Identiv, Inc.

Good afternoon. Welcome to Identiv's presentation of its first quarter 2026 earnings call. My name is Tom 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 management'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 in documents filed from time to time with the SEC, including the company's 2025 Annual Report on Form 10-K, as amended, and the first quarter 2026 Form 10-Q, 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 us for our first quarter 2026 earnings conference call. I will begin with a few highlights from the first quarter as we continue to build strong momentum executing against our perform, accelerate, and transform strategy. As discussed on our last call, we achieved a significant milestone by signing a long-term agreement with IFCO to exclusively supply BLE smart labels for use on their pool of more than 400 million reusable plastic containers. Since then, we have been focused on development activities and expect to begin production for over half a million pilot units shortly, with mass production anticipated to start in the fourth quarter of this year. We also made meaningful progress at our Thailand manufacturing facility, which has now fully transitioned from Singapore. This facility is increasing our ability to serve our customers more efficiently and at lower costs, while continuing to deliver high levels of product quality and service, reflected in the positive feedback we are receiving from customers. In addition, we are continuing to grow our opportunity pipeline, particularly for IDBlue, our portfolio of BLE smart labels for asset tracking and logistics applications. We are seeing strong and growing interest across multiple industries, including global logistics, pharmaceuticals, and food distributors. And we remain on track to make these products commercially available later in the year. Turning to our first quarter financial performance, I'm pleased to report that first quarter sales of 7.4 million exceeded our guidance, with other key financial metrics coming in as expected. As anticipated, We saw a slight decline in gross margin versus the fourth quarter, given the product mix and some additional scale-up costs for a new customer. We expect to see some margin improvement throughout the year as our operations become more efficient, but we will also have some offsetting costs in the second half due to the scale-up of IFCO. We are starting to see some impact from the current macroeconomic environment, primarily in our consumer-facing applications, where demand for higher-end products has softened. At the same time, certain suppliers have implemented price increases. We are assessing and will be taking pricing actions to offset these costs while continuing to focus on delivering value to our customers and maintaining our margin profile. Our CFO, Ed Kernbauer, will now provide a detailed review of our first quarter financial performance, and afterwards, I'll share more on our progress across our strategic initiatives.

Thanks, Kirsten. In the first quarter of 2026, we delivered $7.4 million in revenue, which exceeded our previously announced guidance range, compared to $5.3 million in Q1 2025. The year-over-year increase was as expected and included strong demand from current customers, the conversion of new customers, and the benefit of one of our larger customers ordering their full year 2026 sales volume in Q1. First quarter gap and non-gap gross margins were 17.4% and 23.8% respectively, compared to gap and non-gap gross margins of 2.5% and 10.8% respectively in Q1 2025. The primary factor driving the improvement in gross margin was the transition of production to our state-of-the-art Thailand production facility. This included cost savings and efficiencies achieved in procurement and production, improved facility utilization, and the elimination of manufacturing production costs from our Singapore operation in Q1 of 2025. In addition, the gross margin improvement year-over-year also reflected the benefit from charges recorded in the first quarter of 2025 to cost of revenue related to the write-down of obsolete inventory at our Singapore facility of $0.3 million, and a warranty claim from one of our customers of $0.2 million. Gap and non-gap operating expenses for the first quarter of 2026, including research and development, sales and marketing, general and administrative expenses, and restructuring and severance, totaled $5.5 million and $4.4 million, respectively, as compared to $5.6 million and $4.5 million, respectively, in Q1 2025. The year-over-year decrease in GAAP operating expenses was driven primarily by lower restructuring and severance expenses, partially offset by higher strategic review-related costs incurred in Q1 of 2026 compared to the first quarter of 2025. Non-GAAP operating expenses in Q1 2026 were comparable to the prior year period, demonstrating our continued disciplined allocation of operating expenses as we execute on our PAT strategic initiatives. First quarter gap net loss was $3.4 million, or $0.15 per basic and diluted share, compared to gap net loss of $4.8 million, or $0.21 per basic and diluted share, in the first quarter of 2025. This improvement in net loss was primarily due to the increase in sales volume in Q1 2026, lower restructuring and severance costs, and, as mentioned, the impact of charges to cost of revenue of approximately $0.5 million in the first quarter of 2025. Non-gap adjusted EBITDA loss for Q1 2026 was $2.7 million compared to $3.9 million in the first quarter of 2025. As mentioned, the decreased loss was the result of production efficiencies achieved at our Thailand facility, charges to cost of revenue in Q1 of 2025, and the disciplined spending of operating expenses as we continue to execute it 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 Q1, 2026 with $124.8 million in cash, cash equivalents, and restricted cash. Our balance sheet position remains strong with working capital exiting Q1 of $129.6 million. In our 10Q filing, we will be providing a full reconciliation of year-to-date cash flows. For completeness, we've included the full balance sheet in the appendix of today's earnings release. Finally, I would like to discuss our financial outlook for the second quarter of 2026. We anticipate sales of $5.4 to $6.0 million. As discussed, Q1 sales demonstrated strong growth, driven in part by a significant full-year 2026 customer order placed early to secure product availability. As such, our Q2 sales guidance reflects the pull forward of this volume into Q1. Additionally, the projection incorporates some uncertainty related to softening demand trends among certain consumer-facing customers. As mentioned on our March call, we do expect to see margin improvement throughout 2026 as our operations become more efficient. We do, however, expect some variability in gross margins as we continue scaling production for the IFCO program, which reflects the typical dynamics of ramping production for large programs. Again, it is 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 support attractive long-term margin performance. From a cash usage perspective, we continue to expect to utilize $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 IFCO production, a $1 million increase in working capital to support growth, and $1.5 million to purchase chips, locking in favorable pricing required to fulfill customer orders, which extend past 2026. This concludes the financial discussion. I'll now pass the call back to Kirsten.