BEAVERTON, Ore., Oct. 30, 2019 /PRNewswire/ -- Digimarc
Corporation (NASDAQ: DMRC), creator of the Digimarc Platform for
digital identification and detection, reported financial results
for the third quarter ended September 30,
2019.
Third Quarter 2019 Financial Results
Revenue for the
third quarter of 2019 increased 19 percent to $5.8 million, compared to $4.9 million in the third quarter of 2018. The
increase in revenue was due to higher subscription and service
revenue.
Operating expenses for the third quarter of 2019 increased three
percent to $11.9 million,
compared to $11.6 million in the
same quarter a year-ago. The increase in operating expenses was
primarily due to routine annual compensation adjustments for
employees.
Operating loss for the third quarter of 2019 decreased seven
percent to $8.0 million, compared to
$8.6 million in the third quarter of
2018. The lower operating loss was primarily due to higher revenue,
partially offset by higher operating expenses.
Net loss for the third quarter of 2019 decreased seven percent
to $7.8 million or $(0.65) per
diluted share compared to net loss of $8.3
million or $(0.73) per diluted
share in the same quarter a year-ago.
At quarter-end, cash, cash equivalents and marketable securities
totaled $42.8 million, compared to
$50.0 million at June 30, 2019.
Conference Call
Digimarc will hold a conference call
today (Wednesday, October 30, 2019)
to discuss these results, as well as provide an update on market
conditions and execution of strategy. Chairman and CEO Bruce Davis and CFO Charles Beck will host the call starting at
5:00 p.m. Eastern time (2:00 p.m. Pacific time). A question and answer
session will follow management's presentation.
The conference call will be broadcast live and available for
replay here and in the investor section of the company's website.
The conference call script will also be posted to the company's
website shortly before the call.
For those who wish to listen to the call via telephone, please
dial the number below at least five minutes prior to the scheduled
start time:
Toll-Free Number: 866-562-9934
International Number: 706-679-0638
Conference ID: 96755405
If you have any difficulty connecting with the conference call,
please contact Gateway Investor Relations at 949-574-3860.
About Digimarc
Digimarc Corporation (NASDAQ: DMRC) is
a pioneer in the automatic identification of everyday objects such
as product packaging and virtually any media, including print,
images and audio. The Digimarc Platform provides innovative and
comprehensive automatic recognition technologies to simplify
search, and transform information discovery through unparalleled
reliability, efficiency and security. Digimarc has a global patent
portfolio, which includes over 1,100 granted and pending patents.
These innovations include state-of-the-art identification
technology, Digimarc Barcode, as well as Digimarc Discover®
software for barcode scanning, image recognition, as layers of its
ground-breaking Platform. Digimarc is based in Beaverton, Oregon. The Digimarc Platform
enables applications that benefit retailers and consumer brands,
national and state government agencies, media and entertainment
industries, and others. Visit digimarc.com and follow us @digimarc
to learn more about The Barcode of Everything®.
Forward-looking Statements
With the exception of
historical information contained in this release, the matters
described in this release contain various "forward-looking
statements." These forward-looking statements include statements
identified by terminology such as "will," "should," "expects,"
"estimates," "predicts" and "continue" or other derivations of
these or other comparable terms. These forward-looking statements
are statements of management's opinion and are subject to various
assumptions, risks, uncertainties and changes in circumstances.
Actual results may vary materially from those expressed or implied
from the statements in this release as a result of changes in
economic, business and/or regulatory factors. More detailed
information about risk factors that may affect actual results are
set forth in the company's Form 10-K for the year ended
December 31, 2018 and in subsequent
periodic reports filed with the SEC. Readers are cautioned not to
place undue reliance on these forward-looking statements, which
reflect management's opinions only as of the date of this release.
Except as required by law, Digimarc undertakes no obligation to
publicly update or revise any forward-looking statements to reflect
events or circumstances that may arise after the date of this
release.
Digimarc
Corporation
|
Consolidated Income
Statement Information
|
(in thousands, except
per share amounts)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Month
Information
|
|
Nine Month
Information
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue:
|
|
|
|
|
|
|
|
Service
|
$
3,003
|
|
$
2,787
|
|
$
10,167
|
|
$
9,630
|
Subscription
|
2,273
|
|
1,532
|
|
5,924
|
|
4,554
|
License
|
552
|
|
595
|
|
1,577
|
|
1,781
|
Total
revenue
|
5,828
|
|
4,914
|
|
17,668
|
|
15,965
|
|
|
|
|
|
|
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
Service
|
1,287
|
|
1,301
|
|
4,371
|
|
4,412
|
Subscription
|
459
|
|
480
|
|
1,369
|
|
1,470
|
License
|
172
|
|
154
|
|
497
|
|
443
|
Total cost of
revenue
|
1,918
|
|
1,935
|
|
6,237
|
|
6,325
|
|
|
|
|
|
|
|
|
Gross
profit:
|
|
|
|
|
|
|
|
Service
|
1,716
|
|
1,486
|
|
5,796
|
|
5,218
|
Subscription
|
1,814
|
|
1,052
|
|
4,555
|
|
3,084
|
License
|
380
|
|
441
|
|
1,080
|
|
1,338
|
Total gross
profit
|
3,910
|
|
2,979
|
|
11,431
|
|
9,640
|
|
|
|
|
|
|
|
|
Gross
margin:
|
|
|
|
|
|
|
|
Service
|
57%
|
|
53%
|
|
57%
|
|
54%
|
Subscription
|
80%
|
|
69%
|
|
77%
|
|
68%
|
License
|
69%
|
|
74%
|
|
68%
|
|
75%
|
Percentage of gross
profit to total revenue
|
67%
|
|
61%
|
|
65%
|
|
60%
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Sales
and marketing
|
4,839
|
|
4,741
|
|
14,876
|
|
14,385
|
Research, development and engineering
|
4,105
|
|
4,069
|
|
12,124
|
|
12,074
|
General
and administrative
|
2,656
|
|
2,447
|
|
8,194
|
|
7,495
|
Intellectual property
|
342
|
|
328
|
|
1,093
|
|
948
|
Total operating
expenses
|
11,942
|
|
11,585
|
|
36,287
|
|
34,902
|
|
|
|
|
|
|
|
|
Operating
loss
|
(8,032)
|
|
(8,606)
|
|
(24,856)
|
|
(25,262)
|
|
|
|
|
|
|
|
|
Other income,
net
|
259
|
|
273
|
|
727
|
|
799
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
(7,773)
|
|
(8,333)
|
|
(24,129)
|
|
(24,463)
|
|
|
|
|
|
|
|
|
Benefit
(provision) for income taxes
|
12
|
|
(9)
|
|
(28)
|
|
(29)
|
Net
loss
|
$
(7,761)
|
|
$
(8,342)
|
|
$
(24,157)
|
|
$
(24,492)
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share:
|
|
|
|
|
|
|
|
Loss per common
share - basic
|
$
(0.65)
|
|
$
(0.73)
|
|
$
(2.07)
|
|
$
(2.16)
|
Loss per common
share - diluted
|
$
(0.65)
|
|
$
(0.73)
|
|
$
(2.07)
|
|
$
(2.16)
|
Weighted
average common shares outstanding - basic
|
11,924
|
|
11,394
|
|
11,693
|
|
11,333
|
Weighted
average common shares outstanding - diluted
|
11,924
|
|
11,394
|
|
11,693
|
|
11,333
|
Digimarc
Corporation
|
Consolidated Balance
Sheet Information
|
(in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2019
|
|
2018
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents (1)
|
$
16,414
|
|
$
27,278
|
Marketable securities
(1)
|
24,921
|
|
16,378
|
Trade accounts
receivable, net
|
3,570
|
|
3,888
|
Other current
assets
|
2,882
|
|
2,100
|
Total current
assets
|
47,787
|
|
49,644
|
Marketable securities
(1)
|
1,497
|
|
—
|
Property and
equipment, net
|
3,594
|
|
3,955
|
Intangibles,
net
|
6,723
|
|
6,649
|
Goodwill
|
1,114
|
|
1,114
|
Other
assets
|
2,871
|
|
425
|
Total
assets
|
$
63,586
|
|
$
61,787
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
other accrued liabilities
|
$
2,615
|
|
$
1,092
|
Deferred
revenue
|
2,391
|
|
3,226
|
Total current
liabilities
|
5,006
|
|
4,318
|
Deferred rent and
other long-term liabilities
|
2,739
|
|
854
|
Total
liabilities
|
7,745
|
|
5,172
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
Preferred stock
|
50
|
|
50
|
Common
stock
|
12
|
|
12
|
Additional paid-in capital
|
185,811
|
|
162,428
|
Accumulated deficit
|
(130,032)
|
|
(105,875)
|
Total
shareholders' equity
|
55,841
|
|
56,615
|
|
|
|
|
Total liabilities
and shareholders' equity
|
$
63,586
|
|
$
61,787
|
|
|
|
|
|
|
|
|
(1) Aggregate cash,
cash equivalents and marketable securities was $42,832 and $43,656
at September 30, 2019 and
December 31, 2018, respectively.
|
Digimarc
Corporation
|
Consolidated Cash
Flow Information
|
(in
thousands)
|
(Unaudited)
|
|
|
|
|
|
Nine Month
Information
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
Net
loss
|
$
(24,157)
|
|
$
(24,492)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
Depreciation, amortization and write-off of property and
equipment
|
1,098
|
|
1,167
|
Amortization and write-off of intangibles
|
533
|
|
437
|
Stock-based compensation
|
6,094
|
|
5,345
|
Changes in
operating assets and liabilities:
|
|
|
|
Trade accounts
receivable
|
318
|
|
3,447
|
Other current
assets
|
(782)
|
|
(261)
|
Other
assets
|
263
|
|
(148)
|
Accounts payable and
other accrued liabilities
|
1,086
|
|
(299)
|
Deferred
revenue
|
(735)
|
|
(1,225)
|
Lease liability and
other long-term liabilities
|
(481)
|
|
(75)
|
Net cash
used in operating activities
|
(16,763)
|
|
(16,104)
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchase of property and equipment
|
(692)
|
|
(1,023)
|
Capitalized patent costs
|
(524)
|
|
(571)
|
Maturity of marketable securities
|
27,997
|
|
30,179
|
Purchase of marketable securities
|
(38,037)
|
|
(18,904)
|
Net cash
provided by (used in) investing activities
|
(11,256)
|
|
9,681
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Issuance of common stock, net of issuance costs
|
19,615
|
|
—
|
Exercise of stock options
|
293
|
|
1,064
|
Purchase of common stock
|
(2,753)
|
|
(1,689)
|
Net cash
provided by (used in) financing activities
|
17,155
|
|
(625)
|
|
|
|
|
Net
decrease in cash and cash equivalents (2)
|
$
(10,864)
|
|
$
(7,048)
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and
marketable securities at beginning of period
|
43,656
|
|
67,738
|
Cash, cash equivalents and
marketable securities at end of period
|
42,832
|
|
49,415
|
(2)
Net decrease in cash, cash equivalents and marketable
securities
|
$
(824)
|
|
$
(18,323)
|
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SOURCE Digimarc Corporation