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Digimarc Reports First Quarter 2018 Financial Results

BEAVERTON, Ore., April 25, 2018 /PRNewswire/ -- Digimarc Corporation (DMRC), inventor of the Intuitive Computing Platform™ featuring Digimarc Barcode, reported financial results for the first quarter 2018.

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

First Quarter 2018 Financial Results
Revenue for the first quarter of 2018 totaled $5.6 million compared to $6.1 million in the same quarter a year-ago. The decrease was primarily due to lower license revenue reflecting the impact of amending an existing license agreement in the third quarter of 2017 whereby the company waived all future royalty obligations in one of the licensed fields of use in exchange for an upfront $3.5 million license fee.

Operating expenses for the first quarter of 2018 totaled $11.8 million compared to $10.2 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 first quarter of 2018 totaled $8.4 million compared to an operating loss of $6.4 million in the same quarter a year-ago. The higher operating loss was primarily due to higher operating expenses. 

Net loss for the first quarter of 2018 totaled $8.1 million or $(0.72) per diluted share, compared to net loss of $6.2 million or $(0.61) per diluted share in the same quarter a year-ago.

At quarter-end, cash, cash equivalents and marketable securities totaled $63.7 million, compared to $67.7 million at December 31, 2017.

Conference Call
Digimarc will hold a conference call later today (Wednesday, April 25, 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: 96755399

If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

About Digimarc
Digimarc Corporation (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 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™.

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.

Company Contacts:
Charles Beck
Chief Financial Officer
503-469-4721
Charles.Beck@digimarc.com

Matt Glover
Liolios Group, Inc.
Investor Relations for Digimarc
949-574-3860
DMRC@liolios.com

 

Digimarc Corporation

Consolidated Income Statement Information

(in thousands, except per share amounts)

(Unaudited)






Three Month Information


March 31,


March 31,


2018


2017

Revenue:




   Service

$    3,507


$    3,696

   Subscription

1,578


1,445

   License

528


950

      Total revenue

5,613


6,091





Cost of revenue:




   Service

1,563


1,635

   Subscription

482


556

   License

140


118

      Total cost of revenue

2,185


2,309





Gross profit:




   Service

1,944


2,061

   Subscription

1,096


889

   License

388


832

      Total gross profit

3,428


3,782





Gross margin:




   Service

55%


56%

   Subscription

69%


62%

   License

73%


88%

      Percentage of gross profit to total revenue

61%


62%





Operating expenses:




   Sales and marketing

4,887


3,992

   Research, development and engineering

3,947


3,459

   General and administrative

2,632


2,385

   Intellectual property

315


392

      Total operating expenses

11,781


10,228





Operating loss

(8,353)


(6,446)





Other income, net

252


118





Loss before income taxes

(8,101)


(6,328)





Benefit (provision) for income taxes

(11)


110

Net loss

$   (8,112)


$   (6,218)





Earnings (loss) per common share:




Loss per common share - basic

$    (0.72)


$    (0.61)

Loss per common share - diluted

$    (0.72)


$    (0.61)

   Weighted average common shares outstanding - basic

11,266


10,161

   Weighted average common shares outstanding - diluted

11,266


10,161

 

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)










March 31,


December 31,


2018


2017

Assets




Current assets:




  Cash and cash equivalents (1)

$  48,449


$         40,823

  Marketable securities (1)

15,219


26,915

  Trade accounts receivable, net 

3,790


6,404

  Other current assets 

1,888


2,171

  Total current assets 

69,346


76,313

Property and equipment, net 

4,103


4,236

Intangibles, net 

6,478


6,381

Goodwill

1,114


1,114

Other assets

324


326

  Total assets 

$  81,365


$         88,370





Liabilities and Shareholders' Equity




  Current liabilities:




    Accounts payable and other accrued liabilities

$    1,464


$          1,914

    Deferred revenue

2,839


3,124

  Total current liabilities 

4,303


5,038

  Deferred rent and other long-term liabilities

941


985

  Total liabilities 

5,244


6,023





Commitments and contingencies








Shareholders' equity:




   Preferred stock

50


50

   Common stock

12


12

   Additional paid-in capital

157,540


155,793

   Accumulated deficit

(81,481)


(73,508)

  Total shareholders' equity 

76,121


82,347





  Total liabilities and shareholders' equity 

$  81,365


$         88,370









(1) Aggregate cash, cash equivalents and marketable securities was $63,668 and $67,738


     at March 31, 2018 and December 31, 2017, respectively.




 

Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)






Three Month Information


March 31,


March 31,


2018


2017

Cash flows from operating activities:




  Net loss

$   (8,112)


$   (6,218)

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




    Depreciation, amortization and write-off of property and equipment

380


299

    Amortization and write-off of intangibles

146


257

    Stock-based compensation

1,671


1,503

  Changes in operating assets and liabilities:




      Trade accounts receivable

2,614


1,274

      Other current assets

304


70

      Other assets

44


55

      Accounts payable and other accrued liabilities

(420)


128

      Deferred revenue

(219)


(498)

        Net cash used in operating activities

(3,592)


(3,130)





Cash flows from investing activities:




    Purchase of property and equipment

(302)


(605)

    Capitalized patent costs

(208)


(200)

    Maturity of marketable securities

18,657


16,399

    Purchase of marketable securities

(6,961)


(10,561)

        Net cash provided by investing activities

11,186


5,033





Cash flows from financing activities:




    Exercise of stock options

560


177

    Purchase of common stock

(528)


(583)

        Net cash provided by (used in) financing activities

32


(406)





        Net increase in cash and cash equivalents (2)

$    7,626


$    1,497









     Cash, cash equivalents and marketable securities at beginning of period

67,738


60,526

     Cash, cash equivalents and marketable securities at end of period

63,668


56,185

(2)    Net decrease in cash, cash equivalents and marketable securities

$   (4,070)


$   (4,341)

 

Cision

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