Identiv, Inc. — Call Transcript 2025

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. Following management's remarks, we will open the call for questions. Before we begin, please note that during the call, management may be making references to non-GAAP financial measures for 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 in 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 Q2 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 a 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 inlay, tags, and labels provide digital IDs that solve real-world challenges across sectors, from cold chain logistics to smart packaging to healthcare and consumer electronics. Our devices enable real-time tracking, condition monitoring, compliance, security, and more engaging consumer experiences. Financially, our Q2 revenue was $5 million within our previously announced guidance. Our core channel business remains on track, though we are seeing increased competition, particularly within our standard product lines, where several competitors have recently expanded manufacturing capacity. We are also closely monitoring macroeconomic risks, particularly regarding U.S. trade with Thailand. On July 31st, the White House announced a 19% tariff on imports from Thailand. This was generally seen as a positive for electronics manufacturers based in Thailand, as it is a significant reduction from the previously announced 36% rate and positions Thailand as a reliable manufacturing alternative to China. However, the requirements around the amount of Thailand-made components needed to obtain a Thailand certificate of origin are still a source of uncertainty, particularly with new U.S. measures aimed at preventing transshipment. As we noted on our May call, approximately a quarter of our business is exposed to U.S. import tariffs due to our manufacturing footprint in Thailand. We developed a responsible pass-through strategy to protect margins, and to date, all affected customers have agreed to absorb the additional costs. The potential indirect effect on customer demand, especially in more discretionary segments, is less clear. A key highlight this quarter: earlier this week, we announced a strategic partnership with grocery logistics leader IFCO to enhance traceability, efficiency, and sustainability across the fresh grocery supply chain. IFCO is the world's leading provider of reusable packaging solutions for grocery products, and we have been closely collaborating with the IFCO team for several months to develop and launch a BLE-enabled smart label that will enable real-time tracking and temperature monitoring of IFCO's extensive global pool of reusable packaging containers (RPCs). With over 400 million RPCs in circulation, the value expected to be provided by our smart label in reducing the waste of fresh produce is significant. The goal is to tag the entire pool of 400+ million RPCs over the next four to five years, representing a major volume opportunity. This initiative is a top strategic priority, as we are currently producing prototypes for pilot-scale runs and expect to begin mass production in 2026. Operationally, we achieved a major milestone in Q2 by completing the transfer of production from Singapore to our lower-cost facility in Thailand. All customers have been successfully requalified, and the Thailand team is progressing well toward full productivity by early next year. A small transition team remains in Singapore to manage the site closure and support continued training in Thailand. Strategically, we are now six months into executing our Perform, Accelerate, Transform (PAT) strategy. The key objectives of PAT are: (1) to strengthen and optimize the performance of our core channel business, (2) accelerate our growth through high-value applications, and (3) ultimately transform Identiv into a market leader of specialty IoT solutions. We've made measurable progress across all three pillars this quarter, and I will provide more detail after end reviews of financials. In closing, despite a challenging macro backdrop, we believe our customers clearly see the value Identiv provides. Our specialized IoT tags, inlays, and labels are not only enabling digital transformation, but are solving real-world industry challenges. These long-term trends not only remain intact but, in many ways, are accelerating. As a focused, pure-play IoT solutions company, we are executing our PAT strategy with discipline, and we believe this positions us well for sustainable long-term growth. Ed, over to you. 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 reduce 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 -9.4% and -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 one-time strategic review-related costs. The decrease in non-GAAP operating expenses reflects management's targeted resource allocation to support the company's organic growth initiatives, as outlined in the PAT strategic framework. Second quarter GAAP loss from continuing operations was $6.0 million or $0.26 per basic and diluted share, compared to GAAP net loss from continuing operations of $6.9 million or $0.31 per basic and diluted share in the second quarter of 2024. This decrease in net loss was primarily due to strategic review-related costs of $1.6 million incurred in the second quarter of 2024 that did not occur in the second quarter of 2025, and unrealized foreign currency losses of $0.9 million, partially offset by interest income of $1.3 million. Non-GAAP adjusted EBITDA loss for Q2 2025 was $4.6 million, compared to $3.7 million in the second quarter of 2024. The decrease was primarily due to Thailand transition costs and adjustments for obsolete inventory at our Singapore production facility. 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. Moving now to the balance sheet, we exited Q2 2025 with $129.6 million in cash, cash equivalents, and restricted cash. In the second quarter of 2025, we used $3 million in cash. This brings our total net operating cash used for the nine months following September 30, 2024, to $10.3 million. Previously, we expected net operating cash used for the 12-month period following September 30, 2024, to be in the range of $14 million-$16 million. Given our cash usage through Q2 2025 and current expectations for Q3, we are revising this range to $13 million-$15 million for the period ending September 30, 2025. Our working capital exiting Q2 was $137.5 million. Our balance sheet position remains strong, enabling us to pursue our organic and inorganic growth initiatives within the PAT strategic framework. In our 10-Q filing, we will be providing a full reconciliation of the year-to-date cash flows. For completeness, we have included the full balance sheet in the appendix of today's earnings release. Lastly, our financial outlook. We're continuing to monitor macroeconomic risks, particularly those related to U.S. trade with Thailand, as Kirsten mentioned. We're also looking at any indirect impacts these risks could have on customer demand and project timelines. In addition to these risks, we are also mindful of the ongoing competitive pressures on our standard product lines, which have been impacted by increased manufacturing capacity from some of our key competitors. This is causing some headwinds in the shorter term with standard product opportunities. As the macroeconomic environment evolves and we gain more visibility, we're prepared for a variety of possible outcomes. As we continue to exit lower margin business, we anticipate our largest customer will continue to reduce their inventory position. Based on this outlook, as of today's call for Q3 2025, we currently expect net revenue in the range of $4.8 million-$5.2 million. This concludes the financial discussion. I'll now pass the call back to Kirsten. 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 requests 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 foundation, and ensure the business is scalable. Moving to the second pillar of our PAT framework, Accelerate, we're advancing three specific growth initiatives to build our pipeline and drive long-term revenue and margin expansion: (1) expanding our BLE technology platform and multi-component MCL manufacturing capabilities, (2) targeting growth in three healthcare high-value applications, and (3) further driving growth in three consumer and logistics high-value applications. Beginning with BLE expansion, we are making meaningful progress. As we've discussed, BLE is a next-generation technology for IoT, providing significant benefits for applications that require real-time traceability or condition monitoring, which are challenging to address with traditional RFID technologies. Over the past several months, we have seen increasing interest in specialized BLE labels spanning logistics, pharmaceuticals, and asset tracking applications. These BLE-enabled solutions not only provide real-time visibility but also generate high-frequency data streams that can be used to power AI models, unlocking predictive insights, operational optimization, and automated decision-making. We have several significant BLE projects in our NPD pipeline, including the food logistics project I mentioned earlier and in an industrial track and trace application, all with the potential to improve business efficiency and reduce waste through the analytics they generate. The technical demands of BLE smart label design and manufacturing play to our engineering strengths and offer a clear competitive edge. Over the past six months, we invested in new MCL manufacturing equipment at our Munich, Germany, R&D center, expanded our engineering team with RF and software engineers, and strengthened product management capability dedicated to BLE innovation. In May, we introduced our new BLE smart labels at RFID Journal LIVE!, marking an important step toward commercialization. We are collaborating with InPlay on a new portfolio of BLE-enabled battery-powered smart labels designed for high-value logistics applications. The upcoming smart label portfolio will be powered by InPlay's IN100 NanoBeacon, an ultra-low-power BLE system on a chip, and is expected to be available late this year. A full launch of this secure, scalable BLE portfolio is targeted for early 2026. We continue to work closely with Wiliot on the production of their next-generation IoT Pixels. Our teams have been actively collaborating to ensure we are prepared to support volume production for Wiliot's customers and partners in the coming months. Wiliot IoT Pixels are small, battery-free, Bluetooth sensors powered by harvesting ambient radio frequency energy, enabling continuous transmission of data like temperature, motion, and location for smart supply chain and IoT applications. We are highly encouraged by the momentum building in BLE and the increasing interest from the market. The second and third Accelerate initiatives focus on driving growth across six high-value, high-volume applications: three in healthcare, two in consumer, and one in logistics. To support these initiatives, we've expanded our business development and product management teams to drive market engagement through strategic partnerships and direct OEM relationships, and to ensure our product roadmaps are aligned with the specific requirements of each target application. Strategic partnerships are essential to the development and deployment of solutions in these key markets. While Identiv delivers a critical component of any IoT solution, our inlays, tags, and labels, customers also require robust, application-specific data analytics to generate meaningful insights. Over the past six months, we've prioritized building relationships that complement our technology and will continue pursuing partnerships where strong strategic alignment exists. In addition to IFCO, we also announced a strategic partnership with Narravero, a global SaaS platform for digital product passports, or DPPs, and supply chain transparency. The collaboration comes in anticipation of new EU regulations requiring DPPs, which are scheduled to go into effect starting in 2027. A DPP is a digital record that contains detailed information about a product's material, origin, environmental impact, and life cycle, enabling greater transparency and sustainability across the supply chain. By combining Identiv's NFC inlays for dynamic product data with Narravero's robust data management platform, this collaboration is intended to offer a comprehensive, integrated solution that streamlines DPP deployment for companies. Based on current projections and regulatory scope, we estimate the EU's DPP framework could apply to more than 3 billion products annually across categories such as apparel, electronics, and industrial goods. We believe this positions our collaboration with Narravero as a high-volume opportunity, potentially enabling Identiv to deliver millions of NFC inlays per year as DPP regulations roll out over time across multiple product categories. We're also advancing collaborations launched earlier this year, including our strategic partnerships with Novanta for medical device applications and Tag-N-Trac for pharmaceutical cold chain management. Last week in Chicago, we joined our partner, Novanta, for the ADLM Diagnostics Industry Trade Show. At their booth, we showcased our combined solution for advanced diagnostics, demonstrating how Identiv's RFID tags and Novanta's ThingMagic reader technology can be integrated into diagnostic test equipment. This innovative solution allows for the seamless monitoring of test samples and medical consumables, which helps ensure accurate test results and enhances patient safety. Our strategic partnership with Tag-N-Trac combines our advanced BLE smart labels with Tag-N-Trac's RELATIVITY SaaS platform and is intended to offer pharma customers an integrated IoT solution that delivers item-level visibility and actionable insights for cold chain tracking within the pharmaceutical industry supply chain. In June, we co-hosted a keynote session with Tag-N-Trac at the AIPIA & AWA Smart Packaging World Congress 2025 in Amsterdam, and we're enthusiastic about the potential opportunities in the pipeline. Turning now to the third part of our strategic framework, Transform. This pillar focuses on driving business expansion and capability growth through M&A. Our objective is to accelerate reaching EBITDA break-even by gaining scale, broadening our product portfolio, and enhancing our technical capabilities through strategic acquisition. We continue to evaluate, with our financial advisor Raymond James, our strategic alternatives. We have also strengthened our board and standing M&A committee with the addition of our newest board member, Mick Lopez. As a former public company CFO, Mick brings deep expertise in M&A and corporate finance, along with a strong shareholder-focused perspective that is already proving valuable to our strategic decision-making. Starting last quarter, we began reporting several metrics to monitor our progress across our strategic objectives. Throughout this year, we will be developing our baseline and will be refining our learning. Based on our findings, we intend to establish targets for these metrics in 2026. The new metrics are: (1) new sales pipeline and conversion rate. This metric tracks the number of opportunities with new customers or customers we have not sold to in over two years. At the end of Q2, we had 100 new opportunities in our pipeline. This is an increase from the 75 we had at the end of Q1. We have converted 14% of our new opportunities to sales in the first half of the year. NPD, new product development projects. This metric tracks the number of active NPD initiatives. These projects involve the development of entirely new RFID or BLE tags, inlays, or labels. As of the end of Q2, there were 19 active NPD projects, 12 customer-driven and seven internally driven. Four of the customer-driven projects target healthcare applications, and five utilize BLE technology, which represent the largest share of potential volume and steady-state revenue. (3) NPD project completion. This metric captures the number of NPD projects completed within the quarter. In Q2, we completed one internally driven project, a specialized new conductive adhesive that forms the critical connection between the chip and the antenna on the inlay. Finally, I would like to provide an update on our corporate governance. At the 2025 annual meeting held on June 10th, stockholders approved the proposal to amend the company's charter to declassify the board. Therefore, the Class 2 director nominees were re-elected for one-year terms, and the board's classified structure will end at the end of 2026's annual meeting of stockholders, at which time all nominees for election as director will stand for one-year terms. As a reminder, the board previously announced plans to declassify its structure as part of its ongoing corporate governance review, which aims to better align the company's governance with best practices and enhance accountability to shareholders. In closing, while we expect the global macroeconomic uncertainty to continue, Identiv's value proposition remains strong and consistent. The long-term secular trends that are driving demand for RFID and BLE-enabled solutions remain solid. As a focused, pure-play IoT solutions provider, we believe we have the right team in place to execute our PAT strategic framework. By reinforcing our core channel strengths, expanding through new strategic partnerships and innovative product development, and working expeditiously through our Transform process with our financial advisor, we believe we can create value for all of our stakeholders. With that, I'd like to open the call for your questions. Operator, please open the question queue. Certainly. Everyone, at this time we will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your headset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Your first question is coming from Jaeson Schmidt from Lake Street. Your line is live. Yeah, thanks for taking my questions. 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? We're really excited and pleased about this partnership, and it is a significant potential volume opportunity for us. 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 four to five years. There's an ongoing opportunity because there's roughly 10% or more of those plastic containers that need to get replenished every single year. Excited about the opportunity. It is still very much an active development program. The goal is to be able to launch mass production in 2026. 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 real interesting innovation related to the manufacturing process. All that still is being developed, but the goal will be to start mass production. Gotcha. Just curious if you could talk about sort of order patterns so far here in the first six weeks of the quarter. Sure. Are you saying specifically for the third quarter? Yes. I think the order patterns seem to be on track with the guidance that we have provided. Gotcha. Last one for me, I'll jump back into 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? Yeah, definitely, and Ed can weigh in on this as well, but we definitely, in the first half of the year, were significantly impacted in our gross margin with our dual manufacturing sites, both Thailand and Singapore, and also just some additional transition costs that we had in terms of doubling up with training and so on and so forth. We were really happy to hit our goal or our milestone of completing production in Singapore in Q2, and that has been achieved. 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. We definitely expect to see a benefit for sure in the second half as we close down the site. Maybe add any other color? I would agree with that. With the closing of production in Singapore, we should definitely see a positive impact of margin as we go into Q3 as well as Q4. Okay, perfect. Thanks a lot, guys. Thank you. Thank you. Once again, everyone, if you have any questions or comments, please press star, then one on your phone. Please hold while we poll for questions. Thank you. 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 CMC conference in New York on Wednesday, September 10, and Lake Street will be hosting a virtual NDR on Tuesday, September 16. 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.

Speaker 4: 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. Following management's remarks, we will open the call for questions. Before we begin, please note that during the call, management may be making references to non-GAAP financial measures for 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 in future plans, strategies, opportunities, and goals is a forward-looking statement. Good afternoon and welcome to Identiv's Presentation of its Second Quarter 2025 Earnings Call. 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. 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. joining us for today's presentation are the company's ceo kirsten newquist and cfo ed kirnbauer Following management's remarks, we will open the call for questions. following management's remarks we will open the call for questions Before we begin, please note that during the call, management may be making references to non-GAAP financial measures for guidance, including non-GAAP adjusted EBITDA, non-GAAP gross profit, non-GAAP gross margin, and non-GAAP operating expenses. before we begin please note that during the call management may be making references to non-gaap financial measures for 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. 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 in future plans, strategies, opportunities, and goals is a forward-looking statement. 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 in 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. Actual results may differ materially from those expressed in these forward-looking statements. 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. 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. identiv assumes no obligation to update these forward-looking statements I will now turn the call over to CEO Kirsten Newquist for her comments. i will now turn the call over to ceo kirsten newquist for her comments Ms. Newquist, please proceed. ms newquist please proceed

Speaker 1: Thanks, operator, and thank you all for joining our Q2 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. Thanks, operator, and thank you all for joining our Q2 2025 earnings call. thanks operator and thank you all for joining our q2 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. 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 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. 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. 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. 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. 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 a 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. 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. 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. 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. 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 a growing global emphasis on sustainability. 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 a growing global emphasis on sustainability RFID and related technologies generate the real-world data needed to power digital transformation and, increasingly, AI. 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. 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. our products serve as a critical bridge turning physical items into data-generating assets Identiv is helping to lead this transformation. Our specialized IoT inlay, tags, and labels provide digital IDs that solve real-world challenges across sectors, from cold chain logistics to smart packaging to healthcare and consumer electronics. Our devices enable real-time tracking, condition monitoring, compliance, security, and more engaging consumer experiences. Financially, our Q2 revenue was $5 million within our previously announced guidance. Our core channel business remains on track, though we are seeing increased competition, particularly within our standard product lines, where several competitors have recently expanded manufacturing capacity. We are also closely monitoring macroeconomic risks, particularly regarding U.S. trade with Thailand. On July 31st, the White House announced a 19% tariff on imports from Thailand. This was generally seen as a positive for electronics manufacturers based in Thailand, as it is a significant reduction from the previously announced 36% rate and positions Thailand as a reliable manufacturing alternative to China. Identiv is helping to lead this transformation. identiv is helping to lead this transformation Our specialized IoT inlay, tags, and labels provide digital IDs that solve real-world challenges across sectors, from cold chain logistics to smart packaging to healthcare and consumer electronics. our specialized iot inlay tags and labels provide digital ids that solve real-world challenges across sectors from cold chain logistics to smart packaging to healthcare and consumer electronics Our devices enable real-time tracking, condition monitoring, compliance, security, and more engaging consumer experiences. our devices enable real-time tracking condition monitoring compliance security and more engaging consumer experiences Financially, our Q2 revenue was $5 million within our previously announced guidance. financially our q2 revenue was $5 million within our previously announced guidance Our core channel business remains on track, though we are seeing increased competition, particularly within our standard product lines, where several competitors have recently expanded manufacturing capacity. our core channel business remains on track though we are seeing increased competition particularly within our standard product lines where several competitors have recently expanded manufacturing capacity We are also closely monitoring macroeconomic risks, particularly regarding U.S. trade with Thailand. we are also closely monitoring macroeconomic risks particularly regarding u.s trade with thailand On July 31st, the White House announced a 19% tariff on imports from Thailand. on july 31st the white house announced a 19% tariff on imports from thailand This was generally seen as a positive for electronics manufacturers based in Thailand, as it is a significant reduction from the previously announced 36% rate and positions Thailand as a reliable manufacturing alternative to China. this was generally seen as a positive for electronics manufacturers based in thailand as it is a significant reduction from the previously announced 36% rate and positions thailand as a reliable manufacturing alternative to china However, the requirements around the amount of Thailand-made components needed to obtain a Thailand certificate of origin are still a source of uncertainty, particularly with new U.S. measures aimed at preventing transshipment. As we noted on our May call, approximately a quarter of our business is exposed to U.S. import tariffs due to our manufacturing footprint in Thailand. We developed a responsible pass-through strategy to protect margins, and to date, all affected customers have agreed to absorb the additional costs. The potential indirect effect on customer demand, especially in more discretionary segments, is less clear. A key highlight this quarter: earlier this week, we announced a strategic partnership with grocery logistics leader IFCO to enhance traceability, efficiency, and sustainability across the fresh grocery supply chain. However, the requirements around the amount of Thailand-made components needed to obtain a Thailand certificate of origin are still a source of uncertainty, particularly with new U.S. measures aimed at preventing transshipment. however the requirements around the amount of thailand-made components needed to obtain a thailand certificate of origin are still a source of uncertainty particularly with new u.s measures aimed at preventing transshipment As we noted on our May call, approximately a quarter of our business is exposed to U.S. import tariffs due to our manufacturing footprint in Thailand. as we noted on our may call approximately a quarter of our business is exposed to u.s import tariffs due to our manufacturing footprint in thailand We developed a responsible pass-through strategy to protect margins, and to date, all affected customers have agreed to absorb the additional costs. we developed a responsible pass-through strategy to protect margins and to date all affected customers have agreed to absorb the additional costs The potential indirect effect on customer demand, especially in more discretionary segments, is less clear. the potential indirect effect on customer demand especially in more discretionary segments is less clear A key highlight this quarter: earlier this week, we announced a strategic partnership with grocery logistics leader IFCO to enhance traceability, efficiency, and sustainability across the fresh grocery supply chain. a key highlight this quarter earlier this week we announced a strategic partnership with grocery logistics leader ifco to enhance traceability efficiency and sustainability across the fresh grocery supply chain IFCO is the world's leading provider of reusable packaging solutions for grocery products, and we have been closely collaborating with the IFCO team for several months to develop and launch a BLE-enabled smart label that will enable real-time tracking and temperature monitoring of IFCO's extensive global pool of reusable packaging containers (RPCs). With over 400 million RPCs in circulation, the value expected to be provided by our smart label in reducing the waste of fresh produce is significant. The goal is to tag the entire pool of 400+ million RPCs over the next four to five years, representing a major volume opportunity. This initiative is a top strategic priority, as we are currently producing prototypes for pilot-scale runs and expect to begin mass production in 2026. Operationally, we achieved a major milestone in Q2 by completing the transfer of production from Singapore to our lower-cost facility in Thailand. IFCO is the world's leading provider of reusable packaging solutions for grocery products, and we have been closely collaborating with the IFCO team for several months to develop and launch a BLE-enabled smart label that will enable real-time tracking and temperature monitoring of IFCO's extensive global pool of reusable packaging containers (RPCs). ifco is the world's leading provider of reusable packaging solutions for grocery products and we have been closely collaborating with the ifco team for several months to develop and launch a ble-enabled smart label that will enable real-time tracking and temperature monitoring of ifco's extensive global pool of reusable packaging containers (rpcs) With over 400 million RPCs in circulation, the value expected to be provided by our smart label in reducing the waste of fresh produce is significant. with over 400 million rpcs in circulation the value expected to be provided by our smart label in reducing the waste of fresh produce is significant The goal is to tag the entire pool of 400+ million RPCs over the next four to five years, representing a major volume opportunity. the goal is to tag the entire pool of 400+ million rpcs over the next four to five years representing a major volume opportunity This initiative is a top strategic priority, as we are currently producing prototypes for pilot-scale runs and expect to begin mass production in 2026. this initiative is a top strategic priority as we are currently producing prototypes for pilot-scale runs and expect to begin mass production in 2026 Operationally, we achieved a major milestone in Q2 by completing the transfer of production from Singapore to our lower-cost facility in Thailand. operationally we achieved a major milestone in q2 by completing the transfer of production from singapore to our lower-cost facility in thailand All customers have been successfully requalified, and the Thailand team is progressing well toward full productivity by early next year. A small transition team remains in Singapore to manage the site closure and support continued training in Thailand. Strategically, we are now six months into executing our Perform, Accelerate, Transform (PAT) strategy. The key objectives of PAT are: (1) to strengthen and optimize the performance of our core channel business, (2) accelerate our growth through high-value applications, and (3) ultimately transform Identiv into a market leader of specialty IoT solutions. We've made measurable progress across all three pillars this quarter, and I will provide more detail after end reviews of financials. In closing, despite a challenging macro backdrop, we believe our customers clearly see the value Identiv provides. Our specialized IoT tags, inlays, and labels are not only enabling digital transformation, but are solving real-world industry challenges. All customers have been successfully requalified, and the Thailand team is progressing well toward full productivity by early next year. all customers have been successfully requalified and the thailand team is progressing well toward full productivity by early next year A small transition team remains in Singapore to manage the site closure and support continued training in Thailand. a small transition team remains in singapore to manage the site closure and support continued training in thailand Strategically, we are now six months into executing our Perform, Accelerate, Transform (PAT) strategy. strategically we are now six months into executing our perform accelerate transform (pat) strategy The key objectives of PAT are: (1) to strengthen and optimize the performance of our core channel business, (2) accelerate our growth through high-value applications, and (3) ultimately transform Identiv into a market leader of specialty IoT solutions. the key objectives of pat are (1) to strengthen and optimize the performance of our core channel business (2) accelerate our growth through high-value applications and (3) ultimately transform identiv into a market leader of specialty iot solutions We've made measurable progress across all three pillars this quarter, and I will provide more detail after end reviews of financials. we've made measurable progress across all three pillars this quarter and i will provide more detail after end reviews of financials In closing, despite a challenging macro backdrop, we believe our customers clearly see the value Identiv provides. in closing despite a challenging macro backdrop we believe our customers clearly see the value identiv provides Our specialized IoT tags, inlays, and labels are not only enabling digital transformation, but are solving real-world industry challenges. our specialized iot tags inlays and labels are not only enabling digital transformation but are solving real-world industry challenges These long-term trends not only remain intact but, in many ways, are accelerating. As a focused, pure-play IoT solutions company, we are executing our PAT strategy with discipline, and we believe this positions us well for sustainable long-term growth. Ed, over to you. These long-term trends not only remain intact but, in many ways, are accelerating. these long-term trends not only remain intact but in many ways are accelerating As a focused, pure-play IoT solutions company, we are executing our PAT strategy with discipline, and we believe this positions us well for sustainable long-term growth. as a focused pure-play iot solutions company we are executing our pat strategy with discipline and we believe this positions us well for sustainable long-term growth Ed, over to you. ed over to you

Speaker 3: 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 reduce 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 -9.4% and -0.8%, respectively, compared to GAAP and non-GAAP gross margin of 9.1% and 14.6%, respectively, in Q2 2024. Thanks, Kirsten. 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. 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. 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 reduce sales to our largest customer, who is working through inventory they built up in 2024 in anticipation of transitioning production to Thailand. this year-over-year decrease was due to lower sales of rfid transponder products as we continue to exit lower margin business and reduce 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 -9.4% and -0.8%, respectively, compared to GAAP and non-GAAP gross margin of 9.1% and 14.6%, respectively, in Q2 2024. second quarter gaap and non-gaap gross margin was -9.4% and -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. 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. 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. 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. 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. 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. 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 one-time strategic review-related costs. The decrease in non-GAAP operating expenses reflects management's targeted resource allocation to support the company's organic growth initiatives, as outlined in the PAT strategic framework. Second quarter GAAP loss from continuing operations was $6.0 million or $0.26 per basic and diluted share, compared to GAAP net loss from continuing operations of $6.9 million or $0.31 per basic and diluted share in the second quarter of 2024. This decrease in net loss was primarily due to strategic review-related costs of $1.6 million incurred in the second quarter of 2024 that did not occur in the second quarter of 2025, and unrealized foreign currency losses of $0.9 million, partially offset by interest income of $1.3 million. The year-over-year decrease in GAAP operating expenses was driven primarily by a reduction in one-time strategic review-related costs. the year-over-year decrease in gaap operating expenses was driven primarily by a reduction in one-time strategic review-related costs The decrease in non-GAAP operating expenses reflects management's targeted resource allocation to support the company's organic growth initiatives, as outlined in the PAT strategic framework. the decrease in non-gaap operating expenses reflects management's targeted resource allocation to support the company's organic growth initiatives as outlined in the pat strategic framework Second quarter GAAP loss from continuing operations was $6.0 million or $0.26 per basic and diluted share, compared to GAAP net loss from continuing operations of $6.9 million or $0.31 per basic and diluted share in the second quarter of 2024. second quarter gaap loss from continuing operations was $6.0 million or $0.26 per basic and diluted share compared to gaap net loss from continuing operations of $6.9 million or $0.31 per basic and diluted share in the second quarter of 2024 This decrease in net loss was primarily due to strategic review-related costs of $1.6 million incurred in the second quarter of 2024 that did not occur in the second quarter of 2025, and unrealized foreign currency losses of $0.9 million, partially offset by interest income of $1.3 million. this decrease in net loss was primarily due to strategic review-related costs of $1.6 million incurred in the second quarter of 2024 that did not occur in the second quarter of 2025 and unrealized foreign currency losses of $0.9 million partially offset by interest income of $1.3 million Non-GAAP adjusted EBITDA loss for Q2 2025 was $4.6 million, compared to $3.7 million in the second quarter of 2024. The decrease was primarily due to Thailand transition costs and adjustments for obsolete inventory at our Singapore production facility. 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. Moving now to the balance sheet, we exited Q2 2025 with $129.6 million in cash, cash equivalents, and restricted cash. In the second quarter of 2025, we used $3 million in cash. This brings our total net operating cash used for the nine months following September 30, 2024, to $10.3 million. Previously, we expected net operating cash used for the 12-month period following September 30, 2024, to be in the range of $14 million-$16 million. Non-GAAP adjusted EBITDA loss for Q2 2025 was $4.6 million, compared to $3.7 million in the second quarter of 2024. non-gaap adjusted ebitda loss for q2 2025 was $4.6 million compared to $3.7 million in the second quarter of 2024 The decrease was primarily due to Thailand transition costs and adjustments for obsolete inventory at our Singapore production facility. the decrease was primarily due to thailand transition costs and adjustments for obsolete inventory at our singapore production facility 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. 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 Moving now to the balance sheet, we exited Q2 2025 with $129.6 million in cash, cash equivalents, and restricted cash. moving now to the balance sheet we exited q2 2025 with $129.6 million in cash cash equivalents and restricted cash In the second quarter of 2025, we used $3 million in cash. in the second quarter of 2025 we used $3 million in cash This brings our total net operating cash used for the nine months following September 30, 2024, to $10.3 million. this brings our total net operating cash used for the nine months following september 30 2024 to $10.3 million Previously, we expected net operating cash used for the 12-month period following September 30, 2024, to be in the range of $14 million- $16 million. previously we expected net operating cash used for the 12-month period following september 30 2024 to be in the range of $14 million- $16 million Given our cash usage through Q2 2025 and current expectations for Q3, we are revising this range to $13 million-$15 million for the period ending September 30, 2025. Our working capital exiting Q2 was $137.5 million. Our balance sheet position remains strong, enabling us to pursue our organic and inorganic growth initiatives within the PAT strategic framework. In our 10-Q filing, we will be providing a full reconciliation of the year-to-date cash flows. For completeness, we have included the full balance sheet in the appendix of today's earnings release. Lastly, our financial outlook. We're continuing to monitor macroeconomic risks, particularly those related to U.S. trade with Thailand, as Kirsten mentioned. We're also looking at any indirect impacts these risks could have on customer demand and project timelines. Given our cash usage through Q2 2025 and current expectations for Q3, we are revising this range to $13 million- $15 million for the period ending September 30, 2025. given our cash usage through q2 2025 and current expectations for q3 we are revising this range to $13 million- $15 million for the period ending september 30 2025 Our working capital exiting Q2 was $137.5 million. our working capital exiting q2 was $137.5 million Our balance sheet position remains strong, enabling us to pursue our organic and inorganic growth initiatives within the PAT strategic framework. our balance sheet position remains strong enabling us to pursue our organic and inorganic growth initiatives within the pat strategic framework In our 10-Q filing, we will be providing a full reconciliation of the year-to-date cash flows. in our 10-q filing we will be providing a full reconciliation of the year-to-date cash flows For completeness, we have included the full balance sheet in the appendix of today's earnings release. for completeness we have included the full balance sheet in the appendix of today's earnings release Lastly, our financial outlook. lastly our financial outlook We're continuing to monitor macroeconomic risks, particularly those related to U.S. trade with Thailand, as Kirsten mentioned. we're continuing to monitor macroeconomic risks particularly those related to u.s trade with thailand as kirsten mentioned We're also looking at any indirect impacts these risks could have on customer demand and project timelines. we're also looking at any indirect impacts these risks could have on customer demand and project timelines In addition to these risks, we are also mindful of the ongoing competitive pressures on our standard product lines, which have been impacted by increased manufacturing capacity from some of our key competitors. This is causing some headwinds in the shorter term with standard product opportunities. As the macroeconomic environment evolves and we gain more visibility, we're prepared for a variety of possible outcomes. As we continue to exit lower margin business, we anticipate our largest customer will continue to reduce their inventory position. Based on this outlook, as of today's call for Q3 2025, we currently expect net revenue in the range of $4.8 million-$5.2 million. This concludes the financial discussion. I'll now pass the call back to Kirsten. In addition to these risks, we are also mindful of the ongoing competitive pressures on our standard product lines, which have been impacted by increased manufacturing capacity from some of our key competitors. in addition to these risks we are also mindful of the ongoing competitive pressures on our standard product lines which have been impacted by increased manufacturing capacity from some of our key competitors This is causing some headwinds in the shorter term with standard product opportunities. this is causing some headwinds in the shorter term with standard product opportunities As the macroeconomic environment evolves and we gain more visibility, we're prepared for a variety of possible outcomes. as the macroeconomic environment evolves and we gain more visibility we're prepared for a variety of possible outcomes As we continue to exit lower margin business, we anticipate our largest customer will continue to reduce their inventory position. as we continue to exit lower margin business we anticipate our largest customer will continue to reduce their inventory position Based on this outlook, as of today's call for Q3 2025, we currently expect net revenue in the range of $4.8 million- $5.2 million. based on this outlook as of today's call for q3 2025 we currently expect net revenue in the range of $4.8 million- $5.2 million This concludes the financial discussion. this concludes the financial discussion I'll now pass the call back to Kirsten. i'll now pass the call back to kirsten

Speaker 1: 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. Thanks, Ed. 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. 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. 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. 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. 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. 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. 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 requests 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. 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 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. 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 requests for information from our website compared to the second quarter of last year. 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 requests 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. 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. 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. 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 foundation, and ensure the business is scalable. Moving to the second pillar of our PAT framework, Accelerate, we're advancing three specific growth initiatives to build our pipeline and drive long-term revenue and margin expansion: (1) expanding our BLE technology platform and multi-component MCL manufacturing capabilities, (2) targeting growth in three healthcare high-value applications, and (3) further driving growth in three consumer and logistics high-value applications. Beginning with BLE expansion, we are making meaningful progress. As we've discussed, BLE is a next-generation technology for IoT, providing significant benefits for applications that require real-time traceability or condition monitoring, which are challenging to address with traditional RFID technologies. Over the past several months, we have seen increasing interest in specialized BLE labels spanning logistics, pharmaceuticals, and asset tracking applications. To support continuous improvement in our Thailand operations, we have launched CRM and MRP initiatives designed to automate our key processes, strengthen our operational foundation, and ensure the business is scalable. to support continuous improvement in our thailand operations we have launched crm and mrp initiatives designed to automate our key processes strengthen our operational foundation and ensure the business is scalable Moving to the second pillar of our PAT framework, Accelerate, we're advancing three specific growth initiatives to build our pipeline and drive long-term revenue and margin expansion: (1) expanding our BLE technology platform and multi-component MCL manufacturing capabilities, (2) targeting growth in three healthcare high-value applications, and (3) further driving growth in three consumer and logistics high-value applications. moving to the second pillar of our pat framework accelerate we're advancing three specific growth initiatives to build our pipeline and drive long-term revenue and margin expansion (1) expanding our ble technology platform and multi-component mcl manufacturing capabilities (2) targeting growth in three healthcare high-value applications and (3) further driving growth in three consumer and logistics high-value applications Beginning with BLE expansion, we are making meaningful progress. beginning with ble expansion we are making meaningful progress As we've discussed, BLE is a next-generation technology for IoT, providing significant benefits for applications that require real-time traceability or condition monitoring, which are challenging to address with traditional RFID technologies. as we've discussed ble is a next-generation technology for iot providing significant benefits for applications that require real-time traceability or condition monitoring which are challenging to address with traditional rfid technologies Over the past several months, we have seen increasing interest in specialized BLE labels spanning logistics, pharmaceuticals, and asset tracking applications. over the past several months we have seen increasing interest in specialized ble labels spanning logistics pharmaceuticals and asset tracking applications These BLE-enabled solutions not only provide real-time visibility but also generate high-frequency data streams that can be used to power AI models, unlocking predictive insights, operational optimization, and automated decision-making. We have several significant BLE projects in our NPD pipeline, including the food logistics project I mentioned earlier and in an industrial track and trace application, all with the potential to improve business efficiency and reduce waste through the analytics they generate. The technical demands of BLE smart label design and manufacturing play to our engineering strengths and offer a clear competitive edge. Over the past six months, we invested in new MCL manufacturing equipment at our Munich, Germany, R&D center, expanded our engineering team with RF and software engineers, and strengthened product management capability dedicated to BLE innovation. In May, we introduced our new BLE smart labels at RFID Journal LIVE!, marking an important step toward commercialization. These BLE-enabled solutions not only provide real-time visibility but also generate high-frequency data streams that can be used to power AI models, unlocking predictive insights, operational optimization, and automated decision-making. these ble-enabled solutions not only provide real-time visibility but also generate high-frequency data streams that can be used to power ai models unlocking predictive insights operational optimization and automated decision-making We have several significant BLE projects in our NPD pipeline, including the food logistics project I mentioned earlier and in an industrial track and trace application, all with the potential to improve business efficiency and reduce waste through the analytics they generate. we have several significant ble projects in our npd pipeline including the food logistics project i mentioned earlier and in an industrial track and trace application all with the potential to improve business efficiency and reduce waste through the analytics they generate The technical demands of BLE smart label design and manufacturing play to our engineering strengths and offer a clear competitive edge. the technical demands of ble smart label design and manufacturing play to our engineering strengths and offer a clear competitive edge Over the past six months, we invested in new MCL manufacturing equipment at our Munich, Germany, R&D center, expanded our engineering team with RF and software engineers, and strengthened product management capability dedicated to BLE innovation. over the past six months we invested in new mcl manufacturing equipment at our munich germany r&d center expanded our engineering team with rf and software engineers and strengthened product management capability dedicated to ble innovation In May, we introduced our new BLE smart labels at RFID Journal LIVE!, marking an important step toward commercialization. in may we introduced our new ble smart labels at rfid journal live marking an important step toward commercialization We are collaborating with InPlay on a new portfolio of BLE-enabled battery-powered smart labels designed for high-value logistics applications. The upcoming smart label portfolio will be powered by InPlay's IN100 NanoBeacon, an ultra-low-power BLE system on a chip, and is expected to be available late this year. A full launch of this secure, scalable BLE portfolio is targeted for early 2026. We continue to work closely with Wiliot on the production of their next-generation IoT Pixels. Our teams have been actively collaborating to ensure we are prepared to support volume production for Wiliot's customers and partners in the coming months. Wiliot IoT Pixels are small, battery-free, Bluetooth sensors powered by harvesting ambient radio frequency energy, enabling continuous transmission of data like temperature, motion, and location for smart supply chain and IoT applications. We are highly encouraged by the momentum building in BLE and the increasing interest from the market. We are collaborating with InPlay on a new portfolio of BLE-enabled battery-powered smart labels designed for high-value logistics applications. we are collaborating with inplay on a new portfolio of ble-enabled battery-powered smart labels designed for high-value logistics applications The upcoming smart label portfolio will be powered by InPlay's IN100 Nano Beacon, an ultra-low-power BLE system on a chip, and is expected to be available late this year. the upcoming smart label portfolio will be powered by inplay's in100 nano beacon an ultra-low-power ble system on a chip and is expected to be available late this year A full launch of this secure, scalable BLE portfolio is targeted for early 2026. a full launch of this secure scalable ble portfolio is targeted for early 2026 We continue to work closely with Wiliot on the production of their next-generation IoT Pixels. we continue to work closely with wiliot on the production of their next-generation iot pixels Our teams have been actively collaborating to ensure we are prepared to support volume production for Wiliot's customers and partners in the coming months. our teams have been actively collaborating to ensure we are prepared to support volume production for wiliot's customers and partners in the coming months Wiliot IoT Pixels are small, battery-free, Bluetooth sensors powered by harvesting ambient radio frequency energy, enabling continuous transmission of data like temperature, motion, and location for smart supply chain and IoT applications. wiliot iot pixels are small battery-free bluetooth sensors powered by harvesting ambient radio frequency energy enabling continuous transmission of data like temperature motion and location for smart supply chain and iot applications We are highly encouraged by the momentum building in BLE and the increasing interest from the market. we are highly encouraged by the momentum building in ble and the increasing interest from the market The second and third Accelerate initiatives focus on driving growth across six high-value, high-volume applications: three in healthcare, two in consumer, and one in logistics. To support these initiatives, we've expanded our business development and product management teams to drive market engagement through strategic partnerships and direct OEM relationships, and to ensure our product roadmaps are aligned with the specific requirements of each target application. Strategic partnerships are essential to the development and deployment of solutions in these key markets. While Identiv delivers a critical component of any IoT solution, our inlays, tags, and labels, customers also require robust, application-specific data analytics to generate meaningful insights. Over the past six months, we've prioritized building relationships that complement our technology and will continue pursuing partnerships where strong strategic alignment exists. The second and third Accelerate initiatives focus on driving growth across six high-value, high-volume applications: three in healthcare, two in consumer, and one in logistics. the second and third accelerate initiatives focus on driving growth across six high-value high-volume applications three in healthcare two in consumer and one in logistics To support these initiatives, we've expanded our business development and product management teams to drive market engagement through strategic partnerships and direct OEM relationships, and to ensure our product roadmaps are aligned with the specific requirements of each target application. to support these initiatives we've expanded our business development and product management teams to drive market engagement through strategic partnerships and direct oem relationships and to ensure our product roadmaps are aligned with the specific requirements of each target application Strategic partnerships are essential to the development and deployment of solutions in these key markets. strategic partnerships are essential to the development and deployment of solutions in these key markets While Identiv delivers a critical component of any IoT solution, our inlays, tags, and labels, customers also require robust, application-specific data analytics to generate meaningful insights. while identiv delivers a critical component of any iot solution our inlays tags and labels customers also require robust application-specific data analytics to generate meaningful insights Over the past six months, we've prioritized building relationships that complement our technology and will continue pursuing partnerships where strong strategic alignment exists. over the past six months we've prioritized building relationships that complement our technology and will continue pursuing partnerships where strong strategic alignment exists In addition to IFCO, we also announced a strategic partnership with Narravero, a global SaaS platform for digital product passports, or DPPs, and supply chain transparency. The collaboration comes in anticipation of new EU regulations requiring DPPs, which are scheduled to go into effect starting in 2027. A DPP is a digital record that contains detailed information about a product's material, origin, environmental impact, and life cycle, enabling greater transparency and sustainability across the supply chain. By combining Identiv's NFC inlays for dynamic product data with Narravero's robust data management platform, this collaboration is intended to offer a comprehensive, integrated solution that streamlines DPP deployment for companies. Based on current projections and regulatory scope, we estimate the EU's DPP framework could apply to more than 3 billion products annually across categories such as apparel, electronics, and industrial goods. In addition to IFCO, we also announced a strategic partnership with Narravero, a global SaaS platform for digital product passports, or DPPs, and supply chain transparency. in addition to ifco we also announced a strategic partnership with narravero a global saas platform for digital product passports or dpps and supply chain transparency The collaboration comes in anticipation of new EU regulations requiring DPPs, which are scheduled to go into effect starting in 2027. the collaboration comes in anticipation of new eu regulations requiring dpps which are scheduled to go into effect starting in 2027 A DPP is a digital record that contains detailed information about a product's material, origin, environmental impact, and life cycle, enabling greater transparency and sustainability across the supply chain. a dpp is a digital record that contains detailed information about a product's material origin environmental impact and life cycle enabling greater transparency and sustainability across the supply chain By combining Identiv's NFC inlays for dynamic product data with Narravero's robust data management platform, this collaboration is intended to offer a comprehensive, integrated solution that streamlines DPP deployment for companies. by combining identiv's nfc inlays for dynamic product data with narravero's robust data management platform this collaboration is intended to offer a comprehensive integrated solution that streamlines dpp deployment for companies Based on current projections and regulatory scope, we estimate the EU's DPP framework could apply to more than 3 billion products annually across categories such as apparel, electronics, and industrial goods. based on current projections and regulatory scope we estimate the eu's dpp framework could apply to more than 3 billion products annually across categories such as apparel electronics and industrial goods We believe this positions our collaboration with Narravero as a high-volume opportunity, potentially enabling Identiv to deliver millions of NFC inlays per year as DPP regulations roll out over time across multiple product categories. We're also advancing collaborations launched earlier this year, including our strategic partnerships with Novanta for medical device applications and Tag-N-Trac for pharmaceutical cold chain management. Last week in Chicago, we joined our partner, Novanta, for the ADLM Diagnostics Industry Trade Show. At their booth, we showcased our combined solution for advanced diagnostics, demonstrating how Identiv's RFID tags and Novanta's ThingMagic reader technology can be integrated into diagnostic test equipment. This innovative solution allows for the seamless monitoring of test samples and medical consumables, which helps ensure accurate test results and enhances patient safety. We believe this positions our collaboration with Narravero as a high-volume opportunity, potentially enabling Identiv to deliver millions of NFC inlays per year as DPP regulations roll out over time across multiple product categories. we believe this positions our collaboration with narravero as a high-volume opportunity potentially enabling identiv to deliver millions of nfc inlays per year as dpp regulations roll out over time across multiple product categories We're also advancing collaborations launched earlier this year, including our strategic partnerships with Novanta for medical device applications and Tag-N- Trac for pharmaceutical cold chain management. we're also advancing collaborations launched earlier this year including our strategic partnerships with novanta for medical device applications and tag-n- trac for pharmaceutical cold chain management Last week in Chicago, we joined our partner, Novanta, for the ADLM Diagnostics Industry Trade Show. last week in chicago we joined our partner novanta for the adlm diagnostics industry trade show At their booth, we showcased our combined solution for advanced diagnostics, demonstrating how Identiv's RFID tags and Novanta's ThingMagic reader technology can be integrated into diagnostic test equipment. at their booth we showcased our combined solution for advanced diagnostics demonstrating how identiv's rfid tags and novanta's thingmagic reader technology can be integrated into diagnostic test equipment This innovative solution allows for the seamless monitoring of test samples and medical consumables, which helps ensure accurate test results and enhances patient safety. this innovative solution allows for the seamless monitoring of test samples and medical consumables which helps ensure accurate test results and enhances patient safety Our strategic partnership with Tag-N-Trac combines our advanced BLE smart labels with Tag-N-Trac's RELATIVITY SaaS platform and is intended to offer pharma customers an integrated IoT solution that delivers item-level visibility and actionable insights for cold chain tracking within the pharmaceutical industry supply chain. In June, we co-hosted a keynote session with Tag-N-Trac at the AIPIA & AWA Smart Packaging World Congress 2025 in Amsterdam, and we're enthusiastic about the potential opportunities in the pipeline. Turning now to the third part of our strategic framework, Transform. This pillar focuses on driving business expansion and capability growth through M&A. Our objective is to accelerate reaching EBITDA break-even by gaining scale, broadening our product portfolio, and enhancing our technical capabilities through strategic acquisition. We continue to evaluate, with our financial advisor Raymond James, our strategic alternatives. Our strategic partnership with Tag-N- Trac combines our advanced BLE smart labels with Tag -N- Trac's RELATIVITY SaaS platform and is intended to offer pharma customers an integrated IoT solution that delivers item-level visibility and actionable insights for cold chain tracking within the pharmaceutical industry supply chain. our strategic partnership with tag-n- trac combines our advanced ble smart labels with tag -n- trac's relativity saas platform and is intended to offer pharma customers an integrated iot solution that delivers item-level visibility and actionable insights for cold chain tracking within the pharmaceutical industry supply chain In June, we co-hosted a keynote session with Tag-N- Trac at the AIPIA & AWA Smart Packaging World Congress 2025 in Amsterdam, and we're enthusiastic about the potential opportunities in the pipeline. in june we co-hosted a keynote session with tag-n- trac at the aipia & awa smart packaging world congress 2025 in amsterdam and we're enthusiastic about the potential opportunities in the pipeline Turning now to the third part of our strategic framework, Transform. turning now to the third part of our strategic framework transform This pillar focuses on driving business expansion and capability growth through M&A. this pillar focuses on driving business expansion and capability growth through m&a Our objective is to accelerate reaching EBITDA break-even by gaining scale, broadening our product portfolio, and enhancing our technical capabilities through strategic acquisition. our objective is to accelerate reaching ebitda break-even by gaining scale broadening our product portfolio and enhancing our technical capabilities through strategic acquisition We continue to evaluate, with our financial advisor Raymond James, our strategic alternatives. we continue to evaluate with our financial advisor raymond james our strategic alternatives We have also strengthened our board and standing M&A committee with the addition of our newest board member, Mick Lopez. As a former public company CFO, Mick brings deep expertise in M&A and corporate finance, along with a strong shareholder-focused perspective that is already proving valuable to our strategic decision-making. Starting last quarter, we began reporting several metrics to monitor our progress across our strategic objectives. Throughout this year, we will be developing our baseline and will be refining our learning. Based on our findings, we intend to establish targets for these metrics in 2026. The new metrics are: (1) new sales pipeline and conversion rate. This metric tracks the number of opportunities with new customers or customers we have not sold to in over two years. At the end of Q2, we had 100 new opportunities in our pipeline. We have also strengthened our board and standing M&A committee with the addition of our newest board member, Mick Lopez. we have also strengthened our board and standing m&a committee with the addition of our newest board member mick lopez As a former public company CFO, Mick brings deep expertise in M&A and corporate finance, along with a strong shareholder-focused perspective that is already proving valuable to our strategic decision-making. as a former public company cfo mick brings deep expertise in m&a and corporate finance along with a strong shareholder-focused perspective that is already proving valuable to our strategic decision-making Starting last quarter, we began reporting several metrics to monitor our progress across our strategic objectives. starting last quarter we began reporting several metrics to monitor our progress across our strategic objectives Throughout this year, we will be developing our baseline and will be refining our learning. throughout this year we will be developing our baseline and will be refining our learning Based on our findings, we intend to establish targets for these metrics in 2026. based on our findings we intend to establish targets for these metrics in 2026 The new metrics are: (1) new sales pipeline and conversion rate. the new metrics are (1) new sales pipeline and conversion rate This metric tracks the number of opportunities with new customers or customers we have not sold to in over two years. this metric tracks the number of opportunities with new customers or customers we have not sold to in over two years At the end of Q2, we had 100 new opportunities in our pipeline. at the end of q2 we had 100 new opportunities in our pipeline This is an increase from the 75 we had at the end of Q1. We have converted 14% of our new opportunities to sales in the first half of the year. NPD, new product development projects. This metric tracks the number of active NPD initiatives. These projects involve the development of entirely new RFID or BLE tags, inlays, or labels. As of the end of Q2, there were 19 active NPD projects, 12 customer-driven and seven internally driven. Four of the customer-driven projects target healthcare applications, and five utilize BLE technology, which represent the largest share of potential volume and steady-state revenue. (3) NPD project completion. This metric captures the number of NPD projects completed within the quarter. In Q2, we completed one internally driven project, a specialized new conductive adhesive that forms the critical connection between the chip and the antenna on the inlay. This is an increase from the 75 we had at the end of Q1. this is an increase from the 75 we had at the end of q1 We have converted 14% of our new opportunities to sales in the first half of the year. we have converted 14% of our new opportunities to sales in the first half of the year NPD, new product development projects. npd new product development projects This metric tracks the number of active NPD initiatives. this metric tracks the number of active npd initiatives These projects involve the development of entirely new RFID or BLE tags, inlays, or labels. these projects involve the development of entirely new rfid or ble tags inlays or labels As of the end of Q2, there were 19 active NPD projects, 12 customer-driven and seven internally driven. as of the end of q2 there were 19 active npd projects 12 customer-driven and seven internally driven Four of the customer-driven projects target healthcare applications, and five utilize BLE technology, which represent the largest share of potential volume and steady-state revenue. (3) NPD project completion. four of the customer-driven projects target healthcare applications and five utilize ble technology which represent the largest share of potential volume and steady-state revenue (3) npd project completion This metric captures the number of NPD projects completed within the quarter. this metric captures the number of npd projects completed within the quarter In Q2, we completed one internally driven project, a specialized new conductive adhesive that forms the critical connection between the chip and the antenna on the inlay. in q2 we completed one internally driven project a specialized new conductive adhesive that forms the critical connection between the chip and the antenna on the inlay Finally, I would like to provide an update on our corporate governance. At the 2025 annual meeting held on June 10th, stockholders approved the proposal to amend the company's charter to declassify the board. Therefore, the Class 2 director nominees were re-elected for one-year terms, and the board's classified structure will end at the end of 2026's annual meeting of stockholders, at which time all nominees for election as director will stand for one-year terms. As a reminder, the board previously announced plans to declassify its structure as part of its ongoing corporate governance review, which aims to better align the company's governance with best practices and enhance accountability to shareholders. In closing, while we expect the global macroeconomic uncertainty to continue, Identiv's value proposition remains strong and consistent. The long-term secular trends that are driving demand for RFID and BLE-enabled solutions remain solid. Finally, I would like to provide an update on our corporate governance. finally i would like to provide an update on our corporate governance At the 2025 annual meeting held on June 10th, stockholders approved the proposal to amend the company's charter to declassify the board. at the 2025 annual meeting held on june 10th stockholders approved the proposal to amend the company's charter to declassify the board Therefore, the Class 2 director nominees were re-elected for one-year terms, and the board's classified structure will end at the end of 2026's annual meeting of stockholders, at which time all nominees for election as director will stand for one-year terms. therefore the class 2 director nominees were re-elected for one-year terms and the board's classified structure will end at the end of 2026's annual meeting of stockholders at which time all nominees for election as director will stand for one-year terms As a reminder, the board previously announced plans to declassify its structure as part of its ongoing corporate governance review, which aims to better align the company's governance with best practices and enhance accountability to shareholders. as a reminder the board previously announced plans to declassify its structure as part of its ongoing corporate governance review which aims to better align the company's governance with best practices and enhance accountability to shareholders In closing, while we expect the global macroeconomic uncertainty to continue, Identiv's value proposition remains strong and consistent. in closing while we expect the global macroeconomic uncertainty to continue identiv's value proposition remains strong and consistent The long-term secular trends that are driving demand for RFID and BLE-enabled solutions remain solid. the long-term secular trends that are driving demand for rfid and ble-enabled solutions remain solid As a focused, pure-play IoT solutions provider, we believe we have the right team in place to execute our PAT strategic framework. By reinforcing our core channel strengths, expanding through new strategic partnerships and innovative product development, and working expeditiously through our Transform process with our financial advisor, we believe we can create value for all of our stakeholders. With that, I'd like to open the call for your questions. Operator, please open the question queue. As a focused, pure-play IoT solutions provider, we believe we have the right team in place to execute our PAT strategic framework. as a focused pure-play iot solutions provider we believe we have the right team in place to execute our pat strategic framework By reinforcing our core channel strengths, expanding through new strategic partnerships and innovative product development, and working expeditiously through our Transform process with our financial advisor, we believe we can create value for all of our stakeholders. by reinforcing our core channel strengths expanding through new strategic partnerships and innovative product development and working expeditiously through our transform process with our financial advisor we believe we can create value for all of our stakeholders With that, I'd like to open the call for your questions. with that i'd like to open the call for your questions Operator, please open the question queue. operator please open the question queue

Speaker 4: Certainly. Everyone, at this time we will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your headset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Your first question is coming from Jaeson Schmidt from Lake Street. Your line is live. Certainly. certainly Everyone, at this time we will be conducting a question and answer session. everyone at this time we will be conducting a question and answer session If you have any questions or comments, please press star one on your phone at this time. if you have any questions or comments please press star one on your phone at this time We do ask that while posing your question, please pick up your headset if you're listening on speakerphone to provide optimum sound quality. we do ask that while posing your question please pick up your headset if you're listening on speakerphone to provide optimum sound quality Once again, if you have any questions or comments, please press star one on your phone. once again if you have any questions or comments please press star one on your phone Your first question is coming from Jaeson Schmidt from Lake Street. your first question is coming from jaeson schmidt from lake street Your line is live. your line is live

Speaker 2: Yeah, thanks for taking my questions. 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? Yeah, thanks for taking my questions. yeah thanks for taking my questions 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. 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? can you help us get a sense of the size of this opportunity longer term and when it can be impactful to the model

Speaker 1: We're really excited and pleased about this partnership, and it is a significant potential volume opportunity for us. 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 four to five years. There's an ongoing opportunity because there's roughly 10% or more of those plastic containers that need to get replenished every single year. Excited about the opportunity. It is still very much an active development program. The goal is to be able to launch mass production in 2026. 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 real interesting innovation related to the manufacturing process. All that still is being developed, but the goal will be to start mass production. We're really excited and pleased about this partnership, and it is a significant potential volume opportunity for us. we're really excited and pleased about this partnership and it is a significant potential volume opportunity for us IFCO, they have over 400 million plastic containers that they ultimately want to get tagged. 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 four to five years. the goal is to tag all of them over the next four to five years There's an ongoing opportunity because there's roughly 10% or more of those plastic containers that need to get replenished every single year. there's an ongoing opportunity because there's roughly 10% or more of those plastic containers that need to get replenished every single year Excited about the opportunity. excited about the opportunity It is still very much an active development program. it is still very much an active development program The goal is to be able to launch mass production in 2026. the goal is to be able to launch mass production in 2026 There is always a little bit of uncertainty when you're doing a development program. there is always a little bit of uncertainty when you're doing a development program It is a very innovative product. it is a very innovative product It's using a next-generation chip. it's using a next-generation chip There's some real interesting innovation related to the manufacturing process. there's some real interesting innovation related to the manufacturing process All that still is being developed, but the goal will be to start mass production. all that still is being developed but the goal will be to start mass production

Speaker 2: Gotcha. Just curious if you could talk about sort of order patterns so far here in the first six weeks of the quarter. Gotcha. gotcha Just curious if you could talk about sort of order patterns so far here in the first six weeks of the quarter. just curious if you could talk about sort of order patterns so far here in the first six weeks of the quarter

Speaker 1: Sure. Are you saying specifically for the third quarter? Sure. sure Are you saying specifically for the third quarter? are you saying specifically for the third quarter

Speaker 2: Yes. Yes. yes

Speaker 1: I think the order patterns seem to be on track with the guidance that we have provided. I think the order patterns seem to be on track with the guidance that we have provided. i think the order patterns seem to be on track with the guidance that we have provided

Speaker 2: Gotcha. Last one for me, I'll jump back into 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? Gotcha. gotcha Last one for me, I'll jump back into queue. last one for me i'll jump back into queue How should we think about gross margin? 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? 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

Speaker 1: Yeah, definitely, and Ed can weigh in on this as well, but we definitely, in the first half of the year, were significantly impacted in our gross margin with our dual manufacturing sites, both Thailand and Singapore, and also just some additional transition costs that we had in terms of doubling up with training and so on and so forth. We were really happy to hit our goal or our milestone of completing production in Singapore in Q2, and that has been achieved. 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. We definitely expect to see a benefit for sure in the second half as we close down the site. Maybe add any other color? Yeah, definitely, and Ed can weigh in on this as well, but we definitely, in the first half of the year, were significantly impacted in our gross margin with our dual manufacturing sites, both Thailand and Singapore, and also just some additional transition costs that we had in terms of doubling up with training and so on and so forth. yeah definitely and ed can weigh in on this as well but we definitely in the first half of the year were significantly impacted in our gross margin with our dual manufacturing sites both thailand and singapore and also just some additional transition costs that we had in terms of doubling up with training and so on and so forth We were really happy to hit our goal or our milestone of completing production in Singapore in Q2, and that has been achieved. we were really happy to hit our goal or our milestone of completing production in singapore in q2 and that has been achieved That is done. that is done At this point, we have a very small skeleton crew that remains to really support the shutdown. 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. we have to pack up the final equipment and ship it off and we have to shut down the site We definitely expect to see a benefit for sure in the second half as we close down the site. we definitely expect to see a benefit for sure in the second half as we close down the site Maybe add any other color? maybe add any other color

Speaker 3: I would agree with that. With the closing of production in Singapore, we should definitely see a positive impact of margin as we go into Q3 as well as Q4. I would agree with that. i would agree with that With the closing of production in Singapore, we should definitely see a positive impact of margin as we go into Q3 as well as Q4. with the closing of production in singapore we should definitely see a positive impact of margin as we go into q3 as well as q4

Speaker 2: Okay, perfect. Thanks a lot, guys. Okay, perfect. okay perfect Thanks a lot, guys. thanks a lot guys

Speaker 1: Thank you. Thank you. thank you

Speaker 4: Thank you. Once again, everyone, if you have any questions or comments, please press star, then one on your phone. Please hold while we poll for questions. Thank you. That concludes our Q&A session. I'll now hand the conference back to CEO Kirsten Newquist for closing remarks. Please go ahead. Thank you. thank you Once again, everyone, if you have any questions or comments, please press star, then one on your phone. once again everyone if you have any questions or comments please press star then one on your phone Please hold while we poll for questions. please hold while we poll for questions Thank you. thank you That concludes our Q&A session. that concludes our q&a session I'll now hand the conference back to CEO Kirsten Newquist for closing remarks. i'll now hand the conference back to ceo kirsten newquist for closing remarks Please go ahead. please go ahead

Speaker 1: 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 CMC conference in New York on Wednesday, September 10, and Lake Street will be hosting a virtual NDR on Tuesday, September 16. Thank you again for joining us this afternoon and evening, and have a nice night. Bye-bye. Thanks, operator, and thank you all again for joining us today. thanks operator and thank you all again for joining us today We appreciate the continued support of our customers, partners, shareholders, and employees. we appreciate the continued support of our customers partners shareholders and employees In terms of investor outreach, we'll be attending the B. in terms of investor outreach we'll be attending the b Riley CMC conference in New York on Wednesday, September 10, and Lake Street will be hosting a virtual NDR on Tuesday, September 16. riley cmc conference in new york on wednesday september 10 and lake street will be hosting a virtual ndr on tuesday september 16 Thank you again for joining us this afternoon and evening, and have a nice night. thank you again for joining us this afternoon and evening and have a nice night Bye-bye. bye-bye

Speaker 4: Thank you. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation. Thank you. thank you Everyone, this concludes today's event. everyone this concludes today's event You may disconnect at this time and have a wonderful day. you may disconnect at this time and have a wonderful day Thank you for your participation. thank you for your participation