069   416   (287)  670   (5,338) Cumulative dividends on Series B preferred stock (262)  (259)  —   (779)  —  Net income (loss) attributable to common stockholders$807  $157  $(287) $(109) $(5,338)            Net income (loss) per share:          Basic$0.05  $0.01  $(0.02) $(0.01) $(0.34) Diluted$0.05  $0.01  $(0.02) $(0.01) $(0.34)            Weighted average shares used in computing net income (loss) per common share:          Basic 17,006   16,953   15,750   16,933   15,484  Diluted 17,766   17,795   15,750   16,933   15,484             

Identiv, Inc.  Consolidated Balance Sheets (in thousands)           September 30, June 30, March 31, December 31,   2019  2019  2019  2018          ASSETS        Current assets:        Cash$11,052 $11,117 $8,930 $10,866 Accounts receivable, net of allowances 19,261  17,560  15,456  14,952 Inventories 13,964  13,588  12,460  13,631 Prepaid expenses and other assets 2,812  2,931  2,361  2,743 Total current assets 47,089  45,196  39,207  42,192 Property and equipment, net 2,202  2,425  2,669  2,624 Operating lease right-of-use assets 5,133  5,525  5,970  — Intangible assets, net 10,722  11,378  11,997  10,980 Goodwill 10,128  10,138  10,441  9,286 Other assets 1,216  1,188  1,322  1,224 Total assets$76,490 $75,850 $71,606 $66,306          LIABILITIES AND STOCKHOLDERS´ EQUITY        Current liabilities:        Accounts payable$7,596 $8,211 $6,304 $5,654 Current portion – payment obligation 1,192  1,122  1,050  1,025 Current portion – financial liabilities 14,812  13,222  11,787  11,554 Operating lease liabilities 1,914  1,880  2,067  — Notes payable —  —  —  2,000 Deferred revenue 2,880  3,052  2,779  2,174 Accrued compensation and related benefits 1,853  1,866  1,779  1,794 Other accrued expenses and liabilities 4,179  4,696  4,165  5,277 Total current liabilities 34,426  34,049  29,931  29,478 Long-term payment obligation 860  1,216  1,569  1,860 Long-term operating lease liabilities 3,409  3,827  4,072  — Long-term deferred revenue 685  660  625  636 Other long-term liabilities 366  558  559  632 Total liabilities 39,746  40,310  36,756  32,606 Total stockholders´ equity 36,744  35,540  34,850  33,700 Total liabilities and stockholders´equity$76,490 $75,850 $71,606 $66,306          

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, September 30,   2019   2019   2018   2019   2018  Reconciliation of GAAP gross profit margin and non-GAAP gross profit margin           GAAP cost of revenue$12,500  $12,354  $11,538  $35,672  $33,699  Reconciling items included in GAAP cost of revenue:          Stock-based compensation (35)  (34)  (22)  (98)  (64) Amortization and depreciation (340)  (338)  (320)  (980)  (934) Total reconciling items included in GAAP cost of revenue (375)  (372)  (342)  (1,078)  (998) Non-GAAP cost of revenue$12,125  $11,982  $11,196  $34,594  $32,701  Non-GAAP gross profit margin 47%  46%  44%  47%  42%            Reconciliation of GAAP operating expenses to non-GAAP operating expenses          GAAP operating expenses$9,274  $9,076  $8,639  $27,484  $26,103  Reconciling items included in GAAP operating expenses:          Stock-based compensation (654)  (659)  (681)  (1,971)  (1,923) Amortization and depreciation (614)  (560)  (481)  (1,724)  (1,428) Increase in fair value of earnout liability (175)  —   —   (175)  —  Acquisition related transaction costs (19)  (16)  (84)  (93)  (605) Restructuring and severance 87   2   (223)  101   (591) Total reconciling items included in GAAP operating expenses (1,375)  (1,233)  (1,469)  (3,862)  (4,547) Non-GAAP operating expenses$7,899  $7,843  $7,170  $23,622  $21,556             Reconciliation of GAAP net income (loss) to non-GAAP adjusted EBITDA          GAAP net income (loss) attributable to Identiv, Inc.$1,069  $416  $(287) $670  $(5,338) Reconciling items included in GAAP net income (loss):          Provision for income taxes 105   80   41   289   121  Net income attributable to noncontrolling interest —   —   —   —   5  Interest expense, net 246   241   291   766   1,239  Loss on extinguishment of debt —   —   —   —   1,369  Foreign currency (gains) losses, net (168)  70   (200)  (96)  (354) Stock-based compensation 689   693   703   2,069   1,987  Amortization and depreciation 954   898   801   2,704   2,362  Increase in fair value of earnout liability 175   —   —   175   —  Acquisition related transaction costs 19   16   84   93   605  Restructuring and severance (87)  (2)  223   (101)  591   Total reconciling items included in GAAP net income (loss) 1,933   1,996   1,943   5,899   7,925   Non-GAAP adjusted EBITDA$3,002  $2,412  $1,656  $6,569  $2,587             Reconciliation of GAAP net cash (used in) provided by operating activities to non-GAAP free cash flow          GAAP net cash (used in) provided by operating activities$(1,053) $934  $(433) $1,370  $(3,011) Capital expenditures (97)  (40)  (417)  (202)  (634) Non-GAAP free cash flow$(1,150) $894  $(850) $1,168  $(3,645)