Segment Reporting, Geographic Information and Major Customers

9 Months Ended

Sep. 30, 2014

Segment Reporting [Abstract]

Segment Reporting, Geographic Information and Major Customers

10. Segment Reporting, Geographic Information and Major Customers

ASC Topic 280, Segment Reporting (“ASC 280”) establishes standards for the reporting by public business enterprises of information about operating segments, products and services, geographic areas, and major customers. The method for determining what information to report is based on the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses and about which separate financial information is available to its chief operating decision makers (“CODM”). The Company’s CODM are considered to be its CEO and CFO.

Identiv’s trust solutions allow people to trust their premises, information systems, and even everyday items. To deliver these solutions, the Company reorganized its operations into four reportable business segments in the first quarter of 2014 principally by product families: Premises, Identity, Credentials and All Other. As a result of the change, product families and services were organized within the four segments. To provide improved visibility and comparability, the Company reclassified segment operating results for 2013 to conform to the 2014 organizational realignments. In the Premises segment, Identiv’s Trust for Premises solution secures buildings via an integrated access control system. Identiv’s uTrust premises product offerings include MX controllers, Velocity management software, TS door readers, and third party products. In the Identity segment, Identiv delivers a solution to secure enterprise information including PCs, networks, email encryption, login, and printers via delivery of smart card reader products and identity management via our idOnDemand service. In the Credentials segment, the Company offers standards-driven hardware products using near field communication (“NFC”), radio frequency identification (“RFID”) and smart card technologies, including inlays, tags, readers and other products. In the All Other segment, the Company offers products, including Chipdrive and Media readers. The products included in the All Other segment do not meet the quantitative thresholds for determining reportable segments in accordance with ASC 280 and therefore have been combined for reporting purposes.

The CODM reviews financial information and business performance for each operating segment. The Company evaluates the performance of its operating segments at the revenue and gross profit levels. The CODM does not review operating expenses or asset information by operating segment for purposes of assessing performance or allocating resources.

Net revenue and gross profit information by segment for the nine months ended September 30, 2014 and 2013 is as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Premises:
Net revenue	$	4,939		$	6,234		$	13,026		$	15,469
Gross profit		3,047			3,946			8,030			9,875
Gross profit margin		62	%		63	%		62	%		64	%
Identity:
Net revenue		3,770			5,010			12,558			14,498
Gross profit		1,943			2,153			6,027			6,291
Gross profit margin		52	%		43	%		48	%		43	%
Credentials:
Net revenue		12,834			8,591			33,166			21,746
Gross profit		4,317			3,156			9,719			7,307
Gross profit margin		34	%		37	%		29	%		34	%
All Other:
Net revenue		1,169			1,074			3,117			3,032
Gross profit		565			709			1,628			1,253
Gross profit margin		48	%		66	%		52	%		41	%
Total:
Net revenue		22,712			20,909			61,867			54,745
Gross profit		9,872			9,964			25,404			24,726
Gross profit margin		43	%		48	%		41	%		45	%
Operating expenses:
Research and development		1,813			1,643			5,046			5,206
Selling and marketing		5,078			4,527			15,844			13,972
General and administrative		3,685			3,845			9,595			11,002
Impairment of long-lived assets		—			178			—			178
Impairment of goodwill		—			10,935			—			10,935
Restructuring and severance		1,825			1,252			2,874			1,252
Total operating expenses:		12,401			22,380			33,359			42,545
Loss from operations		(2,529	)		(12,416	)		(7,955	)		(17,819	)
Non-operating income (expense):
Interest expense, net		(564	)		(387	)		(3,154	)		(1,603	)
Foreign currency loss (gain), net		(700	)		284			(952	)		461
Loss from continuing operations before income    taxes and noncontrolling interest	$	(3,793	)	$	(12,519	)	$	(12,061	)	$	(18,961	)

Geographic revenue is based on customer’s ship-to location. Information regarding revenue by geographic region is as follows (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Americas	$	15,655		$	12,561		$	38,933		$	29,835
Europe and the Middle East		3,930			5,036			12,722			15,594
Asia-Pacific		3,127			3,312			10,212			9,316
Total	$	22,712		$	20,909		$	61,867		$	54,745
Revenues
Americas		69	%		60	%		63	%		55	%
Europe and the Middle East		17	%		24	%		21	%		28	%
Asia-Pacific		14	%		16	%		16	%		17	%
Total		100	%		100	%		100	%		100	%

One customer represented 27% of total revenue for the three and nine months ended September 30, 2014. No customer exceeded 10% or more of total revenue for the three and nine months ended September 30, 2013. No customer represented 10% of the Company’s accounts receivable balance at September 30, 2014 or December 31, 2013.

The Company tracks assets by physical location. Long-lived assets by geographic location as of September 30, 2014 and December 31, 2013 are as follows (in thousands):

	September 30,		December 31,
	2014		2013
Property and equipment, net:
Americas
United States	$	2,127	$	1,693
Other		—		1
Total Americas		2,127		1,694
Europe and the Middle East
Germany		1,419		1,839
Total Europe and the Middle East		1,419		1,839
Asia-Pacific
Singapore		2,014		2,258
Other		71		97
Total Asia-Pacific		2,085		2,355
Total property and equipment, net	$	5,631	$	5,888