UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to ______ Commission File Number: 000-29440 IDENTIV, INC. (Exact Name of Registrant as Specified in its Charter) (State or other jurisdiction of incorpo ...

Identiv, Inc. (NASDAQ:INVE) Q2 2023 Earnings Conference Call August 3, 2023 5:00 PM ET Company Participants Steven Humphreys - Chief Executive Officer Justin Scarpulla - Chief Financial Officer Amir Khoshniyati - General Manager & Vice President-Transponder Business Manfred Mueller - Chief Operating Officer Conference Call Participants Craig Ellis - B. Riley Anthony Stoss - Craig-Hallum Jaeson Schmidt - Lake Street Operator Good afternoon. Welcome to Identiv's presentation of its Second Quarter Fiscal 2023 ...

PART I. FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) For the first quarter ended March 31, 2023, Identiv, Inc. reported total assets of $105.6 million and total liabilities of $32.0 million, with net revenue of $26.0 million and a net loss of $2.7 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2023, total assets increased to $105.6 million from $102.8 million at year-end 2022, primarily due to a rise in cash and inventories, while total liabilities grew to $32.0 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $20,804 | $16,650 | | Accounts receivable, net | $21,136 | $24,826 | | Inventories | $30,609 | $28,958 | | **Total Assets** | **$105,551** | **$102,765** | | **Current Liabilities** | | | | Accounts payable | $9,926 | $14,760 | | Financial liabilities, net | $9,941 | $— | | **Total Liabilities** | **$31,950** | **$27,371** | | **Total Stockholders' Equity** | **$73,601** | **$75,394** | [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) For the three months ended March 31, 2023, net revenue increased by 4% year-over-year to $26.0 million, but the net loss widened to $2.7 million, or ($0.13) per share, due to a 20% increase in total operating expenses Q1 2023 vs Q1 2022 Performance (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net revenue | $25,997 | $25,061 | | Gross profit | $9,211 | $8,966 | | Total operating expenses | $11,943 | $9,987 | | Loss from operations | $(2,732) | $(1,021) | | Net loss | $(2,719) | $(999) | | Net loss per share (Basic & Diluted) | $(0.13) | $(0.06) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2023, net cash used in operating activities was $4.7 million, primarily due to a larger net loss and unfavorable working capital changes, while financing activities provided $9.8 million from a revolving loan facility Cash Flow Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,698) | $(34) | | Net cash used in investing activities | $(1,225) | $(486) | | Net cash provided by (used in) financing activities | $9,752 | $(399) | | **Net increase (decrease) in cash** | **$4,030** | **$(1,119)** | | **Cash at end of period** | **$21,167** | **$28,688** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, showing strong revenue growth in the Americas, segment performance, the extension of a revolving loan facility, and no goodwill impairment - Revenue is disaggregated by geography, with the Americas region accounting for **83% of total net revenue** in Q1 2023, up from **67% in Q1 2022**[33](index=33&type=chunk)[75](index=75&type=chunk) Segment Net Revenue (in thousands) | Segment | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Identity | $14,678 | $14,579 | | Premises | $11,319 | $10,482 | | **Total** | **$25,997** | **$25,061** | - On February 8, 2023, the company amended its Loan Agreement with East West Bank, extending the maturity date of its revolving loan facility to February 8, 2025, with **$10.0 million outstanding** as of March 31, 2023[49](index=49&type=chunk)[50](index=50&type=chunk) - The company tested goodwill for impairment and noted **no indicators of impairment** during Q1 2023[44](index=44&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2023 revenue growth to segment performance and strong Americas sales, despite a slight gross margin decrease and a wider operating loss due to increased expenses, while affirming sufficient liquidity for the next 12 months - The company's performance is affected by the market adoption of RFID products, seasonality with stronger demand in the second half of the year, U.S Federal Government budget cycles, and macroeconomic conditions like supply chain challenges and inflation[93](index=93&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk) - The company operates in two segments: **Identity** (RFID, logical access) and **Premises** (physical access control, video surveillance)[92](index=92&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Q1 2023 revenue grew 4% to $26.0 million, driven by segment increases and a 28% surge in Americas revenue, despite a slight gross margin dip and a 20% rise in operating expenses, leading to a $2.7 million operating loss Q1 2023 vs Q1 2022 Results of Operations (in thousands) | Metric | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | **Net Revenue** | **$25,997** | **$25,061** | **4%** | | Identity | $14,678 | $14,579 | 1% | | Premises | $11,319 | $10,482 | 8% | | **Gross Profit** | **$9,211** | **$8,966** | **3%** | | Gross Margin | 35% | 36% | - | | **Total Operating Expenses** | **$11,943** | **$9,987** | **20%** | | **Loss from Operations** | **$(2,732)** | **$(1,021)** | **168%** | Geographic Net Revenue (in thousands) | Region | Q1 2023 | Q1 2022 | % Change | | :--- | :--- | :--- | :--- | | Americas | $21,628 | $16,891 | 28% | | Europe and the Middle East | $2,984 | $3,794 | (21%) | | Asia-Pacific | $1,385 | $4,376 | (68%) | | **Total** | **$25,997** | **$25,061** | **4%** | - The increase in operating expenses was driven by higher headcount and related payroll costs, increased stock-based compensation, and higher travel-related costs[120](index=120&type=chunk)[122](index=122&type=chunk)[124](index=124&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2023, the company had $49.4 million in working capital and $20.8 million in cash, using $4.7 million in operations cash but drawing $9.9 million from its revolving loan facility, which was extended to February 2025 - Working capital was **$49.4 million** as of March 31, 2023, a decrease from **$51.7 million** at year-end 2022[131](index=131&type=chunk) - The company amended its Loan Agreement with East West Bank, extending the maturity to February 8, 2025, and was in compliance with all financial covenants as of March 31, 2023[132](index=132&type=chunk) - Cash used in operations was **$4.7 million**, primarily due to the net loss of **$2.7 million** and unfavorable working capital changes, while cash from financing was **$9.8 million**, driven by borrowings under the revolving loan facility[137](index=137&type=chunk)[140](index=140&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from foreign currency exchange rate fluctuations, particularly with the Indian Rupee, Canadian Dollar, and Euro, with a hypothetical 10% adverse U.S Dollar movement estimated to result in a $1.3 million gain or loss - The company's main market risk is from foreign currency fluctuations, particularly with the Indian Rupee, Canadian Dollar, and Euro[151](index=151&type=chunk) - A sensitivity analysis showed that a hypothetical **10% adverse movement** in the U.S Dollar exchange rate would result in an estimated **$1.3 million** in foreign currency gains or losses as of March 31, 2023[153](index=153&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal control over financial reporting during Q1 2023 - The CEO and CFO concluded that as of March 31, 2023, the company's disclosure controls and procedures were **effective at the reasonable assurance level**[157](index=157&type=chunk) - No material changes were made to the internal control over financial reporting during the three months ended March 31, 2023[158](index=158&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings and claims arising in the ordinary course of business, the uncertain outcomes of which could materially affect its financial condition, results, or cash flows - The company is subject to various legal proceedings and claims arising in the ordinary course of business, the outcomes of which are uncertain[159](index=159&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - There have been **no material changes** from the risk factors disclosed in the company's 2022 Annual Report on Form 10-K[160](index=160&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2023, the company repurchased 24,812 shares of common stock at a weighted average price of $7.42 per share to satisfy tax withholding obligations related to vesting restricted stock units - In Q1 2023, the company repurchased **24,812 shares** of its common stock to satisfy tax withholding obligations from vesting RSUs[161](index=161&type=chunk) Issuer Purchases of Equity Securities (Q1 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jan 2023 | 13,388 | $7.38 | | Feb 2023 | 4,832 | $8.38 | | Mar 2023 | 6,592 | $6.79 | | **Total** | **24,812** | **$7.42** | [Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the Fourth Amendment to the Loan and Security Agreement and required CEO/CFO certifications - Key exhibits filed include the Fourth Amendment to the company's loan agreement and required CEO/CFO certifications[163](index=163&type=chunk)

Financial Data and Key Metrics Changes - In Q1 2023, the company reported net revenue of $26 million, a 4% increase compared to the same period in 2022, slightly above consensus estimates [81][82] - Non-GAAP adjusted EBITDA was a loss of $0.9 million in Q1 2023, compared to a gain of $0.2 million in Q1 2022, reflecting increased operating expenses [13] - GAAP net loss for Q1 2023 was $2.7 million or $0.13 per share, compared to a net loss of $1 million or $0.06 per share in Q1 2022 [13] - Non-GAAP adjusted gross profit margin was 37.1% in Q1 2023, consistent with the same period in 2022, while GAAP gross profit margin was 35.4% [82] Business Line Data and Key Metrics Changes - The Identity segment generated $14.7 million in revenue, accounting for 56% of total revenue, slightly up from $14.6 million in Q1 2022 [85] - The Premises segment revenue was $11.3 million, a year-over-year increase of 8% from $10.5 million in Q1 2022, with federal sales up 16% [86][91] - Non-GAAP adjusted gross margin for the Premises segment was 55% in Q1 2023, down from 57% in Q1 2022, primarily due to product mix [67] Market Data and Key Metrics Changes - The company shipped nearly 43 million IoT units in Q1 2023, with non-recurring engineering projects at 54%, primarily in medical and healthcare [60] - Demand for end-to-end security solutions increased, evidenced by a 30% rise in demos at the ISC West Trade Show [79] - The company maintained 100% customer retention in RFID in Q1, despite suspending business with one lower-margin customer as planned [76] Company Strategy and Development Direction - The company aims for disciplined growth in 2023 while strengthening its strategic position in both IoT and physical security sectors [3] - A long-term gross margin target of 35% to 40% in the Identity business and 55% to 60% in the Premises business has been set [5][67] - The company is focusing on expanding its competitive advantage in both IoT and physical security markets, which are critical solutions for customers [89] Management's Comments on Operating Environment and Future Outlook - Management noted that supply chain conditions have improved, with semiconductor prices dropping and availability increasing [41][93] - The company expects to work through its inventory and pay off its revolver in the second half of 2023 [15] - Management expressed confidence in the 2023 outlook, maintaining guidance with potential for accelerated growth and improved EBITDA margins [27] Other Important Information - The company is on track to begin production at its Thailand facility in July 2023, which is expected to reduce production costs [94] - The company is diversifying its supplier base to reduce dependence on a single chip supplier, enhancing its supply chain resilience [77] Q&A Session Summary Question: Any meaningful changes to the macro environment affecting guidance? - Management indicated that supply conditions have improved significantly, with semiconductor prices dropping and availability increasing [41] Question: Expectations for Premises segment growth in the next quarter? - Management anticipates sequential growth in the Premises segment, supported by federal government demand and the full solution ecosystem [32] Question: Discussion on the revolver debt taken out? - Management confirmed it is a revolver used as needed for working capital, with expectations to be unnecessary within the next three quarters [33][36]

Thursday, May 4, 2023, at 5:00PM EDT Safe Harbor Non-GAAP Financial Measures (Unaudited) This presentation contains trademarks, service marks, trade names and copyrights of Identiv and other companies, and are the property of their respective owners. Agenda 3 © 2023 Identiv, Inc. | All Rights Reserved | NASDAQ: INVE • Shipped 43 million units; maintained 100% RFID customer retention; supported 54 NRE projects • Chip availability improving; partnered with ProQure to launch new NFC Type 2 tags • Federal sales ...

PART I [ITEM 1. BUSINESS](index=3&type=section&id=ITEM%201.%20BUSINESS) Identiv is a global security technology company securing physical items and places through its Identity and Premises segments - Identiv's mission is to software-enable the entire physical world, securing both physical items (Identity segment) and physical places (Premises segment)[14](index=14&type=chunk)[15](index=15&type=chunk) - The Identity segment focuses on **RFID Internet of Things (IoT) devices** and software, enabling secure digital interaction for various applications[14](index=14&type=chunk)[16](index=16&type=chunk)[18](index=18&type=chunk) - The Premises segment provides physical security systems including identification, access control, video surveillance, and analytics[15](index=15&type=chunk)[20](index=20&type=chunk) - Key competitive advantages include **best-in-class designs**, patented technologies, vertical integration, and a comprehensive product line[21](index=21&type=chunk)[22](index=22&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) - Growth strategies involve pervasive deployment of high-end RFID devices and expanding its Premises platform to government and commercial markets[27](index=27&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk)[32](index=32&type=chunk)[34](index=34&type=chunk) - The company maintains global R&D facilities in Germany, Singapore/Southeast Asia, India, Vietnam, Mexico, and the U.S[37](index=37&type=chunk) - As of December 31, 2022, Identiv had **343 employees**, with 73 in R&D and 92 in sales and marketing[43](index=43&type=chunk) [ITEM 1A. Risk Factors](index=9&type=section&id=ITEM%201A.%20Risk%20Factors) The company faces risks from adverse economic conditions, supply chain disruptions, competition, technological change, and security breaches - Adverse global economic conditions, including **inflation and higher interest rates**, have negatively impacted demand and increased costs in fiscal year 2022[47](index=47&type=chunk)[48](index=48&type=chunk) - The company is vulnerable to **supply chain disruptions and component shortages**, such as the ongoing global semiconductor shortage[49](index=49&type=chunk) - Financial performance is highly dependent on the pace of **RFID market adoption**, which can cause significant revenue fluctuations[50](index=50&type=chunk) - Reductions or delays in **government security programs**, particularly in the U.S, could adversely affect revenues[52](index=52&type=chunk)[54](index=54&type=chunk) - The security technology market is **intensely competitive**, and rapid technological changes necessitate continuous product improvement[56](index=56&type=chunk)[60](index=60&type=chunk) - **Security breaches, product defects, and IT system failures** could damage reputation and incur substantial costs[61](index=61&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Global operations expose the company to risks such as **foreign currency fluctuations**, diverse legal compliance, and political instability[66](index=66&type=chunk)[68](index=68&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - Revenue and operating results are subject to **significant fluctuations**, making accurate forecasting difficult[74](index=74&type=chunk)[75](index=75&type=chunk) - The company's **stock price is volatile**, and future issuance of additional shares could dilute existing ownership interests[87](index=87&type=chunk)[88](index=88&type=chunk)[89](index=89&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=18&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments were reported[91](index=91&type=chunk) [ITEM 2. Properties](index=18&type=section&id=ITEM%202.%20Properties) The company leases global facilities, with corporate headquarters in Fremont, California and key sites in Germany, India, and Singapore - Corporate headquarters are in Fremont, California, and operational headquarters in Santa Ana, California[92](index=92&type=chunk) Major Facilities as of December 31, 2022 | Location | Function | Square Feet | Lease Expiration | | :--- | :--- | :--- | :--- | | Fremont, California | Corporate headquarters | 3,082 | November 2024 | | Santa Ana, California | Administration; manufacturing; research and development | 34,599 | January 2028 | | Sauerlach, Germany | European operations; research and development; sales | 5,156 | April 2026 | | Chennai, India | Research and development | 17,500 | September 2024 | | Singapore | RFID/NFC product manufacturing | 16,060 | May 2023 | [ITEM 3. Legal Proceedings](index=18&type=section&id=ITEM%203.%20Legal%20Proceedings) As of December 31, 2022, Identiv was not a party to any material legal proceedings - As of December 31, 2022, the company was **not a party to any material legal proceedings**[93](index=93&type=chunk) - Legal proceedings could result in material costs, divert management resources, and entail penalties[93](index=93&type=chunk) [ITEM 4. Mine Safety Disclosures](index=19&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to Identiv's business - Mine Safety Disclosures are not applicable[95](index=95&type=chunk) [Information About Our Executive Officers](index=19&type=section&id=Information%20About%20Our%20Executive%20Officers) This section provides brief biographies of CEO Steven Humphreys and CFO Justin Scarpulla - **Steven Humphreys** has served as CEO since September 2015 and as a director since July 1996[96](index=96&type=chunk) - **Justin Scarpulla** has served as CFO since December 2021, bringing extensive finance experience from various technology companies[97](index=97&type=chunk) PART II [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=20&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Identiv's stock (INVE) trades on Nasdaq; the company repurchased shares in Q4 2022 for tax obligations and does not pay dividends - Identiv's common stock is traded on The Nasdaq Capital Market under the symbol **"INVE"**[100](index=100&type=chunk) - As of March 2, 2023, there were **108 registered holders** of common stock[100](index=100&type=chunk) Issuer Purchases of Equity Securities (Q4 2022) | Period | Total number of shares purchased | Average price paid per share | | :--- | :--- | :--- | | October 1, 2022 – October 31, 2022 | 4,377 | $12.46 | | November 1, 2022 – November 30, 2022 | 4,500 | $11.47 | | December 1, 2022 – December 31, 2022 | 4,772 | $7.95 | | Total | 13,649 | $10.56 | - Shares repurchased were to satisfy tax withholding obligations for restricted stock units[102](index=102&type=chunk) - The company has **never declared or paid cash dividends** and intends to retain future earnings[102](index=102&type=chunk) [ITEM 6. [Reserved]](index=21&type=section&id=ITEM%206.%20%5BReserved%5D) This item is reserved and contains no information [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, net revenue grew 9% to $112.9 million, but a net loss of $0.392 million was reported due to higher operating expenses - Identiv's mission is to digitally enable every physical thing and place through its comprehensive technology solutions[111](index=111&type=chunk) - Financial performance is significantly influenced by the pace and depth of **RFID market adoption**[113](index=113&type=chunk) - The business experiences seasonality, with stronger demand typically in the **second half of the fiscal year**[118](index=118&type=chunk) - Macroeconomic conditions, including **inflation and supply chain challenges**, have impacted costs and customer orders[120](index=120&type=chunk)[121](index=121&type=chunk) Key Financial Highlights (2022 vs. 2021) | Metric | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Net Revenue | $112,915 | $103,769 | 9% | | Gross Profit | $40,944 | $37,067 | 10% | | Gross Profit Margin | 36% | 36% | 0% | | Loss from Operations | $(333) | $(1,347) | (75)% | | Income (Loss) before Income Tax Provision | $(291) | $1,648 | (118)% | | Net Income (Loss) | $(392) | $1,620 | (124)% | Net Revenue by Segment (2022 vs. 2021) | Segment | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Identity | $67,422 | $64,725 | 4% | | Premises | $45,493 | $39,044 | 17% | | Total | $112,915 | $103,769 | 9% | Gross Profit by Segment (2022 vs. 2021) | Segment | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Identity | $15,153 | $15,670 | (3)% | | Premises | $25,791 | $21,397 | 21% | | Total | $40,944 | $37,067 | 10% | Operating Expenses (2022 vs. 2021) | Expense Category | 2022 (in thousands) | 2021 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Research and Development | $9,916 | $8,673 | 14% | | Selling and Marketing | $20,730 | $17,033 | 22% | | General and Administrative | $10,429 | $11,891 | (12)% | | Restructuring and Severance | $202 | $817 | (75)% | | Total Operating Expenses | $41,277 | $38,414 | 7% | - **Cash used in operating activities was $7.8 million** in 2022, compared to cash provided of $1.2 million in 2021[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - **Cash used in investing activities increased to $3.9 million** in 2022 due to capital investments in manufacturing and R&D[155](index=155&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - **Cash used in financing activities was $1.0 million** in 2022, a significant change from $19.3 million provided in 2021 from a public offering[155](index=155&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - Working capital as of December 31, 2022, was **$51.7 million**, with cash and cash equivalents at $16.7 million[149](index=149&type=chunk) - The company's Loan and Security Agreement with East West Bank was amended in February 2023, extending the maturity date to February 2025[150](index=150&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Identiv is primarily exposed to market risks from fluctuations in foreign currency exchange rates - Identiv is primarily exposed to changes in currency exchange rates, particularly the **Indian Rupee, Canadian Dollar, and Euro**[198](index=198&type=chunk)[199](index=199&type=chunk) - A hypothetical **10% movement in foreign currency exchange rates** would result in increased gains or losses of $1.1 million as of December 31, 2022[200](index=200&type=chunk) - The company's exposure includes both **transaction exposure** and **translation exposure**[200](index=200&type=chunk)[201](index=201&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=36&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Identiv's audited consolidated financial statements and supplementary data for fiscal years 2020-2022 - The consolidated financial statements received an **unqualified opinion** from the independent auditor, BPM LLP[208](index=208&type=chunk)[209](index=209&type=chunk) - A critical audit matter identified was **inventory valuation**, due to significant management judgment in forecasting product demand[213](index=213&type=chunk)[214](index=214&type=chunk) Consolidated Balance Sheet Highlights (in thousands) | Metric | December 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Current Assets | $75,098 | $72,726 | | Total Assets | $102,765 | $96,663 | | Total Current Liabilities | $23,393 | $20,848 | | Total Liabilities | $27,371 | $22,151 | | Total Stockholders' Equity | $75,394 | $74,512 | Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Metric | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net Revenue | $112,915 | $103,769 | $86,920 | | Gross Profit | $40,944 | $37,067 | $33,681 | | Loss from Operations | $(333) | $(1,347) | $(3,448) | | Net Income (Loss) | $(392) | $1,620 | $(5,105) | | Basic EPS | $(0.07) | $0.02 | $(0.34) | | Diluted EPS | $(0.07) | $0.02 | $(0.34) | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | 2022 | 2021 | 2020 | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(7,807) | $1,228 | $(1,766) | | Net cash used in investing activities | $(3,872) | $(1,476) | $(1,564) | | Net cash provided by (used in) financing activities | $(1,039) | $19,341 | $4,853 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $(12,670) | $18,398 | $2,026 | | Cash, cash equivalents, and restricted cash, end of year | $17,137 | $29,807 | $11,409 | - The company adopted ASU No 2016-13 (Financial Instruments-Credit Losses) on January 1, 2022, with **no material impact**[257](index=257&type=chunk) - As of December 31, 2022, Identiv had federal NOL carryforwards of **$121.0 million**, fully offset by a valuation allowance[184](index=184&type=chunk)[296](index=296&type=chunk) - The company recognized a **net loss of $392 thousand in 2022**, compared to a net income of $1,620 thousand in 2021[220](index=220&type=chunk) [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=67&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure were reported[348](index=348&type=chunk) [ITEM 9A. Controls and Procedures](index=67&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022 - As of December 31, 2022, Identiv's **disclosure controls and procedures were deemed effective** at the reasonable assurance level[350](index=350&type=chunk) - Management concluded that the company's **internal control over financial reporting was effective** as of December 31, 2022[354](index=354&type=chunk)[355](index=355&type=chunk) - BPM LLP issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting[355](index=355&type=chunk)[359](index=359&type=chunk) - **No material changes** to internal control over financial reporting occurred during the fourth quarter of 2022[356](index=356&type=chunk) [ITEM 9B. Other Information](index=69&type=section&id=ITEM%209B.%20Other%20Information) This item states that there is no other information to report - No other information was reported[366](index=366&type=chunk) [ITEM 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections](index=69&type=section&id=ITEM%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdiction%20that%20Prevent%20Inspections) This item states that there are no disclosures regarding foreign jurisdictions that prevent inspections - No disclosures regarding foreign jurisdictions that prevent inspections were reported[367](index=367&type=chunk) PART III [ITEM 10. Directors, Executive Officers and Corporate Governance](index=70&type=section&id=ITEM%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, officers, and corporate governance is incorporated by reference from the 2023 Proxy Statement - Information on directors, executive officers, and corporate governance is **incorporated by reference** from the 2023 Proxy Statement[369](index=369&type=chunk) - **No waivers** under the Code of Conduct and Ethics have been granted to date[369](index=369&type=chunk) [ITEM 11. Executive Compensation](index=70&type=section&id=ITEM%2011.%20Executive%20Compensation) Details on executive compensation are incorporated by reference from the company's Proxy Statement - Executive compensation information is **incorporated by reference** from the Proxy Statement[370](index=370&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=70&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's Proxy Statement - Security ownership and equity compensation plan information is **incorporated by reference** from the Proxy Statement[371](index=371&type=chunk) [ITEM 13. Certain Relationships and Related Transactions, and Director Independence](index=70&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the company's Proxy Statement - Information on related transactions and director independence is **incorporated by reference** from the Proxy Statement[372](index=372&type=chunk) [ITEM 14. Principal Accountant Fees and Services](index=70&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) Details on principal accountant fees and services are incorporated by reference from the company's Proxy Statement - Information on principal accountant fees and services is **incorporated by reference** from the Proxy Statement[373](index=373&type=chunk) PART IV [ITEM 15. Exhibits and Financial Statement Schedule](index=70&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedule) This section lists all exhibits and financial statement schedules filed as part of the 10-K report - The section lists financial statements, schedules, and exhibits filed as part of the report[375](index=375&type=chunk) - Exhibits include corporate governance documents, incentive plans, loan agreements, and certifications[376](index=376&type=chunk)[377](index=377&type=chunk) [ITEM 16. Form 10-K Summary](index=72&type=section&id=ITEM%2016.%20Form%2010-K%20Summary) This item indicates that a Form 10-K summary is not applicable - Form 10-K Summary is not applicable[378](index=378&type=chunk) SIGNATURES [SIGNATURES](index=73&type=section&id=SIGNATURES) The report is duly signed by the CEO, CFO, and Board of Directors, affirming their authorization and responsibility - The report is signed by **Steven Humphreys (CEO)** and **Justin Scarpulla (CFO)** on March 15, 2023[381](index=381&type=chunk)[384](index=384&type=chunk) - Other directors, including **James E. Ousley (Chairman)**, also signed the report[384](index=384&type=chunk)

Identiv, Inc. (NASDAQ:INVE) Q4 2022 Earnings Conference Call March 2, 2023 5:00 PM ET Company Participants Steven Humphreys - Chief Executive Officer Justin Scarpulla - Chief Financial Officer Amir Khoshniyati - General Manager and Vice President-Transponder Business Conference Call Participants Craig Ellis - B. Riley Securities Brian Ruttenbur - Imperial Capital Jaeson Schmidt - Lake Street Anthony Stoss - Craig-Hallum Operator Good afternoon. Welcome to Identiv’s Presentation of its Fourth Quarter and Fis ...

IIDENTIV © 2023 Identiv, Inc. | All Rights Reserved | NASDAQ: INVE This presentation 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 refe ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for the period ended September 30, 2022, show an increase in total assets to $101.4 million, a net loss of $0.7 million for the nine months ended, and negative cash flow from operations of $3.0 million [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Balance Sheet Items (in thousands) | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,202 | $28,553 | | Accounts receivable, net | $23,588 | $19,963 | | Inventories | $25,060 | $19,924 | | **Total current assets** | **$74,456** | **$72,726** | | **Total assets** | **$101,400** | **$96,663** | | Accounts payable | $15,074 | $10,502 | | **Total current liabilities** | **$23,757** | **$20,848** | | **Total liabilities** | **$27,440** | **$22,151** | | **Total stockholders' equity** | **$73,960** | **$74,512** | - Total assets increased to **$101.4 million** as of September 30, 2022, from **$96.7 million** at year-end 2021, driven by increases in inventories and accounts receivable[10](index=10&type=chunk) - Total liabilities also grew to **$27.4 million** from **$22.2 million**, primarily due to higher accounts payable[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) | Income Statement (in thousands) | Q3 2022 | Q3 2021 | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $30,996 | $29,097 | $83,914 | $75,252 | | Gross profit | $11,188 | $11,118 | $30,364 | $27,650 | | Income (loss) from operations | $549 | $2,060 | $(733) | $531 | | Net income (loss) | $519 | $2,540 | $(731) | $3,541 | | Diluted EPS | $0.01 | $0.09 | $(0.07) | $0.12 | - For the nine months ended September 30, 2022, the company reported a net loss of **$731,000**, compared to a net income of **$3,541,000** in the same period of 2021, primarily due to the absence of a **$2,946,000** gain on PPP loan forgiveness in 2022[11](index=11&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity decreased slightly from **$74.5 million** at the end of 2021 to **$74.0 million** as of September 30, 2022, driven by a net loss of **$0.7 million** and an unrealized loss from foreign currency translation of **$1.5 million**, partially offset by **$2.6 million** in stock-based compensation[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Summary (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(3,014) | $5 | | Net cash used in investing activities | $(2,978) | $(1,312) | | Net cash provided by (used in) financing activities | $(896) | $19,560 | | **Net (decrease) increase in cash** | **$(7,907)** | **$17,809** | - Cash used in operating activities was **$3.0 million** for the first nine months of 2022, a significant shift from being cash neutral in the prior year, mainly due to a **$5.2 million** increase in inventories and a **$3.7 million** increase in accounts receivable[17](index=17&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Revenue by Geography (YTD, in thousands) | Region | YTD 2022 | YTD 2021 | | :--- | :--- | :--- | | Americas | $55,480 | $49,023 | | Europe and the Middle East | $11,473 | $9,309 | | Asia-Pacific | $16,961 | $16,920 | | **Total** | **$83,914** | **$75,252** | - Goodwill remained stable at **$10.2 million** as of September 30, 2022, with no indicators of impairment noted during the nine months ended[48](index=48&type=chunk)[49](index=49&type=chunk) Segment Performance (YTD, in thousands) | Segment | Net Revenue | Gross Profit | Gross Margin | | :--- | :--- | :--- | :--- | | **2022** | | | | | Identity | $50,647 | $11,459 | 23% | | Premises | $33,267 | $18,905 | 57% | | **2021** | | | | | Identity | $47,199 | $12,133 | 26% | | Premises | $28,053 | $15,517 | 55% | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 12% year-over-year revenue growth for the first nine months of 2022 to strong performance in the Premises segment (up 19%) and moderate growth in the Identity segment (up 7%), with stable gross margin at 36% and increased operating expenses leading to an operating loss of $0.7 million, while liquidity remains solid with $21.2 million in cash and access to a $20.0 million revolving credit facility [Overview](index=24&type=section&id=Overview) - Identiv is a global provider of secure identification and physical security, leveraging RFID, NFC, and cybersecurity technologies for the Internet of Things (IoT) market[96](index=96&type=chunk)[97](index=97&type=chunk) - The company operates through two reportable business segments: Identity (secure access to information, RFID) and Premises (access control, video surveillance, analytics)[99](index=99&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Financial Highlights (YTD 2022 vs YTD 2021, in thousands) | Metric | YTD 2022 | YTD 2021 | % Change | | :--- | :--- | :--- | :--- | | Net Revenue | $83,914 | $75,252 | 12% | | Gross Profit | $30,364 | $27,650 | 10% | | Total Operating Expenses | $31,097 | $27,119 | 15% | | Income (Loss) from Operations | $(733) | $531 | (238%) | - Identity segment revenue grew **7%** YTD, driven by higher sales of RFID transponders, though gross margin decreased from **26%** to **23%** due to product mix and investments in manufacturing[115](index=115&type=chunk)[123](index=123&type=chunk) - Premises segment revenue grew **19%** YTD, driven by higher sales of Hirsch Velocity hardware, software, and video products, with gross margin improving from **55%** to **57%** due to product mix and logistical efficiencies[118](index=118&type=chunk)[119](index=119&type=chunk)[124](index=124&type=chunk) - Operating expenses increased across the board for the nine months ended Sep 30, 2022: R&D up **16%**, Selling & Marketing up **24%**, and G&A up **7%**, primarily due to higher headcount and related costs[128](index=128&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2022, the company had working capital of **$50.7 million** and a cash and cash equivalents balance of **$21.2 million**[140](index=140&type=chunk) - The company maintains a **$20.0 million** non-formula revolving loan facility with East West Bank, maturing in February 2023, with no amounts outstanding as of September 30, 2022[142](index=142&type=chunk) - Management believes existing cash, cash from operations, and available credit will be sufficient to fund operations for the next 12 months[145](index=145&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is from foreign currency exchange rate fluctuations, as it conducts operations in currencies like the Indian Rupee, Canadian Dollar, and Euro, affecting both transaction gains/losses and the translation of foreign subsidiary financial statements, with a hypothetical 10% movement in the U.S. Dollar resulting in a $0.8 million impact on foreign currency gains or losses - The company is primarily exposed to market risk from changes in foreign currency exchange rates, including the Indian Rupee, Canadian Dollar, and Euro[159](index=159&type=chunk) - A sensitivity analysis as of September 30, 2022, indicated that a hypothetical **10%** movement in the U.S. Dollar exchange rate would result in an incremental gain or loss of **$0.8 million**[161](index=161&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) The company's management, including the CEO and CFO, evaluated the disclosure controls and procedures as of September 30, 2022, concluding their effectiveness at a reasonable assurance level, with no material changes to internal control over financial reporting during the third quarter of 2022 - The Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective at the reasonable assurance level[165](index=165&type=chunk) - No material changes were made to the company's internal control over financial reporting during the three months ended September 30, 2022[167](index=167&type=chunk) [PART II. OTHER INFORMATION](index=35&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it may be subject to various legal proceedings and claims that arise in the ordinary course of business, with uncertain outcomes that could potentially have a material effect on its financial condition - The company is, and may become, subject to various legal proceedings and claims arising in the ordinary course of business, the outcomes of which cannot be predicted with certainty[168](index=168&type=chunk) [Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) The company highlights that adverse global and regional economic conditions pose a material risk to its business, including inflation, foreign currency fluctuations, and economic slowdown, which have already caused delays and reductions in customer orders, supply chain challenges, and increased costs for materials and transportation in the third quarter of 2022 - Adverse global economic conditions, including inflation, currency fluctuations, and economic slowdowns, may materially and adversely affect the company's business, results, and financial condition[170](index=170&type=chunk) - In Q3 2022, the company experienced negative impacts from macroeconomic conditions, including delays in customer orders, component shortages, and increased costs of materials and shipping[171](index=171&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the third quarter of 2022, the company repurchased 19,963 shares of its common stock to satisfy employee tax withholding obligations related to the vesting of restricted stock units (RSUs), not as part of a publicly announced buyback program - In the three months ended September 30, 2022, the company repurchased **19,963** shares of its common stock, which were surrendered by employees to satisfy tax withholding obligations upon the vesting of restricted stock units[174](index=174&type=chunk) [Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include certifications from the CEO and CFO as required by the Sarbanes-Oxley Act, and Inline XBRL data files for financial reporting - The exhibits filed with this report include CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act of 2002, as well as Inline XBRL documents[176](index=176&type=chunk)

Identiv, Inc. (NASDAQ:INVE) Q3 2022 Earnings Conference Call November 2, 2022 5:00 PM ET Company Participants Steve Humphreys - Chief Executive Officer Justin Scarpulla - Chief Financial Officer Amir Khoshniyati - General Manager and Vice President-Transponder Business Conference Call Participants Jaeson Schmidt - Lake Street Anthony Stoss - Craig-Hallum Mike Latimore - Northland Capital Craig Ellis - B. Riley Securities Brian Ruttenbur - Imperial Capital Operator Good afternoon. Welcome to Identiv’s Presen ...