Digimarc Reports Second Quarter 2020 Financial Results

BEAVERTON, Ore., July 29, 2020 /PRNewswire/ — Digimarc Corporation (NASDAQ: DMRC), creator of the Digimarc Platform for digital identification and detection, reported…

BEAVERTON, Ore., July 29, 2020 /PRNewswire/ — Digimarc Corporation (NASDAQ: DMRC), creator of the Digimarc Platform for digital identification and detection, reported financial results for the second quarter ended June 30, 2020.

Second quarter 2020 financial results

Revenue for the second quarter of 2020 increased five percent to $6.5 million compared to $6.2 million in the second quarter of 2019. The increase in revenue was primarily a result of growth in service revenue from Government and Retail customers.

Operating expenses for the second quarter of 2020 decreased two percent to $11.9 million compared to $12.1 million in the same quarter a year ago. The primary contributors to the decrease in operating expenses were lower travel, consulting and marketing costs.

Operating loss for the second quarter of 2020 decreased eight percent to $7.5 million compared to $8.2 million in the second quarter of 2019, due to higher revenue and lower operating expenses.

Net loss for the second quarter of 2020 decreased six percent to $7.5 million or $(0.62) per diluted share compared to a net loss of $7.9 million or $(0.68) per diluted share in the same quarter a year ago.

At quarter-end, cash, cash equivalents and marketable securities totaled $30.5 million compared to $36.8 million at December 31, 2019. The change in cash and investments during the second quarter was nominal due to the proceeds from the Paycheck Protection Program loan, higher revenues and lower expenses.

Conference call

Digimarc will hold a conference call today (Wednesday, July 29, 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 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: 7779319

If you have any difficulty connecting with the conference call, please contact Digimarc investor relations at 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


Six Month Information


June 30,


June 30,


June 30,


June 30,


2020


2019


2020


2019

Revenue:








   Service

$  3,892


$  3,575


$   7,630


$   7,389

   Subscription

2,605


2,605


5,056


4,451

      Total revenue

6,497


6,180


12,686


11,840









Cost of revenue:








   Service

1,601


1,676


3,285


3,321

   Subscription

512


509


1,026


998

      Total cost of revenue

2,113


2,185


4,311


4,319









Gross profit:








   Service

2,291


1,899


4,345


4,068

   Subscription

2,093


2,096


4,030


3,453

      Total gross profit

4,384


3,995


8,375


7,521









Gross margin:








   Service

59%


53%


57%


55%

   Subscription

80%


80%


80%


78%

      Percentage of gross profit to total revenue

67%


65%


66%


64%









Operating expenses:








   Sales and marketing

4,633


5,087


9,879


10,037

   Research, development and engineering

4,208


3,981


8,641


8,019

   General and administrative

3,081


3,079


6,448


6,289

      Total operating expenses

11,922


12,147


24,968


24,345









Operating loss

(7,538)


(8,152)


(16,593)


(16,824)









Other income, net

79


231


221


468









Loss before income taxes

(7,459)


(7,921)


(16,372)


(16,356)









Benefit (provision) for income taxes

(2)


(12)


3


(40)

Net loss

$ (7,461)


$ (7,933)


$(16,369)


$(16,396)









Earnings (loss) per common share:








Loss per common share – basic

$  (0.62)


$  (0.68)


$    (1.36)


$    (1.42)

Loss per common share – diluted

$  (0.62)


$  (0.68)


$    (1.36)


$    (1.42)

   Weighted average common shares outstanding – basic

12,108


11,665


12,073


11,576

   Weighted average common shares outstanding – diluted

12,108


11,665


12,073


11,576

 

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)










June 30,


December 31,


2020


2019

Assets




Current assets:




Cash and cash equivalents (1)

$ 11,934


$         11,213

Marketable securities (1)

18,559


25,604

Trade accounts receivable, net 

3,576


4,021

Other current assets 

2,095


2,456

Total current assets 

36,164


43,294

Property and equipment, net 

3,359


3,650

Intangibles, net 

6,611


6,670

Goodwill

1,114


1,114

Other assets

2,342


2,660

Total assets 

$ 49,590


$         57,388





Liabilities and Shareholders’ Equity




Current liabilities:




Accounts payable and other accrued liabilities

$   2,083


$          2,272

Deferred revenue

2,678


3,172

Note payable, current

2,245


Total current liabilities 

7,006


5,444

Note payable, long-term

2,795


Lease liability and other long-term liabilities

2,512


2,494

Total liabilities 

12,313


7,938





Commitments and contingencies








Shareholders’ equity:




   Preferred stock

50


50

   Common stock

13


12

   Additional paid-in capital

192,298


188,103

   Accumulated deficit

(155,084)


(138,715)

Total shareholders’ equity 

37,277


49,450





Total liabilities and shareholders’ equity 

$ 49,590


$         57,388



(1)

Aggregate cash, cash equivalents and short-term marketable securities was $30,493 and $36,817 at June 30, 2020 and December 31, 2019, respectively.

 

Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)






Six Month Information


June 30,


June 30,


2020


2019

Cash flows from operating activities:




  Net loss

$(16,369)


$(16,396)

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




    Depreciation, amortization and write-off of property and equipment

745


747

    Amortization and write-off of intangibles

431


372

    Stock-based compensation

4,522


4,053

  Changes in operating assets and liabilities:




      Trade accounts receivable

445


(351)

      Other current assets

361


(40)

      Other assets

318


77

      Accounts payable and other accrued liabilities

(155)


1,132

      Deferred revenue

(500)


(244)

      Lease liability and other long-term liabilities

24


(325)

        Net cash used in operating activities

(10,178)


(10,975)





Cash flows from investing activities:




    Purchase of property and equipment

(456)


(404)

    Capitalized patent costs

(311)


(359)

    Maturity of marketable securities

26,535


14,671

    Purchase of marketable securities

(19,490)


(15,085)

        Net cash provided by (used in) investing activities

6,278


(1,177)





Cash flows from financing activities:




    Proceeds from note payable

5,032


    Issuance of common stock, net of issuance costs

574


19,615

    Exercise of stock options

135


293

    Purchase of common stock

(1,120)


(1,868)

        Net cash provided by financing activities

4,621


18,040





        Net increase in cash and cash equivalents (2)

$      721


$   5,888









     Cash, cash equivalents and marketable securities at beginning of period

36,817


43,656

     Cash, cash equivalents and marketable securities at end of period

30,493


49,958

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

$  (6,324)


$   6,302

 

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SOURCE Digimarc Corporation