Identiv expands portfolio with 3VR acquisition

Feb. 7, 2018
The company will now move forward with a complete physical security solution that includes video and data analytics
Identiv logo 920 5a7b6aebc9693

In a transaction that Steven Humphreys, CEO of Identiv Inc. hopes will move his company into becoming the full-service technology solutions provider he envisions for future growth, the Fremont, Calif.-based provider of physical security and secure identification technologies has entered into an agreement to acquire 3VR Security Inc., a leading video technology and analytics company out of San Francisco.

Identiv boasts a broad product portfolio including its highly-touted Hirsch physical access control solutions that are embedded in many federal government facilities around the world and other critical infrastructure facilities. Present Identiv technology offering also ranges from smart card readers and myriad credentialing options to RFID and NFC solutions. However, the one missing piece in its substantial technology lineup was a robust video technology and data analytics solution. The addition of 3VR’s intelligent single-platform for real-time video surveillance and analytics will now provide Humphrey’s and his team the full range of technologies to deliver its vision for secure, pervasive yet frictionless premises security, situational awareness and business insights.

“We’ve worked very hard to build our organic base and today we announce our first inorganic activity. And really it is that rare combination of strategic components coming together with the right business scale, very aligned markets, solid financials, and in particular, 3VR really advances our business scale and development strategy, and also sets us up to deliver solutions to customers that are already asking for these solutions – simple, secure, integrated access, video and analytics. So we have a channel and ready base for that immediately," says Humphreys, who has been an integral part of Identiv’s growth for more than a decade.

 “One of the things that really made this transaction work was the people, and that is often said of a successful transaction. We have very aligned visions for these businesses and as we went through the ups and downs of getting something over the line that is really what kept us in it as we go forward Al and the rest of the team at 3VR and what they’ve built. We are taking that forward with that same vision they’ve had since the beginning and along with that aligned vision is an equally aligned culture,” adds Humphrey mentioning 3VR CEO Al Shipp as his vision partner.

Shipp stresses that 3VR is excited to be joining the Identiv team, which shares the company’s passion for innovation and will enable a new level of security and business intelligence solutions. Shipp feels that the combination of both technology and shared vision offers a robust scale of capabilities that will accelerate further innovation and help create more value for their combined customer base.

I echo Steve’s comments almost verbatim. It became very clear early on in the discussions that we serve the same markets to some degree, yet we approached it differently, we have different products but that are complementary, and we have different customer’s strengths that would align very well together,” Shipp says. “So if you tie all those together, it is a great short-term solution. The way we approach the market, the way we think about technology and innovation, we share very similar thought processes there, so having a chance to move this technology base to the next level presented an incredible opportunity for this combination.  We are very excited about it. “

Identiv expects 3VR to add between $10 million and $11 million to the company’s Premises segment revenue in the fiscal year 2018. Identiv also expects 3VR to contribute a mid-term target non-GAAP adjusted EBITDA margin of approximately 10 percent post synergies.

In a company statement, Identiv General Manager of Physical Access Mark Allen said: “Our DNA has always been to build trusted relationships with our customers and partners. Our companies’ vertical expertise and anchor customer strengths reflect our shared strategy as a trusted advisor to our customers. Since the video industry has arrived at the point where everything is digital — from the camera to the screen — the focus now is on usability. The combination of Identiv and 3VR not only makes sense but when we integrate 3VR’s video technology into our Hirsch PACS platform, we anticipate creating a seamless user experience. Today, Identiv is substantially deepening the scope of the solutions and bringing these benefits to the physical world of people, places and things.”

With video becoming more analytic-centric, more events driven and more dependent on enabled machine learning, Humphreys admits this was a driving force in 3VR being at the top of their list for acquisition as they searched for a video solution.

“From the beginning, as Al said, 3VR had the vision of an interoperable, pluggable analytics engine optimized for video streams, but architected to leverage a customer’s infrastructure from whatever data feeds that were available. Also, 3VR has an architecture known as ‘event cards’ which makes it really intuitive and faster than most video-intensive platforms. So we think this is really a sustainable competitive advantage that they’ve built and aligns perfectly with our market strategy,” Humphreys contends.

Humphreys goes on to say that 3VR is leveraging more than $60 million in venture capital investment that has allowed them to build this technology platform. They also have tremendous anchor customers that have validated their advantages by adopting and deploying them across their entire infrastructure, particularly in banking, retail and critical infrastructure.

“When you look at the combined solution, access control, RFID, access cards and readers, video and analytics, you really have one of the most complete and flexible customer-optimized platforms to deliver our vision of secure frictionless access to all physical resources and then to leverage this into the full range of IoT benefits from an instrumented real-time analyzed physical environment.

“In addition to the strategic vision, combining 3VR’s business with our business gives us a very straightforward tactical advantage. Their verticals across retail, banking, and others line up with what we do, and all of our customers need video. This lets us leverage our channel and the trusted advisor role we have with our customer base,” he says.

From a channel perspective, Humphreys admits that the expansion in solutions is a win-win for their customers. He adds that it will effectively leverage their respective channels and sales forces right from the beginning and benefit their channel partners.

“We sell through Stanley and Convergint and a number of other systems integrators that are the same across both of us, and we become more relevant to those systems integrators as our volumes grow,” he says.

Also, the fact that the 3VR hardware appliances are made in the U.S. is a potentially big marketing angle for Identiv.

“That positions us nicely with our federal government and others who place a great value on country of origin,” says Humphries, pointing out many other competitive video vendors are based in Ireland, Sweden or China. “None of which are as attractive as buying from Wisconsin if you’re the federal government. We think that is a great leverage point as well.” 

He adds that the company alignments and synergies will not only drive top-line revenues but will also make sure that they have an efficient cost platform that is very straightforward.

“The revenue synergies are obviously where a lot of the upside will be. From a product synergies perspective there is a phased-approach plan that is to have basic integration coming right out of the shoot the first month, then working towards that single pane of glass which is what everyone wants to work towards that lets you have one view into your security and your customer insights,” says Humphreys

But Humphreys is confident that this move won’t be the last.

“This is really just the first step. There is more in the pipeline and there is more growth to be had. Looking ahead, we will continue to drive that organic and inorganic growth and we really think this dual approach to growth will lead us not just to greater scale as an organization, but accelerate our strategies and expand our margins so we can sustain profitability and continue to drive value creation for our shareholders,” concludes Humphreys.

Identiv’s acquisition of 3VR is subject to customary closing conditions and is expected to close no later than February 20, 2018. The total consideration at the close is expected to be $6.9 million, comprised of $1.6 million in cash; $2.0 million in subordinated promissory notes; and $3.3 million in shares of Identiv common stock. Additionally, in the event 3VR achieves certain significant shipment targets in 2018, Identiv would be obligated to issue additional earnout consideration in shares of Identiv common stock, and in the event that 3VR generates certain additional gross margin concerning a supply arrangement, Identiv would pay a portion of the additional margin as consideration, as further described in the definitive agreement.

About the Author:

Steve Lasky is the Editorial Director of SouthComm Security Media, which includes print publications Security Technology Executive, Security Dealer & Integrator, Locksmith Ledger Int’l and the world’s most trafficked security web portal He is a 30-year veteran of the security industry and a 27-year member of ASIS.




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