BEAVERTON, Ore., Oct. 28, 2020 /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, 2020.
Third quarter 2020 financial results
Revenue for the
third quarter of 2020 was $5.8
million, even with the third quarter of 2019. Service
revenue increased six percent, reflecting growth in services to
Government customers. Subscription revenue decreased ten percent,
reflecting the impact of a renegotiated contract with a Retail
supplier partner in the first quarter of 2020.
Operating expenses for the third quarter of 2020 increased two
percent to $12.2 million compared to
$11.9 million in the same quarter a
year ago. The increased costs resulted from $0.8 million of non-recurring severance costs
related to our restructuring plan implemented in July 2020, partially offset by lower travel,
consulting and other costs. Excluding the severance costs,
operating expenses would have been down five percent.
Operating loss for the third quarter of 2020 increased four
percent to $8.4 million compared to
$8.0 million in the third quarter of
2019, due to the non-recurring severance costs noted above.
Net loss for the third quarter of 2020 increased eight percent
to $8.4 million or $(0.68) per diluted share compared to a net loss
of $7.8 million or $(0.65) per diluted share in the same quarter a
year ago. The non-recurring severance costs of $0.8 million incurred during the third quarter of
2020 accounted for $(0.07) per
diluted share of the net loss.
TCM|Strategic Partners entered into an agreement in September to
invest $53.5 million in Digimarc.
$36.5 million of cash proceeds were received prior to quarter
end from the issuance and sale of common stock pursuant to the
investment. At quarter-end, cash, cash equivalents and marketable
securities totaled $62.7 million
compared to $36.8 million at
December 31, 2019. The remaining
$17.0 million of cash proceeds was
received on October 1, 2020, when the
convertible preferred stock was issued. For more details regarding
the investment, see
https://www.digimarc.com/about/news-events/press-releases/2020/09/29/tcm-strategic-partners-invests-$53.5-million-in-digimarc
Conference call
Digimarc will hold a conference call today (Wednesday, October 28, 2020) to discuss these
results and provide an update on market conditions and execution of
strategy. Chairman and CEO Bruce
Davis, CFO Charles Beck and
EVP Bob Chamness 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 call in via telephone, please dial the
number below at least five minutes before the scheduled start
time:
Toll-Free Number: 866-562-9934
International Number: 706-679-0638
Conference ID: 4997586
If you have any difficulty connecting with the conference call,
please contact Digimarc investor relations at +1 503-469-4762.
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 identification 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
Except for 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 regulatory factors. More detailed information about
risk factors that may affect actual results are outlined in the
company's Form 10-K for the year ended December 31, 2019, 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,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue:
|
|
|
|
|
|
|
|
|
Service
|
|
$
3,352
|
|
$
3,160
|
|
$
10,982
|
|
$
10,549
|
Subscription
|
|
2,399
|
|
2,668
|
|
7,455
|
|
7,119
|
Total
revenue
|
|
5,751
|
|
5,828
|
|
18,437
|
|
17,668
|
|
|
|
|
|
|
|
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
Service
|
|
1,406
|
|
1,409
|
|
4,691
|
|
4,730
|
Subscription
|
|
522
|
|
509
|
|
1,548
|
|
1,507
|
Total cost of
revenue
|
|
1,928
|
|
1,918
|
|
6,239
|
|
6,237
|
|
|
|
|
|
|
|
|
|
Gross
profit:
|
|
|
|
|
|
|
|
|
Service
|
|
1,946
|
|
1,751
|
|
6,291
|
|
5,819
|
Subscription
|
|
1,877
|
|
2,159
|
|
5,907
|
|
5,612
|
Total gross
profit
|
|
3,823
|
|
3,910
|
|
12,198
|
|
11,431
|
|
|
|
|
|
|
|
|
|
Gross
margin:
|
|
|
|
|
|
|
|
|
Service
|
|
58%
|
|
55%
|
|
57%
|
|
55%
|
Subscription
|
|
78%
|
|
81%
|
|
79%
|
|
79%
|
Percentage of gross
profit to total revenue
|
|
66%
|
|
67%
|
|
66%
|
|
65%
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
4,538
|
|
4,839
|
|
14,417
|
|
14,876
|
Research, development
and engineering
|
|
4,662
|
|
4,105
|
|
13,303
|
|
12,124
|
General and
administrative
|
|
3,009
|
|
2,998
|
|
9,457
|
|
9,287
|
Total operating
expenses
|
|
12,209
|
|
11,942
|
|
37,177
|
|
36,287
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(8,386)
|
|
(8,032)
|
|
(24,979)
|
|
(24,856)
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
36
|
|
259
|
|
257
|
|
727
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(8,350)
|
|
(7,773)
|
|
(24,722)
|
|
(24,129)
|
|
|
|
|
|
|
|
|
|
Benefit
(provision) for income taxes
|
|
(2)
|
|
12
|
|
1
|
|
(28)
|
Net
loss
|
|
$
(8,352)
|
|
$
(7,761)
|
|
$
(24,721)
|
|
$
(24,157)
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share:
|
|
|
|
|
|
|
|
|
Loss per common
share - basic
|
|
$
(0.68)
|
|
$
(0.65)
|
|
$
(2.04)
|
|
$
(2.07)
|
Loss per common
share - diluted
|
|
$
(0.68)
|
|
$
(0.65)
|
|
$
(2.04)
|
|
$
(2.07)
|
Weighted average
common shares outstanding - basic
|
|
12,241
|
|
11,924
|
|
12,129
|
|
11,693
|
Weighted average
common shares outstanding - diluted
|
|
12,241
|
|
11,924
|
|
12,129
|
|
11,693
|
Digimarc
Corporation
|
Consolidated Balance
Sheet Information
|
(in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
December
31,
|
|
|
2020
|
|
2019
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents(1)
|
|
$
45,461
|
|
$
11,213
|
Marketable
securities(1)
|
|
17,194
|
|
25,604
|
Trade accounts
receivable, net
|
|
3,022
|
|
4,021
|
Other current
assets
|
|
2,396
|
|
2,456
|
Total current
assets
|
|
68,073
|
|
43,294
|
Property and
equipment, net
|
|
3,361
|
|
3,650
|
Intangibles,
net
|
|
6,604
|
|
6,670
|
Goodwill
|
|
1,114
|
|
1,114
|
Other
assets
|
|
2,353
|
|
2,660
|
Total
assets
|
|
$
81,505
|
|
$
57,388
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
other accrued liabilities
|
|
$
2,469
|
|
$
2,272
|
Note payable,
current
|
|
3,096
|
|
—
|
Deferred
revenue
|
|
2,098
|
|
3,172
|
Total current
liabilities
|
|
7,663
|
|
5,444
|
Lease liability and
other long-term liabilities
|
|
2,712
|
|
2,494
|
Note payable,
long-term
|
|
1,957
|
|
—
|
Total
liabilities
|
|
12,332
|
|
7,938
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Preferred
stock
|
|
50
|
|
50
|
Common
stock
|
|
15
|
|
12
|
Additional paid-in
capital
|
|
232,544
|
|
188,103
|
Accumulated
deficit
|
|
(163,436)
|
|
(138,715)
|
Total
shareholders' equity
|
|
69,173
|
|
49,450
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
$
81,505
|
|
$
57,388
|
|
|
|
|
|
|
|
|
|
|
(1) Aggregate cash,
cash equivalents and marketable securities was $62,655 and $36,817
at
September 30, 2020 and December 31, 2019, respectively.
|
Digimarc
Corporation
|
Consolidated Cash
Flow Information
|
(in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
Nine Month
Information
|
|
|
September 30,
|
|
September 30,
|
|
|
2020
|
|
2019
|
Cash flows from
operating activities:
|
|
|
|
|
Net loss
|
|
(24,721)
|
|
$
(24,157)
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Depreciation,
amortization and write-off of property and equipment
|
|
1,112
|
|
1,098
|
Amortization and
write-off of intangibles
|
|
612
|
|
533
|
Stock-based
compensation
|
|
7,149
|
|
6,094
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Trade accounts
receivable
|
|
999
|
|
318
|
Other current
assets
|
|
60
|
|
(782)
|
Other
assets
|
|
307
|
|
263
|
Accounts payable and
other accrued liabilities
|
|
146
|
|
1,086
|
Deferred
revenue
|
|
(1,092)
|
|
(735)
|
Lease liability and
other long-term liabilities
|
|
236
|
|
(481)
|
Net cash used in
operating activities
|
|
(15,192)
|
|
(16,763)
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Purchase of property
and equipment
|
|
(694)
|
|
(692)
|
Capitalized patent
costs
|
|
(478)
|
|
(524)
|
Maturity of
marketable securities
|
|
30,598
|
|
27,997
|
Purchase of
marketable securities
|
|
(22,188)
|
|
(38,037)
|
Net cash provided by
(used in) investing activities
|
|
7,238
|
|
(11,256)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Issuance of common
stock, net of issuance costs
|
|
38,603
|
|
19,615
|
Proceeds from note
payable
|
|
5,032
|
|
—
|
Exercise of stock
options
|
|
135
|
|
293
|
Purchase of common
stock
|
|
(1,568)
|
|
(2,753)
|
Net cash provided by
financing activities
|
|
42,202
|
|
17,155
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents(2)
|
|
$
34,248
|
|
$
(10,864)
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents and marketable securities at beginning of
period
|
|
36,817
|
|
43,656
|
Cash, cash
equivalents and marketable securities at end of period
|
|
62,655
|
|
42,832
|
(2) Net increase
(decrease) in cash, cash equivalents and marketable
securities
|
|
$
25,838
|
|
$
(824)
|
View original content to download
multimedia:http://www.prnewswire.com/news-releases/digimarc-reports-third-quarter-2020-financial-results-301161125.html
SOURCE Digimarc Corporation