Digimarc Reports Third Quarter 2016 Financial Results

Digimarc Reports Third Quarter 2016 Financial Results

PR Newswire

BEAVERTON, Ore., Nov. 2, 2016 /PRNewswire/ -- Digimarc Corporation (NASDAQ: DMRC) reported financial results for the third quarter ended September 30, 2016.

Digimarc The Barcode of Everything(TM)

Third Quarter 2016 Financial Results
Revenue for the third quarter of 2016 totaled $5.6 million compared to $5.4 million in the same quarter a year-ago. The increase was primarily due to higher service revenue.

Operating expenses for the third quarter of 2016 totaled $8.7 million compared to $7.8 million in the third quarter of 2015. The increase was primarily due to higher investments in sales and marketing as the company continues to address important opportunities in market development and delivery for Digimarc Discover and Digimarc Barcode.

Operating loss for the third quarter of 2016 totaled $5.3 million compared to an operating loss of $4.5 million in the same quarter a year-ago. The higher operating loss was primarily due to higher operating expenses. 

Net loss for the third quarter of 2016 totaled $5.2 million or $(0.55) per diluted share, compared to a net loss of $4.5 million or $(0.54) per diluted share in the third quarter of 2015.

At quarter-end, cash, cash equivalents and marketable securities totaled $66.3 million, compared to $31.9 million at June 30, 2016. The increase was due to proceeds from the sale of common stock in an underwritten public offering completed in August 2016.

Conference Call
Digimarc will hold a conference call later today (Wednesday, November 2, 2016) 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: 8340839

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

About Digimarc
Digimarc Corporation (NASDAQ: DMRC), based in Beaverton, Oregon, is the inventor of Digimarc Discover® software and the imperceptible Digimarc Barcode for automatically identifying and interacting with virtually any media. Digimarc Discover software enables industrial scanners, smartphones, tablets and other computer interfaces to reliably, efficiently and economically identify traditional barcoded items, along with many other media objects. Digimarc Barcodes are imperceptible to people and do all that visible barcodes do, but perform better. They can be applied to virtually all forms of media. These remarkable capabilities have allowed Digimarc and its business partners to supply a wide range of patented consumer engagement, media management and security solutions across multiple consumer and government industry sectors. Digimarc owns an extensive intellectual property portfolio, with patents in digital watermarking, content identification and management, media object discovery, and intuitive computing more generally. For more information and the latest news, please visit www.digimarc.com and follow on Twitter at @Digimarc.

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, 2015 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,


2016


2015


2016


2015

Revenue:








   Service

$              3,252


$              3,072


$              9,650


$              9,808

   Subscription

1,417


1,561


4,374


4,947

   License

907


753


2,589


2,418

      Total revenue

5,576


5,386


16,613


17,173









Cost of revenue:








   Service

1,455


1,204


4,288


4,279

   Subscription

600


808


1,856


2,428

   License

107


86


302


256

      Total cost of revenue

2,162


2,098


6,446


6,963









Gross profit:








   Service

1,797


1,868


5,362


5,529

   Subscription

817


753


2,518


2,519

   License

800


667


2,287


2,162

      Total gross profit

3,414


3,288


10,167


10,210









Gross margin:








   Service

55%


61%


56%


56%

   Subscription

58%


48%


58%


51%

   License

88%


89%


88%


89%

      Percentage of gross profit to total revenue

61%


61%


61%


59%









Operating expenses:








   Sales and marketing

2,945


2,309


8,756


6,497

   Research, development and engineering

3,291


3,236


9,975


9,345

   General and administrative

2,039


1,847


6,185


6,033

   Intellectual property

394


367


1,290


1,025

      Total operating expenses

8,669


7,759


26,206


22,900









Operating loss

(5,255)


(4,471)


(16,039)


(12,690)









Other income, net

69


29


157


84









Loss before income taxes

(5,186)


(4,442)


(15,882)


(12,606)









Provision for income taxes

(12)


(27)


(34)


(25)

Net loss

$             (5,198)


$             (4,469)


$           (15,916)


$           (12,631)









Earnings (loss) per common share:








Loss per common share - basic

$               (0.55)


$               (0.54)


$               (1.79)


$               (1.56)

Loss per common share - diluted

$               (0.55)


$               (0.54)


$               (1.79)


$               (1.56)

   Weighted average common shares outstanding - basic

9,506


8,309


8,878


8,101

   Weighted average common shares outstanding - diluted

9,506


8,309


8,878


8,101









 

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)










September 30,


December 31,


2016


2015

Assets




Current assets:




Cash and cash equivalents (1)

$            24,647


$              3,160

Marketable securities (1)

29,819


33,027

Trade accounts receivable, net 

2,521


4,616

Other current assets 

1,924


1,487

Total current assets 

58,911


42,290

Marketable securities (1)

11,842


2,999

Property and equipment, net 

3,443


3,010

Intangibles, net 

6,459


6,613

Goodwill

1,114


1,114

Other assets

394


338

Total assets 

$            82,163


$            56,364





Liabilities and Shareholders' Equity




Current liabilities:




Accounts payable and other accrued liabilities

$              1,487


$              1,657

Deferred revenue

1,605


3,023

Total current liabilities 

3,092


4,680

Deferred rent and other long-term liabilities

949


226

Total liabilities 

4,041


4,906





Commitments and contingencies








Shareholders' equity:




   Preferred stock

50


50

   Common stock

11


9

   Additional paid-in capital

120,017


77,439

   Accumulated deficit

(41,956)


(26,040)

Total shareholders' equity 

78,122


51,458





Total liabilities and shareholders' equity 

$            82,163


$            56,364









(1)

Aggregate cash, cash equivalents, short- and long-term marketable securities was $66,308 and $39,186 at September 30, 2016 and December 31, 2015, respectively.

 

Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)






Nine Month Information


September 30,


September 30,


2016


2015

Cash flows from operating activities:




  Net loss

$           (15,916)


$           (12,631)

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




    Depreciation and amortization and write-off of property and equipment

1,016


930

    Amortization and write-off of intangibles

876


794

    Change in allowance for doubtful accounts

-


16

    Stock-based compensation

4,162


3,857

  Changes in operating assets and liabilities:




      Trade accounts receivable

2,095


1,842

      Other current assets

(437)


(251)

      Other assets

(56)


66

      Accounts payable and other accrued liabilities

680


280

      Deferred revenue

(1,407)


(1,929)

        Net cash used in operating activities

(8,987)


(7,026)





Cash flows from investing activities:




    Purchase of property and equipment

(1,565)


(747)

    Capitalized patent costs

(623)


(646)

    Maturity of marketable securities

35,182


27,151

    Purchase of marketable securities

(40,817)


(25,786)

        Net cash used in investing activities

(7,823)


(28)





Cash flows from financing activities:




    Issuance of common stock, net of issuance costs

39,700


12,896

    Exercise of stock options

476


1,321

    Purchase of common stock

(1,879)


(1,833)

        Net cash provided by financing activities

38,297


12,384





        Net increase in cash and cash equivalents (2)

$            21,487


$              5,330









     Cash, cash equivalents and marketable securities at beginning of period

39,186


39,072

     Cash, cash equivalents and marketable securities at end of period

66,308


43,037

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

$            27,122


$              3,965









 

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SOURCE Digimarc Corporation

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