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Digimarc Reports Fourth Quarter and Full Year 2019 Financial Results

Digimarc Reports Fourth Quarter and Full Year 2019 Financial Results

BEAVERTON, Ore., Feb. 26, 2020 /PRNewswire/ -- Digimarc Corporation (NASDAQ: DMRC), creator of the Digimarc Platform for digital identification and detection, reported financial results for the fourth quarter and full year ended December 31, 2019.

Fourth Quarter 2019 Financial Results
Revenue for the fourth quarter of 2019 increased two percent to $5.3 million compared to $5.2 million in the fourth quarter of 2018. The increase in revenue was primarily due to higher subscription revenue, partially offset by lower service revenue due to timing of program work.

Operating expenses for the fourth quarter of 2019 increased nine percent to $12.4 million compared to $11.4 million in the same quarter a year-ago. The increase in operating expenses was primarily due to routine annual compensation and benefits adjustments for employees and increased headcount.

Operating loss for the fourth quarter of 2019 increased seven percent to $8.9 million compared to $8.3 million in the fourth quarter of 2018. The increased operating loss was primarily due to higher operating expenses.

Net loss for the fourth quarter of 2019 increased eight percent to $8.7 million or $(0.73) per diluted share compared to net loss of $8.0 million or $(0.70) per diluted share in the same quarter a year-ago.

At quarter-end, cash, cash equivalents and marketable securities totaled $36.8 million compared to $42.8 million at September 30, 2019.

Full Year 2019 Financial Results
Revenue for the full year 2019 increased eight percent to $23.0 million, compared to $21.2 million in 2018. The increase in revenue was primarily due to higher subscription revenue reflecting higher Digimarc Discover and Digimarc Barcode revenue, partially offset by lower Digimarc Guardian revenue.

Operating expenses for the full year 2019 increased five percent to $48.7 million compared to $46.3 million in 2018. The increase in operating expenses was primarily due to routine annual compensation and benefits adjustments for employees.

Operating loss for the full year 2019 increased one percent to $33.7 million compared to an operating loss of $33.5 million in 2018. The increased operating loss was primarily due to higher operating expenses, partially offset by higher revenue. 

Net loss for the full year 2019 increased one percent to $32.8 million or $(2.79) per diluted share, compared to a net loss of $32.5 million or $(2.86) per diluted share in 2018.

Conference Call
Digimarc will hold a conference call today (Wednesday, February 26, 2020) 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: 2985885

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 media, including packaging, other commercial print, digital images, audio and video. The Digimarc Platform provides innovative and comprehensive automatic recognition software and services to simplify search, and transform information discovery through unparalleled reliability, efficiency and security. The Digimarc Platform enables applications that benefit retailers and consumer brands, national and state government agencies, media and entertainment industries, and others. Digimarc is based in Beaverton, Oregon with a growing supplier network around the world. 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


Twelve-Month Information


December 31,


December 31,


December 31,


December 31,


2019


2018


2019


2018

Revenue:








   Service

$          2,626


$          3,144


$         12,793


$         12,774

   Subscription

2,201


1,487


8,125


6,041

   License

492


596


2,069


2,377

      Total revenue

5,319


5,227


22,987


21,192









Cost of revenue:








   Service

1,152


1,510


5,523


5,922

   Subscription

471


437


1,840


1,907

   License

176


154


673


597

      Total cost of revenue

1,799


2,101


8,036


8,426









Gross profit:








   Service

1,474


1,634


7,270


6,852

   Subscription

1,730


1,050


6,285


4,134

   License

316


442


1,396


1,780

      Total gross profit

3,520


3,126


14,951


12,766









Gross margin:








   Service

56%


52%


57%


54%

   Subscription

79%


71%


77%


68%

   License

64%


74%


67%


75%

      Percentage of gross profit to total revenue

66%


60%


65%


60%









Operating expenses:








   Sales and marketing

4,999


4,755


19,875


19,140

   Research, development and engineering

4,343


3,897


16,467


15,971

   General and administrative

2,654


2,402


10,848


9,897

   Intellectual property

399


334


1,492


1,282

      Total operating expenses

12,395


11,388


48,682


46,290









Operating loss

(8,875)


(8,262)


(33,731)


(33,524)









Other income, net

185


258


912


1,057









Loss before income taxes

(8,690)


(8,004)


(32,819)


(32,467)









Benefit (provision) for income taxes

7


(10)


(21)


(39)

Net loss

$         (8,683)


$         (8,014)


$        (32,840)


$        (32,506)









Earnings (loss) per common share:








Loss per common share - basic

$           (0.73)


$           (0.70)


$           (2.79)


$           (2.86)

Loss per common share - diluted

$           (0.73)


$           (0.70)


$           (2.79)


$           (2.86)

   Weighted average common shares outstanding - basic

11,967


11,443


11,762


11,360

   Weighted average common shares outstanding - diluted

11,967


11,443


11,762


11,360

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)










December 31,


December 31,


2019


2018

Assets




Current assets:




Cash and cash equivalents (1)

$         11,213


$         27,278

Marketable securities (1)

25,604


16,378

Trade accounts receivable, net 

4,021


3,888

Other current assets 

2,456


2,100

Total current assets 

43,294


49,644

Property and equipment, net 

3,650


3,955

Intangibles, net 

6,670


6,649

Goodwill

1,114


1,114

Other assets

2,660


425

Total assets 

$         57,388


$         61,787





Liabilities and Shareholders' Equity




Current liabilities:




Accounts payable and other accrued liabilities

$          2,272


$          1,092

Deferred revenue

3,172


3,226

Total current liabilities 

5,444


4,318

Lease liability and other long-term liabilities

2,494


854

Total liabilities 

7,938


5,172





Commitments and contingencies








Shareholders' equity:




   Preferred stock

50


50

   Common stock

12


12

   Additional paid-in capital

188,103


162,428

   Accumulated deficit

(138,715)


(105,875)

Total shareholders' equity 

49,450


56,615





Total liabilities and shareholders' equity 

$         57,388


$         61,787









(1) Aggregate cash, cash equivalents, short-term marketable securities was $36,817 and $43,656




     at December 31, 2019 and 2018, respectively.




Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)






Twelve-Month Information


December 31,


December 31,


2019


2018

Cash flows from operating activities:




  Net loss

$        (32,840)


$        (32,506)

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




    Depreciation, amortization and write-off of property and equipment

1,449


1,554

    Amortization and write-off of intangibles

758


589

    Stock-based compensation

8,214


7,298

  Changes in operating assets and liabilities:




      Trade accounts receivable

(133)


2,516

      Other current assets

(356)


92

      Other assets

474


(57)

      Accounts payable and other accrued liabilities

702


(744)

      Deferred revenue

(41)


182

      Lease liability and other long-term liabilities

(639)


(134)

        Net cash used in operating activities

(22,412)


(21,210)





Cash flows from investing activities:




    Purchase of property and equipment

(1,055)


(1,292)

    Capitalized patent costs

(659)


(747)

    Maturity of marketable securities

42,084


34,558

    Purchase of marketable securities

(51,310)


(24,021)

        Net cash provided by (used in) investing activities

(10,940)


8,498





Cash flows from financing activities:




    Issuance of common stock, net of issuance costs

19,615


    Exercise of stock options

1,178


1,256

    Purchase of common stock

(3,506)


(2,089)

        Net cash provided by (used in) financing activities

17,287


(833)





        Net decrease in cash and cash equivalents (2)

$        (16,065)


$        (13,545)









     Cash, cash equivalents and marketable securities at beginning of period

43,656


67,738

     Cash, cash equivalents and marketable securities at end of period

36,817


43,656

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

$         (6,839)


$        (24,082)

SOURCE Digimarc Corporation

Related Links

https://www.digimarc.com