Identiv, Inc.

Good afternoon. Welcome to Adena's presentation of its fourth quarter and fiscal year 2025 earnings call. My name is John, and I will be your operator this afternoon. Joining us for today's presentation are the company's CEO, Kirsten Newquist, and CFO, Ed Kernbauer. Following manager's remarks, we will open the call for questions. Before we begin, please note that during this call, management may be making references to non-GAAP financial measures or guidance. including non-GAAP adjusted EBITDA, non-GAAP gross profit, non-GAAP gross margin, and non-GAAP operating expenses. In addition, during the call, management will be making forward-looking statements. Any statement that refers to expectations, 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 and documents filed from time to time with the SEC, including the company's 2024 Annual Report on Form 10-K and Second Quarter 2025 Form 10-Q. and the 2025 Annual Report on Form 10-K, which will be filed with the SEC in the future. IDENTIF assumes no obligation to update these forward-looking statements. I will now turn the call over to CEO Kirsten Newquist for her comments. Ms. Newquist, please proceed.

Thank you, Operator, and thank you all for joining our Quarter 4 and Fiscal Year 2025 Earnings Call. During the fourth quarter, we made meaningful progress across each pillar of our perform, accelerate, and transform strategy. Of particular note, we made significant advancements in the development of the specialized Bluetooth Low Energy, BLE, smart label in collaboration with IFCO, a leading global provider of reusable packaging solutions for fresh food. As announced on Tuesday, we signed a multi-year agreement with IFCO to manufacture and supply these specialized next-generation BLE smart labels. This agreement represents a major milestone in our high-growth BLE strategy and reinforces IDENSA's leadership in scalable, BLE-enabled solutions for complex global industries. Our BLE smart label will be a key component of IFCO's digital platform, designed to transform the global fresh grocery supply chain by delivering enhanced visibility, reducing waste, and supporting a more sustainable circular food system. Under the multi-year agreement, Identiv will serve as exclusive supplier for committed manufacturing volumes. Following the development phase, ISCA will maintain exclusivity for these customized BLE labels as they are deployed across its global network of more than 400 million reusable packaging containers. Full-scale mass production is expected to begin later this year, subject to achieving final development milestones. Turning to our quarter four financial performance, I'm pleased to report that fourth quarter sales of $6.2 million exceeded our guidance, with all other key financial metrics also coming in ahead of expectations. We saw continued strength in growth profit margin, reflecting the successful completion of our two-year transition of production from Singapore to our new state-of-the-art manufacturing facility in Thailand. With the Singapore shutdown now complete, we have completed our second full quarter of operations entirely out of Thailand, which has structurally reduced our cost profile while increasing manufacturing efficiency and scalability. Our CFO, Ed Kernbauer, will now provide a detailed review of our quarter four financial performance, and I'll return afterward to share more on how we're progressing across our strategic initiatives.

Thanks, Kirsten. In the fourth quarter of 2025, we delivered $6.2 million in revenue, which exceeded our previously announced guidance range, compared to $6.7 million in Q4 2024. The year-over-year decrease was as expected, and due to the exit of lower-margin business, which we did not transfer to Thailand. Fourth quarter gap and non-gap gross margins were 18.1% and 25.6% respectively, compared to gap and non-gap gross margins of negative 14.9% and negative 5.2% respectively in Q4 2024. Factors driving the expansion of gross margin included the elimination of direct labor and fixed manufacturing overhead costs associated with our discontinued Singapore operations, and improved utilization of our manufacturing production facility in Thailand. As we mentioned on our November call, we stopped production of RFID inlays and labels in Singapore at the end of Q2 2025. Singapore facility shutdown activities continued through the fourth quarter of 2025, And as of December 31st, 2025, it's now complete. Gap and non-gap operating expenses for the fourth quarter of 2025, including research and development, sales and marketing, general and administrative, and restructuring and severance, totaled $5.8 million and $4.1 million, respectively, as compared to $5.6 million and $4.1 million, respectively, in Q4 2024. The year-over-year increase in GAAP operating expenses was driven primarily by higher strategic review-related costs incurred in Q4 2025 compared to the fourth quarter of 2024. Non-GAAP operating expenses in Q4 2025 were comparable to the prior year period as we continue a careful allocation of operating expenses as we execute on our PAT strategic initiatives. Fourth quarter gap net loss from continuing operations was $3.7 million, or $0.16 per basic and diluted share, compared to gap net loss from continuing operations of $4.3 million, or $0.19 per basic and diluted share, in the fourth quarter of 2024. This reduction in net loss was due to lower direct labor and overhead costs following the shutdown of our Singapore operations. as well as 1.1 million of charges to cost of revenues recorded in the fourth quarter of 2024. These charges were primarily related to inventory written off after a customer phased out a legacy program earlier than expected. These cost improvements were partially offset by strategic review-related expenses incurred in the fourth quarter of 2025. Non-GAAP adjusted EBITDA loss for Q4 2025 was 2.5 million. compared to $4.5 million in the fourth quarter of 2024. The decreased loss was a result from the production transition to our Thailand facility in 2025, the charge to cost of revenue in Q4 2024, and the disciplined spending of operating expenses as we executed on our PAT strategic initiatives as mentioned earlier. 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. Turning now to our fiscal year 2025 financials. Fiscal year 2025 revenue was $21.5 million, a decrease of $5.1 million compared to the prior year period, primarily the result of the intentional exit of certain lower margin legacy business. Fiscal year 2025 gap and non-gap gross margin was 6.1% and 14.3%, respectively, compared to gap and non-gap gross margin of 1.3% and 8%, respectively, in fiscal year 2024. This year-over-year margin expansion reflects a more favorable product mix and significant operational efficiencies following the successful completion of our manufacturing transition to Thailand. Gap and non-gap operating expenses for fiscal year 2025, including research and development, sales and marketing, general and administrative, and restructuring and severance, totaled $23.5 million and $17.6 million, respectively, as compared to $28.3 million and $17.9 million, respectively, in fiscal year 2024. Fiscal year 2024 GAAP operating expenses included 5.3 million of incremental strategic review-related costs compared to 2025. Fiscal year GAAP net loss from continuing operations was 18 million, or 79 cents per basic and diluted share, compared to GAAP net loss from continuing operations of 25.9 million, or $1.14 per basic and diluted share in fiscal year 2024. Non-GAAP adjusted EBITDA loss for fiscal year 2025 was $14.5 million, compared to $15.8 million in fiscal year 2024. This relative stability in adjusted EBITDA, despite lower year-over-year revenues, was primarily driven by the reduction in manufacturing overhead and targeted allocation of operating expenses as we execute on our PAT strategic initiatives. Moving now to the balance sheet. We exited Q4 2025 with 128.9 million in cash, cash equivalents, and restricted cash, which is a sequential increase of 2.3 million over the third quarter of 2025. This increase included an income tax refund of 2.9 million and a prepayment of 2.8 million from a new customer to procure product for their full 2026 projected sales volumes. Excluding these items, Operating cash usage net of interest income for the fourth quarter was approximately 3.4 million. Our working capital exiting Q4 was 133.3 million. Our balance sheet remains strong as we move into 2026. In our 10-K filing, we will be providing a full reconciliation of full-year cash flows. For completeness, we have included the full balance sheet in the appendix of today's earnings release. As we look ahead into 2026, we anticipate Q1 sales of 6.7 to 7.2 million, which includes the benefit of one of our new customers ordering their full year volume in Q1. This would be an anticipated increase of 26% to 35% over the 5.3 million in sales that we reported for Q1 of 2025. Throughout 2026, we do expect some near-term variability in gross margins as we begin scaling production for the IFCO program and for another new customer in Q1. This reflects the typical dynamics of ramping production for large programs. It's important to note that the underlying cost structure improvements from our manufacturing transition remain in place. As these programs mature and volume scale, we believe they will support attractive long-term margin performance. From a cash usage perspective, we expect to use $14 to $16 million in 2026, excluding strategic review-related costs. This includes the cash required to support ongoing operations, plus $3.5 million of capital expenditures primarily related to the IFFCO production, $1 million increase in working capital to support growth, and $1.5 million to purchase chips, locking in favorable pricing required to fulfill orders which extend past 2026. This concludes the financial discussion. I'll now pass the call back to Kirsten.