Good afternoon. Welcome to Identiv's presentation of its Second Quarter 2020 Earnings Call. My name is Rochanne, and I will be the operator this afternoon. Joining us for today's presentation are the company's CEO, Steve Humphreys; and CFO, Sandra Wallach. Following management remarks, we will open the call for questions. Before we begin, please note that during this call, management may be making references to non-GAAP measures and projections, including adjusted EBITDA and free cash flow. In addition, during the call, management will be making forward-looking statements. Any statement that refers to expectations, projections or other characteristics of future events, including financial projections and future market conditions is a forward-looking statement. Actual results may differ materially from those expressed in these forward-looking statements. For more information, please refer to the risk factors discussed in documents filed from time to time with the SEC, including the company's latest annual report on Form 10-K. Identiv assumes no obligations to update these forward-looking statements, which speak as of today. I will now turn the call over to CEO, Steve Humphreys, for his comments. Steve Humphreys, the floor is yours.

Thanks, operator, and thank you all for joining us today. Our second quarter showed strength in all the areas we expected. This has lined us up for a strong third quarter and second half of 2020, and we're seeing momentum in building backlog carrying us into an even stronger 2021. As you all know, our primary focus areas are RFID and our federal business. I will go into more details, but the headline numbers are this. RFID grew 36% year-over-year, and more importantly, our backlog and shipment rates confirm that we're on track for RFID growth of over 80% for 2020. Now as we've discussed, the broad adoption of RFID within our major customers' core products shows that this growth is a long-term trend that we're just beginning to see take off. Our other area, of course, is the federal market, where our Federal Access control business grew 28% year-over-year. Our smart card readers also are largely driven by federal customers, and we saw year-over-year growth in these products of 23%. Now from our experience with the U.S. government, we expect these trends to continue the rest of the year and into 2021. So as a result of these growth trends and largely due to our RFID momentum, our total revenue for the second quarter of 2020 grew 5% sequentially. More tangibly, orders during the second quarter came in at record rates. And as a result, we entered Q3 with a record backlog of over $13 million. This is up 140% from our Q3 backlog a year ago and up 48% from the already strong backlog going into the last quarter. What the numbers demonstrate is that orders were coming in even faster than shipments were increasing during the second quarter. So in tough economic times like these, our business looks like it's one of the ones that's thriving. Now underneath the headline numbers, I want to clarify that Q2 sales came from our core business execution. Less than $400,000 came from the major programs we've talked about that are ramping up going into Q3 and the rest of the year. So these results demonstrate the three main factors driving our business: long-term RFID growth, the sudden need for work-from-home technologies, and our strength in the federal government. All these drove our business in the second quarter as well as driving the backlog growth going into Q3. So with that in mind, let's look at the second quarter in more detail. Within our Identity business, both our smart card reader and our RFID products grew. Revenue from our Identity business increased sequentially by 18% to $11.6 million. Within that segment, our smart card readers grew 23% year-over-year, and RFID grew 36% year-over-year, as I already mentioned. Now during the quarter, we also launched prototypes of our temperature tags, which are wearable sensors that track core body temperature. We have requests for over 30,000 samples already for a range of applications. And we've got a short video on the presentation here showing the tag at work, and we're ramping up pilot production of samples, meeting the requests that are continuing to come in every day. Also in the RFID business during the quarter, we put to work the project financing that we put in place for our production ramp in the third quarter and to start scaling up in our Singapore production facility. Now I'll give more updates on these initiatives when we talk about Q3 and the second half of the year and growth into 2021. So turning to our Premises business in Q2, this showed the strength of our federal government focus. Now any business that depends on installations and physical buildings was going to be impacted, but we saw our federal business actually increased 28% year-over-year. So the near-term trend is clear. Small dealers and small and medium commercial businesses have slowed. But since federal, state and local government customers are more than 80% of the business for our physical access platforms, we see overall strong performance in this part of the business and growth going forward. In addition to the strength already in the federal market, we've launched products to serve the new needs for health and safety in the physical security market overall. Last quarter, we talked about our contact tracing downloadable extension for our Velocity Access system. More recently, we launched the complete occupancy tracking system based on our 3VR platform. And this creates a dashboard for stores, bars, restaurants and others to track occupancy in their facilities real time. You can see it here deployed in a store in Mexico. The really visible user interface and the ability to manage multiple locations makes it a great system to manage occupancy limits. We also priced the tracking system at $120 per month per door. So it's really easy to adopt, even for the smallest business. Now I know that market opportunities for new product launches can be hard to evaluate. Let me just calibrate this opportunity and also the value of the solution. A company called Density IO does something similar, and they just raised another $50 million at a valuation of several hundred million, but they only provide a component of the solution, the people counter. They are in early deployment stages. We provide the total solution. We have an existing channel, and we already deployed a similar system across hundreds of stores in a large retailer in Mexico. One of the reasons we could bring this targeted solution to market so fast is that we already had this very similar solution widely deployed. So although RFID and the federal space were the highlights for the quarter, a key component of our strategy remains increasing recurring revenues. To help drive recurring revenues, we launched a new subscription service of our video platform called 3VR Prime, a total video management system-as-a-service solution. As our customers are dealing with a tough economy, we're providing hardware, software services and refreshes, all in one monthly fee. We had a great response already to 3VR Prime, but we just launched it, so we'll keep you updated as adoption progresses. Now we're also taking advantage of the economic circumstances to aggressively strengthen and optimize our people, processes, and systems. Some companies are having challenges in this environment, and there are some very good people coming on the market that we are selectively bringing in to strengthen our business for the long term. Since January 1, we've added 12 new sales team members. We've made four strategic additions in R&D and product management. We've added 14 to our operations in support of our major production ramp-up in Singapore for our RFID business. We did this all while holding our overall headcount increase to only 10 worldwide. And as Sandra will mention, we've done this also while driving down total ongoing operating expenses. In particular, on the people side, I'd like to highlight our new global sales leader, Mike Taylor. Mike brings world-class experience from AMAG, Brivo, Milestone and other leaders in our industry. And we could talk about Mike more in Q&A, but we've always been strong in technology and products. With Mike's sales leadership, we've got everything in place to leverage all of our competitive advantages. So overall, the second quarter was highlighted by 5% sequential revenue growth, 36% year-on-year RFID growth, 28% federal access control year-over-year growth, 23% year-over-year smart card reader growth, and backlog at the end of the second quarter up 48% from the already record levels we had going into the second quarter. Now there are certain near challenges in the economic environment we're all in. But the strong secular growth we're experiencing in RFID, our strength in federal, work from home going into a second wave of demand, and the products we've launched take advantage of return-to-home needs have built the base for a very strong second half and well into 2021. So with that business base, as Sandra will discuss, we're also on track to generate positive cash flow from operations exiting 2020, which will have us on track to clear our debt obligations from the production ramp working capital and to return to GAAP EPS profitability. So I'll pause here and turn it over to Sandra to walk through the second quarter financial results in more detail. Then I'll go into some more metrics and events driving acceleration into the second half of the year and into 2021.

As Steve mentioned, the headlines for this quarter are all in the numbers. The first metric is revenue growth. Even with the continued impact of COVID-19 and the shelter in place that started in February, we closed out the second quarter of 2020 with $19.1 million in total revenue, up 5% compared to the first quarter of 2020 and down 14% compared to the second quarter of 2019. Our top line results for Q2 2020 were impacted by continued mixed demand changes across our portfolio, including temporal shifts driven by the shelter-in-place orders impacting our Premises business and select verticals, continuing strength in demand for our Identity business driven by work-from-home actions, and sustained growth in our transponder business, in which we saw a 37% increase quarter over comparable quarter in 2019 and a 23% increase sequentially. Our standalone software and services business was 11% of our second quarter revenue and 13% of our total revenue for the first half of 2020. On a trailing 12-month, or TTM basis, our standalone software and services business was steady at 13% of revenue, up 16 basis points over the prior comparable period. Our recurring revenue, a subset of our stand-alone software and services metric, reflecting longer-term multi-period commitments for support and services, accounted for 8% of our second quarter revenue and 9% of total revenue in the first half of 2020. This part of our business remains steady at 9% of our total trailing 12 months consolidated revenue, a 74 basis point improvement over the prior period. For the second quarter of 2020, our GAAP and non-GAAP adjusted gross profit margins were 40% and 42%, respectively. For the trailing 12-month period, our non-GAAP adjusted gross profit margin was 44%. Our GAAP and non-GAAP adjusted gross profit margins for Q2 2020 were negatively impacted by mix across and within our segments compared to Q2 2019. For Q2 2020, we returned to positive non-GAAP adjusted EBITDA again, with 14 of the last 15 quarters positive, except Q1 2020. Our adjusted EBITDA margin was positive 2% and positive 4% for the trailing 12-month period, which is down on a trailing 12-month period 572 basis points from the same period last year. Our GAAP net loss for the second quarter of 2020 was $2.7 million compared with a net loss of $2 million in Q1 2020 and net income of $0.4 million in Q2 2019. The results for Q2 2020 include a nonrecurring restructuring charge of $1.2 million or a negative $0.07 per share impact related to the impairment of a right-of-use operating lease asset that was acquired as part of an acquisition, subsequently subleased, which has gone into default due to nonpayment of rent. With the dividends on the Series B preferred, our GAAP net loss attributable to stockholders was $3 million or a loss of $0.17 per share compared with a loss of $0.13 per share in Q1 2020, and a positive $0.01 per share in Q2 2019. Adjusted for the nonrecurring restructuring charge, our GAAP net loss would have been $0.10 per share. We have provided in the appendix today a full reconciliation of GAAP to non-GAAP information, which is also included in our earnings release. On the next slide, further analyzing trends by segment, our Premises segment accounted for $7.5 million or 39% of our total revenue in Q2, a decrease in dollars of 30% from Q2 2019 and a decrease of 9% from Q1 2020. The year-over-year and sequential declines were primarily driven by lower sales of video technology and analytics software products and related services, lower sales of our Freedom, Enterphone and MESH access control products, as well as the lower sales of our Hirsch Physical Access Control products. Revenue from our Identity products, which includes sales of physical access credentials, smart card readers, transponders and mobile security products, totaled $11.6 million or 61% of our total revenue in Q2 2020, which was flat in absolute dollars compared to Q2 2019 and an increase of 18% from Q1 2020. The year-over-year impact was primarily driven by a 65% reduction in sales of access card products. These decreases were offset by higher sales of readers as well as RFID transponder products. The sequential quarterly increase was driven by higher sales of readers as well as RFID transponder products. These increases were offset by lower access card sales compared to Q1 2020, and lower Thursby mobile security solution sales with the nonrecurring large deployment of our new PDF signing capability to the U.S. Navy Reserve in Q1 2020. Our non-GAAP gross profit margin, which excludes certain noncash items, was 42% in the second quarter of 2020. This compares with 43% in Q1 2020 and 46% in Q2 2019, driven by both the mix of products across segments and within segments. Our Premises margins were 55%, relatively flat compared to Q1 2020 and Q2 2019 at 55% and 56%, respectively. Our Identity segment margins were 31%, relatively flat compared to Q1 2020 at 30% and lower than Q2 of 2019 at 34%, due to a higher proportion of lower-margin transponder sales. Now moving to our operating expense management. Our non-GAAP operating expenses as a percentage of revenue decreased to 40% in the second quarter of 2020 compared with 45% in the first quarter of 2020 and 35% in the second quarter of 2019. Our GAAP operating expenses for the second quarter were $10 million, which was up from $9.3 million in Q1 2020 and up from $9.1 million in Q2 2019. This increase was primarily due to the nonrecurring $1.4 million of restructuring expense. Our non-GAAP operating expenses adjusted to exclude restructuring and severance costs and certain noncash items normally excluded from our non-GAAP results, such as stock-based compensation, a decrease in the fair value of the earn-out liability, and depreciation and amortization, as well as additional non-GAAP items consisting of acquisition-related transaction costs totaled $7.6 million in the second quarter of 2020. This compares to $8.1 million in Q1 2020 and $7.8 million in Q2 2019. Now turning to the balance sheet. We'll be comparing our position at June 2020 to the position one quarter ago at March 2020 and the prior year quarter ended June 2019. We exited the second quarter of 2020 with cash at $13.1 million, a net increase of $4.4 million over Q1 2020 and $2 million over Q2 2019. Net cash activity for the quarter was driven by a $0.1 million use of cash, driven by our net loss excluding noncash items; $0.4 million of cash used from operating assets and liabilities, driven primarily by an increase in working capital to support our Singapore growth project ramping up during the second quarter. With $0.5 million invested in capital expenditures for Singapore, our non-GAAP free cash flow generated was a negative $1 million. Under financing activities, we had $5.3 million net cash provided, driven by $4 million of proceeds received from a term loan, $2.9 million of proceeds from the PPP loan program, partially offset by a $1.4 million increase in net repayments under our East West Bank revolver and term loan facility, offset by $0.2 million tax payments related to RSU releases. Lastly, there was a $0.1 million impact of foreign currency fluctuation to reconcile to our GAAP cash flow. In our 10-Q filings, we will be providing a full reconciliation of the year-to-date cash flows. For completeness, we have included the full balance sheet per the earnings release in the appendix. As we look forward to the balance of 2020, as Steve mentioned, we delivered a solid Q2, continue to operate our business and are seeing increased visibility into the third quarter and second half. However, with the general uncertainty on the severity and duration of the current pandemic, we will again share as much information as we have regarding our current thinking regarding guidance for 2020. We still believe that we have visibility to revenue in the range of $86 million to $90 million, which is on track to deliver our prior guidance, with more confidence around the second half of the year. In addition, due to the mix shift with higher growth rates projected in our lower-margin Identity segment, we believe there will be additional downward pressure on our gross margin rate versus our original guidance and consistent with Q2 actuals. In addition, recognizing these trends and unknowns, we will be adjusting our operating expenses, and we'll provide a full update when we have more clarity. With that, I'll conclude the financial discussion and pass it back to Steve.

Thanks, Sandra. Now as I said in the opening section, the RFID growth we expect in the second half is predictable because it's heavily backlog-driven. So let me start with an update there. Since entering the third quarter with a record backlog I mentioned, we've now received orders for all of our expected RFID shipments for the quarter. That means any additional orders either contribute to upside within the quarter or drive even more backlog for Q4 and into 2021. Our expected growth in RFID of over 80% this year, especially in an environment that's continuing to be uncertain, sounds aggressive. But as you can tell, it's built on tangible backlog and orders that are continuing to come. Now as I've said before, reporting backlog hasn't been our normal practice. But in the unpredictable economic environment we're in, we're trying to give as much data as we can. So with that in mind, let me give you a little bit of visibility further into our backlog. For the fourth quarter, our backlog already exceeds the total shipments that we had from the fourth quarter of 2019, and it's about 30% above the backlog that we had moving into the fourth quarter. And of course, we're still building the backlog for the fourth quarter, but already above the backlog we had a year ago. So on the Premises side, our federal business is almost always strengthened with the federal year-end. So let me turn to that a little – in a little bit more detail. This year, we have the benefits of the federal year-end and the products we've launched, as well as the new sales leadership we brought on. A month into the quarter, the roughly 20% sequential growth that we're expecting in Premises is also on track, led by federal. Now to be clear, there continues to be pressure on access cards and in the commercial physical security space. Industries like retail are, of course, going to be slow to recover. So it's certainly a tough environment. But again, the strengths we've built earlier in the year have us on track for the sequential growth in Premises as an overall number, not just the federal market. The third factor driving our growth in the third quarter and second half is the second wave of work-from-home demand. Now in the first couple of months of lockdown, we saw a spike in initial demand for work-from-home products. It then stayed above our normal growth rates, but less dramatically for the next couple of months. Now with work-from-home coming up on 20 weeks for a lot of us and clearly going into next year for many organizations, we're seeing higher demand again for our smart card readers and other work-from-home products. A lot of demand from these products also comes from the federal market with a combination of the second wave of work-from-home and the federal year-end driving strength there also. Now in addition to these core businesses, we've launched a range of products in the second quarter and the beginning of the third. I already mentioned the temperature tag, occupancy tracking, and 3VR Prime. We have now continued to launch targeted products, especially for our federal market and for the growing demand for touchless security. Let me just focus on a couple of those. In our federal business, we launched our FICAM insertion reader that brings highly secured two-factor authentication to federal government agencies. It's already under evaluation with three major government agencies, which have plans to deploy several thousand readers over the next couple of years. This also is a product we're onshoring to ensure the security of every aspect of the technology. It's aligned with the buy American preferences in the federal government and positions us to take advantage of the prohibition on China-sourced products that's becoming the default for any communication or security product for the U.S. government. The just-passed Defense Appropriation bill includes some very strong requirements to avoid Chinese products, and our sourcing for this product is therefore very much aligned with this trend in the government. So again, in line with the touchless solutions we're deploying, we launched a UHF identity card. This allows you to authenticate from 50 feet away or more. It's great for car parks, entry gates, and other large locations and also creates an entirely touchless, convenient experience while also being highly secure. Now among our RFID product launches, we mentioned before the temperature tracking tag, but there's an even wider range of applications in trials. We've talked about a lot of these across luxury brands, mobility, medical testing, and others, so I'm not going to go into them again today. But if there's a desire, we can discuss them in the Q&A and talk more about the implications. The main point is what's showing in our numbers for RFID. Growth is expanding right now dramatically, and underneath the numbers are two factors to understand: The first is that the applications are for hundreds of millions and billions of units, which we're just seeing the beginnings of now; the second is that in nearly all of our customers, we're selling multiple products. This means they're deploying ecosystems around RFID and especially NFC, not just a single-use case. This really gives us an indication that there's sustainability in what they're doing in the RFID products they're bringing to market. So when we talk about those large volumes, we have greater expectation they're going to happen because each major customer is driving multiple initiatives around them. The last growth driver I'd like to focus on is our now complete range of recurring revenue security products and the position this creates to deliver on our vision of a digital physical world. With our launch of 3VR Prime, we now have a complete range of subscription products. Our mobile SID mobile credentials, 3VR Prime for video analytics, and Freedom and Cirrus Cloud Access systems. Together, they provide subscription-based identities, video intelligence, and access control for SMBs, large enterprises, and governments. Our ability to deploy on-premise, cloud, mobile, and software-enabled premises security and convenience is now completely in place. To put it all together, we've got immediate growth drivers with these initiatives. The backlog-driven visibility of our RFID business as well as several RFID use cases that each can deliver hundreds of millions of units and the clear federal government market for our physical security, smart card reader, and tertiary products. The Avoid Chinese products and Buy American trends give us even more of a defensive moat after growth opportunities, and our complete range of recurring revenue products are now in place. The result of all this is that we expect a strong second half of 2020, with full-year RFID growth, as I mentioned, over 80%, strong sequential growth in premises and work-from-home products in the 20% range, and growth across both our core RFID and federal market products going into 2021 and beyond. Financially, we expect to have positive cash flow from operations in the fourth quarter and for the rest of 2021 thereafter, and a return to profitability by the end of this year. As a result, we expect to comfortably retire the project financing debt we brought on to provide working capital for the production ramp that's happening this quarter right now. Like all businesses, we have areas that are impacted by the tough economic environment caused by COVID and the lockdown. But we're fortunate. Our main growth drivers are either of a scale to transcend the near-term problems or where they actually benefit from them. Hopefully, this gives you some good metrics around the third and the fourth quarter and some clarity around our growth trajectory going into 2021. As we go into the second half of 2020, we're realistic about the economic impact of everything happening around us. We've certainly felt the effects in parts of our business and in our internal operations like everyone, but the key measures of our core strategy give us good visibility into our near-term drivers and these long-term growth trends. So with that, let me open the discussion to questions.

Okay. Our first question comes from Mike Latimore. Mike, please state your question.

Yes, thanks a lot. Congratulations on the solid quarter there. I guess, Steve or Sandra, when you talk about – I think you mentioned 20% sequential growth, was that specific to the third quarter? Or is that third and fourth quarter in your premise business?

That was the third quarter specifically that we have zeroed in on because that's where we already know where we stand month and into the quarter, frankly.

Okay. You already know that you're going there.

You bet. We have to. With the trajectory there, we're trying to make sure we give solidly based projections on that business.

Okay. Great. And then I wasn't sure how to interpret the operating expense comments; should we think about it as being roughly flat in the next couple of quarters?

Sandra, go ahead with that.

Yes. So we're actually continuing to look at reallocation and redeployment of resources around the key focus areas that Steve mentioned. I think that our plans are that we'll see some of those additional actions rolling into Q3 early, and so we'll continue to see a step down of operating expenses.

Okay, got it. And then I didn't hear anything about sort of supply chain, but it sounds like the supply chain may be – I mean, are you getting kind of all the supplies you need on time and all that?

Yes, good question. The answer is yes. In fact, we seem to be doing better than some companies. Some of our smart card reader growth and actually transponder, too, is coming because some of our competitors can't supply, and customers are coming to us, and we're able to supply better. That said, it is – same as I said on the last call, it's hand-to-hand combat figuring out sources. The commercial flights used for logistics, putting a bunch of cargo in the bellies of passenger planes has dried up. So you got to find logistics. Our shipping costs are a little higher as a result. In fact, I was just reading that United has gotten approval from the government to reconfigure a couple of dozen of their passenger planes to be pure cargo, so they're shifting over that. So there's a lot going on in the supply chain. It is creating some pressure on gross margins. But we're not going to let it stop us from supplying our customers, and Identiv's not.

Got it. And periodically, you have a large Thursby software order. Are any of those types of orders in the pipeline?

They're in the pipeline. But of course, the challenge, of course, is they're so lumpy, as you imply with that, and hard to predict if they're going to fall into one quarter or another. But there's been a lot of individual service people ordering Thursby readers, and they're part of that second wave of work from home as people are realizing it's taking – going to take longer to get back. In terms of big ones, yes, it works. But whether it comes in this quarter or next quarter, that's never assumed or predictable.

Okay, thanks a lot.

Actually, two things I wanted to follow up on that I just got a ping from my marketing person. I just noticed that it was different on the slide here. I mentioned 30,000 samples of the temp tag. I know, Mike, you were curious about that in the past. We're actually up to 75,000 temp tag samples. My number was from the end of June. Now at the end of July, we've got requests for 75,000 temp tag samples there. So I just wanted to correct that bit that I had in my comments.

Great. Thanks.

Okay. Next on the line we have Jeff Kessler. Jeff, please state your question.

Thank you, and congratulations on a solid quarter. I'm interested in whether or not you can open up the doors a little bit to your Singapore factory and tell us what's being manufactured and for what purposes?

Sure. Happy to. So that's all of our RFID transponders for the vast majority. We do outsource some. But it's all designed, planned, and managed out of Singapore. That's everything from these authentication tags for luxury goods. We talked about some devices in the mobile space, some that go into some of the COVID test kits, some that are going into respirator breathing tubes to make sure the right tube is going into the right equipment, then some longer-term ones. There's a pharmaceutical company that we do RFID tags that go on pills. So if you're visually impaired, you can tap it with your phone and it will read the pill content in the prescription bottle. I could go on. But it's all those RFID device applications, mostly NFC-based that come out of Singapore. We do about 150 million to 200 million units a year, just to give a sense of scale.

Okay. One of the companies I cover is FLIR, and they had to spend because I've got questions about half the time talking about their infrared and thermal readers being used right now for elevated skin temperature. It seems to me that they're plateauing at a very high level. I'm wondering if the nature of these temp tags that you're looking at is a little bit different; the end-use case may be a little bit different than having a high-end $2,000 thermal reader being used for, let's call it, enterprise commercial security?

Yes. I think that's a very good point because these temp tags are sub-$5, and you use your iPhone or your Android phone to read them. That's the entire infrastructure. The rest is all data in the cloud. Our strategy is these are consumables, of course. Though they last about 10 days, they're unpowered tags and then you throw them away and use another one. Our strategy is very low-cost of adoption. So it's easy for an assisted living facility or hospital to deploy them and – or even a hotel or a theme park or anything else; they can deploy them with very low cost. If the need passes or if there's a different use case they want, they haven't made this multi tens of thousands of dollar investment with a bunch of hard infrastructure around it. One of the reasons we're seeing so much interest in it is that people realize they can just take this and try it, and it's not a major long-term commitment.

Right. Now that kind of NFC has, what I'll call, opened up a bit, and it's standardized here because one company has been able to get its arms around having it for more than just one use. I'm wondering if you could talk about in your total RFID business whether you are expecting NFC to become a larger percentage of that 80% growth that you're talking about? Is it part of – is it a larger proportion of the future backlog going forward? And are the use cases for NFC that you're marketing with some of your new people, is that – are they going up?

Yes. I think, absolutely. Most of the use cases that I mentioned are NFC, and that's where the growth is. The NFC applications are becoming more capable. Some of the NFC chips are getting more capable. As you alluded to, with Apple, with iOS 14 especially, there was one – I won't take too much time on this. The one use case that Apple still has not gotten deployed properly was not having to open an app. An Android phone, you just tap it, you see it on temp tags, you tap it, it automatically opens the app and reads the tag. Apple now has that with iOS 14 and with the iPhone 12. The use case has become really general. Also, Apple is launching this thing called App Clips, where you can just go up to like a parking meter. Instead of downloading the whole parking meter app, there can be a QR code or an NFC tag. But you think, is it a better use case that you open your camera and do a QR reader and go through all that, or you just tap the thing? The NFC tag automatically drops you into the App Clip. If you download an app, it uses Apple Pay and you can pay for your parking meter immediately instead of spending two minutes trying to figure it out and enroll your credit card. Yes, the broad support of the platform, especially from the company that drives a lot of it, the addition of App Clips, really shows that it's becoming part of their platform and the use cases that we talked about. We're seeing it go into everything from bicycles to cars to handbags. It's really broadening out and going in pretty large volumes when you get into any of these categories.

One final question on the financial side, maybe for Sandra. At what revenue level – it doesn't seem to be quite there yet, but at what revenue level is the inflection point at which the growth in revenues becomes a lot slower than the growth in margins and actually – and operating income?

So that's a really great question. We've always talked about our long-term model, Jeff. When we're at $100 million a quarter or a year with mid-40s on the non-GAAP gross profit margins, that gets us to about a 15% to 20% non-GAAP adjusted EBITDA, and we're nicely positive on the EPS line. So it really is, again, breaking through that $100 million revenue number. Getting the different parts of our business that we're talking about to grow evenly so that we can get back to the mid-40s in non-GAAP gross margins.

Okay, great. Thank you very much.

Thanks, Jeff.

Our next question comes from Jaeson Schmidt. Jaeson, please state your questions.

Hey, guys. Thanks for taking my questions. You're seeing some really nice tailwinds from sort of a broader macro or even in spite of the broader macro. Just curious if you're at all concerned that this is sort of pulling in demand from 2021 or beyond?

Very good question. We do have some – we at the beginning of the second quarter had some companies that were kind of worried and talked about pulling in some demand and then they pretty quickly backed away from it because we demonstrated that our delivery schedules are still fine, and the supply chain is working through. We have had them – we talked with them very closely. There are some pulling in demand because demand is actually increasing. One of our medical device companies has pulled in much of their first half of 2021 order demand, but they started placing orders to replace that pull-in. So where we're seeing it, it seems to be taking advantage of orders they already had to shorten their lead times, and then they're still adding on top of that. But it's a good point. I really want to be sure we're not coming across as assuming the world isn't changing. The world is definitely a tough economic environment. But we see this demand just continue to come in, some of it driven by the environment, but also some of it seems to be regardless of the environment. Some of our bigger companies are customers of ours that seem to be doing very well, and they seem to be taking advantage of it to drive their business. We don't see pull-ins that are artificially weakening demand going forward.

Okay. That's helpful. And just to clarify, one of the previous questions on the supply chain. So are you assuming that there's no significant improvement in the supply chain here in Q3?

Yes. It's a good question. It hasn't slowed us down, but it has had expenses, logistic expenses, everything else. So you're right, we're not assuming substantial improvement in that because between trade wars and economic battles and next waves of COVID and lockdowns and other things, we think that the second quarter is a good baseline to assume we're going to have to live with that kind of a world. If we can start doing better, that's great. But we didn't want to assume things are going to start getting better. And again, to be clear, that puts some pressure on margin, but it's not getting in the way of supply or ability to drive revenues. As soon as things normalize a little bit, that will give us some relief on margins.

Okay. That makes sense. And the last one for me, and I'll jump back into queue. I apologize if I missed this, but how are you thinking about the education and school market going forward?

Yes, it's – the short answer is we're just trying to follow them and support them. There was just a survey of teachers; 11% of whom said that their school districts, which includes colleges and public schools, 11% said that their organizations have well thought out plans that they understand for going back to school, which means 89% are in environments that they still aren't sure how the back-to-school works. We're seeing the same thing at our customers. They just don't know. Some are trying some different things and piloting some things; some are looking at occupancy tracking because maybe that's one of the things you want to do to make sure that each classroom isn't over occupied. Some of the colleges are looking at that. So there are lecture halls, which may set limitations on how many people can be in lecture halls. We're assuming that that's an area that will stay soft because they're still trying to figure it all out. We factored that in that we're not expecting a lot of business or recovery out of the Ed parts of our Fed's led strategy.

Okay. That makes sense. Thanks a lot, guys.

Thanks, Jaeson.

There are no further questions. Steve Humphrey, I'd like to now turn it back to you.

Okay. Thanks, operator, and thank you all for joining us today. Please, if you do have time, please also join us; we'll be at a number of virtual investor events coming up. Canaccord's Global Growth Conference is just next week, August 11 through 13. I think we'll actually be presenting on the 13th. The Ninth Annual Gateway Conference is coming up in September 9 through 10. H.C. Wainwright is in the middle of September, 14 through the 16. Please join us. We look forward to seeing some of you virtually then. Until then, best wishes, stay well and be safe, please, and have a good evening. Thanks again.

Ladies and gentlemen, this does conclude today's teleconference. You may now disconnect your lines, and enjoy the rest of your day.