Identiv's Q3 2025: Contradictions Emerge on IFCO Production Timeline, Gross Margin Goals, and Grocery Project Timelines

Date of Call: November 10, 2025

Financials Results

• Revenue: $5.0M, within guidance, compared to $6.5M in Q3 2024
• EPS: $0.15 loss per basic and diluted share, compared to $0.40 loss per share in Q3 2024
• Gross Margin: GAAP 10.7% and non-GAAP 19.1%, compared to GAAP 3.6% and non-GAAP 9.3% in Q3 2024

Guidance:

• Q4 2025 net revenue expected to be $5.4M to $5.9M.
• Expect continued margin expansion over the next few quarters as Thailand reaches full productivity and Singapore shutdown is completed by year-end.
• Capital use and operations expected to remain disciplined while scaling NPD and BLE commercialization.

Business Commentary:

• Revenue and Sales Performance:
• Identiv reported $5.0 million in revenue for Q3 2025, within the previously announced guidance range.

• The year-over-year decrease was driven by lower sales as the company exited lower-margin businesses earlier in the year.

• Gross Margin Improvement:

• GAAP and non-GAAP gross margins improved to 10.7% and 19.1%, respectively, compared to 3.6% and 9.3% in Q3 2024.

• This was attributed to the reduction in fixed manufacturing overhead costs and direct labor costs at the discontinued Singapore operation, improved utilization of the Thailand manufacturing facility, and sales of fully reserved inventory.

• Operational Efficiency and Cost Management:

• GAAP and non-GAAP operating expenses decreased to $6.1 million and $4.5 million, compared to $9.8 million and $5.1 million in Q3 2024.
• The decrease was primarily due to reduced strategic review-related costs and targeted resource allocation to support organic growth initiatives.

• Manufacturing Transition Success:
• 100% of RFID tags, inlays, and labels are now produced at the new state-of-the-art Thailand facility.

• This transition has lowered manufacturing costs, improved operational efficiency, and enhanced scalability, laying the foundation for continued margin growth.

• BLE Technology and Strategic Partnerships:

• Identification of notable progress in R&D and new product development for BLE technology, with successful production runs of IFCO BLE prototypes and Wiliot's next-generation pixels.
• Formalized strategic partnerships with Wiliot and IFCO to scale up BLE technology, leveraging Identiv's expertise in multi-component manufacturing and next-generation RFID technology.

Sentiment Analysis:

Overall Tone: Positive

• "sales were in line with guidance with all other key financial metrics exceeding expectations," management said; CFO noted "we delivered $5.0 million in revenue, which was within our previously announced guidance range." Management highlighted 100% production now in Thailand and expects further margin expansion as Singapore shutdown completes.

Q&A:

• Question from Craig Ellis (B. Riley): For Q4 you're expecting sales up about 11% — what's driving the sequential growth across channel and NPD conversion, and what are the key tailwinds and headwinds as we exit the year?
  Response: Growth is driven by both existing channel customers and increased traction from BLE projects entering the field.

• Question from Craig Ellis (B. Riley): On BLE — is IFCO on track for volume shipments in the second half of next year, and what is the potential with Wiliot for next year?
  Response: IFCO product development is progressing with production prototypes in field POCs; Wiliot next‑generation qualification is underway and next‑gen units are being shipped to the field, both representing scalable opportunities.

• Question from Craig Ellis (B. Riley): Given Singapore shutdown benefits and higher-quality revenue, what should we expect for gross margins in Q4 and any headwinds to be aware of?
  Response: Benefits from reduced Singapore fixed costs will continue, but full margin impact likely won't be realized until Q1 as shutdown activities and Thailand ramp finish.

• Question from Craig Ellis (B. Riley): As mix shifts toward NPD, what uplift should we expect from higher-margin products?
  Response: Expect a slight mix and utilization improvement in Q4, but some Singapore shutdown and NPD ramp costs will temper near-term margin gains.

• Question from Anthony Stoss (Craig-Hallum): You mentioned conversions — when will converted opportunities show up in the P&L and how many have you converted year-to-date?
  Response: Year-to-date we converted ~18% of new opportunities (about 10% of Q3 sales); these will scale into 2026 and show revenue as programs commercialize.

• Question from Anthony Stoss (Craig-Hallum): Roughly what percentage of the converted opportunities meet or exceed your 28% gross margin goal?
  Response: Approximately two‑thirds of converted opportunities are above ~30% gross margin, with about one‑third slightly below.

• Question from Anthony Stoss (Craig-Hallum): Can you frame the size of the Wiliot opportunity and anticipated gross margins?
  Response: Not disclosing ultimate volume; expect Wiliot margins to be significantly higher than they were two years ago and to improve further over the next 3–4 quarters.

• Question from Anthony Stoss (Craig-Hallum): Where do healthcare opportunities stand and what is the timing to commercialization?
  Response: Healthcare remains a meaningful, long‑term opportunity (~1/3 of NPD), but these projects take longer to commercialize versus logistics/consumer initiatives.

Contradiction Point 1

IFCO Opportunity and Production Timeline

It involves changes in the expected timeline for a significant volume opportunity, which could impact revenue forecasts and investor expectations.

Is IFCO on track for shipment volumes in next year's second half? - Craig Ellis (B. Riley Securities, Inc., Research Division)

2025Q3: IFCO's product development is progressing well, with prototypes in the field for testing. - Kirsten Newquist(CEO)

What is the scale of this opportunity in the grocery space and when will it impact the model? - Jaeson Allen Min Schmidt (Lake Street Capital Markets, LLC, Research Division)

2025Q2: Mass production is expected to start in 2026, but there are uncertainties in the development program. - Kirsten Newquist(CEO)

Contradiction Point 2

Gross Margin Improvement Expectations

It involves changes in expectations regarding gross margin improvement, which are critical financial indicators for investors.

What are your expectations for gross margins in the fourth quarter? - Craig Ellis (B. Riley Securities, Inc., Research Division)

2025Q3: We expect gross margins to continue to benefit from the Thailand facility's cost reductions, but full impact will be seen in Q1 2026. - Edward Kirnbauer(CFO)

How should we think about gross margin in Q3 and Q4? - Jaeson Allen Min Schmidt (Lake Street Capital Markets, LLC, Research Division)

2025Q2: After completing production in Singapore, we expect a positive impact on margins in Q3 and Q4. - Kirsten F. Newquist(CEO)

Contradiction Point 3

Tariff Impact and Market Uncertainty

It pertains to the potential impact of tariffs on customer behavior and market conditions, which can influence sales and revenue projections.

What's driving sequential growth in Q4, and what are the key tailwinds and headwinds as we exit the year? - Craig Ellis (B. Riley Securities, Inc., Research Division)

2025Q3: We've gotten some concerns from customers regarding tariffs, but no significant impact yet. There's uncertainty and caution in the market due to changing tariff circumstances. - Kirsten Newquist(CEO)

Can you elaborate on the indirect impact of tariffs on customers in your pipeline and any cautions you're seeing? - Rian Bisson (Craig-Hallum)

2025Q1: We've got concerns from customers regarding tariffs, but no significant impact yet. There's uncertainty and caution in the market due to changing tariff circumstances. - Kirsten Newquist(CEO)

Contradiction Point 4

Grocery Logistics Project Timeline

It involves the expected timeline for the completion and launch of a significant project, which can affect revenue expectations and customer satisfaction.

What's driving Q4 growth sequentially, and what are the key trade-offs between tailwinds and headwinds as we exit the year? - Craig Ellis (B. Riley Securities, Inc., Research Division)

2025Q3: As we continue to make progress on the new product development, specifically with IFCO, we are seeing great traction with our BLE projects with several customers. - Kirsten Newquist(CEO)

When will the grocery logistics deal close? - Rian Bisson (Craig-Hallum)

2025Q1: The project is tracking as planned. The customer is pushing for it, and trials are expected towards the end of the year, with the project going live in the middle of next year. - Kirsten Newquist(CEO)

Contradiction Point 5

Grocery Store Device Opportunity

It involves the timing and potential impact of a grocery store device opportunity on ASP, which could influence revenue expectations and product strategy.

What are your expectations for fourth-quarter gross margins, and are there any headwinds to consider? - Craig Ellis (B. Riley Securities, Inc., Research Division)

2025Q3: We do expect to see some increase in higher margin NPD sales in the fourth quarter, although we are still in the ramp-up phase. - Kirsten Newquist(CEO)

What is the impact of the grocery store device opportunity on ASP and timing? - Anthony Stoss (Craig-Hallum)

2024Q4: This BLE device is a higher price point than typical products. It's designed for harsh environments and is expected to launch towards the end of 2025 or early 2026, with significant buying potential. - Kirsten Newquist(CEO)