Identiv(INVE) - 2024 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - GAAP revenue from the IoT business for Q2 2024 was $6.7 million, down from$11.5 million in Q2 2023, primarily due to lower sales of BLE transponder products [15][16] - GAAP net loss from the IoT business in Q2 2024 was $6.9 million, or$0.31 per share, compared to a net loss of $3.5 million, or$0.16 per share, in Q2 2023 [18] - Aggregated non-GAAP revenue for Q2 2024 was $24.3 million, down from$29.6 million in Q2 2023, attributed to lower sales of BLE transponder products [19] - Aggregated non-GAAP net loss for Q2 2024 was $6.2 million, compared to a net loss of$1.1 million in Q2 2023 [21] Business Line Data and Key Metrics Changes - The IoT business experienced a decrease in GAAP and non-GAAP gross margins, with Q2 2024 margins at 9.1% and 14.6% respectively, down from 14.2% and 16.6% in Q2 2023 [16] - Non-GAAP gross margin for the IoT business is expected to reach 26% to 28% post-transition to Thailand, with a long-term goal of over 30% [12][16] Market Data and Key Metrics Changes - The company is focusing on high-value and high-growth segments outside of healthcare, including smart home devices, smart packaging, and specialty retail, with expected growth rates of over 25% CAGR in RFID inlays for specialty retail applications [27] Company Strategy and Development Direction - The company aims to strengthen relationships with channel customers and shift to a collaborative partnership model, focusing on high-potential and sustainable opportunities [8][9] - A Stage Gate process is being implemented to manage new product development projects, ensuring they meet acceptance criteria before proceeding [10] - The company is exploring strategic options such as mergers, partnerships, and acquisitions to drive growth [14] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in closing the divestiture of the security business, expecting to add approximately $130 million in net cash post-transaction [5][22] - The company anticipates achieving EBITDA breakeven at$60 million to $70 million in annual sales, with a focus on scaling the IoT business [13][14] Other Important Information - The company exited Q2 2024 with$19 million in cash, a decrease of 5.4 million since December 31, 2023 [22] - The transition of RFID production from Singapore to Thailand is a key priority, with expectations to complete the majority of the transition by Q1 2025 [11][12] Q&A Session Summary Question: Are there any low-probability projects in the current pipeline? - Management confirmed that they are continuously assessing the new product development pipeline and will discontinue projects that do not meet the new criteria [34] Question: Does the 60 million to $70 million EBITDA target assume a gross margin of 26$14 million to $16 million in cash use over the next 12 months, with expectations of linear distribution across the quarters [39] Question: What is the outlook for sequential growth and seasonality? - Management noted that the seasonality previously seen in the combined business will change, with the IoT side expected to show a slight decline in Q3 revenue compared to Q2 [40]