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Digimarc Reports Second Quarter 2018 Financial Results

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Digimarc Reports Second Quarter 2018 Financial Results

PR Newswire

BEAVERTON, Ore., Aug. 1, 2018 /PRNewswire/ -- Digimarc Corporation (NASDAQ:DMRC), the inventor of the Intuitive Computing Platform (ICP™) featuring Digimarc Barcode, reported financial results for the second quarter ended June 30, 2018.

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

Second Quarter 2018 Financial Results
Revenue for the second quarter of 2018 totaled $5.4 million compared to $­­5.6 million in the same quarter a year-ago. The decrease in revenue was due to lower license revenues 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 second quarter of 2018 totaled $11.5 million compared to $10.5 million in the same quarter a year-ago. The increase in operating expenses was primarily 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 second quarter of 2018 totaled $8.3 million compared to $7.1 million in the same quarter a year-ago. The higher operating loss was primarily due to higher operating expenses and lower license revenue. 

Net loss for the second quarter of 2018 totaled $8.0 million or $(0.71) per diluted share compared to a net loss of $6.9 million or $(0.68) per diluted share in the same quarter a year-ago.

At quarter-end, cash, cash equivalents and marketable securities totaled $56.8 million, compared to $63.7 million at March 31, 2018.

Conference Call
Digimarc will hold a conference call later today (Wednesday, August 1, 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: 96755400

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


Six Month Information


June 30,


June 30,


June 30,


June 30,


2018


2017


2018


2017

Revenue:








   Service

$    3,336


$    3,253


$    6,843


$    6,949

   Subscription

1,444


1,420


3,022


2,865

   License

658


914


1,186


1,864

      Total revenue

5,438


5,587


11,051


11,678









Cost of revenue:








   Service

1,548


1,464


3,111


3,099

   Subscription

508


534


990


1,090

   License

149


122


289


240

      Total cost of revenue

2,205


2,120


4,390


4,429









Gross profit:








   Service

1,788


1,789


3,732


3,850

   Subscription

936


886


2,032


1,775

   License

509


792


897


1,624

      Total gross profit

3,233


3,467


6,661


7,249









Gross margin:








   Service

54%


55%


55%


55%

   Subscription

65%


62%


67%


62%

   License

77%


87%


76%


87%

      Percentage of gross profit to total revenue

59%


62%


60%


62%









Operating expenses:








   Sales and marketing

4,757


3,997


9,644


7,989

   Research, development and engineering

4,058


3,936


8,005


7,395

   General and administrative

2,416


2,239


5,048


4,624

   Intellectual property

305


345


620


737

      Total operating expenses

11,536


10,517


23,317


20,745









Operating loss

(8,303)


(7,050)


(16,656)


(13,496)









Other income, net

274


116


526


234









Loss before income taxes

(8,029)


(6,934)


(16,130)


(13,262)









Benefit (provision) for income taxes

(9)


(9)


(20)


101

Net loss

$    (8,038)


$    (6,943)


$    (16,150)


$    (13,161)









Earnings (loss) per common share:








Loss per common share - basic

$    (0.71)


$    (0.68)


$    (1.43)


$    (1.29)

Loss per common share - diluted

$    (0.71)


$    (0.68)


$    (1.43)


$    (1.29)

   Weighted average common shares outstanding - basic

11,337


10,266


11,302


10,214

   Weighted average common shares outstanding - diluted

11,337


10,266


11,302


10,214

 

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)










June 30,


December 31,


2018


2017

Assets




Current assets:




Cash and cash equivalents (1)

$            35,071


$            40,823

Marketable securities (1)

21,713


26,915

Trade accounts receivable, net 

3,843


6,404

Other current assets 

1,982


2,171

Total current assets 

62,609


76,313

Property and equipment, net 

4,068


4,236

Intangibles, net 

6,558


6,381

Goodwill

1,114


1,114

Other assets

403


326

Total assets 

$            74,752


$            88,370





Liabilities and Shareholders' Equity




Current liabilities:




Accounts payable and other accrued liabilities

$              1,695


$              1,914

Deferred revenue

2,410


3,124

Total current liabilities 

4,105


5,038

Deferred rent and other long-term liabilities

944


985

Total liabilities 

5,049


6,023





Commitments and contingencies








Shareholders' equity:




   Preferred stock

50


50

   Common stock

12


12

   Additional paid-in capital

159,160


155,793

   Accumulated deficit

(89,519)


(73,508)

Total shareholders' equity 

69,703


82,347





Total liabilities and shareholders' equity 

$            74,752


$            88,370









(1) Aggregate cash, cash equivalents and short-term marketable securities was $56,784 and $67,738 at

     June 30, 2018 and December 31, 2017, respectively.

 

Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)






Six Month Information


June 30,


June 30,


2018


2017

Cash flows from operating activities:




  Net loss

$    (16,150)


$    (13,161)

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




    Depreciation, amortization and write-off of property and equipment

764


664

    Amortization and write-off of intangibles

287


486

    Stock-based compensation

3,480


3,093

  Changes in operating assets and liabilities:




      Trade accounts receivable

2,561


1,181

      Other current assets

210


(163)

      Other assets

(35)


50

      Accounts payable and other accrued liabilities

(248)


336

      Deferred revenue

(658)


(835)

        Net cash used in operating activities

(9,789)


(8,349)





Cash flows from investing activities:




    Purchase of property and equipment

(557)


(938)

    Capitalized patent costs

(402)


(406)

    Maturity of marketable securities

20,839


28,636

    Purchase of marketable securities

(15,637)


(13,261)

        Net cash provided by investing activities

4,243


14,031





Cash flows from financing activities:




    Issuance of common stock, net of issuance costs

-


17,702

    Exercise of stock options

914


568

    Purchase of common stock

(1,120)


(1,348)

        Net cash provided by (used in) financing activities

(206)


16,922





        Net increase (decrease) in cash and cash equivalents (2)

$    (5,752)


$    22,604









     Cash, cash equivalents and marketable securities at beginning of period

67,738


60,526

     Cash, cash equivalents and marketable securities at end of period

56,784


67,755

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

$    (10,954)


$    7,229









 

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SOURCE Digimarc Corporation

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