EANS-News: Identive Group Inc. / Identive Group announces third quarter 2011 results

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quarterly report

Subtitle: Broad demand for identity management solutions drives 30%
growth

Santa Ana, Calif. and Ismaning, Germany, October 31, 2011 (euro
adhoc) - Identive Group, Inc. (NASDAQ: INVE; Frankfurt: INV), a
provider of products, services and solutions for the security,
identification and RFID industries, today announced results for the
fiscal third quarter (Q3) ended September 30, 2011.

Revenue in Q3 2011 was $26.8 million, up 30% from $20.5 million in Q3
2010 and up 4% from $25.6 million in the second quarter (Q2) of 2011.
Sales in Q3 were driven by broad demand for identity management
solutions for consumer and citizen ID applications globally as well
as ongoing implementations of physical and IT access control systems
for corporate and government facilities, offset by continued
implementation delays with some U.S. government projects. Q3 2011
sales reflected 15% organic growth year over year net of the effect
of acquisitions.

"Our Q3 performance reflects continued strong momentum for Identive
technology and solutions. Year-on-year quarterly growth of 30% was
fueled by higher demand across nearly all parts of our business,
underscoring the critical role of identity management in enabling
applications from network access to mobile payments. Gross margin
also improved throughout the business," said Ayman S. Ashour,
chairman and chief executive officer of Identive Group. "It is
particularly important that we have been able to deliver strong
performance at a time when our Enterprise Security sales were again
affected by continued deferrals of projects and spending in the
federal government sector, coming in below last year´s levels and our
own expectations. A stronger focus on commercial markets and
professional services helped to offset some of the decrease. We also
followed through on our plans to accelerate investment in R&D to
develop our NFC and idOnDemand offerings and to expand our cashless
payment solutions, which we believe provide underlying value and
fundamental growth opportunities for Identive."

Sales highlights in Q3 2011 included:

• 36% growth in the Company´s ID Infrastructure division, driven by
sales of eHealth terminals for the German electronic healthcard
program and smart card readers for a variety of citizen ID, employee
ID and corporate projects in Europe, Japan and other parts of Asia. •
34% growth in the Company´s Multicard Integrated ID Solutions
business unit, reflecting demand for identity management solutions
from a wide array of regions and markets, including one-card campus
ID systems in Europe and government worker ID and cashless payment
programs in Australia. • Strong sales of integrated identity
management, payment and loyalty solutions for the Swiss and German
education and healthcare markets from Identive´s most recent
acquisition, polyright. • $1.4 million of revenue related to
continued fulfillment of secure readers for the German national ID
program. To date, the Company has recognized $12.1 million in revenue
from sales of card readers for the program. Fulfillment of existing
orders is expected to be completed by the end of the year.

Additional business highlights in Q3 2011 included:

• The acquisition of polyright, which provides identity management
solutions for the Swiss education and healthcare markets.
Polyright´s core competence is the development, installation and life
cycle management of single-credential, multi-function identity
management and cashless payment solutions integrated with systems
such as enterprise resource planning and access control. • Identive´s
selection by a leading mobile handset manufacturer to design and
supply more than three million NFC tags in the third and fourth
quarters of the current year. The tags will be included in-box with
each purchase of an NFC-enabled smart phone to enhance consumers´
day-to-day mobile experience with a variety of NFC applications. • A
66% increase in R&D spending over the previous quarter, reflecting
accelerated development of Software as a Service (SaaS) offerings in
the idOnDemand business unit, additional investment in the NFC
solutions area, and the effect of strong R&D investment in
polyright`s cashless payment and point of sale (POS) solutions. • The
launch of several new RFID inlays and tags, including a newly
expanded TOM™ (TagOnMetal) product line that combines various
shielding elements and tag surfaces for use with emerging NFC
applications and the "Quadro" UHF (ultra high frequency) RFID inlay,
which offers three-dimensional readability for industrial and
logistics applications.

"The ongoing proliferation of NFC-enabled mobile phones and the
increasing adoption of cloud-based service models such as
idOnDemand´s are clear industry trends, and our investments aim to
ensure that Identive is positioned to capitalize on the opportunities
they will generate. In addition we remain highly focused on achieving
performance improvement in our base activity, which is providing
solid growth even at these times of economic uncertainty," said Mr.
Ashour.

The following results are reported in U.S. GAAP, except as noted.
Identive uses certain non-GAAP measures as a way to compare the
underlying performance of our business from period to period, and a
discussion of non-GAAP measures and reconciliation to the applicable
GAAP measures is included below.

On a GAAP basis, Identive recorded net loss of $(3.7) million, or
$(0.06) per share in Q3 2011. This compares to net loss of $(2.0)
million, or $(0.05) per share in Q3 2010 and net loss of $(1.6)
million, or $(0.03) per share in Q2 2011. Non-GAAP adjusted EBITDA
(EBITDA before stock-based compensation, adjustments to earnout
estimates, acquisition, transition and integration costs) was $(0.3)
million in Q3 2011, compared with $(0.02) million in Q3 2010 and
$(0.3) million in Q2 2011.

GAAP net loss in Q3 2011 included non-cash charges of $0.5 million of
unrealized foreign currency losses, $0.4 million associated with
adjustments to the present value of the earnout estimate related to
idOnDemand, and $1.2 million of amortization expense related to
acquisitions.

GAAP gross profit margin was 44% in Q3 2011, compared with 44% in Q3
2010 and 40% in Q2 2011. Non-GAAP gross profit margin (excluding
amortization and depreciation, overhead allocations, transition and
acquisition costs and stock-based compensation) was 48% in Q3 2011,
compared with 48% in Q3 2010 and 44% in Q2 2011. Margins in Q3
primarily were impacted by favorable product mix across the majority
of the Company´s business.

Cash and cash equivalents at September 30, 2011 were $17.7 million,
compared with $20.6 million at June 30, 2011, primarily reflecting
$2.8 net cash paid for the polyright acquisition and $0.7 million for
paydown of outstanding debts during the quarter.

Conference Call and Webcast Information Identive Group will host a
conference call and webcast today at 11:00 AM Eastern Time, which can
be accessed by dialing 866.700.7477 (toll free within the U.S.) or +1
617.213.8840 (for international callers) and using pass code
55067512. A webcast of the call that includes presentation slides can
be accessed by visiting the investor relations section of the
Company´s website at www.identive-group.com, and by clicking on
"Presentations, Reports & Webcasts," where it also will be archived
for thirty days for those unable to listen to the live webcast. An
audio replay of the call also will be available for one week and can
be accessed by dialing 888.286.8010 (toll free within the U.S.) or +1
617.801.6888 (for international callers) and using pass code
26510070.

About Identive Group Identive Group, Inc. (NASDAQ: INVE; Frankfurt:
INV) is focused on building the world´s signature company in Secure
ID. The company´s products, software, systems and services address
the markets for identity management, physical and logical access
control, NFC and a host of RFID-enabled applications for customers in
the government, enterprise, consumer, education, healthcare and
transportation sectors. Identive´s mission is to build a lasting
business of scale and technology based on a combination of strong
technology-driven organic growth and disciplined acquisitive
expansion. For additional info visit: www.identive-group.com.

Use of Non-GAAP Financial Information In evaluating our business, our
adjusted EBITDA and non-GAAP gross profit margin differ from GAAP net
income (loss) and GAAP gross profit margin due to the exclusion of
certain items detailed in the reconciliation table within this press
release. Our management uses each of these non-GAAP measures
internally and believes that they provide investors with a meaningful
way to evaluate the Company´s operating performance. However, we
caution investors to consider these non-GAAP financial measures in
addition to, and not as a substitute for, our GAAP financial
measures.

Note Regarding Forward Looking Information: This press release
contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements can be identified by words such as "anticipates,"
"believes," "plans," "will," "intends," "expects," and similar
references to the future. Examples of such statements include,
without limitation, statements we make about our expectations
regarding increased demand for our identity management solutions, our
ability to identify and capitalize on trends in identity management
markets, our ability to achieve results from increased investment in
R & D, and our expectations for future growth and profitability.
Readers should not unduly rely on these forward-looking statements,
which are not a guarantee of future performance and are subject to a
number of risks and uncertainties, many of which are outside our
control, which could cause our actual business and operating results
to differ. Factors that could cause actual results to differ
materially from those in the forward-looking statements include our
ability to grow our company based on a strategy of providing
products, components and services for the identity management
solutions; our ability to successfully develop and introduce new
products that satisfy the evolving and increasingly complex
requirements of customers; whether the markets in which we
participate or target may grow, converge or standardize at
anticipated rates or at all, including the identity management
markets that we are targeting; and our ability to successfully
compete in the markets in which we participate or target. For a
discussion of further risks and uncertainties related to our
business, please refer to our public company reports, including our
Annual Report on Form 10-K for the year ended December 31, 2010 and
subsequent reports filed with the U.S. Securities and Exchange
Commission. All forward-looking statements are based on information
available to us on the date hereof, and we assume no obligation to
update such statements.

All trade names are trademarks or registered trademarks of their
respective holders.

Further inquiry note:
Frau Annika Oelsner
Tel.: +49 89 9595-5220
E-Mail: aoelsner@identive-group.com

end of announcement euro adhoc
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company: Identive Group Inc.
Carnegie Ave., Bldg. B 1900
US-CA 92705 Santa Ana
phone: +1 949 553 4280
FAX: +49 89 9595-5555
mail: investorrelations@identive-group.com
WWW: http://www.identive-group.com
sector: Computing & Information Technology
ISIN: US45170X1063
indexes: NASDAQ
stockmarkets: Nasdaq: New York, free trade: Berlin, Hamburg, Stuttgart,
Düsseldorf, München, Open Market / Entry Standard: Frankfurt
language: English