SANTA ANA, Calif. and ISMANING, Germany, November 1, 2012 -
Identive Group, Inc. (NASDAQ: INVE; Frankfurt: INV), a
provider of products, services and solutions for the
identification, security and RFID industries, today
announced results for the fiscal third quarter (Q3), ended
September 30, 2012.
Q3 2012 Highlights:
• Continued operating expense reduction
and further lowering of breakeven point
• Record smart card reader sales for US
Government programs
• Recovery in demand for transponder
products, creating a stronger Q4 forecast
• Continued progress in emerging growth
opportunities for near field communication (NFC), payment
and cloud-based solutions
• Strong cash performance during
quarter
"Our core business continued to be affected by global
economic and budget uncertainties, particularly in Europe.
While some sales of access systems for US Government
customers slipped into October, new cyber security programs
at federal agencies drove a strong increase in smart card
reader sales and previously delayed transponder orders also
began to recover towards the end of the quarter," said
Ayman S. Ashour, CEO and chairman of Identive. "Our
continued focus on cost reduction drove a further 9%
sequential decline in our base operating expenses and
adjusted EBITDA also improved significantly, bringing us
close to breakeven on relatively weak revenues. Our cash
performance in Q3 was better than anticipated and in
October we also secured additional non-dilutive debt
financing, strengthening our ability to manage our growth
needs."
Q3 Results
As reported in accordance with U.S. generally accepted
accounting principles (GAAP), Q3 2012 revenues were $22.9
million, down 4% from $23.9 million in Q2 2012 and down 14%
from $26.8 million in Q3 2011. By segment, Identity
Management Services and Solutions (Identity Management)
revenues were $13.8 million and ID Products revenues were
$9.1 million in Q3 2012.
GAAP gross profit margin was 42% in Q3 2012, compared with
40% in Q2 2012 and 44% in Q3 2011. Total research and
development, sales and marketing, and general and
administrative expenses (referred to in this release as
base operating expenses) were $12.1 million in Q3 2012,
down 9% from $13.3 million in Q2 2012 and down 17% from
$14.5 million in Q3 2011 as a result of the restructuring
plan we initiated in June of this year and from ongoing
initiatives to improve the efficiency of our business.
On a GAAP basis, Identive recorded net loss of $(7.9)
million, or $(0.13) per share in Q3 2012, compared with net
loss of $(41.9) million, or $(0.70) per share in Q2 2012
and net loss of $(3.7) million, or $(0.06) per share in Q3
2011. Reflected in our results for Q3 2012 are non-cash
impairment charges of $5.8 million, which accounted for
$(0.10) of the $(0.13) GAAP net loss per share recorded in
the quarter. In Q2 2012, non-cash impairment charges and
other associated non-cash adjustments accounted for $(0.66)
of the reported net loss.
As previously announced, during Q2 2012 a sharp decline in
our market capitalization triggered a required impairment
analysis of our goodwill, intangible and long-lived assets,
and at the time of our second quarter earnings announcement
we had concluded that some assets were impaired and
recognized preliminary non-cash charges for this impairment
in our Q2 2012 financial statements. During Q3 2012 we
completed our impairment analysis and recorded further
charges, as described above. These charges do not impact
our day-to-day operations or liquidity and will not result
in any future cash expenditures. They do, however, reduce
the amount of non-cash amortization charges we must record
each quarter, which has a beneficial effect on our future
net earnings.
Non-GAAP gross profit margin was 46% in Q3 2012, compared
with 45% in Q2 2012. We recorded non-GAAP net loss of
$(1.6) million, or $(0.03) per share in Q3 2012, compared
with a non-GAAP net loss of $(1.1) million, or $(0.02) per
share in Q2 2012. Adjusted EBITDA was $(0.3) million in Q3
2012, compared with $(1.2) million in Q2 2012.
Non-GAAP gross profit margin, adjusted EBITDA and non-GAAP
net loss and net loss per share all exclude various items
that are detailed in the financial table and accompanying
footnotes reconciling GAAP to non-GAAP results contained in
this release. An explanation of these measures is also
included below under the heading "Non-GAAP Financial
Measures."
Cash, cash equivalents and restricted cash were $8.3
million at September 30, 2012 and included $2.1 million of
cash generated from operations in the quarter, compared
with $6.3 million of cash, cash equivalents and restricted
cash at June 30, 2012.
David Wear, CFO of Identive commented, "As we projected, we
were able to continue to reduce our costs and manage our
cash effectively during the quarter. Expense reductions to
date have helped to lower our EBITDA breakeven point
significantly to between $23 million and $24 million in
revenue per quarter. Our ongoing focus on cost efficiency
and continued improvement in our revenue outlook should
allow us to take advantage of this lower breakeven point to
deliver EBITDA positive results on a consistent basis."
Q3 2012 Business Highlights
Ongoing investment in product development resulted in the
announcement of several important new products in the
quarter, including:
• The launch of Hirsch Velocity 3.5, our next generation
access control software platform that now enables access to
real-time system information across a wide range of
corporate and mobile devices and environments, enabling
enterprise customers greater levels of security and
control.
• The TouchSecure® Desktop Reader, an innovative identity
authentication solution that allows enterprise customers to
implement secure access to their physical facilities,
corporate networks, shared printers and copiers using a
single identity credential -- their employees' existing
building access cards.
• A new family of multi-protocol LEGIC® card readers that
address the growing trend in corporate, campus and other
environments towards the use of a single smart ID card to
perform many functions.
Identive gained visibility at the London Olympics this
summer as more than 100,000 visitors used the Company's
payment and identity management products and solutions:
• Our Polyright identity management solution provided
secure entry to the Olympic Club for members of the
International Olympic Committee (IOC), VIP visitors and
staff.
• In cooperation with the leading Dutch bank Rabobank,
Identive enabled cashless payment at one of the Olympics'
largest hospitality venues. Using innovative convertible
payment cards based on the Company's patent pending tomPAY™
tag technology, visitors were able to tap and pay for
refreshments using either the card or a removable NFC
payment sticker that enables payment using a mobile
phone.
In addition, Identive's payment solution cashless payment
system was selected for use at various music festivals in
Europe and for the Rat Verlegh Stadium in Breda, The
Netherlands.
Mr. Ashour concluded, "Looking forward, a higher than usual
backlog of orders for access control systems and readers
for US Government agencies and the commencement of both
delayed and new NFC and other transponder projects are
creating an improved sales outlook for Q4. Successful
development efforts also continue to reinforce our early
leadership position in emerging growth opportunities. We
have now expanded our www.IdentiveNFC.com online NFC
marketplace to sell to a wider and growing customer base.
We also are encouraged by the strong reception we are
receiving from beta trials for our NFC marketing platform
and are preparing for the platform's public launch in Q4.
The progress we are making to position Identive as the
signature company in Secure ID is further supported by the
improvements we have made to our financial base."
Outlook for Q4 2012
Based on its current expectations, for the fourth quarter
of 2012, management expects revenues of $26.0 million to
$28.0 million and non-GAAP, adjusted EBITDA of $1.5 million
to $2.0 million.
Conference Call and Webcast Information
Identive Group will host a conference call and webcast
today at 10:00 AM Eastern Time, which can be accessed by
dialing 888.771.4371 (toll free within the U.S.) or +1
847.585.4405 (for international callers) and using pass
code 33654779. A webcast of the call that includes
presentation slides can be accessed by visiting the
investor relations section of the Company's website at
www.identive-group.com, and by clicking on "Presentations,
Reports & Webcasts," where it also will be archived for
those unable to listen to the live webcast. An audio
replay of the call also will be available for one week and
can be accessed by dialing 888.843.7419 (toll free within
the U.S.) or +1 630.652.3042 (for international callers)
and using pass code.
About Identive Group
Identive Group, Inc. (NASDAQ: INVE; Frankfurt: INV) is
focused on building the world's signature company in Secure
ID. The company's products, software, systems and services
address the markets for identity management, physical and
logical access control, cashless payment, NFC solutions and
a host of RFID-enabled applications for customers in the
government, enterprise, consumer, education and healthcare
sectors. Identive's mission is to build a lasting business
of scale and technology based on a combination of strong
technology-driven organic growth and disciplined
acquisitive expansion. The company delivers up-to-date
information on its activity as well as industry trends
through its industry-leading social media initiatives and
educational resource, AskIdentive.com. For additional
information, please visit www.identive-group.com or follow
on Twitter at @IdentiveGroup.
Non-GAAP Financial Measures
Identive has provided in this release financial information
that has not been prepared in accordance with GAAP,
including non-GAAP gross profit margin, adjusted EBITDA and
non-GAAP net loss and net loss per share. Identive uses
these non-GAAP financial measures internally in analyzing
its financial results and believes they are useful to
investors, as a supplement to GAAP measures, in evaluating
Identive's ongoing operational performance. Identive
believes that the use of these non-GAAP financial measures
provides an additional tool for investors to use in
evaluating ongoing operating results and trends. As noted,
the non-GAAP financial results discussed above exclude
various items which are detailed in the reconciliation
table and accompanying footnotes contained within this
release. Non-GAAP financial measures should not be
considered in isolation from, or as a substitute for,
financial information prepared in accordance with GAAP.
Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable
GAAP financial measures as detailed in this release.
Note Regarding Forward Looking Information:
This press release contains forward-looking statements
within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Forward-looking
statements can be identified by words such as
"anticipates," "believes," "plans," "will," "intends,"
"expects," and similar references to the future. Examples
of such statements include, without limitation, statements
we make regarding our expectations regarding continued
demand for our products, solutions and services, our
expectations regarding market acceptance of our NFC,
cashless payment and cloud-based solutions, our ability to
realize savings from our cost savings and restructuring
plans, our ability to capitalize and improve upon our
technology portfolio, our expectations regarding future
results, including Q4 and full year 2012 results, and our
expectations for future growth and profitability. Readers
should not unduly rely on these forward-looking statements,
which are not a guarantee of future performance and are
subject to a number of risks and uncertainties, many of
which are outside our control, which could cause our actual
business and operating results to differ. Factors that
could cause actual results to differ materially from those
in the forward-looking statements include our ability to
grow our company based on a strategy of providing products,
components and services for the secure identification
market; to successfully develop and commercialize new
products and solutions that satisfy the evolving and
increasingly complex requirements of customers; whether the
markets in which we participate or target may grow,
converge or standardize at anticipated rates or at all,
including the markets that we are targeting; our ability to
successfully integrate acquired businesses; our ability to
successfully compete in the markets in which we participate
or target; our ability to meet our sales forecasts; our
ability to meet financial covenants of our loan agreement;
our ability to meet growing demand for our products; and
general global political and economic factors which are
beyond our control but may unduly impact our markets and
our business. For a discussion of further risks and
uncertainties related to our business, please refer to our
public company reports, including our Annual Report on Form
10-K for the year ended December 31, 2011 and subsequent
reports filed with the U.S. Securities and Exchange
Commission. All forward-looking statements are based on
information available to us on the date hereof, and we
assume no obligation to update such statements.
All trade names are trademarks or registered trademarks of
their respective holders.
Contacts:
Darby Dye, +1 949 553-4251, This e-mail address is being
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Lennart Streibel, +49 89 9595 5195, This e-mail address is
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