Identiv, Inc.

Previous wording

This Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other parts of this Quarterly Report on Form 10-Q (“Quarterly Report”) contain forward-looking statements, within the meaning of the safe harbor provisions under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Forward-looking statements reflect current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “will,” “believe,” “could,” “should,” “would,” “may,” “anticipate,” “intend,” “plan,” “estimate,” “expect,” “project” or the negative of these terms or other similar expressions. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A of this Quarterly Report, and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Risk Factors”. The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Current wording

This Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other parts of this Quarterly Report on Form 10-Q (“Quarterly Report”) contain forward-looking statements, within the meaning of the safe harbor provisions under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Forward-looking statements reflect current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “will,” “believe,” “could,” “should,” “would,” “may,” “anticipate,” “intend,” “plan,” “estimate,” “expect,” “project” or the negative of these terms or other similar expressions. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 and Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Risk Factors”. The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Previous wording

Our results of operations for the three and six months ended June 30, 2025 and 2024 are as follows (in thousands, except percentages).

Current wording

Our results of operations for the three and nine months ended September 30, 2025 and 2024 are as follows (in thousands, except percentages).

Previous wording

Net revenue for the three and six months ended June 30, 2025 was $5.0 million and $10.3 million, respectively, and decreased by $1.7 million and $3.1 million, respectively, compared with net revenue of $6.7 million and $13.4 million in the comparable periods of 2024. Net revenue in the Americas for three and six months ended June 30, 2025 decreased 46% and 36%, respectively, compared with the comparable periods of 2024. Net revenue in Europe, the Middle East, and the Asia-Pacific for three and six months ended June 30, 2025 was $3.2 million and $6.2 million, respectively, and decreased 4% and 12%, respectively, compared with $3.4 million and $7.1 million, respectively, in the comparable periods of 2024. The decrease was primarily due to lower unit sales of RFID transponder products as we exit low margin business opportunities, as well as reduced sales to our largest customer, who is working through safety stock they built up in 2024 in anticipation of transitioning production to Thailand.

Current wording

Net revenue for the three and nine months ended September 30, 2025 was $5.0 million and $15.3 million, respectively, and decreased by $1.5 million and $4.6 million, respectively, compared with net revenue of $6.5 million and $19.9 million in the comparable periods of 2024. Net revenue in the Americas for three and nine months ended September 30, 2025 decreased 7% and 27%, respectively, compared with the comparable periods of 2024. Net revenue in Europe, the Middle East, and the Asia-Pacific for three and nine months ended September 30, 2025 was $2.4 million and $8.7 million, respectively, and decreased 36% and 20%, respectively, compared with $3.8 million and $10.8 million, respectively, in the comparable periods of 2024. The decrease was primarily due to lower unit sales of RFID transponder products as we exit low margin business opportunities, as well as reduced sales to our largest customer, who is working through safety stock they built up in 2024 in anticipation of the transition of production to our Thailand facility.

Previous wording

Gross profit (loss) for the three and six months ended June 30, 2025 was a gross loss of $474,000 and $342,000, respectively, compared with gross profit of $614,000 and $1.1 million, respectively, in the comparable periods of 2024. Gross profit represents net revenue less direct cost of product sales, manufacturing overhead, other costs directly related to preparing the product for sale including freight, scrap, and inventory adjustments, where applicable.

Current wording

Gross profit for the three and nine months ended September 30, 2025 was $534,000 and $192,000, respectively, compared with $238,000 and $1.3 million, respectively, in the comparable periods of 2024. Gross profit represents net revenue less direct cost of product sales, manufacturing overhead, other costs directly related to preparing the product for sale including freight, scrap, and inventory adjustments, where applicable.

Previous wording

Gross profit (loss) margin for the three and six months ended June 30, 2025 decreased to gross loss margins of 9% and 3%, respectively, compared with gross profit margins of 9% and 8%, respectively, in the comparable periods of 2024. The decreases in gross profit margins were primarily attributable to incremental costs related to the transition of production to our Thailand facility and the dual manufacturing sites required during the transition, combined with underutilization of our manufacturing production facilities due to lower sales. In addition, we recorded a charge to cost of revenue of approximately $639,000 in the second quarter of 2025 related to the write-down of obsolete inventory at our Singapore production facility.

Current wording

Gross profit margin for the three months ended September 30, 2025 increased to 11% compared with 4% in the comparable period of 2024. The increase was primarily attributable to sales of fully reserved inventory of $222,000, reduction in fixed manufacturing overhead at our discontinued Singapore operation, and improved utilization of our manufacturing production facility in Thailand. Gross profit margin for the nine months ended September 30, 2025 decreased to 1% compared with 7% in the comparable period of 2024. The decrease was attributable to incremental costs related to the transition of production to our Thailand facility and the dual manufacturing sites required during the transition in first half of 2025, combined with underutilization of our manufacturing production facilities due to lower sales. In addition, we recorded a charge to cost of revenue of approximately $639,000 in the second quarter of 2025 related to the write-down of obsolete inventory at our Singapore production facility.

Previous wording

We expect there will be variation in our gross profit from period to period, as our gross profit has been and will continue to be affected primarily by varying mix among our products. Within each product category, gross margins have tended to be consistent, but over time may be affected by a variety of factors, including, without limitation, competition, product pricing, the volume of sales in any given quarter, manufacturing volumes, product configuration and mix, the availability of new products, product enhancements, risk of inventory write-downs and the cost and availability of components. At the end of the second quarter of 2025, we completed production of RFID transponder devices in our manufacturing facility in Singapore. We have requalified our customers in our Thailand production facility. Furthermore, in the fourth quarter of 2025, we expect to complete all shutdown activities associated with our Singapore facility. As a result of the elimination of fixed costs from our Singapore facility, we expect gross product margins to increase overall in the second half of 2025.

Current wording

We expect there will be variation in our gross profit from period to period, as our gross profit has been and will continue to be affected primarily by varying mix among our products. Within each product category, gross margins have tended to be consistent, but over time may be affected by a variety of factors, including, without limitation, competition, product pricing, the volume of sales in any given quarter, manufacturing volumes, product configuration and mix, the availability of new products, product enhancements, risk of inventory write-downs and the cost and availability of components. At the end of the second quarter of 2025, we completed production of RFID transponder devices in our manufacturing facility in Singapore. We have requalified our customers in our Thailand production facility. Furthermore, at the end of the fourth quarter of 2025, we expect to complete all shutdown activities associated with our Singapore facility. As a result of the reduction of fixed costs throughout the quarter from our Singapore facility, we expect gross product margins to continue to increase in the fourth quarter of 2025.

Previous wording

Information about our operating expenses for the three and six months ended June 30, 2025 and 2024 is set forth below (dollars in thousands).

Current wording

Information about our operating expenses for the three and nine months ended September 30, 2025 and 2024 is set forth below (dollars in thousands).

Previous wording

Research and development expenses consist primarily of employee compensation and fees for the development of hardware, software and firmware products. The majority of our research and development activities focused on the continued development of existing products and the development of new offerings for emerging market opportunities.

Current wording

Research and development expenses consist primarily of employee compensation and fees for the development of RFID and BLE inlays, labels, and tags. The majority of our research and development activities focused on the customization of existing products and the development of new offerings for emerging market opportunities.

Previous wording

Research and development expenses for the three and six months ended June 30, 2025 decreased in dollars compared to the comparable prior year periods primarily due to lower external services costs, as well as lower prototype related costs but increased as a percentage of revenue due to lower revenue levels.

Current wording

Research and development expenses for the three and nine months ended September 30, 2025 decreased in dollars compared to the comparable prior year periods of 2024 primarily due to lower payroll related costs, as certain research and development activities transitioned to Thailand from our Singapore facility.

Previous wording

Selling and marketing expenses for the three and six months ended June 30, 2025 decreased in dollars compared to the comparable periods in 2024 primarily due to lower stock-based compensation expense, lower advertising, trade show and travel related costs but increased as a percentage of revenue due to lower revenue levels.

Current wording

Selling and marketing expenses for the three and nine months ended September 30, 2025 decreased in dollars compared to the comparable periods in 2024 primarily due to lower stock-based compensation expense, lower advertising, trade show and travel related costs.

Previous wording

General and administrative expenses for the three months ended June 30, 2025 decreased compared to the comparable period in 2024 primarily due to strategic review-related costs incurred in 2024 of $1.6 million related to the Asset Sale in 2024 that did not recur in 2025. The dollar decrease in general and administrative expenses for the six months ended June 30, 2025 compared to the prior year period was due to strategic review-related costs of $2.6 million, partially offset by higher stock-based compensation expense in 2025.

Current wording

General and administrative expenses for the three and nine months ended September 30, 2025 decreased compared to the comparable periods in 2024 primarily due to strategic review-related costs incurred in 2024 of $3.6 million and $6.1 million, respectively, related to our Asset Sale in 2024 that did not recur in 2025.

Previous wording

Restructuring expenses for the three and six months ended June 30, 2025 consist of severance costs of $312,000 and $334,000, respectively, and impairments of an operating lease right-of-use asset of $108,000 and $346,000, respectively, primarily associated with shutdown related activities and vacated production space at the Company's Singapore manufacturing facility.

Current wording

Restructuring expenses for the three and nine months ended September 30, 2025 consist of severance costs of $79,000 and $413,000, respectively, and impairments of operating lease right-of-use assets of $323,000 and $669,000, respectively, primarily associated with shutdown related activities and vacated production space at the Company's Singapore manufacturing facility.

Previous wording

Information about our non-operating income (expense) for the three and six months ended June 30, 2025 and 2024 is set forth below (dollars in thousands).

Current wording

Information about our non-operating income (expense) for the three and nine months ended September 30, 2025 and 2024 is set forth below (dollars in thousands).

Previous wording

Interest income (expense), net consists of interest income generated on our cash equivalents net of interest costs on our financial liabilities and amortization of debt issuance costs. The increase in interest income (expense), net for the three and six months ended June 30, 2025 compared to the comparable period of 2024 was primarily attributable to interest earned on our money market accounts and treasury bills.

Current wording

Interest income, net consists of interest income generated on our cash equivalents net of interest costs on our financial liabilities and amortization of debt issuance costs in 2024. The increase in interest income, net for the three and nine months ended September 30, 2025 compared to the comparable periods of 2024 was primarily attributable to interest earned on our money market accounts and treasury bills.

Previous wording

We recorded an income tax provision during the three and six months ended June 30, 2025, respectively, associated primarily with withholding taxes on interest income earned on cash equivalents at one of our foreign subsidiaries. The effective tax rates for the three and six months ended June 30, 2025 and 2024 differ from the federal statutory rate of 21% primarily due to a change in valuation allowance, and the provision or benefit in certain foreign jurisdictions, which are subject to higher tax rates.

Current wording

We recorded an income tax benefit during the three and nine months ended September 30, 2025, respectively, attributed primarily to a state income tax payable adjustment related to fiscal year 2024. The effective tax rates for the three and nine months ended September 30, 2025 and 2024 differ from the federal statutory rate of 21% primarily due to a change in valuation allowance, and the provision or benefit in certain foreign jurisdictions, which are subject to higher tax rates.

Previous wording

As of June 30, 2025, our working capital, defined as current assets less current liabilities, was $137.5 million, a decrease of $7.4 million compared to $144.9 million as of December 31, 2024. As of June 30, 2025, our cash and cash equivalents balance was $129.3 million.

Current wording

As of September 30, 2025, our working capital, defined as current assets less current liabilities, was $135.4 million, a decrease of $9.5 million compared to $144.9 million as of December 31, 2024. As of September 30, 2025, our cash and cash equivalents balance was $126.3 million.

Previous wording

On November 7, 2024, we announced that our board of directors authorized a stock repurchase program (the “Stock Repurchase Program”). Under the Stock Repurchase Program, effective November 15, 2024, we may repurchase up to $10 million of shares of common stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions, or other means. The timing and amount of shares repurchased depends on a number of factors, including stock price, trading volume, general market and business conditions, liquidity and capital needs, and other factors. The Stock Repurchase Program does not obligate us to repurchase any specific dollar amount or acquire any specific number of shares of common stock. The Stock Repurchase Program has no expiration date and may be suspended or discontinued at any time without notice. As of June 30, 2025, we have repurchased a total of 463,779 shares of common stock under the Stock Repurchase Program for total consideration of approximately $1.9 million. During the three and six months ended June 30, 2025, there were no repurchases of shares of common stock under the Stock Repurchase Program.

Current wording

On November 7, 2024, we announced that our board of directors authorized a stock repurchase program (the “Stock Repurchase Program”). Under the Stock Repurchase Program, effective November 15, 2024, we may repurchase up to $10 million of shares of common stock on a discretionary basis from time to time through open market repurchases, privately negotiated transactions, or other means. The timing and amount of shares repurchased depends on a number of factors, including stock price, trading volume, general market and business conditions, liquidity and capital needs, and other factors. The Stock Repurchase Program does not obligate us to repurchase any specific dollar amount or acquire any specific number of shares of common stock. The Stock Repurchase Program has no expiration date and may be suspended or discontinued at any time without notice. As of September 30, 2025, we have repurchased a total of 463,779 shares of common stock under the Stock Repurchase Program for total consideration of approximately $1.9 million. During the three and nine months ended September 30, 2025, there were no repurchases of shares of common stock under the Stock Repurchase Program.

Previous wording

As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. would not incur significant additional taxes related to such amounts. However, our estimates are provisional and subject to further analysis. Generally, most of our foreign subsidiaries have accumulated deficits and cash and cash equivalents that are held outside the United States are typically not cash generated from earnings that would be subject to tax upon repatriation if transferred to the United States. We have access to the cash held outside the United States to fund domestic operations and obligations without any material income tax consequences. As of June 30, 2025, the amount of cash included at such subsidiaries was $13.7 million. We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business.

Current wording

As our previously unremitted earnings have been subjected to U.S. federal income tax, we expect any repatriation of these earnings to the U.S. would not incur significant additional taxes related to such amounts. However, our estimates are provisional and subject to further analysis. Generally, most of our foreign subsidiaries have accumulated deficits and cash and cash equivalents that are held outside the United States are typically not cash generated from earnings that would be subject to tax upon repatriation if transferred to the United States. We have access to the cash held outside the United States to fund domestic operations and obligations without any material income tax consequences. As of September 30, 2025, the amount of cash included at such subsidiaries was $13.5 million. We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business.

Previous wording

We have historically incurred operating losses and negative cash flows from operating activities, and we expect to continue to incur losses in the future. As of June 30, 2025, we had an accumulated deficit of $350.9 million. During the six months ended June 30, 2025, we had a loss from continuing operations of $10.8 million.

Current wording

We have historically incurred operating losses and negative cash flows from operating activities, and we expect to continue to incur losses in the future. As of September 30, 2025, we had an accumulated deficit of $354.3 million. During the nine months ended September 30, 2025, we had a loss from continuing operations of $14.3 million.

Previous wording

The following summarizes our cash flows for the six months ended June 30, 2025 and 2024 (in thousands):

Current wording

The following summarizes our cash flows for the nine months ended September 30, 2025 and 2024 (in thousands):

Previous wording

Cash used in operating activities for the six months ended June 30, 2024 of $2.3 million was primarily due to net loss of $10.8 million, partially offset by an increase in cash from net changes in operating assets and liabilities of $3.9 million and adjustments for certain non-cash items of $4.6 million, consisting primarily of depreciation, amortization and stock-based compensation.

Current wording

Cash used in operating activities for the nine months ended September 30, 2025 of $9.7 million was primarily due to a net loss of $14.3 million, a decrease in cash from net changes in operating assets and liabilities of $430,000, partially offset by adjustments to net loss for certain non-cash items of $5.0 million, primarily consisting of depreciation, amortization, and stock-based compensation.

Previous wording

Cash used in operating activities for the six months ended June 30, 2025 of $6.8 million was primarily due to a net loss of $10.8 million, partially offset by an increase in cash from net changes in operating assets and liabilities of $647,000 and adjustments to net loss for certain non-cash items of $3.3 million, consisting of depreciation, amortization, stock-based compensation, and impairment of operating lease right-of-use asset.

Current wording

Cash used in operating activities for the nine months ended September 30, 2024 of $9.5 million was primarily due to adjustments to net income for certain non-cash items of $88.1 million, consisting primarily of the gain on sale of our Physical Security Business of $99.5 million, as well as depreciation, amortization and stock-based compensation, offset by net income of $75.2 million and an increase in cash from net changes in operating assets and liabilities of $3.4 million.

Previous wording

Cash used in investing activities for the six months ended June 30, 2025 and 2024 was $553,000 and $367,000, respectively, which related to capital expenditures for our manufacturing facility in Thailand.

Current wording

Cash used in investing activities for the nine months ended September 30, 2025 was $607,000 which related primarily to capital expenditures for our manufacturing facility in Thailand, partially offset by proceeds received from an investment.

Previous wording

Cash used in financing activities during the six months ended June 30, 2025 was $354,000 which related to taxes paid related to net share settlements of RSUs.

Current wording

Cash used in financing activities during the nine months ended September 30, 2025 was $398,000 which related to taxes paid associated with net share settlements of RSUs.

Previous wording

Cash used in financing activities during the six months ended June 30, 2024 was $2.7 million, which consisted of net borrowings of $9.9 million offset by repayments of $12.0 million under our revolving loan facility, and taxes paid related to net share settlements of RSUs of $541,000.

Current wording

Cash used in financing activities during the nine months ended September 30, 2024 was $11.7 million, which consisted of net repayments of $10.1 million under our revolving loan facility with our lender, and net share settlements of RSUs of $1.6 million.