Identive Group announced preliminary results of its second quarter (Q2) ended June 30, 2013. These results are subject to further review and completion by the Company and its auditors. Identive intends to hold a conference call and webcast to discuss Q2 performance on August 13, 2013.
Preliminary Q2 Results
Revenue for Q2 2013 is expected to be approximately $23.6 million, in the mid-range of management guidance for the quarter of $22 million to $26 million. This represents sales growth of approximately 17% year-over-year, excluding the company's Access Control & Security business, which decreased 41% year-over-year mainly as a result of temporary, sequester-related delays in US government sales. Revenue growth in the quarter came from an 81% increase in Transponder division sales, the tripling of SaaS sales in the idOnDemand division and a slight increase in ID Infrastructure (smart card reader) sales, offset by a 16% decline in ID Solutions sales compared with the same quarter of 2012. The decrease in ID Solutions sales primarily resulted from variability in the timing of orders from payment customers.
Gross profit margin is expected to be approximately 38.9% in Q2 2013, compared with 40.2% in Q2 2012. Operating expenses are expected to be approximately $11.9 million, reflecting an 11% decrease in base operating expenses (sales and marketing, research and development, and general and administrative expenses) year-over-year as a result of cost reductions initiated in the company's 2012 restructuring.
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Q2 2013 Performance Highlights
During Q2, Identive was awarded a $2 million, long-term SaaS contract from a leading technology company, won a major health care customer, and recorded the first meaningful revenue from its idOnDemand cloud-based identity management solution. These new orders begin to build a stable, visible source of recurring revenue in the company's SaaS business.
Producing at full capacity, Identive shipped 46 million RFID tags and inlays (transponders), an increase of approximately 50% over Q2 2012, to address a variety of contactless applications. As a result, year-to-date 2013 shipments are already on par with the total number of transponders shipped in the full year 2012. A number of large orders for NFC inlays and tags to enable M2M electronic games and mobile phone-based applications, such as access and payment, contributed to this growth, with NFC transponders accounting for more than one-quarter of transponders shipped in the quarter. By selling more intelligent products and subsequently moving up the value chain, the Transponder/NFC business also continued improved margin development.
Within its ID Solutions business, Identive won a multiyear contract at a seventh German sports stadium to provide payment systems for concession sales. The company also continued to deploy payment products, software and services under a $4 million contract with a retail food franchise that includes more than 300 locations in Europe.
Adjusted EBITDA in Q2 2013 is expected to be approximately $(1.0) million, below guidance of $(0.5) million to $0.5 million as a result of lower Access Control & Security and ID Solutions sales. The company defines Adjusted EBITDA as earnings before interest income, taxes, depreciation, amortization of purchased intangibles, stock-based compensation, other income (expense), net, non-controlling interest, pension expense, transition and integration costs and any unusual items.
Cash and cash equivalents were approximately $3.7 million at June 30, 2013, compared with $5.5 million at March 31, 2013. In addition to supporting the $1.0 million Adjusted EBITDA loss, principal uses of cash in Q2 included service of financial and related party liabilities and associated interest of $1.7 million plus a build-up of inventories to support customer orders. Net proceeds from capital raised during the quarter amounted to $2.6 million.