Identiv Reports 4Q, Fiscal Year 2017 Results

Identiv, Inc. reported financial results for the fiscal year and fourth quarter ended Dec. 31, 2017.
 
Revenues for the fourth quarter of 2017 were $16.6 million, compared to $15.4 million in the third quarter of 2017 and $14.6 million in the fourth quarter of 2016, reflecting a sequential increase of 7% from the third quarter of 2017, and a year-over-year increase of 13% from the fourth quarter of 2016.
 
Revenues in the Premises (PACS) segment grew 20% sequentially and grew 5% year-over-year. Contributing to the sequential growth in the fourth quarter were strong controller and access reader sales and deliveries for government orders. Revenues in the Identity segment increased 9% sequentially and decreased 6% year-over-year. The fourth quarter benefited from continued strong sales of reader chipsets and payment modules, as well as strong demand from distribution and OEM partners for applications like secure printing.
 
Revenue in the Credentials segment decreased 6% sequentially and grew 48% year-over-year. The year-over-year growth reflects an increase in RFID and NFC transponder sales, predominantly to key accounts in the US and Asia-Pacific regions, as well as continuing growth in access cards sales domestically.
 
GAAP gross margin was 30% in the fourth quarter of 2017, compared to 38% in the third quarter of 2017 and 43% in the fourth quarter of 2016. The sequential gross margin decrease mainly reflects an increase in gross margin in the Premises and Identity segments, offset by lower margin in the Credentials segment due to a transponder related inventory reserve adjustment associated with a customer relationship which ended at the end of 2015 and the company’s decision to discontinue plans for alternative use of the product.
 
Fiscal Year 2017 Financial Results
 
Fiscal year 2017 revenue was $60.2 million, an increase of 7% from $56.2 million in fiscal year 2016. The increase was predominantly driven by a 21% increase of revenues in the Credentials segment resulting from high demand in RFID and NFC transponder inlays for library and higher value applications in brand authenticity and consumer experience as well as access cards.
 
Revenues from the Identity segment grew 11%, driven by strong demand for smart card readers, chipsets and OEM modules for payment and identity applications. Revenue in the PACS segment decreased by 2%, mainly reflecting lower revenue from controllers and access readers, partially offset by increasing revenue from software and services.
 
Fiscal year 2017 GAAP gross margin was 37%, compared to 42% in fiscal year 2016. The lower gross margin in 2017 mainly relates to a transponder related inventory reserve adjustment in the Credentials segment made in the fourth quarter of 2017, as well as product and channel mix, with the faster growing Credentials segment contributing a higher proportion of revenue in relation to the higher margin Premises segment in 2017 versus 2016.
 
Full year 2017 non-GAAP adjusted EBITDA was $2.7 million, compared with a non-GAAP adjusted EBITDA loss of $(2.1) million in full year 2016, predominantly reflecting the higher revenue and the lower operating expense base.
 
Cash was $19.1 million at December 31, 2017, compared to $15.7 million at September 30, 2017, and $9.1 million at December 31, 2016. The increased liquidity predominantly reflects the proceeds from an underwritten offering of common stock in May 2017 and the issuance of convertible preferred stock in December 2017.
 
Fiscal Year 2018 Guidance
 
For the fiscal year ending December 31, 2018, the Company expects revenue to be between $74 million and $78 million, and non-GAAP adjusted EBITDA between $4 million and $6 million.
 
“2017 was a year of significant progress for Identiv,” said Steven Humphreys, Identiv CEO. “The business returned to annual growth, with the fastest growth occurring in the fourth quarter, demonstrating our building momentum. We’ve solidified our business platform, reaching key parameters of our mid-term target business model, which has led to positive non-GAAP adjusted EBITDA for the first year since 2010. Our business performance has allowed us to significantly strengthen our balance sheet, positioning us well for organic and inorganic growth in 2018.
 
“We believe we are at one of the most exciting inflection points for our company in years,” Humphreys added. “Our core markets have substantial growth opportunities as the physical world leverages access control, RFID, IP, video, mobile and smart card technologies. With the recent addition of 3VR’s analytics platform and the launch of our Identiv Global Services offering, we believe we’re positioned to be one of the leading providers of next-generation security and information solutions for the physical world. We’ve now established our position as the trusted provider for frictionless, cost-effective, high-security solutions for premises and identification, enabling a new level of security and business intelligence for our customers.”