Identiv exceeds financial expectations in Q3 2025, driven by improved gross margins and strategic manufacturing transition to Thailand, positioning for future growth.

Projections or other characteristics of future events, including future financial results, future business and market conditions and opportunities, strategic partnerships and collaborations, and any related benefits and attributes and future plans, strategies, opportunities and goals is a forward looking statement. Actual results may differ materially from those expressed in these forward looking statements. For more information, please refer to the risk factors discussed in documents filed from time to time with SEC, including the company's latest annual report on Form 10K as well as our third quarter 10Q. Once filed, Identiv assumes no obligation to update these forward looking statements. I will now turn the call over to CEO Kirstjen Newquist for her comments. Ms. Newquist, please proceed.

Thanks Operator and thank you all for joining our quarter three 2025 earnings call. As we review this quarter's results, I want to highlight that our Perform, Accelerate and Transform strategy continues to guide everything we do from serving our customers and building our pipeline to driving innovation and commercial momentum in our high value segments and delivering on our financial commitments. This strategy remains central to transforming the organization and creating lasting value for our shareholders. I'm pleased to report that in quarter three sales were in line with guidance with all other key financial metrics exceeding expectations. This quarter is particularly notable for our improved gross profit margin which reflects the initial benefits of completing our two year transition of production from Singapore to our new state of the art manufacturing facility in Thailand. This is the first quarter in which all of our production has been done in Thailand, a significant milestone that has meaningfully lowered our cost structure, enhanced efficiency and scalability and positioned us well for continued margin growth. We expect further margin expansion over the next few quarters as we complete the Singapore site shutdown by year end and the Thailand team reaches full productivity. Our CFO Ed Kirnbauer will now provide a detailed review of our Quarter three financial performance and I'll return afterward to share more on how we're progressing across our strategic initiatives.

Thanks thanks Kirsten. In the third quarter of 2025 we delivered $5.0 million in revenue which was within our previously announced guidance range compared to 65 million in Q3 2024 this year over year decrease was as expected and due to lower sales as we exited lower margin business earlier in the year. Third quarter GAAP and non GAAP gross margins were 10.7 and 19.1% respectively, compared to GAAP and non GAAP gross margins of 3.6 9.3% respectively in Q3 2024. Factors impacting the increase in gross margin included the reduction in fixed manufacturing overhead costs and direct labor costs at our discontinued Singapore operation, improved utilization of our manufacturing production facility in Thailand and sales of fully reserved inventory of 0.2 million. As we mentioned in our August call, we completed production of RFID inlays and labels in Singapore and the requalification of our customers at our Thailand production facility end of Q2 2025 this facility shutdown activities in Singapore continue to progress as planned and are expected to be substantially completed by year end. GAAP and non GAAP operating expenses third quarter of 2025, including research and development, sales and marketing, and general and Administrative expenses totaled 6.1 million and 4.5 million respectively, compared to 9.8 million and 5.1 million respectively in Q3 2024. The year over year decrease in GAAP operating expenses was driven primarily by a reduction in strategic review related costs incurred in 2024. The decrease in non GAAP operating expenses reflects management's targeted resource allocation to support the company's organic growth initiatives as outlined in our PAT strategic framework, third quarter GAAP net loss from continuing operations was 3.5 million or $0.15 per basic and diluted share compared to GAAP net loss from continuing operations of 9.3 million or $0.40 per basic and diluted share in the third quarter of 2024. This decrease in net loss was primarily due to strategic review related costs of 3.6 million incurred in the quarter of 2024 compared to $0.5 million in the third quarter of 2025, higher year over year interest income of $1.1 million and an income tax benefit of $0.8 million in the third quarter of 2025 compared to an income tax provision of 0.4 million in the comparable quarter of 2024. Non GAAP adjusted EBITDA loss for Q3 2025 was $3.6 million compared to 4.5 million in the third quarter Of 2024. The decrease in the loss was primarily due to the reduction in fixed manufacturing costs at our Singapore facility, improved utilization of our manufacturing production facility in Kent, as well as management's continued careful allocation of operating expenses as we execute on our PAT strategic initiatives. In the appendix of today's presentation, we have provided a full reconciliation of GAAP to non GAAP financial information which is also included in our earnings release. Moving now to the balance sheet, we exited Q3 2025 with $126.6 million in cash, cash equivalents and restricted cash. In the third quarter of 2025 we used $3.1 million in cash. This brings our total net operating cash use for the 12 months following September 30, 2024 the end of Q3 2024 to 13.4 million, well within our previously announced guidance range of 13 to 15 million. Our working capital exiting Q3 was 1 35.4 million. Our balance sheet position remains strong. In our 10Q filing, we will be providing a full reconciliation of year to date cash flows for completeness. We have included the full balance sheet in the appendix of today's earnings release. Lastly, our financial outlook, which is based on current market conditions and expectations, including macroeconomic conditions and customer demand. As of Today's call for Q4 2025, we currently expect net revenue in the range of 5.4 million to 5.9 million. This concludes the finance discussion. I'll now pass the call back to Kirstjen Thanks Ed.

As you just heard, we delivered results that met or exceeded our guidance. A solid step forward as we continue executing against our perform, iterate and transform strategy. While we know there's more work ahead to reach our overall financial goals, we're encouraged by the tangible progress we're making across each pillar, performing with focus, accelerating across our high value segments and ultimately transforming our business. We're building a strong foundation for sustained and profitable growth. Let me now share how this progress is unfolding across our organization perform, deliver exceptional results for customers and drive operational excellence. Our first pillar, Perform is focused on strengthening and growing our core channel business. To achieve this, we are prioritizing higher margin opportunities, extending gross margins through our Thailand transition and executing our new product development pipeline with greater discipline. Our goal is to consistently exceed customer expectations through exceptional support, reliable performance and on time delivery. As I mentioned in my opening comments, we reached a major milestone in our manufacturing transformation this quarter. 100% of our RFID tags, inlays and labels are now produced at our new state of the art Thailand facility. The Singapore site shutdown is on track for completion by year end, marking the end of a successful two year transition. The Thailand facility has lowered manufacturing costs, improved efficiency and and enhanced scalability, laying a stronger foundation for continued margin growth. To further advance operational excellence, we launched CRM and MRP automation initiatives earlier this year to streamline key sales and operations planning processes. We've made steady progress and expect to have these systems largely implemented by year end, strengthening our operational foundation and ensuring scalability as we grow. On the commercial front, our new opportunity pipeline continues to expand driven by new sales team members ramping up across their territories and channel partners. So far this year we've converted 18% of our new opportunity pipeline representing almost 10% of quarter three sales with additional growth expected as this new business scales, implementing HubSpot to enhance lead generation and visibility and preparing to launch our new corporate website by year end. We also Germany and Label Expo in Barcelona, both generating meaningful customer engagement and reinforcing strategic partnerships. At Label Expo, our own VP of Business Development Klaus Zimmenmeyer and Neravera CEO Thomas Roding shared insights on DPP compliance during a dynamic NFC RFID panel at the smart labeling seminar 2025, further strengthening Identiv's position as an innovation leader. Finally, the TSA transition with Vita Protect is now substantially complete and we are fully separated from the physical security business we sold one year ago, A key milestone marking our strategic focus and transition to being a pure play in IoT and RFID technologies. Accelerate Accelerate growth in high value segments and through technology innovation. Moving to the second pillar of our PAT framework Accelerate, we are advancing three specific growth initiatives to build our pipeline and drive long term revenue and margin expansion 1 expanding our BLE technology platform and multi component manufacturing capabilities 2 targeting growth in three healthcare high value applications and 3 further driving growth in three consumer and logistics high value applications. This quarter we made notable progress in R and D and new product development, particularly in our Bluetooth Low Energy BLE programs. BLE represents the next generation of IoT technology offering real time traceability and condition monitoring capabilities that are difficult to achieve with traditional rfid. We believe the technical complexity of BLE smart label design and manufacturability aligns well with our engineering expertise and gives us a clear competitive advantage. We successfully completed the first production runs of the ISCO BLE prototypes and Williot's next generation pixels. Key milestones in the development and commercialization of two important customer driven BLE programs. These achievements, along with the internal development of our BLE shipping label, expand our product portfolio and further strengthen our expertise in next generation RFID technology and multi component manufacturing. We also formalized a partnership agreement and a manufacturing agreement with Williott to scale up and commercialize next generation pixels. Wiliot IoT pixels are small battery free Bluetooth sensors powered by harvesting ambient radio frequency energy, enabling continuous transmission of data like temperature, motion and location for smart Supply chain and IoT applications in healthcare innovation. Our RD work with Lilly was recently highlighted in a new white paper that we published in September demonstrating our leadership in RFID innovation for drug adherence and delivery. This is a compelling example of how our technology is enabling smarter, safer patient experiences. We're also advancing collaborations launched earlier this year, including our strategic partnerships with Novanta for medical device applications and TAG and TRACK for pharmaceutical cold chain management. Additionally, we announced a new commercial partnership with Took, bringing our secure NFC technology to children's books. Each book integrates seamlessly with Took's speaker through customizable NFC tags, activating guided audio without screenshots, wi fi or extra devices. Designed for durability and security, this solution is built to scale across classrooms, libraries and homes, empowering the next generation of young readers. These new interactive books are available for purchase now in Scandinavia with expansion planned into the rest of Europe. We were also honored as a winner of the World Beverage innovation awards in 2025 together with our partners Zatap by Collectid and Genuine Analytics AG for our NFC powered smart packaging solution that safeguards luxury wine producers and collectors from counterfeiting. This recognition in the Best technology Innovation category underscores our engineering excellence and collaborative approach to smart packaging. Finally, within our ACCELERATE initiatives, we completed detailed product roadmaps aligned with our high value market segments, which is intended to ensure that our innovation and go to market efforts are tightly connected to customer needs and strategic priorities. Several of these MPD programs will begin in the next quarter. TRANSFORM Create significant business expansion and capability growth through MA for long term success. Our third pillar, transform, focuses on expanding the business through strategic MA that accelerates EBITDA breakeven broadens our product portfolio and enhances our technical capabilities. We continue to work with our financial advisor Raymond James to assess our strategic alternatives Metrics this year we began reporting several new metrics to monitor our progress against strategic objectives. We're continuing to refine these metrics and plan to establish formal targets in 2026. The quarter three results are for the first metric, new sales Pipeline and Conversion Rate. This metric tracks the number of opportunities with new customers or customers we haven't sold to in over 2 years. At the end of quarter 3, we had 118 new opportunities in our pipeline. We added 46, closed 28 and converted 7 to sales leading to a net increase of 18 over quarter 2. We had 100 new opportunities in our pipeline at the end of the quarter two and 75 in quarter one, showing a steady increase over time. So far this year, we have converted 18% of our new opportunities to to sales. Second NPD projects this metric tracks a number of active NPD initiatives. These projects involve the development of entirely new RFID or BLE tags, inlays or labels. As of the end of quarter three, there were 17 active NPD projects, 11 customer driven and six internally driven four of the customer driven projects target healthcare applications and four utilize BLE technology which represents the largest share of potential volume and steady state revenue. Our third metric NPD Project Completion. This metric captures the number of NPD projects completed within the quarter. In quarter three we completed three customer driven projects, two of which are moving into commercialization. Both projects were for anti counterfeiting initiatives in the high end spirits and wine markets which will be scaling up in 2026. In closing, this was a quarter of steady financial performance and meaningful operational milestones. We met or exceeded guidance, achieved 100% production of tags, inlays and labels in Thailand, advanced key R and D and commercialization initiatives and made continued progress across our Perform, Accelerate and Transform Strategy. We reaffirm Identif's commitment to advancing specialized IoT solutions, expanding our BLE capabilities and fully leveraging the strategic advantages of our Thailand based production. By continuing to execute against our Perform, Accelerate and Transform strategy, we believe we are well positioned to capture future growth opportunities within the rapidly evolving global IoT market. As we look ahead, our priorities are complete the Singapore site shutdown by year end, ensure excellent service to our customers while driving productivity and efficiency in Thailand, execute our key new product development initiatives with excellence, expand our commercial and business development pipeline across high value segments and position the company for sustained growth and stronger financial performance in 2026 and beyond. I want to take a moment to thank our employees, customers, partners and shareholders for their continued trust and support. We're encouraged by our progress, confident in our strategy and excited about the opportunities ahead as we continue to lead in the fast growing RFID and BLE markets. With that, I'd like to open the call for your questions. Operator, please open the question queue.

Thank you. At this time we will be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please. While we poll for questions. Our first. Question comes from Craig Ellis with B. Riley. Please proceed.

Yeah, thank you for taking the question and nice job on the gross margins in the quarter. I wanted to start though on the top line. So for the fourth quarter it looks like we're expecting sales to be up about 11%. So the question is, as we look across the different vectors of the business, whether it's channel or NPD conversion, what's driving the growth sequentially. And what are some of the gives and takes as we think about tailwinds and headwinds as we exit the year?

Yeah, no thank you. Let's see. So definitely we are seeing some growth from our existing channel customers, but I do think we're also seeing some uptick that's related to some of our BLE projects that we're seeing some additional traction for in the fourth quarter. So it's a nice combination of both kind of our perform customers as well as some of the accelerate initiatives that we're starting to see some traction quarter over quarter.

Thanks, Kirsten. And just speaking of ble, in the prepared remarks you talked about progress with Identiv and Wiliot. Can we conclude that Identiv is on track for volume shipments in the second. Half of next year? And Wiliot had previously been talked about as a, as a potential high volume customer. Certainly not the size of vifco, but high volume. How do we think about what's possible with Willie at next year?

Yeah, well to start with the Identiv question, yes we are making progress. So you know, product development is well underway. As we mentioned, we shipped out production, made prototypes that are now being used in proof of concepts in the field. And so that of course a lot of learnings will come from that and we'll take those learnings and use that to continue to optimize the design. So that's progressing well. And in terms of Wiliot, we've been working very hard over the last six months to qualify their next generation product. So that's underway and this quarter and even last quarter, last quarter was beginning and this quarter we will be shipping those next generation products to the field. So both of them are nice opportunities. You know, we're excited about both of them and working really hard to make sure that we can complete the development of the Identiv product and then really help to support all the different Wiliot customers as they look to commercialize the Williot solution.

Great, thank you. And if I could sneak one in for Ed. Ed, real nice job by the team with gross margin in the third quarter, with the business getting the benefit of the full Singapore shutdown in the fourth quarter and with higher revenues and with some of that coming from that higher quality revenue basket that the company's been prioritizing, can you talk a little bit about what we could expect for gross margins in the fourth quarter and if there are any headwinds we need to comprehend. Thank you.

Thanks, Craig. Yes, our Q3 numbers, we saw significant benefits from the Reduction in fixed costs with the discontinuance of our Singapore operations from both an overhead cost perspective and direct labor. Now, we expect that to continue. We will be substantially complete with all shutdown activities in Q4. So we're still working through the remainder there. I don't really expect the full impact on gross margin until we enter Q1 of next year.

Okay, and then what about other potential benefits such as sales mix and the move to higher margin products as Mix goes more towards npd?

I'll let Kirsten talk about that. But I do want to say, you. Know, in addition to that, we have. The, you know, we will continue to improve margins with improving the utilization of our Thailand facility. But as far as mix.

Yeah, yeah. So I think what we'll see in. Quarter four, so certainly, you know, some. Slight increase in utilization in the Thailand. Plant that will help. As Ed mentioned, we aren't completely shut down, have shut down Singapore yet. So we still have some labor that's getting that whole plant now back to its original state and shut down, et cetera. So we have still a little bit of cost of Singapore related costs in quarter four in terms of the mix. We definitely have some of our NPV projects starting to ramp. Those are still a little bit in the ramp up phase. So we still have a little bit of ramp up costs until we get the full productivity of those projects. But we do see, you know, kind of a slight increase in mix overall. Going into quarter four.

Thanks, Kirsten. Thanks Hen. Thank you.

Okay, the next question comes from Anthony Stos with Craig Hallam. Please proceed.

Good afternoon, Kirsten and team and congrats on the move to Thailand. Getting it complete. Kirsten, of the roughly 21 opportunities that converted to customers, when will they show up in the P and L? And if you could just ballpark guess, what percentage of those are above your 28% gross margin goal?

Yeah, so I think, I'm not sure where you're getting the 21 conversion, but we did convert, we have roughly converted 18% year to date of our new Opportunity pipelines and that represented in third quarter roughly 10% of our sales. So those will definitely continue to scale and grow as we go into 2026. But yeah, no, we were, we were happy to, you know, year to date we've converted roughly 18% of our total.

New Opportunity pipeline at roughly what percentage. Are at your 28% gross margin goal?

Yeah. So of the new opportunity. Of the, of the, of the new opportunities that converted, I think roughly 2/3 of them were on the higher value Side, So higher than 30% growth margin and probably a third of them were slightly lower than that, but 2/3 of them were what we would consider on the high value side.

Got it. Good, good to hear. And then if you could frame the size of the new opportunity with Williott and also similar question, what kind of gross margins would you expect to generate?

Yeah, so I mean, we're not talking about kind of ultimate sales volume potential with the Wiliot and that's still progressing. Margins, you know, the opportunity is large. We're scaling up the next generation. You know, we definitely anticipate margins to be quite a bit significantly higher than where they were two years ago. But we're still working to increase those over the next, you know, probably three to four quarters and definitely higher, much higher than where they were back in. 2023 and early 2024.

Got it. And the last question for me, Kirsten, with your background in this industry, in the healthcare side, I know in quarters past you've spoke a lot about your healthcare opportunities. Didn't hear a lot on this call. Maybe you can just refresh us where you stand and what you think the opportunity set is on the healthcare side.

Yeah, we certainly still see a nice opportunity in healthcare and we see kind. Of the interest from some of the. Medical device and the pharmaceutical companies in really engaging in, in evaluating these types of solutions. But these are also longer term opportunities. So of our current NPD new product development pipeline, I think roughly a third. Of them are healthcare related. They just take longer to get to the commercialization side. So we remain positive about the opportunity space, we remain positive about the project that we have, but we definitely see some of the ones that are on the logistics side, the consumer product side of getting to market faster than we do with some of the healthcare projects. That we're working on.

Very good. Best of luck.

Thank you. Okay, thanks so much.

We have reached the end of the question and answer session and I will now turn the call over to Kirsten for closing remarks.

Thanks, operator, and thank you all again for joining us today and we look forward to speaking with you next quarter. Have a good afternoon. Bye bye.

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.