Identiv(US:INVE)2023-05-09 21:07PART I. FINANCIAL INFORMATION Financial Statements (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 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 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 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 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 20223375 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, 20234950 - The company tested goodwill for impairment and noted no indicators of impairment during Q1 202344 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 inflation9398100 - The company operates in two segments: Identity (RFID, logical access) and Premises (physical access control, video surveillance)92 Results of Operations 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 costs120122124 Liquidity and Capital Resources 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 2022131 - 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, 2023132 - 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 facility137140 Quantitative and Qualitative Disclosures About Market Risk 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 Euro151 - 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, 2023153 Controls and Procedures 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 level157 - No material changes were made to the internal control over financial reporting during the three months ended March 31, 2023158 PART II. OTHER INFORMATION Legal Proceedings 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 uncertain159 Risk Factors 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-K160 Unregistered Sales of Equity Securities and Use of Proceeds 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 RSUs161 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 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 certifications163