Digimarc Reports Third Quarter 2018 Financial Results
BEAVERTON, Ore., Oct. 30, 2018 /PRNewswire/ -- Digimarc Corporation (NASDAQ: DMRC), the inventor of the Intuitive Computing Platform (ICP(TM)) featuring Digimarc Barcode, reported financial results for the third quarter ended September 30, 2018.
Third Quarter 2018 Financial Results
Revenue for the third quarter of 2018 totaled $4.9 million compared to $8.7 million in the same quarter a year-ago. The decrease in revenue was due to lower license revenue reflecting the impact of the $3.5 million upfront license fee and $0.3 million of royalties realized in the third quarter of 2017 from an existing licensee. In exchange for the upfront license fee, the company waived any future royalty obligations from this licensee in one of the licensed fields of use.
Operating expenses for the third quarter of 2018 totaled $11.6 million compared to $11.0 million in the same quarter a year-ago. The increase in operating expenses was due to higher investment in sales and marketing 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 2018 totaled $8.6 million compared to $4.4 million in the same quarter a year-ago. The higher operating loss was primarily due to lower license revenue and higher operating expenses.
Net loss for the third quarter of 2018 totaled $8.3 million or $(0.73) per diluted share compared to a net loss of $4.2 million or $(0.39) per diluted share in the same quarter a year-ago.
At quarter-end, cash, cash equivalents and marketable securities totaled $49.4 million, compared to $56.8 million at June 30, 2018.
Conference Call
Digimarc will hold a conference call tomorrow (Wednesday, October 31, 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: 96755401
If you have any difficulty connecting with the conference call, please contact Liolios 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, image recognition, and more. Digimarc is based in Beaverton, Oregon, with technologies deployed by major retailers and consumer brands, global 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(®).
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, 2017 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,
2018 2017 2018 2017
Revenue:
Service $2,787 $2,986 $9,630 $9,935
Subscription 1,532 1,306 4,554 4,171
License 595 4,385 1,781 6,249
Total revenue 4,914 8,677 15,965 20,355
Cost of revenue:
Service 1,301 1,332 4,412 4,431
Subscription 480 611 1,470 1,701
License 154 129 443 369
Total cost of
revenue 1,935 2,072 6,325 6,501
Gross profit:
Service 1,486 1,654 5,218 5,504
Subscription 1,052 695 3,084 2,470
License 441 4,256 1,338 5,880
Total gross profit 2,979 6,605 9,640 13,854
Gross margin:
Service 53% 55% 54% 55%
Subscription 69% 53% 68% 59%
License 74% 97% 75% 94%
Percentage of gross
profit to total
revenue 61% 76% 60% 68%
Operating expenses:
Sales and marketing 4,741 4,075 14,385 12,064
Research,
development and
engineering 4,069 4,108 12,074 11,503
General and
administrative 2,447 2,442 7,495 7,066
Intellectual
property 328 387 948 1,124
Total operating
expenses 11,585 11,012 34,902 31,757
Operating loss (8,606) (4,407) (25,262) (17,903)
Other income, net 273 174 799 408
Loss before income
taxes (8,333) (4,233) (24,463) (17,495)
Benefit (provision)
for income taxes (9) (7) (29) 94
Net loss $(8,342) $(4,240) $(24,492) $(17,401)
===
Earnings (loss) per common share:
Loss per common
share -basic $(0.73) $(0.39) $(2.16) $(1.67)
Loss per common
share -diluted $(0.73) $(0.39) $(2.16) $(1.67)
Weighted average
common shares
outstanding -basic 11,394 10,797 11,333 10,410
Weighted average
common shares
outstanding -
diluted 11,394 10,797 11,333 10,410
Digimarc Corporation
Consolidated Balance Sheet Information
(in thousands)
(Unaudited)
September 30,
December 31,
2018 2017
Assets
Current assets:
Cash and cash equivalents (1) $33,775 $40,823
Marketable securities (1) 15,640 26,915
Trade accounts receivable, net 2,957 6,404
Other current assets 2,453 2,171
Total current assets 54,825 76,313
Property and equipment, net 4,096 4,236
Intangibles, net 6,602 6,381
Goodwill 1,114 1,114
Other assets 516 326
Total assets $67,153 $88,370
===
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and other
accrued liabilities $1,576 $1,914
Deferred revenue 1,846 3,124
Total current liabilities 3,422 5,038
Deferred rent and other long-
term liabilities 887 985
Total liabilities 4,309 6,023
Commitments and contingencies
Shareholders' equity:
Preferred stock 50 50
Common stock 12 12
Additional paid-in capital 160,643 155,793
Accumulated deficit (97,861) (73,508)
Total shareholders' equity 62,844 82,347
Total liabilities and
shareholders' equity $67,153 $88,370
===
(1) Aggregate cash, cash
equivalents and short-term
marketable securities was $49,415
and $67,738 at
September 30, 2018 and December 31,
2017, respectively.
Digimarc Corporation
Consolidated Cash Flow Information
(in thousands)
(Unaudited)
Nine Month Information
September 30,
September 30,
2018 2017
Cash flows from operating activities:
Net loss $(24,492) $(17,401)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation,
amortization and
write-off of
property and
equipment 1,167 1,024
Amortization and
write-off of
intangibles 437 775
Stock-based
compensation 5,345 4,872
Changes in operating assets and liabilities:
Trade accounts
receivable 3,447 (1,952)
Other current assets (261) (482)
Other assets (148) 20
Accounts payable and
other accrued
liabilities (374) 373
Deferred revenue (1,225) (1,247)
Net cash used in
operating
activities (16,104) (14,018)
Cash flows from investing activities:
Purchase of property
and equipment (1,023) (1,424)
Capitalized patent
costs (571) (625)
Maturity of
marketable
securities 30,179 41,231
Purchase of
marketable
securities (18,904) (27,631)
Net cash provided by
investing
activities 9,681 11,551
Cash flows from financing activities:
Issuance of common
stock, net of
issuance costs - 17,698
Exercise of stock
options 1,064 793
Purchase of common
stock (1,689) (2,063)
Net cash provided by
(used in) financing
activities (625) 16,428
Net increase
(decrease) in cash
and cash
equivalents (2) $(7,048) $13,961
===
Cash, cash
equivalents and
marketable
securities at
beginning of period 67,738 60,526
Cash, cash
equivalents and
marketable
securities at end
of period 49,415 60,887
(2) Net increase
(decrease) in cash,
cash equivalents
and marketable
securities $(18,323) $361
===
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SOURCE Digimarc Corporation
