Identiv(INVE) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Unaudited Q1 2021 financial statements show a 22% net revenue increase to $22.2 million, a $1.5 million net loss, and improved operating cash flow Condensed Consolidated Balance Sheets As of March 31, 2021, total assets were $78.3 million, liabilities $45.3 million, and stockholders' equity $33.0 million Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $11,518 | $11,409 | | Total current assets | $52,802 | $53,445 | | Total assets | $78,266 | $78,677 | | Liabilities & Equity | | | | Total current liabilities | $42,717 | $41,573 | | Total liabilities | $45,286 | $44,488 | | Total stockholders' equity | $32,980 | $34,189 | | Total liabilities and stockholders' equity | $78,266 | $78,677 | Condensed Consolidated Statements of Comprehensive Loss Q1 2021 net revenue increased 22% to $22.2 million, with net loss narrowing to $1.5 million and improved loss per share Q1 2021 vs Q1 2020 Performance (in thousands, except per share data) | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net revenue | $22,162 | $18,120 | | Gross profit | $7,692 | $7,500 | | Loss from operations | $(1,222) | $(1,849) | | Net loss | $(1,465) | $(2,047) | | Net loss per share (Basic & Diluted) | $(0.09) | $(0.13) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased to $33.0 million by March 31, 2021, primarily due to a $1.5 million net loss - Stockholders' equity decreased by $1.2 million during Q1 2021, from $34,189 thousand to $32,980 thousand[13] - The main drivers for the decrease in equity were the net loss of $1,465 thousand and an unrealized loss from foreign currency translation of $283 thousand[13] Condensed Consolidated Statements of Cash Flows Q1 2021 net cash used in operations improved to $0.4 million, with investing activities using $1.1 million and financing providing $2.0 million Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(411) | $(3,709) | | Net cash used in investing activities | $(1,131) | $(137) | | Net cash provided by financing activities | $1,963 | $3,412 | | Net increase (decrease) in cash | $109 | $(687) | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail accounting policies, revenue disaggregation, financial liabilities, segment performance, and a $37.9 million subsequent stock offering - Revenue disaggregated by geography shows Americas at 68% and Asia-Pacific growing to 21% YoY in Q1 2021, with $21.3 million recognized at a point-in-time[36][93] - As of March 31, 2021, total financial liabilities were $22.5 million, including a $16.8 million revolving loan facility and a $2.9 million PPP loan[56] - Subsequent to quarter-end, on April 7, 2021, the company raised net proceeds of approximately $37.9 million from a public stock offering[104] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 22% Q1 2021 revenue growth to the Identity segment, despite a gross margin decline, with liquidity strengthened by a $37.9 million stock offering Overview and Segments Identiv provides secure identification and physical security through two segments: Identity and Premises - The company's mission is to digitally enable physical objects and places, creating smart physical security[111] - Operations are organized into two segments: Identity and Premises[112] Results of Operations Q1 2021 net revenue increased 22% to $22.2 million, driven by 38% Identity segment growth, with gross margin declining to 35% Segment Performance Q1 2021 vs Q1 2020 (in thousands) | Segment | Net Revenue 2021 | Net Revenue 2020 | % Change | Gross Profit 2021 | Gross Profit 2020 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Identity | $13,658 | $9,886 | 38% | $3,359 | $2,974 | 13% | | Premises | $8,504 | $8,234 | 3% | $4,333 | $4,526 | (4%) | | Total | $22,162 | $18,120 | 22% | $7,692 | $7,500 | 3% | - Overall gross profit margin decreased to 35% from 41% YoY, primarily due to a product mix shift towards lower-margin RFID transponders[129][130] - Total operating expenses decreased by 5% YoY, driven by lower R&D, Selling & Marketing, and G&A costs[123] Liquidity and Capital Resources As of March 31, 2021, cash was $11.5 million, with liquidity bolstered by a $37.9 million April 2021 stock offering - On April 7, 2021, the company sold 3,779,342 shares of common stock, receiving net proceeds of approximately $37.9 million[148][162] - The company amended its Loan and Security Agreement with East West Bank on February 8, 2021, providing for a $20.0 million revolving loan facility[149] - The company repaid the remaining $2.8 million principal on its promissory notes to April 21 Funds on April 13, 2021[157] - The company has a $2.9 million loan under the Paycheck Protection Program (PPP), expected to be forgiven in 2021[159] Quantitative and Qualitative Disclosures About Market Risk Disclosure for this item is not required as the company qualifies as a smaller reporting company - Disclosure for this item is not required[173] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[175] - No material changes were made to internal control over financial reporting during Q1 2021[176] PART II. OTHER INFORMATION Legal Proceedings The company may face legal claims in the ordinary course of business, with uncertain outcomes - The company may become subject to claims arising in the ordinary course of business, with uncertain outcomes[177] Risk Factors No material changes to risk factors from 2020 10-K, but a new risk highlights supply chain dependency and potential disruption - No material changes from the risk factors disclosed in the 2020 Annual Report on Form 10-K, other than an added risk[178] - A new risk factor highlights vulnerability to supply disruption from reliance on suppliers, citing the 2021 global semiconductor shortage[179] Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2021, the company repurchased 25,327 common shares to satisfy tax withholding for RSU vesting - In Q1 2021, the company repurchased 25,327 shares of common stock to satisfy tax withholding obligations for RSU vesting[180] Exhibits This section lists exhibits filed with the Form 10-Q, including a waiver, CEO/CFO certifications, and XBRL data files - The report includes exhibits such as a waiver, CEO/CFO certifications, and XBRL data files[182]