Identiv, Inc. Q2 FY2024 earnings call

• Achieved three main goals in Q2: Kirsten Newquist made progress on IoT strategy, cleared most transaction hurdles, and revenues exceeded consensus. - IoT business is implementing a Stage Gate process for product development, progressing RFID production transition to Thailand (received ISO certifications), and phasing out low-margin business. - Transaction process: Cleared Antitrust, UK, and shareholder approval; remaining step is US CFIUS approval, expected within Q3. - Financially, cash position was better than forecasts, but had gross margin pressure due to mix in Security business and production transition to Thailand.

IoT Business: In Q2 2024, GAAP revenue was $6.7 million. Non-GAAP gross margin of the core IoT business is expected to almost double to 26%-28% once production shifts to Thailand, with a goal of 30%+ non-GAAP gross margin. GAAP operating expenses were $7.3 million, non-GAAP operating expenses $4.7 million. GAAP net loss was $6.9 million. Physical Security and Identity Reader (Discontinued): Aggregated non-GAAP revenue in Q2 2024 was $24.3 million. Aggregated non-GAAP gross margin was 35%, adjusted non-GAAP gross margin 37.3%.

• Q3 2024 IoT revenue expected $5.8M-$6.1M. - If transaction doesn't close by end of Q3, aggregated revenue from IoT and Physical Security expected $24M-$26M. - Expected net proceeds from asset sale ~$130M, net cash use next 12 months $14M-$16M.

• Regulatory risk related to CFIUS approval for the transaction. - Uncertainty around timing and outcome of regulatory approvals. - Impact of mix in Security business and production transition on gross margin.

Q: Jaeson Schmidt asked if there are projects in the pipeline deemed low probability and not meeting new criteria.

A: Kirsten Newquist said they assess the pipeline continuously and will discontinue projects not meeting criteria as they go through development.

Q: Stacy Che inquired about OpEx, Thailand headcount, cash burn, and seasonality.

A: Kirsten Newquist noted ramping up in Thailand with staff training, Justin Scarpulla said cash burn is linear over next 12 months, and Justin explained seasonality was related to Physical Security business which will be separate post-transaction