Digimarc Reports Fourth Quarter and Full Year 2017 Financial Results

BEAVERTON, Ore., Feb. 21, 2018 /PRNewswire/ -- Digimarc Corporation (NASDAQ: DMRC), inventor of the Intuitive Computing Platform(TM) featuring Digimarc Barcode, reported financial results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Financial Results
Revenue for the fourth quarter of 2017 totaled $4.9 million compared to $5.2 million in the same quarter a year-ago. The decrease was primarily due to lower license revenue reflecting the impact of the $3.5 million upfront license fee we realized in the third quarter of 2017 whereby we waived any future royalty obligations from this licensee in one of the licensed fields of use.

Operating expenses for the fourth quarter of 2017 totaled $11.5 million compared to $9.0 million in the same quarter a year-ago. The increase 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 fourth quarter of 2017 totaled $8.7 million compared to an operating loss of $5.9 million in the same quarter a year-ago. The higher operating loss was primarily due to higher operating expenses.

Net loss for the fourth quarter of 2017 totaled $8.4 million or $(0.76) per diluted share, compared to net loss of $5.8 million or $(0.57) per diluted share in the same quarter a year-ago.

At quarter-end, cash, cash equivalents and marketable securities totaled $67.7 million, compared to $60.9 million at September 30, 2017. The increase was primarily due to $12.0 million of net proceeds from the sale of common stock in a registered direct offering completed during the quarter, partially offset by higher operating expenses.

Full Year 2017 Financial Results
Revenue for the full year 2017 totaled $25.2 million compared to $21.8 million in 2016. The increase was primarily due to higher license revenue driven by a one-time $3.5 million license fee from an existing licensee. In exchange for the upfront license fee, we waived any future royalty obligations from this licensee in one of the licensed fields of use.

Operating expenses for the full year 2017 totaled $43.2 million compared to $35.2 million in 2016. The increase was primarily due to higher investment in sales, marketing, and engineering.

Operating loss for the full year 2017 totaled $26.6 million compared to an operating loss of $21.9 million in 2016. The higher operating loss was primarily due to higher operating expenses, partially offset by higher license revenue.

Net loss for the full year 2017 totaled $25.8 million or $(2.44) per diluted share, compared to a net loss of $21.7 million or $(2.36) per diluted share in 2016.

Conference Call
Digimarc will hold a conference call later today (Wednesday, February 21, 2018) 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: 96755398

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 is based in Beaverton, Oregon, with technologies deployed by major retailers and consumer brands, central banks, U.S. states, film companies and professional sports franchises, 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 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           Twelve-Month Information
                                      -----------------------           ------------------------

                                           December 31,                       December 31,                       December 31,             December 31,

                                                                  2017                                2016                           2017                      2016
                                                                  ----                                ----                           ----                      ----

    Revenue:

       Service                                                  $3,001                              $3,017                        $12,936                   $12,667

       Subscription                                              1,348                               1,434                          5,519                     5,808

       License                                                     509                                 729                          6,758                     3,318
                                                                   ---                                 ---                          -----                     -----

          Total revenue                                          4,858                               5,180                         25,213                    21,793


    Cost of revenue:

       Service                                                   1,361                               1,385                          5,792                     5,673

       Subscription                                                563                                 554                          2,264                     2,410

       License                                                     133                                 112                            502                       414
                                                                   ---                                 ---                            ---                       ---

          Total cost of
           revenue                                               2,057                               2,051                          8,558                     8,497


    Gross profit:

       Service                                                   1,640                               1,632                          7,144                     6,994

       Subscription                                                785                                 880                          3,255                     3,398

       License                                                     376                                 617                          6,256                     2,904
                                                                   ---                                 ---                          -----                     -----

          Total gross profit                                     2,801                               3,129                         16,655                    13,296


    Gross margin:

       Service                                                     55%                                54%                           55%                      55%

       Subscription                                                58%                                61%                           59%                      59%

       License                                                     74%                                85%                           93%                      88%

          Percentage of gross
           profit to total
           revenue                                                 58%                                60%                           66%                      61%


    Operating expenses:

       Sales and marketing                                       4,572                               3,132                         16,636                    11,888

       Research,
        development and
        engineering                                              3,932                               3,419                         15,435                    13,394

       General and
        administrative                                           2,614                               2,113                          9,680                     8,298

       Intellectual
        property                                                   345                                 346                          1,469                     1,636

          Total operating
           expenses                                             11,463                               9,010                         43,220                    35,216


    Operating loss                                             (8,662)                            (5,881)                      (26,565)                 (21,920)


    Other income, net                                              180                                 101                            588                       258
                                                                   ---                                 ---                            ---                       ---


    Loss before income
     taxes                                                     (8,482)                            (5,780)                      (25,977)                 (21,662)


    Benefit (provision)
     for income taxes                                              112                                  24                            206                      (10)

    Net loss                                                  $(8,370)                           $(5,756)                     $(25,771)                $(21,672)
                                                               =======                             =======                       ========                  ========


    Earnings (loss) per common share:

    Loss per common
     share -basic                                              $(0.76)                            $(0.57)                       $(2.44)                  $(2.36)

    Loss per common
     share -diluted                                            $(0.76)                            $(0.57)                       $(2.44)                  $(2.36)

       Weighted average
        common shares
        outstanding -
        basic                                                   11,046                              10,111                         10,571                     9,188

       Weighted average
        common shares
        outstanding -
        diluted                                                 11,046                              10,111                         10,571                     9,188

                                                  Digimarc Corporation

                                         Consolidated Balance Sheet Information

                                                     (in thousands)

                                                      (Unaudited)



                                                           December 31,         December 31,

                                                                           2017                  2016
                                                                           ----                  ----

    Assets

    Current assets:

    Cash and cash
     equivalents
     (1)                                                               $40,823               $11,638

    Marketable
     securities (1)                                                      26,915                44,496

    Trade accounts
     receivable,
     net                                                                  6,404                 5,078

    Other current
     assets                                                               2,171                 1,695

    Total current
     assets                                                              76,313                62,907

    Marketable
     securities (1)                                                           -                4,392

    Property and
     equipment, net                                                       4,236                 3,570

    Intangibles,
     net                                                                  6,381                 6,422

    Goodwill                                                              1,114                 1,114

    Other assets                                                            326                   331

    Total assets                                                        $88,370               $78,736
                                                                        =======               =======


    Liabilities and Shareholders' Equity

    Current liabilities:

    Accounts
     payable and
     other accrued
     liabilities                                                         $1,914                $1,523

    Deferred
     revenue                                                              3,124                 2,923

    Total current
     liabilities                                                          5,038                 4,446

    Deferred rent
     and other
     long-term
     liabilities                                                            985                   956

    Total
     liabilities                                                          6,023                 5,402


    Commitments and contingencies


    Shareholders' equity:

       Preferred stock                                                       50                    50

       Common stock                                                          12                    11

       Additional
        paid-in
        capital                                                         155,793               120,985

       Accumulated
        deficit                                                        (73,508)             (47,712)
                                                                        -------               -------

    Total
     shareholders'
     equity                                                              82,347                73,334


    Total
     liabilities
     and
     shareholders'
     equity                                                             $88,370               $78,736
                                                                        =======               =======


             (1)    Aggregate cash, cash
                     equivalents, short- and long-
                     term marketable securities was
                     $67,738 and $60,526 at December
                     31, 2017 and December 31, 2016,
                     respectively.

                                                        Digimarc Corporation

                                                 Consolidated Cash Flow Information

                                                           (in thousands)

                                                             (Unaudited)


                                                 Twelve-Month Information
                                                 ------------------------

                                                       December 31,                 December 31,

                                                                           2017                        2016
                                                                           ----                        ----

    Cash flows from operating activities:

      Net loss                                                        $(25,771)                  $(21,672)

      Adjustments to reconcile net loss to net cash used in
       operating activities:

        Depreciation,
         amortization and
         write-off of
         property and
         equipment                                                        1,430                       1,336

        Amortization and
         write-off of
         intangibles                                                        996                       1,121

        Stock-based
         compensation                                                     6,757                       5,553

      Changes in operating assets and liabilities:

          Trade accounts
           receivable                                                   (1,326)                      (462)

          Other current assets                                            (476)                      (208)

          Other assets                                                        5                           7

          Accounts payable and
           other accrued
           liabilities                                                      585                         637

          Deferred revenue                                                  189                       (176)

            Net cash used in
             operating
             activities                                                (17,611)                   (13,864)


    Cash flows from investing activities:

        Purchase of property
         and equipment                                                  (2,188)                    (1,837)

        Capitalized patent
         costs                                                            (819)                      (790)

        Maturity of
         marketable
         securities                                                      60,360                      41,052

        Purchase of
         marketable
         securities                                                    (38,387)                   (53,914)
                                                                        -------                     -------

            Net cash provided by
             (used in) investing
             activities                                                  18,966                    (15,489)


    Cash flows from financing activities:

        Issuance of common
         stock, net of
         issuance costs                                                  29,677                      39,700

        Exercise of stock
         options                                                          1,183                         668

        Purchase of common
         stock                                                          (3,030)                    (2,537)

            Net cash provided by
             financing
             activities                                                  27,830                      37,831


            Net increase in cash
             and cash
             equivalents (2)                                            $29,185                      $8,478
                                                                        =======                      ======



         Cash, cash
          equivalents and
          marketable
          securities at
          beginning of period                                            60,526                      39,186

         Cash, cash
          equivalents and
          marketable
          securities at end
          of period                                                      67,738                      60,526

    (2)    Net increase
     in cash, cash
     equivalents and
     marketable
     securities                                                          $7,212                     $21,340
                                                                         ======                     =======

View original content with multimedia:http://www.prnewswire.com/news-releases/digimarc-reports-fourth-quarter-and-full-year-2017-financial-results-300602185.html

SOURCE Digimarc Corporation