Identive Group Announces 4Q, Fiscal 2011 Results

Identive Group, Inc. announced results for the fourth quarter (Q4) and year ended Dec. 31, 2011.

Highlights of 2011 included:
• 21% revenue growth to $102.7 million
• Delivery of a broad range of near field communications (NFC) infrastructure products globally, including multiple types of NFC tags, tag customization, readers, tokens and software development kits
• Launch of idOnDemand Software as a Service (SaaS)-based credential management solution
• Expansion of IP portfolio to address larger and emerging growth markets, including radio frequency identification (RFID) tags, smart card manufacturing and innovative credential management products
• 80% expansion in transponder manufacturing capacity
• Significant improvement in cash performance

“2011 was a year of important accomplishments for Identive,” said Ayman S. Ashour, chairman and CEO of Identive. “Our diverse revenue base enabled us to achieve strong growth despite an estimated $3.6 million decline in sales to the U.S. government sector, which continued to experience budget uncertainties and resulting project delays. Building on our unique expertise in both RFID and smart card technologies, we have positioned ourselves as a leading infrastructure player in the emerging NFC ecosystem. Our launch of idOnDemand as a pioneering Identity as a service solution is gaining traction and spinning off innovative technology to enhance our product offerings. Increased investment in R&D has generated new patent pending-technology that, together with our increased transponder production capacity, will allow us to expand our addressable markets for physical access and cyber security. We also made significant improvements particularly in the last two quarters in our cash performance, which increasingly allows us to fund our growth from our own operations.”

Revenue for the full year 2011 was $102.7 million, up 21% from $84.8 million in 2010 and reflecting organic growth outside the U.S. government market of 17%, as well as growth from acquisitions.

Revenue from Identive’s Identity Management services and solutions segment was $56.5 million in 2011, up 19% from $47.5 million in 2010 and benefitting from strong sales of credential management solutions to support consumer and citizen ID programs and growing demand in the education market and for payment applications. This growth was offset by a decline in sales of enterprise security and identity management systems to the U.S. Government due to ongoing budget uncertainty and project delays.

Revenue from the company’s ID Product segment was $46.2 million in 2011, up 24% compared with $37.3 million in 2010, driven by a 64% increase in sales of RFID transponder inlays, tags and other products for a variety of applications including transit and event ticketing, NFC advertising and payment and secure asset tracking. Growth was also supported by sustained demand for smart card and contactless reader technology for the German electronic health card program, national ID and corporate ID programs in Europe, and increased demand from a variety of markets in Asia. Sales in the ID Products segment grew despite lower sales of readers used to provide secure access to PCs and computer networks in the U.S. Government sector.

Research and development expenses in 2011 grew nearly 50% from 2010 as the company increased its investments in core technology and new product and solutions offerings. Sales and marketing expenses as a percentage of sales remained relatively consistent year over year despite continued market development for existing and emerging opportunities.

Net loss in 2011 was $(9.5) million, or $(0.18) per share, compared with net loss in 2010 of $(9.5) million, or $(0.22) per share.

Revenue in Q4 2011 was $27.9 million, compared with $27.8 million in Q4 2010 and up 4% from $26.8 million in the third quarter (Q3) of 2011.

Revenue from the company’s Identity Management services and solutions segment was $14.2 million in Q4 2011 and reflected sales of credential management and payment solutions for a diverse range of consumer and citizen ID programs, offset by a more pronounced drop in sales to the U.S. government market. Revenue from the Company’s ID Product segment was $13.7 million in Q4 2011, and reflected strong demand for readers from the Japanese telecommunications market that drove near 100% growth in sales to Japan year over year, as well as shipments of terminals for the German eHealth card program and increased sales of RFID inlays, tags and other products for contactless ticketing and other applications.

Gross profit margin was 41% in Q4 2011, compared with 43% in Q4 2010 and 44% in Q3 2011. Gross profit margin in Q4 2011 was negatively impacted by lower sales of enterprise security systems to the U.S. Government market, while gross profit margin in the company’s ID Products segment improved year over year.

Net loss was $(2.4) million, or $(0.04) per share in Q4 2011. This compares to net loss of $(0.8) million, or $(0.02) per share in Q4 2010 and net loss of $(3.7) million, or $(0.06) per share in Q3 2011. Net loss in Q4 2011 included non-cash charges of $2.2 million, of which $1.2 million was primarily due to amortization expense related to acquisitions.

“We generated traction in important growth markets in Q4 as we increased sales in Japan, expanded deployments of our payment solutions and began selling our first purpose-built products for converged physical and cyber access,” added Ashour. “Even as we continued to invest in new technology, product and market development and production capacity, we also reduced G&A spending and generated $0.9 million in cash from operating activities in the quarter. We expect that typical seasonality will result in a lower revenue trend in the first quarter but are confident that our market position, robust portfolio of technology and offerings as well as our sound financial base position us to make further progress in 2012 towards our strategy to be the signature company in secure ID.”