By Kiona Smith-Strickland, NFC Times
In a recent NFC Times article, Kiona Smith-Strickland writes, “Post-Restructuring, Identiv Says It Will Be Heavily Invested in NFC”. The full article follows:
As Identiv’s management shifts focus away from the restructuring process the company began in 2013, NFC tags for consumer goods are the company’s heaviest area of investment and largest area of growth, CEO Jason Hart told NFC Times in an interview.
With the restructuring process Identiv began in 2013 now drawing to a close, according to the company, Identiv appears more firmly committed to NFC than a year ago, with the technology linked to all three of its business segments.
Throughout the restructuring process, Identiv’s leadership had stated several times that the company remained committed to NFC despite the sale of business units like Tagtrail, an online platform for tag campaign management, which it launched in late 2012.
The company has shipped 200 million NFC tags over the last 12 months, Hart told NFC Times, which includes 100 million tags for electronic gaming figurines shipped in 2013. Those gaming-related tag orders had all come from a single customer, a spokeswoman told NFC Times in November 2013, but the company has consistently declined to name that customer. It is believed to be Disney Interactive for its Disney Infinity figurines. Hart described RFID-tagged toys as “an area of growth” for Identiv during the company’s first quarter earnings call in May 2014.
At the end of 2013, Identiv had said that it had also received some early wins for tags in other consumer items, but did not name any specific customers or projects. Hart told NFC Times that, in addition to the electronic gaming tags, Identiv is working on projects involving tags equipped with microprocessors, and in some cases paired with sensors, for applications such as product authentication and supply chain verification.
Earlier in 2014, Hart had told investors, “While the ‘Internet of Things’ terminology has mostly focused on things that are online, we believe that it extends to all things that may be connected or may have a microprocessor, if only for a split second, things like toys, consumer goods, medications, passports, ID cards, and many of the other everyday items that you and your family may come in contact with.”
Identiv has described this business segment, which involves most of the company’s NFC and other RFID tag business, as “trust solutions for everyday items,” and it includes the tags for electronic gaming, as well as tags for product authentication and other use cases.
“The Internet of Things, the third leg of our business, which actually uses the same technology as we use in the first two – it’s growing; we grew at over 25% in that market segment, and for us, it is an area, at the moment, of our heaviest investment,” Hart told NFC Times, referring to the consumer goods business segment and, in particular, NFC tags.
“This expansion of the Internet of Things and putting very low-cost intelligent computers in stickers and then being able to interact with them via NFC to give it that connection to the Internet is an area that continues to grow, and that’s a very big area, a very heavy investment area for us,” Hart told NFC Times.
Hart told NFC Times that Identiv had seen around 25% growth in its consumer goods segment during recent quarters, compared with growth rates of 5% to 15% in the other two segments of its business.
Focus Shifts Away from Restructuring
In late 2013, Identiv had restructured its business into three segments: security and access control for premises, which involves the company’s RFID and smart card readers as well as its controllers and software; information, which involves Identive’s smart card readers and online credential management services; and consumer goods, which is primarily concerned with the company’s RFID and NFC tag business.
At the same time, the company began divesting business units that were not central to those segments, including the Tagtrail platform as well as identity and access control business Multicard, also called RockWest Technology.
Identiv also cut 125 employees from its workforce in 2013, a 27% reduction from its previous head count of 460. CFO Brian Nelson said during the conference call on May 14 that Identiv’s workforce cuts may not be over.
Hart contends that the company has now “transitioned” its focus away from the restructuring and toward investing in its remaining business units.
Hart had said during a conference call on May 14 that what he calls Identiv’s simplification project is entering its final stages, but said he expected that the full integration would take the remainder of 2014.
With the second quarter earnings call still a few weeks away, Hart told NFC Times that “the status of things is consistent with the last earnings call, and we have focused the business on the three areas of information, premises, and of course, everyday items.”
Hart had announced plans to narrow the company’s focus, emphasizing secure access and identity, which he described as “core products and technologies” for Identiv, when he became its CEO in August 2013, just after former CEO Ayman S. Ashour resigned from the position. Hart had previously headed the company’s identity management and cloud solutions division. He joined Identiv in 2011 following the company’s acquisition of smart card-based identity and cloud technology company idOnDemand, which Hart had co-founded. The company did not disclose the reasons for Ashour’s resignation.
Despite Identiv’s 2013 restructuring, the company, which has not turned a yearly profit in its history, saw a $1.1 million loss for the full year 2013, compared with a loss of $2.9 million in 2012. The company’s share price dropped throughout 2013, ending the year at an all-time low of just under $5.20 in December, down from just under $14 a year earlier. The company’s shares closed at $11.25 Monday.
In the final quarter of 2012, Identive had reported its first quarterly profit since 2010, $0.2 million, which included a $1.4 million income tax benefit for impairment charges paid earlier in that year.
In its first quarter 2014 earnings call, Identiv said that it expects to report positive adjusted EBITDA for the full year 2014. For the first quarter, it reported negative adjusted EBITDA of $2 million, a slight improvement from negative $2.1 million year-over-year, down from a positive $0.4 million last quarter.
Hart told NFC Times that the company is not targeting cheap memory tags used in proximity marketing and other tagging applications, in which the tag stores a URL or other basic data, like an instruction to connect a device to a Wi-Fi network. “We don’t see ourselves as a tag vendor, as a manufacturer of low-cost memory tags.”
He said that the company is now interested in using tags to bring identity and security to physical goods by embedding what Hart calls “intelligent” tags, which include microprocessors and rely on security certificates and other information security technology, rather than just storing URLs or other basic data, in products like luxury goods, collectibles, pharmaceuticals, and other items.
“For us, at a technical level, there is almost no difference in the technology that we provide to say, a very large router company here in the (California) Bay Area to protect their internal IT system and the same technology that we use to protect the information that flows back and forth between these intelligent Internet of Things tags,” said Hart.
Product authentication would draw on existing security certificate technology to validate the authenticity of products like sports memorabilia, luxury goods, or pharmaceuticals. Hart said that pairing these microprocessor-equipped NFC tags with sensors, such as thermostats or shock sensors, could also help ensure that products like pharmaceuticals or food products had been shipped and stored in the correct conditions.
“For us, all we’ve done is we adapted the high security technology, applied it to what was, in the past, low-cost memory tag manufacturing, and brought to the market intelligent tags with an extremely strong identity ecosystem,” Hart told NFC Times.
Hart recently wrote a post for the company’s blog detailing a hypothetical use case for NFC to authenticate memorabilia for sporting events like the recent World Cup, but he told NFC Times that although the company has tags for such applications ready to ship, it has not yet supplied tags for a real-world implementation.
“We built samples and we’re prospecting in the memorabilia area,” Hart told NFC Times. “The memorabilia concept is a product that we could ship, although to be fair to you today, I can’t give you a reference in that area.”
An Identiv spokeswoman told NFC Times that the company is now supplying tags to inventory and order management company Steady Serv Technologies, the vendor of an inventory management mobile application for restaurants and bars, called iKeg. The NFC tags are paired with iKeg sensors in labels affixed to beer kegs, which employees can tap to view relevant inventory information.
Identiv is not the first vendor to use NFC tags for product authentication or supply chain verification. This has been a much talked about application.
For example, in late 2011, NFC tag supplier Smartrac, chip encoder and printer FineLine Technologies, and application developer ClikGenie recently released CLIKSecure, an NFC product authentication app that the partners claimed as the first to combine tag-based product promotion and authentication functionality.
James Ousley Joins Board of Directors
Meanwhile, the company has also made changes to its board.
James Ousley, senior operating managing partner at CVC Growth Capital, will join Identiv’s board of directors as of July 31, the company announced recently. He has not been appointed to a committee on the board.
Ousley had joined CVC Growth Capital on July 1, 2014, but his appointment to Identiv’s board was apparently not related to any financial arrangement with the firm. An Identiv spokeswoman told NFC Times, “Identiv confirms that it has not received funding from CVC Growth Capital.”
Ousley had previously been CEO of information technology services company Savvis, Inc. from 2010 to 2013. When Savvis was acquired by CenturyLink in 2011, Ousley stayed on as CEO of Savvis and president of CenturyLink’s Enterprise Markets Group.
In addition to Identiv, Ousley is a board member at Internet services company Icelero, network and communications company Integra, data center technology company Datalink, and telecommunications company Pacnet.
The article was originally posted here.