Q3 2025 Identiv Inc Earnings Call
CFO Ed current Bauer <unk>.
Kirsten Newquist: Customers as they look to commercialize the Wiliot solution.
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.
Craig Ellis: Great, thank you. If I could sneak one in for Ed. Ed, real nice job by the team with gross margin in the third quarter. With the business getting the benefit of the full Singapore shutdown in the fourth quarter, and with higher revenues, and with some of that coming from that higher quality revenue basket that the company's been prioritizing, can you talk a little bit about what we could expect for gross margins in the fourth quarter and if there are any headwinds we need to comprehend.
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 the future financial results.
Your business and market conditions and opportunities strategic partnerships and collaborations and any related benefits and attributes.
Ed Kirnbauer: Thank you. Thanks, Craig. Yes, our Q3 numbers, we saw significant benefits from the reduction in fixed costs with the discontinuance of our Singapore operations from both an overhead cost perspective and direct labor. We expect that to continue. We will be substantially complete with all shutdown activities in Q4. We're still working through the remainder there. I don't really expect the full impact on gross margin until we enter Q1 of next year.
And future plans strategies opportunities Ingalls 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 S. E C, including the company's latest annual report on Form 10-K as.
As well as our third quarter 10-Q once filed.
Identive assumes no obligation to update these forward looking statements I will now turn the call over to CEO Kirsten newquist for her comments.
Speaker #1: Joining us for today's presentation are the company CEO, Kirsten Newquist, and CFO, Ed Kirnbauer. Following management's remarks, we will open the call for questions.
Newquist. Please proceed.
Thanks, operator, and thank you all for joining our quarter three 2025 earnings call.
Craig Ellis: Okay, what about other potential benefits such as sales mix and the move to higher margin products as mix goes more towards NPD?
Speaker #1: 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.
As we review this quarter's results I want to highlight that our perform accelerate and transform strategy continues to guide everything we do.
And serving our customers and building, our pipeline and driving innovation and commercial momentum in our high value segments and delivering on our financial commitments.
Ed Kirnbauer: I'll let Kirsten talk about that. I do want to say, you know, in addition to that, we have the, you know, we will continue to improve margins with improving the utilization of our Thailand facility. As far as Mix.
Speaker #1: 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.
This strategy remains central to transforming the organization and creating lasting value for our shareholders.
I am pleased to report that in quarter three sales were in line with guidance with all other key financial metrics exceeding expectations.
Kirsten Newquist: Yeah, yeah.
Kirsten Newquist: I think what we'll see in Q4, certainly, you know, some slight increase in utilization in the Thailand plant that will help. As Ed mentioned, we aren't completely shut down, have shut down Singapore yet. We still have some labor that's getting that whole plant now back to its original state and shut down, et cetera. We have still a little bit of Singapore-related costs in Q4. In terms of the mix, we definitely have some of our kind of NPD projects starting to ramp. Those are still a little bit in.
This quarter it, particularly notable for our improved gross profit margin, which reflects the initial benefits of completing our two year transition of production from Singapore to our new state of the art manufacturing facility in Thailand.
Speaker #1: 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.
This is the first quarter and with all of our production has been done in Thailand.
Speaker #1: Including the company's latest annual report on Form 10-K. As well as our third quarter 10-Q once filed. Identiv assumes no obligation to update these forward-looking statements.
<unk> milestone that has meaningfully lowered our cost structure enhanced efficiency and scalability and positions us well for continued margin growth.
Kirsten Newquist: The ramp-up phase.
Kirsten Newquist: We still have a little bit of ramp up costs until we get.
Kirsten Newquist: To full productivity of those projects.
Kirsten Newquist: We do see, you know, kind of a slight increase in mix overall going into Q4.
We expect further margin expansion over the next few quarters as we complete the Singapore site set down by year end and the Thailand team reaches full productivity.
Speaker #1: I will now turn the call over to CEO Kirsten Newquist for her comments. Ms. Newquist, please proceed.
Craig Ellis: Thanks Kirsten.
Ed Kirnbauer: Thanks Hen.
Kirsten Newquist: Thank you.
Speaker #2: Thanks, Operator. And thank you all for joining our quarter three 2025 earnings call. As we review this quarter's results, I want to highlight that our perform, accelerate, and transform strategy continues to guide everything we do.
Our CFO and Karen Bauer will now provide a detailed review of our quarter three financial performance and I'll return afterward to share more on how we're progressing across our strategic initiatives.
Operator: Okay, the next question comes from Anthony Stos with Craig-Hallum. Please proceed.
Anthony Stos: Good afternoon, Kirsten and team, and congrats on the move to Thailand, getting it complete. Kirsten, of the roughly 21 opportunities that converted to customers, when will they show up in the P&L? If you could just ballpark guess what percentage of those are above your 28% gross margin goal.
Thanks, Kirsten and the third quarter of 2025, we delivered $5.0 million in revenue, which was within our previously announced guidance range compared to $6 5 million in Q3 2024.
Speaker #2: From serving our customers and building our pipeline to driving innovation and commercial momentum in our high-value segments, and delivering on our financial commitments, this strategy remains central to transforming the organization and creating lasting value for our shareholders.
Kirsten Newquist: Yeah, I think, I'm not sure where you're getting the 21 conversion, but we did convert. We have roughly converted 18% year to date of our new opportunity pipelines, and that represented in third quarter roughly 10% of our sales. Those will definitely continue to scale and grow as we go into 2026. Yeah, no, we were happy to, you know, year to date we've converted roughly 18% of our total.
This year over year decrease was as expected and due to lower sales as we exited lower margin business earlier in the year.
Speaker #2: I'm pleased to report that in quarter three, sales were in line with guidance, with all other key financial metrics exceeding expectations. This quarter is particularly notable for our improved gross profit margin, which reflects the initial benefits of completing our two-year transition of production from Singapore to our new state-of-the-art manufacturing facility in Thailand.
Third quarter, GAAP and non-GAAP gross margins were 10, 7% and 19, 1%, respectively compared to GAAP and non-GAAP gross margins of three six and nine 3% respectively. In Q3 2024.
Factors impacting the increase in gross margin included the reduction in fixed manufacturing overhead costs and direct labor costs at our discontinued Singapore operation improved utilization of our manufacturing production facility in Thailand, and sales of fully reserved inventory of zero point $2 million.
Ed Kirnbauer: New opportunity pipeline at roughly what percent.
Anthony Stos: Are you at your 28% gross margin goal?
Speaker #2: This is the first quarter in which all of our production has been done in Thailand. A significant milestone that has meaningfully lowered our cost structure and enhanced efficiency and scalability, and positioned us well for continued margin growth.
Kirsten Newquist: Yeah.
Kirsten Newquist: Of the new opportunity of the.
Kirsten Newquist: Of the new opportunities that converted, I think roughly 2/3 of them were on the higher value side, higher than 30% gross margin.
As we mentioned in our August call, we completed production of RFID, inlays, and labels and Singapore and the re qualification of our customers at our Thailand production facility at the end of Q2 2025.
Speaker #2: We expect further margin expansion over the next few quarters as we complete the Singapore site shutdown by year-end and the Thailand team reaches full productivity.
Kirsten Newquist: Probably a third of them were slightly.
Kirsten Newquist: Lower than that, but 2/3 of them were what we would consider on the high value side.
Ed Kirnbauer: Got it.
Anthony Stos: Good, good to hear. If you could frame the size of the new opportunity with Wiliot and also, similar question, what kind of gross margins would you expect to generate?
Facilities shutdown activities in Singapore continues to progress as planned and are expected to be substantially completed by year end.
Speaker #2: Our CFO, Edward Kirnbauer, will now provide a detailed review of our Q3 financial performance, and I'll return afterward to share more on how we're progressing across our strategic initiatives.
GAAP and non-GAAP operating expenses for the third quarter of 2025, including research and development sales and marketing and general and administrative expenses totaled $6 1 million and $4 5 million, respectively, compared to $9 8 million and $5 1 million respectively. In Q3 2024.
Kirsten Newquist: Yeah, I mean we're not talking about, you know, kind of ultimate sales volume potential with the Wiliot and that, you know, that's progressing margins, you know, the opportunity is large. We're scaling up the next generation. You know, we definitely anticipate margins to be quite a bit significantly higher than where they were two years ago. We're still working to increase those over the next, you know, probably three to four quarters, and definitely higher, much higher than where they were back in 2023 and early 2024.
Speaker #1: Thanks, Kirsten. In the third quarter of 2025, we delivered $5.0 million in revenue, which was within our previously announced guidance range. Compared to $6.5 million in Q3 2024, this year-over-year decrease was as expected and due to lower sales as we exited lower-margin business earlier in the year.
The year over year decrease in GAAP operating expenses was driven primarily by a reduction in the strategic review related cost incurred in 2024.
The decrease in non-GAAP operating expenses reflects management's targeted resource allocation to support the company's organic growth initiatives as outlined in our.
Speaker #1: Third quarter GAAP and non-GAAP gross margins were 19.1% and 3.6%, respectively, compared to GAAP and non-GAAP gross margins of 3.6% and 9.3%, respectively, in Q3 2024. Factors impacting the increase in gross margin included the reduction in fixed manufacturing overhead costs and direct labor costs at our discontinued Singapore operation, improved utilization of our manufacturing production facility in Thailand, and sales of fully reserved inventory of $0.2 million.
Ed Kirnbauer: Got it.
Anthony Stos: Last question for me, Kirsten, with your background in this industry, in the healthcare side, I know in quarters past you've spoke a lot about your healthcare opportunities. Didn't hear a lot on this call. Maybe you can just refresh us where you stand and what you think the opportunity set is on the healthcare side.
Strategic framework.
Third quarter GAAP net loss from continuing operations was $3 5 million or <unk> 15 per basic and diluted share compared to GAAP net loss from continuing operations of $9 3 million or <unk> 40 per basic and diluted share in the third quarter of 2024.
Kirsten Newquist: Yeah, we certainly still see a nice.
Kirsten Newquist: Opportunity in healthcare, and we see kind of the interest from some of the medical device and the pharmaceutical companies in really engaging in, in evaluating these types of solutions. These are also longer term opportunities. Of our current NPD new product development pipeline, I think roughly 1/3 of them are healthcare related. They just take longer to get to the commercialization side. We remain positive about the opportunity space, we remain positive about the project that we have, but we definitely see some of the ones that are on the logistics side, the consumer product side, getting to market faster than we do with some of the healthcare projects that we're working on.
This decrease in net loss was primarily due to strategic review related costs of $3 6 million incurred in the third quarter of 2024 compared to zero point $4 million in the third quarter of 2025 higher year over year interest income of $1 1 million and income.
Speaker #1: As we mentioned in our August call, we completed production of RFID inlays and labels in Singapore and the requalification of our customers at our Thailand production facility at the end of Q2 2025.
Income tax benefit of zero point $8 million in the third quarter of 2025 compared to an income tax provision of zero point $4 million in the comparable quarter of 2024.
Speaker #1: Facility shutdown activities in Singapore continue to progress as planned and are expected to be substantially completed by year-end. GAAP and non-GAAP operating expenses for the third quarter of 2025, including research and development, sales and marketing, and general and administrative expenses, totaled $6.1 million and $4.5 million respectively, compared to $9.8 million and $5.1 million respectively, in Q3 2024.
non-GAAP adjusted EBITDA loss for Q3 of 2025 was $3 6 million compared to $4 5 million in the third quarter of 2024.
The decrease in the loss was primarily due to the reduction in fixed manufacturing costs at our Singapore facility improved utilization of our manufacturing production facility in Thailand, as well as management's continued careful allocation of operating expenses as we execute on our strip.
Ed Kirnbauer: Very good.
Anthony Stos: Best of luck.
Kirsten Newquist: Thank you. Okay, thanks so much.
Operator: We have reached the end of the question and answer session, and I will now turn the call over to Kirsten for closing remarks.
Speaker #1: The year-over-year decrease in GAAP operating expenses was driven primarily by a reduction in strategic review-related costs incurred in 2024. The decrease in non-GAAP operating expenses reflects management's targeted resource allocation to support the company's organic growth initiatives as outlined in our PAT strategic framework.
Kirsten Newquist: Thanks, operator.
Kirsten Newquist: Thank you all again for joining us today. We look forward to speaking with you next quarter.
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.
Kirsten Newquist: Have a good afternoon. Bye bye.
Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.
Moving now to the balance sheet, we exited Q3 of 2025 with a $126 6 million in cash cash equivalents and restricted cash.
Speaker #1: Third quarter GAAP net loss from continuing operations was $3.5 million, or $0.15 per basic and diluted share. Compared to GAAP net loss from continuing operations of $9.3 million, or $0.40 per basic and diluted share in the third quarter of 2024.
In the third quarter of 2025, we used $3 1 million in cash. This brings our total net operating cash use for the 12 months. Following September 32020 for the end of Q3 2024 to $13 4 million well within our previously announced guidance range of 13 to 15 million.
Speaker #1: This decrease in net loss was primarily due to strategic review-related costs of $3.6 million incurred in the third quarter of 2024, compared to $0.4 million in the third quarter of 2025, higher year-over-year interest income of 1.1 million, and an income tax benefit of 0.8 million in the third quarter of 2025, compared to an income tax provision of 0.4 million in the comparable quarter of 2024.
Dollars.
Our working capital exiting Q3 was $135 4 million our balance sheet position remained strong.
And our 10-Q filing we will be providing a full reconciliation of year to date cash flows for completeness. We have included the full balance sheet in the appendix of today's earnings release.
Speaker #1: Non-GAAP adjusted EBITDA loss for Q3 2025 was $3.6 million, compared to $4.5 million in the third quarter of 2024. The decrease in the loss was primarily due to the reduction in fixed manufacturing costs at our Singapore facility, improved utilization of our manufacturing production facility in Thailand, as well as management's continued careful allocation of operating expenses as we execute on our PAT strategic initiatives.
Lastly, our financial outlook, which is based on current market conditions and expectations, including macroeconomic conditions and customer demand.
As of today's call for Q4 2025, we currently expect net revenue in the range of $5 4 million to $5 9 million.
This concludes the financial discussion.
Now pass the call back to Kirsten.
Thanks, Dan.
As you just heard we delivered results that met or exceeded our guidance a solid step forward as we continue executing against our perform accelerate and transform strategy.
Speaker #1: 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.
Speaker #1: Moving now to the balance sheet, we exited Q3 2025 with $126.6 million in cash, cash equivalents, and restricted cash. In the third quarter of 2025, we used $3.1 million in cash.
While we know there's more work ahead to reach our overall financial goals. We're encouraged by the tangible progress we're making.
Cross each pillar <unk>.
Performing with focus.
Celebrating across our high value segments, and ultimately transforming our business. We are building a stronger foundation for sustained and profitable growth.
Speaker #1: This brings our total net operating cash use for the 12 months following September 30th, 2024, the end of Q3 2024, to $13.4 million, well within our previously announced guidance range of $13 to $15 million.
Let me now share how this progress is unfolding across our organization.
Reform deliver exceptional results for our customers and drive operational excellence.
Speaker #1: Our working capital exiting Q3 was $135.4 million. Our balance sheet position remains strong. In our 10-Q filing, we will be providing a full reconciliation of year-to-date cash flows, for completeness, we have included the full balance sheet in the appendix of today's earnings release.
Our first pillar perform is focused on strengthening and growing our core channel business.
To achieve this we are prioritizing higher margin opportunities.
<unk> gross margins for Thailand transition and executing our new product development NPD pipeline with greater discipline.
Speaker #1: Lastly, our financial outlook, which is based on current market conditions and expectations, including macroeconomic conditions and customer demand. As of today's call, for Q4 2025, we currently expect net revenue in the range of $5.4 million to $5.9 million.
Our goal is to consistently exceed customer expectations through exceptional support reliable performance and on time delivery.
As I mentioned in my opening comments, we reached a major milestone in our manufacturing transformation that corner, 100% of our RFID tags and late and labels are now produced at our new state of the art, Thailand facility the.
Speaker #1: This concludes the financial discussion. I'll now pass the call back to Kirsten.
Speaker #2: Thanks, Ed. As you just heard, we delivered results that met or exceeded our guidance. A solid step forward as we continue executing against our perform, accelerate, and transform strategy.
The Singapore site shutdown is on track for completion by year end, marking the end of a successful two year transition.
Speaker #2: While we know there's more work ahead to reach our overall financial goals, we're encouraged by the tangible progress we're making. Across each pillar—performing with focus, accelerating across our high-value segments, and ultimately transforming our business—we're building a stronger foundation for sustained and profitable growth.
The Thailand facility has lowered manufacturing costs improved efficiency and enhanced scalability laying a stronger foundation for continued margin growth.
To further advance operational excellence, we launched CRM and MRP automation initiatives earlier this year to streamline key sales and operations planning processes.
Speaker #2: Let me now share how this progress is unfolding across our organization. Perform. Deliver exceptional results for customers and drive operational excellence. Our first pillar, Perform, is focused on strengthening and growing our core channel business.
We've made steady progress and expect to have these systems largely implemented by year end <unk>.
Strengthening our operational foundation, and ensuring scalability as we grow.
On the commercial front, our new opportunity pipeline continues to expand driven by new sales team members ramping up across our territories and channel partners.
Speaker #2: To To achieve this, we are prioritizing higher margin opportunities, expanding gross margins through our Thailand transition, and executing our new product development, NPD, pipeline with greater discipline.
So far this year, we've converted 18% of our new opportunity pipeline, representing almost 10% of quarter three sales with additional broke expected as this new business scale.
Speaker #2: Our goal is to consistently exceed customer expectations through exceptional support, reliable performance, and on-time delivery. As I mentioned in my opening comments, we reached a major milestone in our manufacturing transformation this quarter.
And marketing following the completion of the transition services agreement TSA with Vida protect we're rebuilding key capabilities implementing hub spot to enhance lead generation and visibility.
Speaker #2: 100% of our RFID tags, inlays, and labels are now produced at our new state-of-the-art Thailand facility. The Singapore site shutdown is on track for completion by year-end, marking the end of a successful two-year transition.
In preparing to launch our new corporate website by year end.
We also maintained a strong presence at major industry events, including W. Iot Tomorrow in Wiesbaden, Germany and label Expo in Barcelona, Spain, both generating meaningful customer engagement and reinforcing strategic partnerships.
Speaker #2: The Thailand facility has lowered manufacturing costs, improved efficiency, and enhanced scalability, laying a stronger foundation for continued margin growth. To further advance operational excellence, we launched CRM and MRP automation initiatives earlier this year, to streamline key sales and operations planning processes.
Label Expo.
Our own VP of business development paths, and admire and narrowed their CEO Thomas routing shared insights on DPP compliance journey dynamic NFC RFID panel at the smart labeling seminar 2025.
Speaker #2: We've made steady progress and expect to have these systems largely implemented by year-end. Strengthening our operational foundation and ensuring scalability as we grow. On the commercial front, our new opportunity pipeline continues to expand, driven by new sales team members ramping up across their territories and channel partners.
Further strengthening <unk> position as an innovation leader.
Finally, the TSA transition with Vida protect is now substantially complete and we are fully separated from the physical security business, we sold one year ago.
Key milestone, marking our strategic focus and transition to being a pure play in Iot and RFID technology.
Speaker #2: So far this year, we've converted 18% of our new opportunity pipeline. Representing almost 10% of Q3 sales, with additional growth expected as this new business scales.
Accelerate.
Accelerated growth in high value segments and through technology innovation maybe.
Moving to the second pillar of our framework accelerate we are advancing three specific growth initiatives to build our pipeline and drive long term revenue and margin expansion, one expanding our BLE technology platform and multi component manufacturing capabilities.
Speaker #2: In marketing, following the completion of the transition services agreement, TSA, with Vita Protect, we're rebuilding key capabilities, implementing HubSpot to enhance lead generation and visibility, and preparing to launch our new corporate website by year-end.
Two targeting growth in three health care high value applications, and three further driving breadth and three consumer and logistics high value applications.
Speaker #2: We also maintained a strong presence at major industry events, including WIoT Tomorrow and vSpot in Germany, and Label Expo in Barcelona, Spain. Both generating meaningful customer engagement and reinforcing strategic partnerships.
This quarter, we made notable progress in R&D and new product development, particularly in our Bluetooth low energy BLE programs.
Speaker #2: At Label Expo, our own VP of Business Development, Klavs Zimmermeyer, and Neravero CEO, Thomas Rodin, shared insights on DPP compliance during a dynamic NFC RFID panel at the Smart Labeling Seminar 2025, further strengthening Identiv's position as an innovation leader.
<unk> represents the next generation of Iot technology, offering real time, traceability and condition monitoring capabilities that are difficult to achieve with traditional RFID. We believe the technical complexity of BLA smart label design and manufacture ability aligns well with our engineering expertise.
And gives us a clear competitive advantage.
Speaker #2: Finally, the TSA transition with Vita Protect is now substantially complete. And we are fully separated from the physical security business we sold one year ago.
We successfully completed the first production runs of the ESCO BLE prototypes and Willy It's next generation textbook.
Speaker #2: A key milestone marking our strategic focus and transition to being a pure play in IoT and RFID technologies. Accelerate. Accelerate growth in high-value segments and through technology innovation.
Key milestones in the development and commercialization of two important customer driven BLA program.
These achievements along with the internal development of our BLA shipping label expand our product portfolio and further strengthen our expertise in next generation RFID technology and multi component manufacturing.
Speaker #2: Moving to the second pillar of our PAT framework, Accelerate. We are advancing three specific growth initiatives to build our pipeline and drive long-term revenue and margin expansion.
We also formalized a partnership agreement and a manufacturing agreement with Willie it to scale up and commercialize next generation pixel.
Speaker #2: One, expanding our BLE technology platform and multi-component manufacturing capabilities. Two, targeting growth in three healthcare high-value applications, and three, further driving growth in three consumer and logistics high-value applications.
Well it Iot pixels are small battery free Bluetooth sensors powered by harvesting ambient radiofrequency energy <unk>.
Enabling continuous transmission of data like temperature motion and location for smart supply chain and Iot application.
Speaker #2: This quarter, we made notable progress in R&D and new product development, particularly in our Bluetooth low energy, BLE programs. BLE represents the next generation of IoT technology, offering real-time traceability and condition monitoring capabilities that are difficult to achieve with traditional RFID.
And health care innovation, our R&D work with Lilly was recently highlighted in a new white paper that we published in September demonstrating our leadership and RFID innovation for drug adherence and delivery. This is a compelling example of how our technology is enabling smarter safer patient experiences.
Speaker #2: We believe the technical complexity of BLE smart label design and manufacturability aligns well with our engineering expertise and gives us a clear competitive advantage.
We're also advancing collaborations launched earlier this year, including our strategic partnerships with Nevada for medical device applications and tag in track for pharmaceutical Cold chain management.
Speaker #2: We successfully completed the first production runs of the ISCO BLE prototypes and Willets next-generation pixels. Key milestones in the development and commercialization of two important customer-driven BLE programs.
Additionally, we announced a new commercial partnership with two bringing our secure NFC technology to children's books.
Each book integrates seamlessly with took speaker through a customizable NFC tags.
Speaker #2: These achievements along with the internal development of our BLE shipping label expand our product portfolio and further strengthen our expertise in next-generation RFID technology and multi-component manufacturing.
Activating guided audio without screen Wi Fi or extra devices.
Designed for durability and security. This solution is built to scale across classroom libraries and home and.
Speaker #2: We also formalized a partnership agreement and a manufacturing agreement with Willet to scale up and commercialize next-generation pixels. Willet IoT pixels are small, battery-free Bluetooth sensors powered by harvesting ambient radio frequency energy.
And powering the next generation of young leaders.
These new interactive books are available for purchase now in Scandinavia with expansion plans into the rest of Europe.
We were also honored as the winner of the world's beverage Innovation awards in 2025, together with our partners. They tapped by clipped Ivy and genuine analytics a G for NFC powered smart packaging solution that safeguards luxury wine producers and collectors from counterfeiting.
Speaker #2: Enabling continuous transmission of data like temperature, motion, and location for smart supply chain and IoT applications. In healthcare innovation, our R&D work with Lilly was recently highlighted in a new white paper that we published in September, demonstrating our leadership in RFID innovation for drug adherence and delivery.
<unk>.
This recognition and the best Technology innovation category underscores our engineering excellence and collaborative approach to smart packaging.
Speaker #2: This is a compelling example of how our technology is enabling smarter, safer patient experiences. We're also advancing collaborations launched earlier this year including our strategic partnerships with Novanta, for medical device applications, and Tag and Track for pharmaceutical cold chain management.
Finally within our accelerate initiatives, we completed a detailed product roadmaps aligned with our high value market segments, which is intended to ensure that our innovation and go to market efforts are tightly connected to customer needs and strategic priorities.
Several of these MPD programs will begin in the next quarter.
Speaker #2: Additionally, we announced a new commercial partnership with Tuk, bringing our secure NFC technology to children's books. Each book integrates seamlessly with Tuk's speaker through customizable NFC tags.
Transform create significant business expansion and capability growth through M&A for long term success.
Our third pillar transform focuses on expanding the business through strategic M&A that accelerates EBITDA breakeven broadens, our product portfolio and enhances our technical capabilities.
Speaker #2: Activating guided audio without screens, Wi-Fi, or extra devices. Designed for durability and security, this solution is built to scale across classrooms, libraries, and homes.
We continue to work with our financial adviser Raymond James to assess our strategic alternatives.
Speaker #2: readers. These new interactive books are available for purchase now in Scandinavia, with expansion planned into the rest of Europe. We were also honored as a winner of the World Beverage Innovation Awards in 2025, together with our Empowering the next generation of young partners Zaytap, By Collect ID, and Genuine Analytics AG for our NFC-powered smart packaging solution, that safeguards luxury wine producers and collectors from counterfeiting.
Metrics.
This year, we began reporting several new metrics to monitor our progress against strategic objectives.
We're continuing to refine these metrics and plan to establish formal targets in 2026.
The quarter three results are for the first metric new sales pipeline and conversion rate. This metric tracks the number of opportunities with new customers or customers, we haven't sold to an over two years.
Speaker #2: This recognition and the best technology innovation category underscores our engineering excellence and collaborative approach to smart packaging. Finally, within our Accelerate initiatives, we completed detailed product roadmaps aligned with our high-value market segments, which is intended to ensure that our innovation and go-to-market efforts are tightly connected to customer needs and strategic priorities.
At the end of quarter, three we had 118 new opportunities in our pipeline. We added 46 closed 28 and converted 7% of sales leading to a net increase of 18 over a quarter or two.
We had 100 new opportunities in our pipeline at the end of quarter two.
And 75 in quarter, one showing a steady increase over time.
Speaker #2: Several of these MPD programs will begin in the next quarter. Transform. Create significant business expansion and capability growth through M&A for long-term success. Our third pillar, Transform, focuses on expanding the business through strategic M&A that accelerates EBITDA breakeven, broadens our product portfolio, and enhances our technical capabilities.
So far this year, we have converted 18% of our new opportunities to sales.
Second MPD projects.
This metric tracks the number of active NPD initiatives. These projects involved in development of entirely new RFID or BLE tags and lays our labels.
As of the end of quarter three.
Speaker #2: We continue to work with our financial advisor, Raymond James, to assess our strategic alternatives. Metrics. This year, we began reporting several new metrics to monitor our progress against strategic objectives.
There were 17 active MPD projects 11 customer driven and six internally driven.
Four of the customer driven projects targeted health care applications, and four utilized BLE technology, which represents the largest share of potential volume and steady state revenue.
Speaker #2: We're continuing to refine these metrics and plan to establish formal targets in 2026. The quarter three results are for the first metric, new sales pipeline and conversion rate.
Our third metric NPD project completion this metric captures the number of MPV projects completed within the quarter.
In quarter, three we completed three customer driven projects two of which are moving into commercialization.
Speaker #2: This metric tracks the number of opportunities with new customers or customers we haven't sold to in over two years. At the end of quarter three, we had 118 new opportunities in our pipeline, we added 46 closed 28, and converted seven to sales leading to a net increase of 18 over quarter two.
Projects were for anti counterfeiting initiatives and the high end spirits and wine markets, which will be scaling up in 2026.
In closing this was a quarter of steady financial performance and meaningful operational milestones.
We met or exceeded guidance achieved 100% production of tags and laythan labels in Thailand.
Speaker #2: We had 100 new opportunities in our pipeline at the end of the quarter two, and 75 in quarter one, showing a steady increase over time.
Advanced key R&D and commercialization initiatives.
And made continued progress across our perform accelerate and transform strategy.
Speaker #2: So far this year, we have converted 18% of our new opportunities to sales. Second, NPD projects. This metric tracks the number of active NPD initiatives.
We reaffirm identity commitment to advancing specialize the Iot solution.
Attending our BLA capabilities.
Speaker #2: These projects involve the development of entirely new RFID or BLE tags inlays or labels. As of the end of quarter three, there were 17 active NPD projects.
And fully leveraging the strategic advantages of our Thailand based production.
By continuing to execute against our perform accelerate and transform strategy. We believe we are well positioned to capture future growth opportunities within the rapidly evolving global Iot market.
Speaker #2: 11 customer-driven and six internally driven. Four of the customer-driven projects target healthcare applications, and four utilize BLE technology, which represents the largest share of potential volume and steady state revenue.
As we look ahead, our priorities are clear and complete the Singapore site shutdown by year end.
And sure excellent service to our customers, while driving productivity and efficiency in Thailand.
Speaker #2: Our third metric, NPD project completion. This metric captures the number of NPD projects completed within the quarter. In quarter three, we completed three customer-driven projects, two of which are moving into commercialization.
Execute our key new product development initiatives with excellence.
Expand our commercial and business development pipeline across high value segments.
Speaker #2: Both projects were for anti-counterfeiting initiatives in the high-end spirits and wine markets, which will be scaling up in 2026. In closing, this was a quarter of steady financial performance and meaningful operational milestones.
And position the company for sustained growth and stronger financial performance in 2026 and beyond.
I wanted to take a moment to thank our employees customers partners and shareholders for their continued trust and support.
Speaker #2: We met or exceeded guidance, achieved 100% production of tags, inlays, and labels in Thailand, advanced key R&D and commercialization initiatives, and made continued progress across our perform, accelerate, and transform strategy.
We're encouraged by our progress competent in our strategy and excited about the opportunities ahead as we continue to lead in the fast growing RFID and daily markets.
With that I'd like to open the call for your questions.
Operator, please open the question queue.
[laughter].
Thank you at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the.
Star Keys.
One moment, please while we poll for questions.
Our first question comes from Craig Ellis with B Riley. Please proceed.
Advanced key R&D and commercialization initiatives and made continued progress, our performed accelerate and transform strategy. We reaffirm identiv commitment to advancing. Specialized iot Solutions, expanding our ble capabilities, and fully leveraging. The Strategic advantages of our Thailand based production by continuing to execute against our performs accelerate and transform strategy. We believe we are well, positioned to capture future growth opportunities within the rapidly evolving Global iot Market. As we look ahead, our priorities are clear complete. The Singapore site shutdown by year end.
Yes. Thank you for taking my question and nice job on the gross merchants in the quarter I wanted to start on the top line. So for the fourth quarter. It looks like we're expecting sales up about 11%. So the question is as we look across the different vectors of the business whether it's channel.
Ensure excellent service to our customers while driving productivity and efficiency in Thailand.
Execute our key new product development initiatives with excellence.
Sure and PD conversion.
What's driving the growth sequentially in and what are some of the gives and takes as we think about tailwind and headwinds as we exit the year.
Expand, our commercial and business development pipeline across high-value, segments and position the company for sustained growth and stronger financial performance in 2026 and Beyond.
Yeah no. Thank you, let's see so definitely we are seeing some growth from our existing channel a channel customers.
I want to take a moment to thank our employees customers partners and shareholders for their continued trust and support. We're encouraged by our progress.
But I do think we're also seeing some uptick that's related to some of our BLA projects that we're seeing some additional traction for in the fourth quarter. So it's a nice combination of both kind of our perform customers as well as some of the accelerate initiatives that we're starting to see some traction quarter over quarter.
Competent in our strategy and excited about the opportunities ahead. As we continue to lead in the fast-growing RFID and BLE markets, I'd like to open the call for your questions.
Operator. Please open the question, queue.
Thanks Kirsten.
And I'm just speaking of a BLA.
The in the prepared remarks, you talked about product gross with fifth go and where we can.
Can we conclude that if co is on track for volume shipments in the second half of next year, and and where we have had previously been talked about as a potential high.
Thank you. At this time. We will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2. If you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keys 1 moment, please while we pull for questions.
Volume customer certainly not besides the best Cobot type volume, how do we think about what's possible, but really a picture.
Yeah, well to start with the ESCO question, Yes, we are making progress so product development is well underway as we mentioned we shipped out production made prototypes that are now being used in proof of concept.
Our first question comes from Craig Ellis with B Riley, please proceed. Yeah, thank you for taking the question and nice job on the gross. Margins in the quarter. I wanted to start though on the top line. So for the fourth quarter it looks like we're expecting sales up about 11%. So the question is is we look across the different vectors to the business whether it's Channel or NPD conversion.
In the field and so that of course, a lot of learnings will come from that and we'll take those learnings and use that to continue to optimize the design.
So that's that's progressing well.
what's driving, the growth sequentially and and what are some of the gifts and takes as we think about Tailwinds and headwinds uh as we exit the year
And in terms of will it we've been working very hard over the last six months to qualify their.
Their next generation products. So that's that's underway and this quarter.
And even last quarter last quarter was beginning in this quarter, we will be shipping those in those next generation products to the field. So you know the bulk of them are nice opportunities are we're excited about both of them and are working really hard to make sure that we can complete.
Yeah, no, thank you. Um, let's see. So definitely we are seeing, you know, some growth from our existing channel, uh, Channel customers. Um, but I do think we're also seeing uh, some uptick that's related to some of our B projects um that we're seeing some additional traction for in the fourth quarter. So it's a nice combination of both kind of our performance customers as well as some of the accelerate initiatives that we're starting to see uh, some traction quarter of a quarter.
The development of the of the ESCO product and then really helped to support all the different willi at customers as they look to commercialize the willies solution.
Great. Thank you and if I could sneak one in for Ed Ed.
Real nice job by the team with a gross margin in the third quarter.
With the business.
Getting the benefit of that.
Full Singapore shutdown in the fourth quarter, and with higher revenues and with some of that coming from the.
Thanks Kristen and um just speaking of uh, a bla um, in the in the prepared remarks, she talked about progress with FCO and willia, can we conclude that if Co is on track for volume shipments? In the second half of next year and, and Willie have had previously been talked about as a as a potential, high volume volume customer certainly not the size of this, but high volume. How do we think about what's possible with Willie at next year? Yeah. Well to start with.
Higher quality revenue bask companies spend prioritizing can you talk a little bit about.
What we could expect for gross margins in the fourth quarter and if there are any headwinds we need to comprehend. Thank you.
Okay.
Thanks, Craig.
Yes.
Our Q3 numbers, we as we saw.
I'm going to see significant benefits from the reduction in fixed costs with the discontinuance of our Singapore operations from both an overhead cost perspective and direct labor now.
We expect that to continue we are.
We will be substantially complete with all shutdown activities.
Q4, so we're still working through the remainder there I don't think really.
Expect the full impact of March there Mark gross margin.
And so.
Until we entered Q1 of next year.
Okay.
What about other potential benefits such as.
Sales mix and the move to higher for merchant products as mix goes more towards MPT.
This, uh, you know, we're excited about, uh, both of them, um, and, uh, working really hard to make sure that we can complete the development of the of the IFCO product. Um, and then really help to support all the different wiliete customers as they look to, uh, commercialize the Willie solution,
I was curious to talk about that but I do want to say.
Great. Thank you. And if I could sneak 1 in for ED ED, uh, real nice job by the team, with, uh, gross margin in the third quarter.
In addition to that we have the.
We will continue to improve margins with.
Improving the utilization of our.
Taiwan facility, but as far as mix, yeah. So I think what we'll see in quarter four so certainly some slight increase in utilization in the Thailand plant that will help as Ed mentioned, we arent completely shut down have shutdown, Singapore, yet. So we still have some labor that's getting you know getting that whole plant.
With the business uh getting the benefit of the full Singapore shutdown in the fourth quarter and with higher revenues. And with some of that coming from that higher quality Revenue basket, that the company's been prioritizing. Can you talk a little bit about what we could expect for gross margins in the fourth quarter and if there are any headwinds we need to comprehend, thank you.
Um, thanks Greg. Um, yes and
Now back with original state and shutdown et cetera. So we have still a little bit of cost of Singapore related costs in quarter four in terms of the mix. We definitely have some of our you know kind.
our Q3 numbers we, as we saw, um,
Kind of NPV projects starting to ramp.
Those are still a little bit in the ramp up phase. So we still have a little bit of a ramp up costs until we get the full productivity of those projects, but we do see kind of a slight increase in mix over all going into quarter four.
I'm going to yeah significant benefits from the reduction in fixed costs with the discontinuing of our Singapore operations from both an overhead cost perspective and direct labor. Now we expect that to continue, we are
Yeah.
Thanks Kirsten.
Uh, we will be substantially complete with all sets on activities in Q4. So we'll we're still working through the remainder there. I don't really expect the full impact on March or March gross margin.
Thank you.
Okay. The next question comes from Anthony Stoss with Craig Hallum. Please proceed.
Until is until we enter, uh, q1 of next year.
Good afternoon interested and team and congrats on the move to Taiwan getting it complete.
First of all the roughly 21 opportunities that converted to customers when will they show up in the P&L.
And if you could just ballpark guess what percentage of those are above your 28% gross margin goal.
Yeah, So I think.
Okay, and then what about what about, uh, other potential benefits such as um uh, sales mix, and the move to higher higher, March, and products as mix goes more towards NPD. Uh, I'll let, I'll let Kirsten talk about that. But I do want to say, um, you know, in addition to that we have the uh,
Not sure where you're getting the 21 conversion, but we did convert we have roughly converted 18% year to date of our new opportunity pipeline and.
you know, we will continue to improve margins with um, improving the utilization of our uh
Thailand facility. But as far as mix,
And that represented in third quarter, roughly 10% of our sales. So that will definitely continue to scale and grow as we go into 2020, but yes. No. We were we were happy to you know year to date, we've converted roughly 18% of our total new opportunity pipeline.
But roughly what percentage alright year, 28% gross margin goal.
Yes, so of the new opportunity.
Of the of the new opportunities that converted I think roughly two thirds of them were on the higher value side, so higher than 30% gross margin and probably a third of them were slightly lower than that but two thirds of them were what we would consider on the high value side.
Yeah, yeah. So I think what we'll see in quarter 4. So certainly, you know, some slight increase in utilization in the Thailand plan that will help. As Ed mentioned, we aren't completely shut down, have shut down Singapore yet. So we still have some labor, that's getting, you know, getting that whole plant now back to its original state and shut down Etc. So we have still a little bit of costs of Singapore, related costs and quarter 4. In terms of the mix. We definitely have some of our, um, you know, kind of NPD projects, starting to ramp. Um, those are still a little bit in the ramp up phase. So we still have a little bit of a ramp up costs. Uh,
Until we get to full productivity of those projects. But we do see, you know, kind of a slight uh increase in mix. Overall going into quarter 4
Got it good good to hear and then.
If you could frame the size of the new opportunity with <unk> and also similar question what kind of gross margins would you expect to generate.
Thanks Kirsten. Thanks s. Thank you.
Okay, the next question comes from. Anthony stosh with Craig halam, please proceed.
Yeah. So I mean, we're not talking about you know kind of ultimate sales volume potential with the Willeit and that's you know that's still progressing.
Margins the opportunity is large we are scaling up.
Good afternoon, Kirsten and team and uh congrats on the move to uh Thailand getting it. Complete Kirsten of the roughly 21 opportunity. That converted to customers. When will they show up in the p&l?
The next generation.
We definitely anticipate margins to be quite a bit significantly higher than where they were two years ago, but we're still working to increase those over the next probably three to four quarters and definitely higher much higher than where they were back in 2023 in early 2024.
Got it and last question from me Christian with your background.
Three of the health care side, I know in quarters past.
Spoke a lot about your health care opportunities didn't hear a lot on this call. Maybe you can just refresh us where you stand and what you think the opportunity set is on the health care side.
We certainly still see a nice opportunity in health care and we see a.
And if you could just ballpark gas, what percentage of those are above your 28%, gross margin goal. Yeah. So I think, um, I'm not sure where you're getting the 21 conversion, but we did convert, we have roughly converted 18%, um, year to date of our new opportunity pipelines, uh, and that represented in third quarter roughly 10% of our sales, so those will definitely continue to scale and grow as we go into 2026. But ya know, we were, we were happy to, you know, year to date. We've converted roughly 18% of our total new opportunity pipeline that roughly what percentage are at your 28%, gross margin goal.
Kind of the interest from some of the medical device and the pharmaceutical companies and really engaging in in and are evaluating these types of solutions. But these are also longer term opportunities. So of our current NPD new product development pipeline I think roughly a third of them are health care related.
Yeah, so of the new opportunity of the, of the of the of the new opportunities that converted I I think roughly 2/3 of them were on the higher value side. So higher than 30% growth margin and probably a third of them were slightly lower than that, but 2/3 of them were what we would consider on the high value side.
Just take longer to get to the commercialization side. So we remain positive about the opportunity space. We remain positive about the projects that we have but we definitely see some of the ones that are on the logistics side, the consumer product side of getting to market faster than we do with some of the health care projects that we're working on.
Got it good. Good to hear. And then um if you could frame the size of the the new opportunity with wiliete and also similar question, what kind of growth margins would you expect to, uh, to generate
Very good best of luck. Thank you.
Okay. Thanks, so much.
We have reached the end of the question and answer session and I will now turn the call over to Kirsten for closing remarks.
Thanks, operator, and thank you all again for joining us today, and we look forward to speaking with you next quarter have a good afternoon bye bye.
This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
You know, that's still progressing. Um, margins. You know, the opportunity is large, we're scaling up, uh, the Next Generation, you know, we definitely anticipate margins to be quite a bit significantly higher than where they were 2 years ago. But we're still working to increase those over the next. You know, probably 3 to 4 quarters and definitely higher much higher than where they were uh back in 2023 and early 2024 got it. And the last question for me, Kirsten with your background, um, in the industry in the healthcare side and no 1 quarters past. You've spoke a lot about your Healthcare opportunities. Didn't hear a lot on this call. Maybe you can just refresh us where you stand and what you think the opportunity said is on the healthcare side,
Yeah, we certainly still see a, a nice opportunity in healthcare and, and we see, uh, you know, kind of the interest from some of the medical devices and the pharmaceutical companies and really engaging in in, in, uh, evaluating these types of solutions. But these are also longer term opportunities. So, of our current NPD new product development pipeline, I think roughly a third of them are healthcare related. They just take longer to, uh, get to the commercialization side. So we remain positive about the opportunity, space. We remain positive about the project that we have, but we definitely see some of the ones that are on the logistics side. The consumer product side of getting to Market, faster than we do with some of the health care projects that we're working on.
Very good, best of luck. Thank you.
Okay, thanks so much.
We have reached the end of the question and answer session and I will now turn the call over to Kirsten for closing remarks.
Thanks operator. Um, and thank you all again for joining us today. And we look forward to speaking with you. Next quarter. Have a good afternoon. Bye bye.