DMRC
$19.03
Digimarc
($.80)
(4.03%)
Earnings Details
3rd Quarter September 2018
Tuesday, October 30, 2018 8:22:00 PM
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Summary

Digimarc (DMRC) Recent Earnings

Digimarc (DMRC) reported a 3rd Quarter September 2018 loss of $0.73 per share on revenue of $4.9 million. The consensus estimate was a loss of $0.74 per share on revenue of $5.2 million. Revenue fell 43.4% compared to the same quarter a year ago.

Digimarc Corporation develops solutions, licenses intellectual property, and provides development services to global business partners across industries.

Results
Reported Earnings
($0.73)
Earnings Whisper
-
Consensus Estimate
($0.74)
Reported Revenue
$4.9 Mil
Revenue Estimate
$5.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

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™) featuring Digimarc Barcode, reported financial results for the third quarter ended September 30, 2018.

Digimarc The Barcode of Everything(TM) (PRNewsfoto/Digimarc Corporation)

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™), 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