Identive will sell its Tagtrail platform for tag campaign management, but the company says NFC tags remain a core part of its business.
“The service (Tagtrail) is not core to our go-forward strategy,” an Identive spokeswoman told NFC Times.
The company announced Wednesday that its board had approved the sale of “noncore” businesses, including Tagtrail and the identity and access-control business Multicard U.S. Agreements to sell Tagtrail and Multicard will be finalized in coming months, Identive said in a statement.
The spokeswoman insisted that the company “will definitely continue to sell NFC tags, readers, and other products. These are an important growth market for us.”
During a conference call last week following release of its third quarter earnings report, CFO David Wear said increased sales during the quarter “was primarily driven by strong revenues from both RFID and NFC product sales, which increased 131% year over year.”
But despite the revenue from tags, Identive reported a substantial loss of $24.2 million during the third quarter. The majority of the loss resulted from impairment charges to goodwill of $22.6 million, including Identive’s U.S. federal government physical access control business, a business Multicard was involved in.
Restructuring expenses of $1.3 million contributed to the quarter’s losses, as well. Without those combined charges, Identive said that it would have reported non-GAAP net losses of only $1 million. A year ago in the third quarter of 2012, Identive reported an operating loss of $8.2 million and a net loss of $7.9 million for the quarter.
Since 2008, company has turned a profit in only a single quarter, the fourth quarter of 2012.
“Our overall operating costs and access to working capital have challenged the business,” said CEO Jason Hart during the conference call. Hart replace former CEO Ayman S. Ashour in September. Hart said that he is prioritizing simplification of the company’s organizational structure, which he believes has previously been too complex.
Identive launched Tagtrail only a year ago. With it, brands and other customers could purchase tags from Identive’s existing line, along with monthly service plans. The service plans allow varying levels of access to the Tagtrail online content management platform and collection of analytics.
At the time, Tagtrail fit the company’s interest in promoting nonpayment applications for NFC. A spokeswoman told NFC Times following the Tagtrail launch, “we think payment is interesting but not the killer app for NFC. There are too many market barriers on the one hand and too many great use cases for NFC on the other.”
But Tagtrail has also been competing with other NFC tag-based campaign management platforms, and these platform providers are potential customers for Identive's tags.
Income from the Multicard and Tagtrail assets to be sold will be reported as income from discontinued operations, with a separate expected disposal loss from the write-down to fair value of the net assets held for sale, said Identive in a statement. The company has not made a public estimate of those figures for Multicard and Tagtrail, but in its third quarter 2013 earnings report, Identive said that it expected total revenues from divested assets to be $5 million to $6 million.
Much of Identive’s recent NFC revenue appears to come from orders of tags for NFC-enabled accessories for video games. “We saw a strong demand for some of our segment products, particularly in high-growth areas such as our cloud identity security products and in a lot of our new electronic toy NFC-RFID products, particularly with some strong contracts from at least one gaming company,” he said during the conference call.
An Identive spokeswoman earlier had told NFC Times that the gaming orders are from a single customer, but Identive had not identified the company. It released a small amount of detail in its second quarter earnings call in August 2013, when Ashour said, “In the coming weeks, you will be able to see the use of NFC, of our NFC, in games compatible with XBox, Playstations, et cetera.”
Two video games using NFC-enabled toys were scheduled for release in the weeks following the second quarter earnings call. Pokémon Rumble U, which was released in August 2013, is available only for Nintendo’s Wii U console, meaning that it was likely not the title to which Ashour referred. Disney Infinity was also released in August 2013 and is available for Microsoft’s Xbox 360, Sony’s Playstation 3, and Nintendo’s Wii U. Identive has not named the title or titles for which it supplies tags.