Digimarc Reports Third Quarter 2017 Financial Results
BEAVERTON, Ore., Oct. 26, 2017 /PRNewswire/ -- Digimarc Corporation (NASDAQ: DMRC), the inventor of the Digimarc Discover® platform featuring the Digimarc Barcode for automatically identifying and interacting with virtually any media, reported financial results for the third quarter ended September 30, 2017.
Third Quarter 2017 Financial Results
Revenue for the third quarter of 2017 totaled $8.7 million compared to $5.6 million in the same quarter a year-ago. The increase in revenue was the result of higher license revenue driven by a $3.5 million license fee from an existing licensee. In exchange for the upfront license fee, Digimarc waived any future royalty obligations from this licensee in one of the licensed fields of use.
Operating expenses for the third quarter of 2017 totaled $11.0 million compared to $8.7 million in the third quarter of 2016. The increase in operating expenses was primarily due to higher investment in sales, marketing, and engineering as the company continues to address important opportunities in market development and delivery of Digimarc Discover and Digimarc Barcode.
Operating loss for the third quarter of 2017 totaled $4.4 million compared to an operating loss of $5.3 million in the same quarter a year-ago. The lower operating loss was due to higher license revenue offset by higher operating expenses.
Net loss for the third quarter of 2017 totaled $4.2 million or $(0.39) per diluted share, compared to a net loss of $5.2 million or $(0.55) per diluted share in the third quarter of 2016.
At quarter-end, cash, cash equivalents and marketable securities totaled $60.9 million, compared to $67.8 million at June 30, 2017.
Conference Call
Digimarc will hold a conference call later today (Thursday, October 26, 2017) 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 via the investor section of the company's website here.
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: 8340851
If you have any difficulty connecting with the conference call, please contact Liolios Group 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. Based on the patented Intuitive Computing Platform (ICP(TM)), Digimarc 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, and more. Digimarc technology is deployed by major retailers and consumer brands, central banks, U.S. states, film and technology companies, among others. Visit digimarc.com and follow us @digimarc to learn more about The Barcode of Everything(TM).
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 and any related inferences regarding higher license revenue and market opportunities for Digimarc Discover and Digimarc Barcode, and other 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, 2016 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,
2017 2016 2017 2016
---- ---- ---- ----
Revenue:
Service $2,986 $3,252 $9,935 $9,650
Subscription 1,306 1,417 4,171 4,374
License 4,385 907 6,249 2,589
----- --- ----- -----
Total revenue 8,677 5,576 20,355 16,613
Cost of revenue:
Service 1,332 1,455 4,431 4,288
Subscription 611 600 1,701 1,856
License 129 107 369 302
--- --- --- ---
Total cost of
revenue 2,072 2,162 6,501 6,446
Gross profit:
Service 1,654 1,797 5,504 5,362
Subscription 695 817 2,470 2,518
License 4,256 800 5,880 2,287
----- --- ----- -----
Total gross profit 6,605 3,414 13,854 10,167
Gross margin:
Service 55% 55% 55% 56%
Subscription 53% 58% 59% 58%
License 97% 88% 94% 88%
Percentage of gross
profit to total
revenue 76% 61% 68% 61%
Operating expenses:
Sales and marketing 4,075 2,945 12,064 8,756
Research,
development and
engineering 4,108 3,291 11,503 9,975
General and
administrative 2,442 2,039 7,066 6,185
Intellectual
property 387 394 1,124 1,290
Total operating
expenses 11,012 8,669 31,757 26,206
Operating loss (4,407) (5,255) (17,903) (16,039)
Other income, net 174 69 408 157
--- --- --- ---
Loss before income
taxes (4,233) (5,186) (17,495) (15,882)
Benefit (provision)
for income taxes (7) (12) 94 (34)
Net loss $(4,240) $(5,198) $(17,401) $(15,916)
======= ======= ======== ========
Earnings (loss) per common share:
Loss per common
share -basic $(0.39) $(0.55) $(1.67) $(1.79)
Loss per common
share -diluted $(0.39) $(0.55) $(1.67) $(1.79)
Weighted average
common shares
outstanding -basic 10,797 9,506 10,410 8,878
Weighted average
common shares
outstanding -
diluted 10,797 9,506 10,410 8,878
Digimarc Corporation
Consolidated Balance Sheet Information
(in thousands)
(Unaudited)
September 30, December 31,
2017 2016
---- ----
Assets
Current assets:
Cash and cash equivalents (1) $25,599 $11,638
Marketable securities (1) 35,288 44,496
Trade accounts receivable, net 7,030 5,078
Other current assets 2,177 1,695
Total current assets 70,094 62,907
Marketable securities (1) - 4,392
Property and equipment, net 4,273 3,570
Intangibles, net 6,369 6,422
Goodwill 1,114 1,114
Other assets 311 331
Total assets $82,161 $78,736
======= =======
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities $2,071 $1,523
Deferred revenue 1,717 2,923
Total current liabilities 3,788 4,446
Deferred rent and other long-term liabilities 989 956
Total liabilities 4,777 5,402
Commitments and contingencies
Shareholders' equity:
Preferred stock 50 50
Common stock 11 11
Additional paid-in capital 142,461 120,985
Accumulated deficit (65,138) (47,712)
------- -------
Total shareholders' equity 77,384 73,334
Total liabilities and shareholders' equity $82,161 $78,736
======= =======
(1) Aggregate cash, cash
equivalents, short- and long-
term marketable securities was
$60,887 and $60,526 at
September 30, 2017 and December
31, 2016, respectively.
Digimarc Corporation
Consolidated Cash Flow Information
(in thousands)
(Unaudited)
Nine Month Information
----------------------
September 30, September 30,
2017 2016
---- ----
Cash flows from operating activities:
Net loss $(17,401) $(15,916)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation,
amortization and
write-off of
property and
equipment 1,024 1,016
Amortization and
write-off of
intangibles 775 876
Stock-based
compensation 4,872 4,162
Changes in operating assets and liabilities:
Trade accounts
receivable (1,952) 2,095
Other current assets (482) (437)
Other assets 20 (56)
Accounts payable and
other accrued
liabilities 373 680
Deferred revenue (1,247) (1,407)
Net cash used in
operating
activities (14,018) (8,987)
Cash flows from investing activities:
Purchase of property
and equipment (1,424) (1,565)
Capitalized patent
costs (625) (623)
Maturity of
marketable
securities 41,231 35,182
Purchase of
marketable
securities (27,631) (40,817)
------- -------
Net cash provided by
(used in) investing
activities 11,551 (7,823)
Cash flows from financing activities:
Issuance of common
stock, net of
issuance costs 17,698 39,700
Exercise of stock
options 793 476
Purchase of common
stock (2,063) (1,879)
Net cash provided by
financing
activities 16,428 38,297
Net increase in cash
and cash
equivalents (2) $13,961 $21,487
======= =======
Cash, cash
equivalents and
marketable
securities at
beginning of period 60,526 39,186
Cash, cash
equivalents and
marketable
securities at end
of period 60,887 66,308
(2) Net increase
in cash, cash
equivalents and
marketable
securities $361 $27,122
==== =======
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SOURCE Digimarc Corporation
