Good afternoon. Welcome to Identiv's presentation of a Third Quarter 2025 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, Kirsten Newquist, and CFO, Edward Kirnbauer. 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. 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, 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 discussed in documents filed from time to time with the SEC, including the company's latest annual report on Form 10-Ks, as well as our third 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. Miss Newquist, please proceed.

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. 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. 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. 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, enhanced efficiency and scalability, and positioned us well for continued margin growth. 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. Our CFO, Edward Kirnbauer, 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.

Thanks, Kirsten. In 2025, we delivered $5 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. Third quarter GAAP and non-GAAP gross margins were 10.7% and 19.1%, respectively, compared to GAAP and non-GAAP gross margins of 3.6% and 60.3%, 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 and utilization of our manufacturing production facility in Thailand and sales of fully reserved inventory of $200,000. 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. This 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 in 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. 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. 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 2024. This decrease in net loss was primarily due to strategic review-related costs…

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. 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 strong foundation for sustained and profitable growth. 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. To achieve this, we are prioritizing higher margin opportunities, exceeding gross margins through our Thailand transition, and executing our new product development (NPD) pipeline with greater discipline. 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. 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. 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. We've made steady progress and expect to have these systems largely implemented by year-end, strengthening our operational foundation and ensuring availability 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…

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. You may press 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. One moment, please, while we pull for questions. Our first question comes from Craig Ellis with B. Riley. Please proceed.

Yes. Thank you for taking my 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, as we look across the different factors of the business, whether it's channel or NPD conversion, what's driving the growth sequentially? And what are some of the gives and takes as we think about tailwinds and headwinds as we exit the year?

Yeah, no, thank you. Let's see. So definitely, we are seeing, you know, some growth from our existing channel customers. But I do think we're also seeing some uptick that's related to some of our BLE 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.

Thanks, Kirsten. And just speaking of BLE, in the prepared remarks, you talked about progress with IFCo and Williot. Can we conclude that IFCo is on track for volume shipments in the second half of next year? And Williot has been talked about as a potential high customer, certainly not the size of IFCo, but high volume. Do we think about what's possible with Williot next year?

Yeah. Well, to start with the IFCo question, yes, we are making progress. So, you know, product development is well underway. As we mentioned, we shipped out production, made prototypes that are now being used in proof of concepts 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 progressing well. And in terms of Williot, we've been working very hard over the last six months to qualify their next-generation product. So that's underway, and this quarter, and even last quarter, last quarter was beginning, and this quarter, we will be shipping those next-generation products to the field. So both of them are nice opportunities. We're excited about both of them. And working really hard to make sure that we can complete the development of the IFCo product. And then really help to support all the different Williot customers as they look to commercialize the Williot solution.

Great. Thank you. And 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 the higher quality revenue basket that the company has 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.

Thanks, Greg. Yes. Our Q3 numbers, we, as we saw, I'm gonna see, yeah, significant benefits from the reduction in fixed costs with the discontinuance of our Singapore operations from both overhead cost perspective and direct labor. Now expect that to continue. We are we will be substantially complete with all shutdown activities in Q4. So we're still working through the remainder there. I don't really expect the full impact on March gross margin until we enter Q1 of next year.

Okay. And then what about other potential benefits such as sales mix and the move to higher margin products as mix goes more towards NPD?

I'll let Kirsten talk about that, but I do want to say, you know, in addition to that, we will continue to improve margins with improving the utilization of our Thailand facility. But as far as mix...

Yeah. Yeah. So I think what we'll see in quarter four, so, 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. So we still have some labor that's getting, you know, getting that whole plant now backed with original state and shut down, etcetera. 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 NPD 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 cost until we get the full productivity of those projects. But we do see, you know, kind of a slight increase in mix overall going into quarter four.

Thanks, Kirsten. Thanks, Ed.

Thank you.

The next question comes from Anthony Stoss with Craig Hallum. Please proceed.

Good afternoon, Kirsten and team, and congrats on the move to Thailand getting it complete. Kirsten, I'll be 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 20% gross margin goal?

Yeah. So 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 pipeline. And that represented in the third quarter roughly 10% of our sales. So those will definitely continue to scale and grow as we go into 2026. But, yeah, no, we were happy to, you know, year-to-date, we've converted roughly 18% of our total new opportunity.

Roughly what percentage at your 28% gross margin goal?

Yeah, so of the new opportunity 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.

Got it. Good to hear. And then you could frame the size of the new opportunity with Williot and also similar question, what kind of gross margins would you expect to generate?

Yeah. So I mean, we're not talking about, you know, kind of ultimate sales volume potential with the Williot, and that's still progressing. Margins, the opportunity large. We're scaling up 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 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.

Got it. And last question for me, Kirsten, with your background in this industry on the healthcare side, I know in quarters past you've spoken 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.

Yeah, we certainly still see a nice opportunity in healthcare, and we see kind of the interest from some of the medical device and the pharmaceutical companies in really engaging in 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 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, are getting to market faster than we do with some of the healthcare 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. And thank you all again for joining us today. 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.