Digimarc Reports Third Quarter 2019 Financial Results
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
