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INVE Identiv

Participants
Steve Humphreys Chief Executive Officer
Sandra Wallach Chief Financial Officer
Manfred Mueller Chief Operating Officer and General Manager
Jaeson Schmidt Lake Street Capital Markets
Mike Latimore Northland Capital Markets
Craig Ellis B. Riley Securities
Jeff Kessler Imperial Capital
Call transcript
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Operator

Good afternoon. Welcome to Identiv's Presentation of its First Quarter 2021 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, Steve Humphreys; and CFO, Sandra Wallach.

Following Management's remarks, we will open the call for questions.

note to this including non-GAAP and cash please be management adjusted begin, free references making measures flow. we that call, during may EBITDA Before or projections,

statements. management or results projections characteristics may statement. those market of financial from be call, conditions to including other this expressed events, differ forward-looking or during that refer materially addition, making In statements. in Actual forward-looking projections Any future is statements expectations, forward-looking will these future a

the latest risk update time Identiv Sir, Steve CEO, to the discussed on For in the as from his more refer for obligation these Humphreys information, XX-K. filed factors to speak turn which call SEC, of documents please over proceed. to Form statements, no please comments. assumes including annual today. to with forward-looking now time I the company's report will

Steve Humphreys

all revenues in thank XXXX, in us. Thanks, business. by our Overall, our you growth year-over-year, in over grew total, XX% continued led RFID XX% the of our to momentum operator, for grow, especially our Identity grew first business. quarter business our joining and XX% RFID In

in other in versus backlog XX% quarter the Our of date up first and also units year metrics to strong XX We the of growth booked shipped increase RFID million million XXXX. profitability the progress. grew units are QX, our in XX% XXXX an And QX, XX Total versus XXXX, of made units key QX prior. at orders end from XX%. QX, the end of month QX

were from as our first more QX, business we showing leverage expenses quarter X% from down in up scale. showed Expenses clearly our the in leverage also XX%, We XXXX, while revenues operating were model.

to new quarter. of in getting designs more design customers and and all production Our complicated expanding cycle, wins, made moving core third the new and generation designs, first customers production, second progress through the bringing growth with strategies new

drivers of designs. the growth now to of of quarter. new with of on for of expanded in and done Starting volume expansions, some we've specifics the in So, customer for number the launches designs each year the committed these this orders customers the second-half here's several existing we've them, and first our

number design major provider For designs production for on doubled now under mobile committed eight. designs first within completely last the more discussion volumes of ramp device another We introduced one this year, more different to from year. complete, with are to actually. also two to the of the example, cases. the four is four customer, are use under groups product second-half other nearly with designs contract we Two We've been already and started two

revenues we these with expect in keep growing from expansion So, upcoming customer to trends, years. this

that's to with case self-testing, right is do data no product so design our and to only which it's soon. false there's results, completed private, the to has kits. use chemicals, customer test work is the drugs planned for Another self-test be changed, devices With has kept data secured can't a a but in be launch the encrypted, and and

RFID-enabled impaired, finding pilot acceptance them, CVS customers our for a visually is us pharmacy the processes is impaired where market The and now well. that tells for third visually one another customers the pharmacists anecdotally in of easy RFID early also prescriptions. in is update mass for going one category, prescriptions are among really programming chain this related And the that

across unit use disclose customer a case, half can't we numbers all market can the positive visually and but Now impaired what people. for billion prescriptions of for feedbacks become course,

we've we've Our new have are of running, appliances. at had is growing, high-end people fourth high-end customer bought This case as volumes use because lot home, is consumables appliances. for stayed design all in a but a

use different very Now, all these are point. but cases, the that's

markets, can of new in as lots drive and customer across and scale. our designs. in seeing which expansion of they volumes continued launches We growth have growth We're each opportunities

at the in look let's now design first So, wins quarter.

the higher price technology. for again complicated I'll Here, pipeline points is potential, good couple volume strong, more a just so describe with

in event venues. theme other critical for ever. the These but to make parks is need most visitor revenues density. starting first is The are lower The each possible and from to wristbands reopen, actually than with more

is multifunction, So, a way device happen. to make friction wearable RFID a low this

As design we're options features. a of through a with range working result, different

robotic for one is Another design wins the win of and exciting high-end for QX third, in was syringes. design in most floor A consumables, cleaners.

dispensed we're other dispense Now incorporating at these rate as as In amounts, data be at temperature exactly design, multi-sensor insertion. have fluid right are this treatments the super precise to for right the including cancer, measurements, and features, dispensing well and exact that and autoimmune temperature, right protection. and authenticity in auto injectors needle the

we're the all in be in to XXX Now since means RFID It'll volumes this to that talking take projects the but approved FDA our get about $X will devices, production a customer million of units. range. while to device $X.XX

more expect so So is respond foreseeable very hits, be similar the Also, in others have future. opportunity business for grow it industry high, be whenever customer will with able Switching will we for the we will which costs to opportunities to the features, major. with us. means the

this as expansion and for complicated, us, see designs a continuing AUPs, gross more like expansion, this, get So, strong margin devices competitive example. like with position in we

also X-ray radiation operate need cases. around X-ray, that We of technology scanners, our continued scanners, devices systems for CT proof launches, these PET RFID customer environments, medical couple for including to use and in new applications a a device specific developing

was levels. is segment RFID growth into will year-over-year. premises from end more the Federal now Now the leading comments. premises product the now for go second us growth the to cycle I'll premises of make in ahead as us almost pre-COVID X% quarter, for put quarter. delayed entire details first forward-looking of quarter. our quarter growth premises of our XXXX This build the year-over-year, XXXX, above remember, But in been QX, the deployments saw beyond high around the XXXX. first first coming about In which to This momentum in of our government. pre-COVID Commercial our We back means started towards growth last the segment, a in exited is year, up that for expect the projecting and strength businesses were starting premises launches. we we've new XX% quarter grew

products. on retention, our we third focus revenue customer customer and predictability track QX, on RFID, kept RFID. is record In by retention of is Our a strategic predictability. In repeatability and consumable focus XXX% driven in

XX% premises, by recurring software use of hear our this recurring of revenues. category in can consumables revenues. QX, We services is you of also we the prescriptions software cases. appliances, predictability And the driven and revenues In premises kept in syringes, as use and and expanding grew service to other

So even strength in growth seasonally our in lowest our QX, growth showed quarter.

and and Just market areas as beyond. technology focus. strong us these launches, design the retention remain RFID launches And and and QX. important, great of The wins in customer made recurring are we customer supporting XXXX leadership a of expansions, wide Federal revenues, our range got and progress growth, and all

Sandra? turn this So, to quarter I'll for rest first financial highlights quarter. the of hit and the over before into next to getting call the the Sandra year,

Sandra Wallach

Thanks.

quarter and Steve double the $XX.X up the have quarter, track in of quarter XX% mentioned, We XXXX. of on exiting the the first XXXX our and revenue, reflect million quarter us business beyond. XXXX, of first fourth for closed growth first and to the As in our out compared XX% financial XXXX, with digit strength results remainder down of to compared

growth RFID of in driven growth year-over-year growth versus our a was first to certain our during offset verticals our in powered shipped units in million increase impact the business, partially by select on Our X% by devices, QX, Federal and XXXX, XX% continuing XXXX. COVID largely QX, business, premises the pre-COVID over XX quarter with by XX% customers,

revenue Our recurring at quarter stable first and our for both X% XX-months. remained trailing

XXXX, and in of XXXX. were GAAP profit XXXX, XX% quarter of and our respectively, first XX% XX% and the and first the in gross quarter XX% the fourth margins and quarter to adjusted non-GAAP compared XX%, XX% of For

XX% For within margin continue XX%, and XX-month within revert across to margins the changes period, GAAP mix to primarily Gross expect respectively. resulted levels were and we and as segments, our gross margins non-GAAP from adjusted XXXX. to our historical trailing profit

positive non-GAAP first million, X% of X% of in QX XXXX. compared in XXXX, margin was the $X.X quarter, with and adjusted QX, in reflecting results negative EBITDA Our X% positive

non-GAAP period, trailing our positive XX-months X%. EBITDA adjusted margin For the was

share Our in a million, $X.XX QX QX, share, or of was per net and per of loss a $X.X XXXX. QX, loss GAAP million, a of $X.XX or XXXX, loss compared $X.X a share $X.XX loss per of in a million of loss or loss with $X

cost We've with growth and impact non-GAAP the ETF today exceeded expectations is on included the of the line provided earnings in summary, RFID saw $X.XX devices, Appendix our external reconciliation managed we GAAP segment expectations. and on which in of better the in of also information, of versus our overweighting mix the So release. met delivered continued a full to top-line,

further products, slide which analyzes by and XX% The XXXX, card lower primarily from of decrease as as QX, well of by segment, of smart year-over-year readers of totaled in is XXXX, with compared higher primarily XX% RFID smart Identity, beginning revenue of a of transponder RFID higher Identity offset seasonality was from or sales million XXXX. card sales The partially higher increase and trends was sales decrease our XX% of card transponder XXXX. access cards. QX, by $XX.X access sequential our next revenue normal driven products and from products sales, by QX, Our total sales driven to an QX, readers increase

very GAAP higher and early QX, from as our RFID of compared segment to XX%, Identity capacity we XXXX than QX, lower are the strategies, margins revenues. due continue investment increased of at XX%, growth to in grow the their to to at XXXX QX, deployment a Our proportion driving stages customers into XX% XXXX, which RFID rapid and

compared with $X.X of year-over-year of of X% Turning to recovery increase this fourth strength Federal increase and normal business in in segment other due in total quarter of and GAAP an segment, premises margins segment of the or the accounted the QX products were our the of continued seasonality. sequential in XXXX, revenues XX% of mix XX% in for from was QX, verticals. segments. decrease the and million The select the our from reflects premises XX% XXXX. representing XXXX, to QX, in compared to The change due premises XXXX, within X% first XX% revenue, the quarter the revenue for to

expense our Now management. moving operating to

Our first million to GAAP for $X.X down of QX compared of and quarter were operating expenses the with compared XXXX. $X.X the XXXX, quarter first million,

of severance as in stock-based such our results, depreciation XXXX. adjusted totaled non-cash This normally charges exclude to compared the first QX XXXX, non-GAAP million operating pieces non-GAAP a from and quarter $X.X and million $X.X in compensation of million costs, the certain $X.X amortization, XXXX. non-GAAP increase and together, QX $X.X compares EBITDA to Bringing was Our all expenses million restructuring the in and $X.X adjusted of first back in to the of excluded and XXXX, our XXXX. QX, million quarter

provided, QX planned cash we we driven net approximately $XX.X units. QX, factory by million million RSU delivered Under balance from our exited the increase offset QX was million a the XXXX, to activities, The to capital revolver, net EastWest for XXXX XXX releases. to $X.X invested $X.X of had Singapore of increase the for sheet, QX cash our were in tax Bank capacity in was quarter borrowings to used a key with our expenditures million financing million cash, related in expansion increase tranche by $X.X support as million $X $X.X the million in $X.X XXXX. net under Turning in drivers and of activity payments a million from next of of

for the In of of an able shares success million. proceeds additional issue follow-on recent we stock of X.X offering, $XX.X gross addition, given to million were our common

second-half as be have We agility line a reconciliation promissory the for will growth of the reduced capital flows. our the on XXXX. provide off of interest to year-to-date note our growth, our providing track we business filings, we of the working paid current XX-Q into In flex will last going of trajectory credit. expense and additional cash This full

previous Appendix. year Due full we've completeness, the $XXX million. included operational confident with in the of our the end balance guidance the For sheet first for momentum exiting today, at the we're lower the full for of XXXX to XXXX, quarter earnings release

QX, Exiting We XX, we this on will $XX XXXX, growth. as share metrics of continue our million. backlog was March at journey QX

the seen period their April in we over customers As finalize prior for as the same schedules shipments backlog of XX% XX, from our have year. increase QX

date is continue prior confidence to to expected quarter-over-quarter. Our the in to seasonality to our of have with the second million, strong same booked Normal XXXX. building total over continue XXXX momentum first-half $X.X the of at growth orders XX% for guidance period new And XX% quarter we is in XX% revenue first-half over year. of

of continue we'll and number we monitor as that I'll to be discussion, assess year, the updated As to able back guidance accurately Steve. the appropriate. This the concludes second-half we'll more to it financial pass provide and

Steve Humphreys

Thanks, Sandra.

for As our financial on we're XXXX. track show,

stronger. for we first wins Just upsides were in a launches, our and the year, for in we our and In are the second-half. of indications both goals new hit QX, quarter. the And drivers RFID, second the think we're they'll in getting near-term of strong quarter design as and position with the growth strong rest customer keep technologies

growth. our few every engineer we're products. that small that who's we've these quarter on with And our our in have of get production next the going and and talk one this go-to-solution support community demo kit, RFID developers into on direct different thinking that of the We're about core competitive is engineering future code, can't The launching front to the to for team. let own a one support integrating our we're features, from want want to customer to this which I'll does RFID direct drive will calls. actually application. designs. We we're high-end provider addition the with of Since prototype XXX-million-unit others experts. RFID their RFID In industry runs, that their we're We to apps, them several focus to quarter, include of know leverage and launching to be got and several from in developers’ we going all. of initiatives NFC-enabled devices that engineers be mobile chips sample two about samples our advantages, building

range. the keep them partner from improve they expertise and and the launch pilot go deepest to big keep as we're prototype their think to help widest cycle, be them the Because hit, whoever to So them bigger and we'll new designs get RFID design has the with able to there, we products. production, through then and we product

and key is kit funnel community Our market is the the expand that right using the field developers’ open. we're round our while of strategies grab and wide to leadership one now,

analog are systems. technology. our in digital because growth complicated, our Another making investment accelerate we're to is production RFID devices mixed they're and

convert acceleration, others automation last capabilities multi-component others support we sensors earnings to strengthens to average margins, digital we analog designs multi-device those sensor cases our prior retention wheels, a obviously and launched analog to part into of sensors. the the of multi-sensor and starting sensors use capacitive about month, to customize using using small of always for talked planned analog are add into adoption They temperature sensors I sensor and drives a process specify, and As want capital temperature, incorporate have bike prices year, and we've RFID equipment be humidity, deliver to and pressure program. on system. call integrated we've systems. last devices. for more to This and feel be their accelerated automated our product them. some integrated and rate raised We and a the with enable We've develop With increases We're to values the systems subsystems. of up production this devices. our the and software customer then RFID sensors

take and now. marketing, to but up selling and can designing systems months will it Now we running, get some start

see start out, private designing. As months they're especially prototypes the only know in a they capabilities to place, our production long are likely already as can customers and if few

doing or and mode to us this, scooter and go, syringes that on these, been they're we've hundreds Getting but multi-center do small scale market's a head customers have Bike to millions high sooner. scale, for need units. hard to harder use shoes likely accelerometers running the and are design more take ready runs. complicated another systems try of early cases like and devices, potential they development. multi-passes, especially to competitive Now capabilities all for volume to tire the creates it's much like of in prototype pilot If devices with are start to sensors,

start on a the and have with usual Now customers. system six longer RFID cycle use soon a project customer now, to the be it'll eight to design up months means to and to and being able get few production. to multi-component lead design even the then take deeper get clear, there's starting But, have the competition through we we from designs, months running, design to cycle, lock-ins

and kits give over we multi-device our baseline our XXXX drivers, especially strategic will are So upside RFID XXXX, automation us and developer's two think outlook.

on that's core Now because growth I RFID, driver. our focused

we Our we're strong, focus growth near-term. weak and doing seeing fiscal great State in states share. the premises local government and spending, we government health recurring our of part and of up Federal state security as level, both also expanding are the need federal drivers from the demand physical see a the lined lots infrastructure revenue strong our and strength. on market we're thought growth In Combining at for particular, to be is local State Federal, With products. pandemic of and for in investments, improved Even business at look and sales that physical level financially the well. going the security, do

in opening we than carries be projected gross that second comments, driving margins. supports can to As towards margins, higher I the EBITDA more This XX% the growth quarter that for my it we're growth premises. trending mentioned for in even expanded And year-over-year overall first-half. XX% XX% the

were strengthened expected. we the strategy trends are looking the for in and our year the than of the So quarter, better foundations first

automation These major to major a over at mentioned to mentioned a be delivered and a of projected a earlier, advantages. represent we've and for and where national billion-unit half units cases to before. market impaired. billion multi-sensor platform a advantages of high units these keep prescription developer's potentially, XXX the now I sample point, opportunity, cannabis first and price cases the because of mentioned I program bottles volumes, huge are of this leading, any for cannabis before bottle mover just hundreds adding to we'll just syringe thousands one designs progress. in use We're kit visually we've syringes barriers are program, higher the and of think over they're continuing include million competitors. We vendor use prescription a building Some is The the with units, billions

in It to month. a our addition capital reasons. you Now, strengths, core had was three know, successful technology as important for last raise we

The financial putting ourselves so see in to ready which of launch investment, faster needs, shortages insulate part We're contracts scale bigger our go. would, first aggressive hitting us we multi-technology balance of aggressive mode, investments. able companies. was customers’ that many from to advance We in the the competitive that comes being steps in getting more prior immediately reactive from taking because This now encourage immediate the like invest operate course, to to lead. an a give they mentioned to we're to were I customer and more to to We're things again with capabilities build sheet, fund to also accelerates earlier. strength than adoption, in place were are automation, and but they customers even with inventory

of XXXX. year, raised a this all for able demand Lastly, the is expansion Canada billion there's U.S. especially us units, soon capital need the an faster XXXX will to this Because and help With production particular could to these in one in we're needed. and up and for in-country use that capital, plan case think will or as we in drive factors, as grow

to the have equity The times to second business community, visibility XX presenting business raising. opportunity raise worked. reason was investment for By demand we're found this the the our to of our for the and increase we almost seems also opportunity

raises $XX the talent, easier our competitors visibility for be investment incredibly It to the a builds in amount industry, we from to customers hire aggressive. also grateful puts raise And more confidence and support from million. that notice community. got million even So that great to it we the upsized on makes show $XX we're we're with the going

position our time in really to Now's puts a submit in market. capital ahead. the leadership raised to jump us we've further even The

to returns generate who major you on thank working those So, to all We're investments. participated. hard

growth to the just some indicators weeks. last wrap-up, here's from few So

same over As Sandra up we're quarter-to-date new time second the the for million now $X year. mentioned, in quarter bookings XX%, last versus

with expansion programs strengthening alcohol consumable of from the putting the use controlled with medical to a to underway trends, XXXX cross Federal marketing in designs and and our have replicate get visibility and We us others. quarter devices, higher is customers XXXX, substances and as We and clearly fast of launching revenue We're cases, we up a potential. in project growing revenues. the of recurring continuing and over RFID and industry predictability XXX-million-unit solutions XXXX. is dozen into multi-million several of rest transportation, rates, customers, second like cannabis unit, to see returning more into prescriptions, bicycles, growth spending the personal these balance position one,

business. mention Dr. runs So discussions. RFID with questions who with But that to on our open let first me Manfred the line also that, Mueller, have me, we I'll and

whatever are the them guy the in there RFID-related business. we cover if questions, from can we and depth who's So, directly driving need,

open the for please operator, discussion. lines So the

Operator

Thank you.

Please We will Jaeson, live. Jaeson take your first And line from is question Instructions] proceed. now your [Operator Street. is Lake coming questions. from Schmidt

Jaeson Schmidt

for been has Thanks correct? and million, that I fully take shift start sort the and million to make taking range for I understand Is We mean guys. in feel to million with competent you expectations. questions. was want that about shouldn't down figure. of just any it. that $XXX there $XXX want to just to Hey, previous I mean, my guidance sure $XXX

Steve Humphreys

No, the opposite.

to we of we going million. is $XXX in we moving In the update the the range not fact, of to was And $XXX visibility been we'll said be million. up And it. top that range below guidance $XX prior we million are into bottom get as the bottom, we said more our what confident were the had

$XXX can $XXX there's So that of end. clear visibility here, important do in But small we one from cap beyond room it raise another? right that we're that And you're bottom. when what upper get that million, we when that confident and million micro is we course. asking? believe about or specific you -- move Does want be deals We clarify to you're direction careful very

Jaeson Schmidt

that's color potential opportunity, Yeah, very then potential Thank you to additional from And market. you. moving any just provide helpful. there can that X-billion-unit a a timeline end perspective,

Steve Humphreys

the think, there. that in government them I mentioned rolls public it's referring provided there's is which far So, opportunity a the big very products. we along, It's to cannabis program. but one you're domain, a And to sample out we've sample

You to tax and programs going they'd the to pace collection it's their as possible, with want increase But as they government would go. it drive fast capability go think because certainty.

the So, out, or third relatively pushes going it should fall se, us, change be with hitting can per it near-term. quarter we and say in quarter it's expectations. to that fourth in the if again, then But

So with they're to give the six and take it, when becomes it's mandated or in on there. months. comfortable track, And moving position. We're assessing is along it taking and samples not but certain, and three exactly it's we're

Jaeson Schmidt

Is going and but into product know just or last given priority applications? I just sort becoming Okay. in simply And over RFID jump depending customer, queue. of bigger your it's interest up me, constraints picking business, wins supply? customers the for out performance for the In a on well-known supply there. because to I'll then of seeing and the one inbound vary you back that other increasing ability Are

Steve Humphreys

in Yes, of of it parts we're business. is. absolutely couple And, our advantage that a taking of

to so some investments, a are very quite aren't supply. or I we're can situations doing mentioned, I private financial competitors, in companies tight And on that the frankly, positions capital working are taking either difficult As inventory. mean. those they ones we on There inventory be and equity-owned,

pretty we're them customers being on their to for because and our mandatory continue proactive it. that, products So, production. most of are And appreciate aggressive

they own them, to critical their see when of fulfill. even is to and supply uncertain, that or our to and the keep fact so is other some production, around even a what them able And from suppliers lot we're inability going, hear

to good build a well to opportunity as it's trust drive the revenues. So, as

Jaeson Schmidt

Okay. Appreciate guys. the Thanks, color.

Steve Humphreys

Thanks, Jaeson.

Operator

And proceed. Mike, Mike your is Capital Latimore from Northland coming please from question next Markets.

Mike Latimore

Thanks. Great. congratulations. It Yeah, outlook. quarter, looks great great

Steve Humphreys

Thanks, Mike.

Mike Latimore

saying million. it's of think $XXX in so the you're $XXX million, that that confident it? think bottoms? you're Are reiterating to about competent million One just two in the clarifications. I $XXX you the sort to extra is, way basically million $XXX then you're Is

Steve Humphreys

Yeah, we're just that's we're for another clarity the guidance, sure. million, the not have we until of yet, we on number of bounding $XXX that some top what And the said new setting is again, the even on top that. it not

million a And is $XXX refine rates at million way $X with it. got plus to obviously, point, So having this minus growth range we're it's isn't a of on future. about as likely in or that the the the think and up we'll of going number we we've get there, saying characterization because

Mike Latimore

characterization? you Got the Or going X-billion-unit It Okay. back technology is opportunity. fair sort cannabis, like on there. that this bake out guess And still it. then, I on? almost that a of sounds Is won

Steve Humphreys

But, of being the clear, a -- anything, looking terms But program, completely and government for. so who, be everything to awarded? answer at you those because short compliance In we're ability to been satisfy wanted comply, not we is, sole be it of more the well, yes. nothing's pretty certainly I they're than source. forefront -- won't overstate Are

Mike Latimore

it. Got

guessing and very a But large deals? large guess, your in rates? deals, high. ones do pipeline. I these you of fairly the it's you you're have And, lot what Okay. win is of winning rate win track I'm some on

Steve Humphreys

bidding you very a Whenever a some the I say rare auto frankly, then When more win not actually more But then the But won't of commoditized, or there's have commoditized, more, be We we trying but categories it's not you won't on injector is don't those win. be and and There's it. like mobile more, where I high. get we're range. in differentiation. win rate lower devices, syringe the can complicated it just do. low get a rate. a you device, end, number certainly when to that put

the was high. because rate expanding field pretty designs the and win team actually bullets on want not noted we're sense of phone that quotes. bottlenecking on some XX% give that win metric these do there. And pipeline with. team, gave programs, mandate of anything So managers release, some is to we're we're nature team to want add that'll to and the you one here. application by Dr. be adding? we're and and that we're has program June the is about And in X, by sure of the the engineers, of it's We're We our filling up to going manage of to Manfred, with dealing the increase that's our that you we rates our scale mostly Mueller technical a

Manfred Mueller

Yeah.

own while already for that we The As in there. volume, that those high. you finally from of the hi, kind many that attach to focus and of need also a comes many the to is formal we on rate the tried too of relationship, then It been we have And through, that proceed. for fairly make it winning. in remain we these, said, of medical And those break with where we project when we simply also terms you sure number Mike, way, and that are deals is decent by when and maintain fairly and little the mass rightfully a indeed it's supply design the a to volume the when that's talked. we're I where why to are time parties the they long bringing beauty getting in particularly project, of is that total our in which most entry, the and excludes hurdle of regard a IP, ones ones. lot is And high

Mike Latimore

That makes sense.

is that? guess, great. I then you that guess quarter? for get you Okay, the I kind is like, of fourth said, you about third, level. gross And to XX%? back you And normal can think then think to should expected How margin we say I about what that on Identity, said

Steve Humphreys

to? Sandra, you want

Sandra Wallach

it. do to Happy

consolidated our to see what So, their returned historical gross is, we'll margins levels. we said

the So, second-half expect range the we in to them of year. this low return XX% to

Mike Latimore

that I lot And would identity comes Got improving imagine your from well. or Identity ID, as a it. of

Sandra Wallach

of be premises, of investments. year-end we'll improvement also as QX into the quarter our we capacity benefit a saw in that gross up -- to some Federal see going the third we quarter. combination And margins and spending drives in in government our It's grew which

be the of both. combination a So, it'll

Mike Latimore

Great. Thank you.

Steve Humphreys

Mike. Thanks,

Operator

Your Riley from proceed. is B. please Ellis from Securities. next question Craig Craig, coming

Craig Ellis

earlier comments. thanks the question. team, of follow-up for wanted the so far. on taking for I all just the information Thanks And to some

get go the 'XX. So into some going to is through a that the engaging just you as that color. and unit see executing wanted and cannabis next arch round back in that Q&A, the we and and help Steve, your a programs, opportunity clear like, We with really might 'XX comments And customers those what about smartphone to early on well, in it's us I could look to talked little lot out out if volume team more of with bit go programs. area the understand

Steve Humphreys

Manfred little different done as over last device then one with it designs I'll bit, it a company mobile major more. we little said, turn You But I'll and comment particular. year in to bet. had four yeah, bit frame a we

new for then last Now in process are that year. course. got understatements year the the with we've production, designs that keep the running, are balance and designs this our into then work right now. into of year two a more And more from going And next designs couple them and

Manfred, with XX eight do stage want groups we'll use And particular to for the cases, different proprietary XX other those different within So, you not range expect I that entirely the gets into little early customer. more are million don't than talking that the to customer. unit stages, that of we And the in with that? to a go color total, talking for volumes and commentary are that add some customer going designs. any range designs designs in applications. granular design in be because yet. And business want the we're something or have in about that, million around for up to you're to Volume-wise,

Manfred Mueller

multiple manufacturers, information is important where think are are piece we managing I we of few probably a that more. Yeah, also contract adding another

both from it's of going contract and over ones this terms also the And year in to phase manufacturers, how year out. new spread require then, which designs, necessary onboarding. these volume multiple spread, be last way the So is and ones in all also phase from the neat pretty a various the projects

overall a we've us steady volume had contribution year. So than seen what to last the some we've in bit flow. little it particularly more XXXX, gives And

view, expect forward. become business So to of really of that our from some we point going sort baseline that

Craig Ellis

That's helpful.

wanted nice albeit back look to open meet forward I Manfred, And never you it's so two follow-ups. before, as meeting we've to it phone. spoken over so I personally, up. the things And ask to you,

first The to and you, then bounce I'll to Steve. it question back

question you capability. Steve and goes for the kit that comments development the to So, about back the made multi-device

be the available the and via differentiated Or important there question your accelerate solution. in design to direct tool out are most and for utilize out the you get is plan a sure could sales? out, distribution get that have the technology. as it companies that mechanisms So, a through of I'm field through folks what real since Will your kit that is network? propagate other uptake that that to website? it engineer How you that with do

Manfred Mueller

and topics the to been bring is industry. in into of Absolutely, discussing to help this the main one we order that basically have

give to supposed sales blocks expanding and it's RFID, the of whether generic feeder all a order building necessary to them necessarily whether their become to to supposed broadening generating first type be in developers NFC to this it's want so. be generating And in it's be it's implement mobile we particularly of interest, supposed So, and the or it's technology. not to RFID various include app and technology, do applications, in the into amount hand,

the in that, on be will them enabling this as for through those existing because our will much we making possible, times. lower we network. be them distribution many as have and our website for basically addition own both to to we done And barrier so So, available today already,

can want glass, a on need just range they a of they making metal are factors they to them play something or bit want and or We or put around they and to whatever, memory little standard really whether of form a sizes that so chipsets lot boot and also or on something whether be available put whether wherever.

So social us we basically social in they really including get access can in getting media utilize our to And order play there is going entire last to to to basically power which that. success order will be the around networks, item, community. and the with marketing right to be is,

So, maker community. maker like the fairs and the

to range really some out order we So basically in this ways have this marketing, into of good basically inroads very how tried very, the also a get to that's there get accomplished. trying and we unconventional there

Craig Ellis

the then player entity And Android player, adopts and and That's back through that to that ecosystem, the something a is, that dynamics of wins one effect it made community it's often helpful. some another industry, will the similar. you're I through the adopt on whether has points volume going about When think maybe Android it Steve, getting. that the then cascades smartphone way does with the cascading smartphone or technology. you about leading a the works often customer

potential do if the these are any of so, the you downstream wins are that see part ecosystem? signs from getting, ramps of interest And of you some where look As other at of those are? that you current customers

Steve Humphreys

going because anything because going in always for on, fighting always so on to case it's is differentiate, days. dynamic on hard these they're it's and that Yes, parity too, and one-upmanship this

getting certainly we're platform cross interest. So,

mobility device how trying time that are areas. of setting others to up in the match I've keep really seen for pace the who in happens positioning. customers to One the to the the players a of out and And first lot be is industry, mobile figure

lot And good be back for that think then a months, as cross on. going is eight there's cycle happening another into say, I few That conversations there's of get with you to design So, virality pollenization chain. the it. and supply to it's and going the of mobile some said, device months

some definitely working they're it to keep up. no they're hard very but So, and -- all takes one behind fall time, wants to

Craig Ellis

of impact, the the Got a it. Sandra, a are one covering the significant the nonetheless. that And you. unique expedites we're an of is some that of lastly, environment, impact current companies things this on environment. in some And gross but other is it margins, hearing things In question having an for we're that to about impact, then for and not

COGS, that might of be the you it that of of Identity. we think exist sense So, of whether for type at you're of looking the issue, component in an other shipment exist any and might us premises the year, as as not minuses? the dynamics around back-half and some filling Can some backlog give the way or and the issues some about or issues is that in be fulfillment whether or thing might the plusses dynamics in and

Sandra Wallach

Great to of entire question. We've that. this really it. been get Got year hard ahead throughout actually working

the background now, anything a have. to significant seeing on right so, planning going impacting us. But we're that of in And that's work not lot we there's the relationships

them, our suppliers can longer we to lock that behalf. very expanded as hand. be can putting supply make on we've all purchase having additional ahead and that order And help orders strong orders up to give planning of the when to chip helps, orders got buy as in able influence, Steve vendors, where by act frame limited in to can because With with not we're XXXX, window contracts ready capital relationships the our We pivot so in come to mentioned, in. confidence sure into we working the we're more our for much getting slightly

watching it. But impacted to we're point. us it So, this hasn't

Craig Ellis

Thanks, everybody. I'll in queue. you. Thank the hop back it. Got

Steve Humphreys

Thanks, you Craig. John, there?

Operator

is question Jeff, Capital. are coming Jeff live. you Kessler your And from from Imperial next

Jeff Kessler

taking call. Thank my you for

been last here. we've for dramatically, particularly here a and of growing demand in backlogs the Asia, at anything particularly larger channel relative where be over some the channels year, are. serve. Europe can plans of in pre-pandemic type The levels. pipeline cards call their electronic, appears And from type that both electronic in cards hurrah levels. and and It England survey despite did oyster last let's or current to Looking be way it that fact, access. over to what in the that from visitor pre-pandemic appears my integrators, you We, in largest This pandemic, above to is access management and

be to of what of on you of very projects this to level you. is, of capability the it some in And as will do advantage the to think take some cross interest with Do you the as of ability well? these integrators, and is appears premises whom some be year, second-half say, question your technology stuff there of just a seems to premises these this given one, let's your I sell to my that large want flow? is awarded work part number obviously of there So large, both, when revenues

Steve Humphreys

a circumstances opportunities, think and as needs I we're Yeah, pent-up in is, finger there people who of access. there's your Sure. under you well lot a some And where. that access particular getting more resurgence everybody's and And the put dynamic. seeing it's on a facilities what become changing, with and are trend

been interest a and of our cross lot has core selling the we're then strategy. So, flexible credentials. course, a in And the seeing to in in more of cloud-based systems, flexible more systems, always

we're think I that the from government board, see to more both commercially across perspective. Federal and going of So,

Jeff Kessler

on of and not to private deals. that in that expect that, do just These it's They're years. to into they're at products in require you discussions say letting to have that clearly, forward. large post-pandemic are very to that a going identify. them seeing are, need but Also, they going looking on Okay. that they to some are But you're or buildings, the customers? multifamily than we've clearly, comes at sure they some of obviously the the are valuations seen question there's companies make identify. can do in incredible identifying more see two we've or based only that equity back some going to obviously, Again, investors with areas, as And To well. having person, to, who or looking they're some specifically, what what been involved investors commercial what valuations -- three and going spec happen are people seen

Steve Humphreys

clarify, seeing Can what you specifically are asking Jeff? about, you

Jeff Kessler

person on right know, revenue. I'm are getting to we're fact there there's that the valuations that access now is, point how very who And buildings, -- There's just a for potential it the remains this into potential is similar the sees they to first what involved of be are XX, to at time, you obviously in well but high that going as out on question. won't that several there multiples for times in is the that -- large number marketplace, Well, uses access my XX say to It's get anymore. talking are they be companies if are.

to and -- to, valued very this in And I to are Sweden may commercial talking years, RFID used able am. the it it cases, all just in seems is, to obviously haven't who buildings. smarter are both is by be in refers like integrators before? multi-factor Again, Identity than on what need they working very point. through are that, this yet. haven't marketplace they of You large thinking places hotels, effectively the that again, they people and this NFC getting I'm go I'm really to highly use I'm and who at end over can particularly can There been crack use, and users interested you companies, or for that are into

Steve Humphreys

the a RFID that's as you take to are space. profile lot matter dev yeah, a becoming and using a of And that and And while. it been the couple see a from technologies right. long identity that around analyzing they're bit even I do individuals off right of virtual really Proxy like and little It's to next all a industry exactly with say, companies Bluetooth of time, is building you useful their because that like way exactly UWB is do and in you're with No, NFC pretty of individual the the is been way see we've what UWB where like companies high. than and and And it's for over has strategy that [Indiscernible] our for access it's you're think Verkada make taking companies and and to value and in high Apple instrumenting the which better of frictionless to pretty And Really, going things much management. that, presence deploying, years, platforms infrastructure valuations. mobile the a with control. to perspective identity some

that's exactly business adoption. So is models. the think I think And direction to get The we different just it's have that starting incumbents going.

that about, way, slow go [Indiscernible] to you Yep. were the And so others. any as they're of pretty talking

Jeff Kessler

you. Thank Great. Okay.

Operator

from Jay [ph]. you Instructions] [Operator are live. Jay, question is Chung Your coming next

Unidentified Analyst

a for you questions. giving me Hi, chance to the Great. thank few ask

thank your to RFID the confidence XX% for year? XXX the update you you What XXX the last again, to million gave this from year on nearly capacity. units million First, capacity grow

Steve Humphreys

very first the wise XX% were year-over-year. quarter, as Well, right you heard unit in up we

seeing So, out, baseline even the XX%, that's a that's overall, of lot put demand. capacity we're pointed as buffer not what increase as you who it our for

expansion. So, I think we also referred to as it initial capacity

utilizing So, prepared we're that close certainly And confident to to that go we're we forward. that we'll be certainly as add to capacity total.

Unidentified Analyst

the actually, of for year? question, in get next And next was, which adding growth ahead a capacity my second-half, try do any Great. to that's maybe you as foresee

Steve Humphreys

in way. scalable a We've which good very that, possibility We've yeah. states, at pretty of a pole. the the got always There's capacity is adding good gotten long

reminder I intensive. technology too, we're a just the drop if surprised straightforward. is be wouldn't in. the that adding certainly capital as very so equipment But And pretty and But we not

can million, So, finance. million capacity XX for units even add we and can that of €X.X we

capital raised, add not it. going capital sure But as long to big as of we that all So, to it's not utilize we're course, for at we be we're a hesitant the hit. can

function we should like the a any And again, need, able So needed that add we capacity do a on we're capacity major programs And could we're we're be or goods then as But basis, later overhead. comes to not so of cost as in that'll positioned going growth something probably year. step drives our there And, and it. the be one to put be of by simply on in pressure need operations that demand. pre-planning needed requirement. it that all these doing we to

Unidentified Analyst

then, since XXXX? you revenues it the Do in for looks rest faster units. in QX, than it grew RFID And than the Great. will ASPs think of grew the XXXX in like higher AFPs year be

Steve Humphreys

Yes, that's think exactly in quarter you're the I I that. seeing And do. what first

It trend continue. that quarter-to-quarter. can fluctuate think I So, will

substantially that is Some in for have it, that seeing margins prices. we're of trend average unit higher these products the drive can but the devices increasing complexity gross the with

Unidentified Analyst

the range The pretty a that’s million talking contract units ASPs, period? the is about highest annual is And number amazing. is XXX highest about that $X.XX that mentioned, like an it you or over this

Steve Humphreys

product, that I we've proprietary they that's nothing they've the indicate of always and to vendor actually at annual done But disclose information, the to that indicated, anybody's be it's careful Once any but not end low expect. that here. to for scale want range

Unidentified Analyst

their to approval. it for then you And in order. where Has FDA that is waiting been something this just Or you're mentioned already? submitted they have get stuff

Steve Humphreys

customers you look at FDA volumes and could you -- want use public, any not it. to be the if you at are I you which into to look go don't for rather pretty that. of I'd that gets That, want you -- close can our case, then look approval, into submissions, very because jeopardize to any at back and And of

Unidentified Analyst

very That's I totally understand. fair.

The other asset parts that mentioned and ID of leaders clubs the business, both you grew.

XX% to November, last this they been year. regard? you to up XX% guidance think gave about I changed in Have that leaders for be So, the

Steve Humphreys

say upside Yes. solidly on it. probably they're rain, that I'd confident some in

Unidentified Analyst

questions the I coming like the see on you opening backlog business Where with just it then nonscheduled think And side, the of Okay. seems here. in positive economy year-over-year? about lot prior and the growing there's a do

Steve Humphreys

of really or how open, that invest or they back world invest. open up. harder will catching It's predict, are We're not to seeing the categories commercial and will because not

still area, Some are like getting confident for very rental in about travel business example, the be Others feeling cars, figuring their seem out. to it they're outlook.

it's range. huge a So,

could think that growing local, commercial, be think with is that we and of whereas safe. a can I factors. faster, easily of commercial be happen just still the Federal, growth expecting easily lot in yes XX%-ish I rate, range, kind surprised But couple is double State probably will it's a for

Unidentified Analyst

your one million strong unit side, business. strong pretty which Okay. of not a see. RFID growth. side, What $XXX the the as And can I'm positive just XX% question, commercial growth. is And just your that's if expect a may growth, low then chunk seems come so like of on you But ASP I observation. And guidance. of observation, And pretty make we'll it end hearing an about is expect Federal then is you as back, well growth, on good the course,

at I have I’m least saying that, is but -- seems is That's growth it not them comment -- all it easy for say. target. XX% seems a So, like to very

Steve Humphreys

Yes, it and as what that you I agree. the range, Again, when month ago, of great we we bottom two we a And that's that's moved confidence or in. say, did said, up. we have the

top have safe. the set are the saying, view is. of and when -- top could of and to a some So, $XXX the we're million, we range to said is, agreed. range of is what question hey, it'd range fact, the guidance not numbers. right. in be bottom when range have absolutely clarity The good of thinking of The completely the want oh, we're $XXX give of don't we've top But please we it to we better want -- when that the be those very we you're But a when what good is million, is, clarity we have say, now

Unidentified Analyst

you Great. Thank much. so

Steve Humphreys

you. Thank

Operator

the this company's session. At concludes this time, question-and-answer

closing Relations your back like to his over If at call Mr. inve@gatewayir.com. turn I'd to may taken, remarks. Identiv's contact the you for team now not question was Investor Humphreys,

Steve Humphreys

really all and week. the thank evening. fast-moving And milestones with for John. you joining industry support appreciate Thanks, this obviously This engagement. the us very Alright. every is new We

metrics coming, forms events going to communication of the transparency a posted, on everything out. chats set us got the visible, we'll through We're website. be forward. them gets So, to and of it's those whether and progress at of But press other the we'll some we as be or the up. you so fireside of number put keep Investor And going We've communication doing course, and industry. up solidified keep certainly both track can we'll can

thank a you and have evening. good So again,

Operator

Thank you joining for us today.

now may Provided Transcript by You disconnect.