Identiv, Inc.

filed from time to time with the SEC, including the company's latest annual report on Form 10-K, as well as our second quarter 10-Q once filed. Identificers assume no obligation to update these forward-looking statements. I will now turn the call over to CEO Kirsten Neuquist for her comments. Ms. Neuquist, please proceed.

Thanks, Operator, and thank you all for joining our quarter two 2025 earnings call. Before we begin, I'm very pleased to announce that Ed Kernbauer has been officially appointed Chief Financial Officer by the Identis Board of Directors. Ed has been serving as Acting CFO since last month, and today's announcement marks his permanent transition into the role. Ed has been with Identis since 2015, most recently serving as our global corporate controller. He also stepped in as interim CFO in late 2021. Prior to joining Identis, Ed held senior finance positions in the technology and manufacturing sectors and began his career at KPMG. We're excited to welcome him into this leadership position as he continues to bring deep expertise and steady guidance to our finance organization. Now turning to our second quarter business update. We continue to see macro trends driving strong demand for RFID and next generation technologies like BLE, even amidst ongoing global market volatility. Businesses are seeking deeper intelligence into their operations and customer engagement to strengthen their competitive position and better differentiate their offerings. Identiv is enabling that deeper intelligence as we help our customers add digital identities to physical products through RFID. This increased demand is being accelerated by several key factors. The rapid expansion of IoT connected devices, evolving regulatory landscapes, rising anti counterfeiting pressures, and the growing global emphasis on sustainability. RFID and related technologies generate the real world data needed to power digital transformation and increasingly AI. As businesses adopt AI to improve forecasting, logistics, and operations, they need accurate real time data from the physical world. Our products serve as a critical bridge, turning physical items into data generating assets. Identiv is helping to lead this transformation. Our specialized IoT inlays, tags, and labels provide digital IDs that solve real world challenges across sectors. From cold chain logistics to smart packaging to healthcare and consumer electronics. Our devices enable real time tracking, condition monitoring, compliance, security, and more engaging consumer experiences. Financially, our quarter to revenue was $5 million within our previously announced guidance. Our core channel business remains on track, but we are seeing increased competition, particularly within our standard product lines, where several competitors have recently expanded manufacturing capacity. We are also closely monitoring macroeconomic risks, particularly regarding US trade with Thailand. On July 31st, the White House announced a 19% tariff on imports from Thailand. This was generally seen as a positive for electronics manufacturers based in Thailand, as it is a significant reduction from the previously announced 36% rate and positions Thailand as a reliable manufacturing alternative to China. However, the requirements around the amount of Thailand-made components needed to obtain a Thailand certificate of origin is still a source of uncertainty, particularly with new US measures aimed at preventing transshipment. As we noted on our May call, approximately a quarter of our business is exposed to US import tariffs due to our manufacturing footprint in Thailand. We developed a responsible pass-through strategy to protect margins, and to date, all affected customers have agreed to absorb the additional costs. The potential indirect effect on customer demand, especially in more discretionary segments, is less clear. A key highlight this quarter. Earlier this week, we announced a strategic partnership with grocery logistics leader, ISCO, to enhance traceability, efficiency, and sustainability across the fresh grocery supply chain. ISCO is the world's leading provider of reusable packaging solutions for grocery products, and we have been closely collaborating with the ISCO team for several months to develop and launch a BLE smart label that will enable real-time tracking and temperature monitoring of ISCO's extensive global pool of reusable packaging containers, RPCs. With over 400 million RPCs in circulation, the value expected to be provided by our smart label in reducing the waste of fresh produce is significant. The goal is to tag the entire pool of 400 million-plus RPCs over the next four to five years, representing a major volume opportunity. This initiative is a top strategic priority as we are currently producing prototypes for pilot-scale runs and expect to begin mass production in 2026. Operationally, we achieved a major milestone in quarter two by completing the transfer of production from Singapore to our lower-cost facility in Thailand. All customers have been successfully re-qualified, and the Thailand team is progressing well toward full productivity by early next year. A small transition team remains in Singapore to manage the site closure and support continued training in Thailand. Strategically, we are now six months into executing our Perform, Accelerate, Transform, PAT strategy. The key objectives of PAT are 1. To strengthen and optimize the performance of our core channel business, 2. Accelerate our growth through high-value applications, and 3. Ultimately transform identities into a market leader of specialty IoT solutions. We've made measurable progress across all three pillars this quarter, and I will provide more detail after Ed reviews the financials. In closing, despite a challenging macro backdrop, we believe our customers clearly see the value Identiv provides. Our specialized IoT tags, inlays, and labels are not only enabling digital transformation, but are solving real-world industry challenges. These long-term trends not only remain intact and in many ways are accelerating. As a focused, pure-play IoT solutions company, we are executing our PAT strategy with discipline, and we believe this positions us well for sustainable long-term growth. Ed, over to you.

Thanks, Kirsten. Having been with Identiv for nearly 10 years, I'm excited to move into the CFO role at this transformative time in our company's history. I look forward to meeting with the investment community in the upcoming months. In the second quarter of 2025, we delivered $5.0 million in revenue, which was within our previously announced guidance range, compared to $6.7 million in Q2 2024. This -over-year decrease was due to lower sales of RFID transponder products as we continue to exit lower margin business and reduce sales to our largest customer who is working through inventory they built up in 2024 in anticipation of transitioning production to Thailand. Second quarter gap and non-gap gross margin was negative .4% and negative .8% respectively, compared to gap and non-gap gross margin of .1% and .6% respectively in Q2 2024. Factors impacting the decrease in gross margin included incremental costs related to the transition of production to Thailand and the dual manufacturing sites required during that transition, as well as decreased utilization due to lower -over-year revenues. In addition, we recorded adjustments, which included approximately 0.6 million associated with obsolete inventory at our single-part facility. As Kirsten mentioned, we have completed production of RFID devices in Singapore and requalified our customers in our Thailand production facility. Facility shutdown activities in Singapore are progressing as planned and are expected to be substantially completed by year end. Gap and non-gap operating expenses for the second quarter of 2025, including research and development, sales and marketing, and general and administrative expenses totaled $5.9 million and $4.5 million respectively, as compared to $7.3 million and $4.7 million respectively in Q2 2024. The -over-year decrease in gap operating expenses was driven primarily by a reduction in one-time strategic review related costs. The decrease in non-gap operating expenses reflects management's targeted resource allocation to support the company's organic growth initiatives as outlined in the PAT strategic framework. Second quarter gap loss from continuing operations was $6.0 million or $0.26 per basic and diluted share, compared to gap net loss from continuing operations of $6.9 million or $0.31 per basic and diluted share in the second quarter of 2024. This decrease in net loss was primarily due to strategic review related costs of $1.6 million incurred in the second quarter of 2024 that did not occur in the second quarter of 2025. And unrealized foreign currency losses of $0.9 million, partially offset by interest income of $1.3 million. Non-gap adjusted EBITDA loss for Q2 2025 was $4.6 million, compared to $3.7 million in the second quarter of 2024. The decrease was primarily due to Thailand transition costs and adjustments for obsolete inventory at our Singapore production facility. In the appendix of today's presentation, we have provided a full reconciliation of gap to non-gap financial information, which is also included in our earnings release. Moving now to the balance sheet. We exited Q2 2025 with $129.6 million in cash, cash equivalents, and restricted cash. In the second quarter of 2025, we use $3 million in cash. This brings our total net operating cash use for the nine months following September 30, 2024 to $10.3 million. Previously, we expected net operating cash used for the 12 month period following September 30, 2024 to be in the range of $14 million to $16 million. Given our cash usage through Q2 2025 and current expectations for Q3, we are revising this range to $13 million to $15 million for the period ending September 30, 2025. Our working capital exiting Q2 was $137.5 million. Our balance sheet position remains strong, enabling us to pursue our organic and inorganic growth initiatives within the PAT strategic framework. In our 10Q filing, we will be providing a full reconciliation of the 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. We're continuing to monitor macroeconomic risks, particularly those related to US trade with Thailand, as Kirsten mentioned. We're also looking at any indirect impacts these risks could have on customer demand and project timelines. In addition to these risks, we are also mindful of the ongoing competitive pressures on our standard product lines, which have been impacted by increased manufacturing capacity from some of our key competitors. This is causing some headwinds in the shorter term with standard product opportunities. As the macroeconomic environment evolves and we gain more visibility, we're prepared for a variety of possible outcomes. As we continue to exit lower margin business, we anticipate our largest customer will continue to reduce their inventory position. Based on this outlook, as of today's call for Q3 2025, we currently expect net revenue in the range of $4.8 million to $5.2 million. This concludes the financial discussion. I'll now pass the call back to Kirsten.