Identiv, a global provider of physical security and secure identification, reported financial results for the first quarter ended March 31, 2018.
Identiv, a global provider of physical security and secure identification, reported financial results for the first quarter ended March 31, 2018.
Recent business highlights
- 23% year-over-year revenue growth in Q1 2018
- Strengthened balance sheet and expanded and improved line-of-credit terms
- Acquired and integrated 3VR; product integrations already demonstrated and selling
- Cross-selling accounts and channels already underway in major verticals: Government, Retail, Banking, International
- Credentials segment revenue up 26%, Premises up 40% year-over-year
- Product throughput accelerating:
- Product launches demonstrated at RFID Journal LIVE! and ISC West trade shows across mobile, web, biometrics, IoT devices, real-time location services (RTLS), and visitor management
- Launched Velocity 3.6 SP3, key release of flagship product, including TS ScramblePad SC with integrated smart card reader for DoD applications: combined Identity and Premises technology strengths
- Launched advanced analytics trial for demographic and behavioral analysis Core business steadily progressing due to strong execution and exposure to high-growth markets and industry catalysts
- Achieved major milestones towards Company vision of making the physical world more digital and secure
First quarter 2018 financial results
Revenues for the first quarter of 2018 were $16.5 million, in line with $16.6 million in the fourth quarter of 2017 in contrast to the typical seasonal sequential reduction in previous years, and reflecting a year-over-year increase of 23% compared to revenues of $13.4 million in the first quarter of 2017.
Revenues in the Premises segment, which includes the company’s physical access control solutions on the Hirsch Velocity and Cisco ICPAM platforms as well as the 3VR branded video and analytics solutions, grew 6% sequentially and 40% year-over-year. The year-over-year growth was driven by the inclusion of 3VR revenues from video solutions and analytics, as well as from higher sales of physical access control solutions. Revenue in the Credentials segment grew 9% sequentially and 26% year-over-year. Revenues in the Identity segment declined 25% sequentially and 10% year-over-year as seasonally expected, while backlog and product launches underpin expected full-year growth.
GAAP gross margin was 39% in the first quarter of 2018, compared to 30% in the fourth quarter of 2017 and 43% in the first quarter of 2017. The sequential gross margin increase partially reflects inventory reserves recorded in the fourth quarter of 2017, and the year-over-year decrease partially reflects normal fluctuations in our product and channel mix within the product categories.
GAAP operating expenses were $8.3 million in the first quarter of 2018, compared to $7.0 million in the fourth quarter of 2017 and $6.6 million in the first quarter of 2017, reflecting a sequential increase of 18% and a year-over-year increase of 24%. The increase in expenses was primarily due to the acquisition of 3VR.
Non-GAAP operating expenses for the first quarter of 2018 were $6.6 million, compared to $5.8 million in the fourth quarter of 2017 and $5.7 million in the first quarter of 2017, reflecting a sequential increase of 13% and a year-over-year increase of 15%. Non-GAAP operating expenses on the historical business were in line with the Company’s previously stated target of less than $6 million on a quarterly basis, and increased following the acquisition of 3VR.
GAAP net loss totaled $2.3 million, or $(0.15) per share in the first quarter of 2018, compared to $4.5 million, or $(0.31) per share in the fourth quarter of 2017, and $0.7 million, or $(0.06) per share in the first quarter of 2017.
Non-GAAP adjusted EBITDA for the first quarter of 2018 totaled $0.2 million, compared with $1.3 million in the fourth quarter of 2017 and $0.3 million in the first quarter of 2017.
Fiscal year 2018 guidance
For the fiscal year ending December 31, 2018, the Company expects revenue to be between $74 million and $78 million, and non-GAAP adjusted EBITDA between $4 million and $6 million, confirming its previously issued guidance.
Management commentary
“Q1 was an exceptional quarter for our company, building on the strong momentum coming out of 2017,” said Steven Humphreys, Identiv CEO. “We grew revenue by 23% year-over-year, which is two to three times faster than the industry, demonstrating that we’re actively adding share and making a bigger impact in the markets we compete in. We’re especially encouraged by the revenue growth, product launches and cross-selling pipeline in our Premises segment, which have been driven by improved execution and the addition of the 3VR video analytics platform. The 26% organic growth in our Credentials segment is equally encouraging, as existing customers deploy our RFID solutions across more product lines, and new customers launch solutions, building pipeline and backlog for growth already extending into 2019. We generated positive adjusted EBITDA for the seventh quarter in a row, showing consistent and predictable strength in our business platform and moving toward positive GAAP net income.
“We hit the ground running particularly from a product standpoint, launching and developing multiple products during the quarter across all of our segments, reflecting our accelerating development throughput. These new products are being well received by our customers and partners, both reflecting the growing demand we’re seeing for our innovative solutions and the desire for trusted vendors providing full-stack solutions and platforms. This strong reception has not only created additional interest in our solutions, but has also helped expand our backlog and pipeline.”
Sandra Wallach, Identiv CFO, added: “Based on our recent results and growing pipeline, we remain on track to achieve our double-digit revenue and adjusted EBITDA growth targets for 2018. We believe that by continuing to execute on our key initiatives, we will not only realize greater business and financial scale, but also expand our margins through core business growth, operating expense leverage, and longer term, the delivery of a complementary set of software and services. Ultimately, we believe this will drive us to achieve our long-term business model, while building a fully-scaled platform that can drive continued, profitable growth moving forward.”