Good afternoon and welcome to Identiv's presentation of its second quarter 2025 earnings call. My name is Matthew, and I'll be your operator this afternoon. Joining us for today's presentation are the company's CEO, Kirsten Newquist; and CFO, Ed Kirnbauer. [Operator Instructions] Before we begin, please note that during the 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. 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 marketing 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. Actual results may differ materially from those expressed in these forward- looking statements. For more information, please refer to the risk factors described in the documents filed from time to time with the SEC, including the company's latest annual report on Form 10-K as well as our second quarter 10-Q once filed. Identiv assumes no obligation to update these forward-looking statements. I will now turn the call over to CEO, Kirsten Newquist for her comments. Ms. Newquist, please proceed.

Thanks, operator, and thank you all for joining our Quarter 2 2025 Earnings Call. Before we begin, I'm very pleased to announce that Ed Kirnbauer has been officially appointed Chief Financial Officer by the Identiv Board of Directors. Ed has been serving as acting CFO since last month and today's announcement marks his permanent transition into the role. Ed has been with Identiv since 2015, most recently serving as our Global Corporate Controller. He also stepped in as Interim CFO in late 2021. Prior to joining Identiv, Ed held senior finance positions in the technology and manufacturing sectors and began his career at KPMG. We're excited to welcome him into this leadership position as he continues to bring deep expertise and steady guidance to our finance organization. Now turning to our second quarter business update. We continue to see macro trends driving strong demand for RFID and next- generation technologies like BLE, even amidst ongoing global market volatility. Businesses are seeking deeper intelligence into their operations and customer engagement to strengthen their competitive position and better differentiate their offerings. Identiv is enabling that deeper intelligence as we help our customers add digital identities to physical products through RFID. This increased demand is being accelerated by several key factors. The rapid expansion of IoT-connected devices, evolving regulatory landscapes, rising anti-counterfeiting pressures and the growing global emphasis on sustainability. RFID and related technologies generate the real-world data needed to power digital transformation and increasingly AI. As businesses adopt AI to improve forecasting, logistics and operations, they need accurate real-time data from the physical world. Our products serve as a critical bridge, turning physical items into data generating assets. Identiv is helping to lead this transformation. Our specialized IoT inlays, tags and labels provide digital IDs that solve real-world challenges across sectors from…

Thanks, Kirsten. Having been with Identiv for nearly 10 years, I'm excited to move into the CFO role at this transformative time in our company's history and look forward to meeting with the investment community in the upcoming months. In the second quarter of 2025, we delivered $5.0 million in revenue, which was within our previously announced guidance range, compared to $6.7 million in Q2 2024. This year-over-year decrease was due to lower sales of RFID transponder products as we continue to exit lower-margin business and reduced sales to our largest customer who is working through inventory they built up in 2024 in anticipation of transitioning production to Thailand. Second quarter GAAP and non-GAAP gross margin was negative 9.4% and negative 0.8%, respectively, compared to GAAP and non-GAAP gross margin of 9.1% and 14.6%, respectively, in Q2 2024. Factors impacting the decrease in gross margin included incremental costs related to the transition of production to Thailand and the dual manufacturing sites required during that transition as well as decreased utilization due to lower year-over-year revenues. In addition, we recorded adjustments, which included approximately $0.6 million associated with obsolete inventory at our Singapore facility. As Kirsten mentioned, we have completed production of RFID devices in Singapore and requalified our customers in our Thailand production facility. Facility shutdown activities in Singapore are progressing as planned and are expected to be substantially completed by year-end. GAAP and non-GAAP operating expenses for the second quarter of 2025, including research and development, sales and marketing, and general and administrative expenses totaled $5.9 million and $4.5 million, respectively, as compared to $7.3 million and $4.7 million, respectively, in Q2 2024. The year-over-year decrease in GAAP operating expenses was driven primarily by a reduction in onetime strategic review related costs. The decrease in non-GAAP operating expenses reflects…

Thanks, Ed. With that financial context in mind, I'd like to share an update on the progress we are making under our Perform- Accelerate-Transform strategic framework. Our first pillar, Perform, is focused on strengthening and growing our core channel business. To achieve this, we are prioritizing higher margin opportunities with existing customers and channel partners, expanding gross margins by completing the transition to Thailand and focusing on executing our new product development, or NPD, pipeline with discipline. Our goal is to consistently exceed customer expectations through exceptional support and reliable on-time delivery. As we execute this strategy, we're building a solid operational foundation to ensure a competitive cost structure, adding key customer- facing roles and putting in place the processes needed to drive NPD. This work is already showing results. Our commercial team is fully in place and sales momentum is building with a 33% increase in new opportunities in our sales pipeline this quarter compared to last quarter. Our commercial efforts are strongly supported by our new marketing team. Through their dedicated work, this past quarter, we have successfully completed 22 marketing initiatives in collaboration with 10 strategic partners, including webinars, white papers, press releases and joint trade shows, driving a remarkable 300% increase in request for information from our website compared to the second quarter of last year. We believe this surge of customer interest is directly contributing to a stronger pipeline of new opportunities and will result in growing momentum for our business. As I mentioned earlier, we have completed all production in Singapore, and the site shutdown is progressing as planned. This transition to Thailand is key to expanding our gross margins. To support continuous improvement in our Thailand operations, we have launched CRM and MRP initiatives designed to automate our key processes, strengthen our operational…

[Operator Instructions] Your first question is coming from Jaeson Schmidt from Lake Street.

I just want to start with your announcement this week and thinking about this sort of opportunity in the grocery space, understanding that it's pilot testing here in 2025 and then full-scale deployment in 2026. Can you help us get a sense of the size of this opportunity longer term and when it can be impactful to the model?

Well, yes, certainly, we're really excited and pleased about this partnership, and it is a significant potential volume opportunity for us. So IFCO, they have over 400 million plastic containers that they ultimately want to get tagged. The goal is to tag all of them over the next 4 to 5 years. And then there's an ongoing opportunity because there's roughly 10% or more of those plastic containers that need to get replenished every single year. So excited about the opportunity. It is still very much an active development program. And so the goal is to be able to launch mass production in 2026, but there is always a little bit of uncertainty when you're doing a development program. It is a very innovative product. It's using a next-generation chip. There's some kind of real interesting innovation related to the manufacturing process. So all that still is being developed, but the goal will be to start mass production in 2026.

Got you. And then just curious if you could talk about sort of order patterns so far here in the first 6 weeks of the quarter.

Sure. Are you saying specifically for the third quarter?

Yes.

Yes. I mean I think the order patterns seem to be on track with the guidance that we have provided.

Got you. And then last one for me, and I'll jump back in the queue. How should we think about gross margin? I know there were some dynamics impacting it in Q2. But looking here in Q3 and Q4, how should we think about sort of the general level?

Yes. So definitely, and Ed can weigh in on this as well. But we definitely -- in the first half of the year, we were significantly impacted in our gross margin with our dual manufacturing sites, both Thailand and Singapore. And then also just some additional transition costs that we had in terms of doubling up with training and so on and so forth. So we were really happy to hit our goal or our milestone of completing production in Singapore in quarter 2, and that has been achieved. So that is done. At this point, we have a very small skeleton crew that remains to really support the shutdown. We have to pack up the final equipment and ship it off and we have to shut down the site. But we definitely expect to see a benefit for sure in the second half as we closed down the site. And then maybe, Ed, any other color?

I'll agree with that. With the closing of production in Singapore, we should -- we will definitely see a positive impact on margins as we go into Q3 as well as Q4.

[Operator Instructions] That concludes our Q&A session. I'll now hand the conference back to CEO, Kirsten Newquist, for closing remarks. Please go ahead.

Thanks, operator, and thank you all again for joining us today. We appreciate the continued support of our customers, partners, shareholders and employees. In terms of investor outreach, we'll be attending the B. Riley TMT Conference in New York on Wednesday, September 10. And Lake Street will be hosting a virtual NDR on Tuesday, September 16. So thank you again for joining us this afternoon and evening, and have a nice night. Bye-bye.

Thank you. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.