Attached files
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| 8-K - FORM 8-K - Digimarc CORP | d247013d8k.htm |
Exhibit 99.1
Company Contacts:
Michael McConnell
Chief Financial Officer
503-469-4652
mmcconnell@digimarc.com
Scott Liolios or Matt Glover
Liolios Group, Inc.
Investor Relations for Digimarc
949-574-3860
info@liolios.com
FOR IMMEDIATE RELEASE
Digimarc Reports Third Quarter 2011 Financial Results
Beaverton, Ore. — October 25, 2011 — Digimarc Corporation (NASDAQ: DMRC) reported financial results for the third quarter ended September 30, 2011.
Revenues for the third quarter of 2011 increased 63% to $8.6 million from $5.2 million in the same quarter a year ago. The increase was primarily due to a 120% increase in license revenues.
Operating income for the third quarter of 2011 totaled $1.4 million, an improvement of $2.2 million from an operating loss of $0.8 million in the same quarter a year ago. The increase primarily reflected higher licensing revenues, net of higher product development and marketing expenses associated with the launch of Digimarc Discover, as well as litigation expenses associated with the Verance dispute.
Net income for the third quarter of 2011 totaled $0.6 million or $0.09 per diluted share, up by $2.1 million or $0.30 per diluted share over a net loss of $1.5 million or $(0.21) per diluted share in the same quarter a year ago. Q3 2011 net income also included $0.7 million for Digimarc's share of the net loss from its research and development joint ventures with Nielsen, up from $0.6 million for the company’s share of the net loss last year.
At September 30, 2011, cash and cash equivalents and marketable securities totaled $31.2 million, down from $33.7 million at June 30, 2011, reflecting nearly $4 million of stock repurchases during the quarter.
Conference Call
Digimarc will hold a conference call later today (Tuesday, October 25, 2011) to discuss third quarter 2011. Chairman and CEO, Bruce Davis and CFO, Mike McConnell 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 call will be simulcast via a link available on Digimarc’s home page at www.digimarc.com, and will be available for replay until November 8, 2011. Thereafter, the webcast will be archived at www.digimarc.com/investors/events.asp.
About Digimarc
Digimarc Corporation (NASDAQ: DMRC), based in Beaverton, Oregon, is a leading innovator and provider of enabling technologies that create digital identities for all forms of media and many everyday objects. The embedded digital IDs are imperceptible to humans, but not to computers, networks and devices like mobile phones, which can now use cameras and microphones as sensory inputs to “see, hear and understand” the world around them within the context of their environment. Digimarc has built an extensive intellectual property portfolio with patents in digital watermarking, content identification and management, media and object discovery to enable ubiquitous computing, and related technologies. Digimarc develops solutions, licenses its intellectual property, and provides development services to business partners across a range of industries. For more information, please visit www.digimarc.com.
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 Digimarc’s investment in marketing and research and development associated with the launch of Digimarc Discover, increases in license revenues, 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, 2010 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
Income Statement Information
(in thousands, except per share amounts)
(Unaudited)
| Three-Month Information | Nine-Month Information | |||||||||||||||
| September
30, 2011 |
September
30, 2010 |
September
30, 2011 |
September
30, 2010 |
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| Revenue: |
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| Service |
$ | 3,108 | $ | 2,761 | $ | 9,342 | $ | 9,193 | ||||||||
| License & subscription |
5,442 | 2,476 | 17,772 | 11,484 | ||||||||||||
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| Total revenue |
8,550 | 5,237 | 27,114 | 20,677 | ||||||||||||
| Cost of revenue: |
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| Service |
1,665 | 1,410 | 4,863 | 4,693 | ||||||||||||
| License & subscription |
77 | 59 | 218 | 173 | ||||||||||||
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| Total cost of revenue |
1,742 | 1,469 | 5,081 | 4,866 | ||||||||||||
| Gross profit: |
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| Service |
1,443 | 1,351 | 4,479 | 4,500 | ||||||||||||
| License & subscription |
5,365 | 2,417 | 17,554 | 11,311 | ||||||||||||
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| Total gross profit |
6,808 | 3,768 | 22,033 | 15,811 | ||||||||||||
| Percentage of gross profit to revenues: |
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| Service |
46 | % | 49 | % | 48 | % | 49 | % | ||||||||
| License & subscription |
99 | % | 98 | % | 99 | % | 98 | % | ||||||||
| Percentage of gross profit to total revenue |
80 | % | 72 | % | 81 | % | 76 | % | ||||||||
| Operating expenses: |
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| Sales and marketing |
1,166 | 953 | 3,285 | 2,453 | ||||||||||||
| Research, development and engineering |
1,958 | 1,471 | 5,617 | 4,051 | ||||||||||||
| General and administrative |
2,000 | 1,842 | 7,117 | 5,414 | ||||||||||||
| Intellectual property |
259 | 315 | 826 | 891 | ||||||||||||
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| Total operating expenses |
5,383 | 4,581 | 16,845 | 12,809 | ||||||||||||
| Operating income (loss) |
1,425 | (813 | ) | 5,188 | 3,002 | |||||||||||
| Net loss from joint ventures |
(695 | ) | (558 | ) | (1,930 | ) | (1,576 | ) | ||||||||
| Interest income, net |
43 | 62 | 149 | 184 | ||||||||||||
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| Income (loss) before provision for income taxes |
773 | (1,309 | ) | 3,407 | 1,610 | |||||||||||
| (Provision) benefit for income taxes |
(134 | ) | (151 | ) | 1,796 | (190 | ) | |||||||||
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| Net income (loss) |
$ | 639 | $ | (1,460 | ) | $ | 5,203 | $ | 1,420 | |||||||
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| Earnings (loss) per share: |
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| Net income per share—basic |
$ | 0.10 | $ | (0.21 | ) | $ | 0.77 | $ | 0.20 | |||||||
| Net income per share—diluted |
$ | 0.09 | $ | (0.21 | ) | $ | 0.71 | $ | 0.19 | |||||||
| Weighted average shares outstanding—basic |
6,706 | 7,098 | 6,755 | 7,097 | ||||||||||||
| Weighted average shares outstanding—diluted |
7,344 | 7,098 | 7,366 | 7,497 | ||||||||||||
Digimarc Corporation
Balance Sheet Information
(in thousands)
(Unaudited)
| September
30, 2011 |
December
31, 2010 |
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| Assets |
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| Current assets: |
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| Cash and cash equivalents (1) |
$ | 2,119 | $ | 6,340 | ||||
| Marketable securities (1) |
24,414 | 28,441 | ||||||
| Trade accounts receivable, net |
3,420 | 3,481 | ||||||
| Other current assets |
1,486 | 1,345 | ||||||
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| Total current assets |
31,439 | 39,607 | ||||||
| Marketable securities (1) |
4,683 | 11,163 | ||||||
| Property and equipment, net |
1,468 | 1,330 | ||||||
| Intangibles, net |
2,661 | 2,174 | ||||||
| Investments in joint ventures |
1,199 | 1,029 | ||||||
| Deferred tax assets |
2,361 | — | ||||||
| Other assets |
428 | 462 | ||||||
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| Total assets |
$ | 44,239 | $ | 55,765 | ||||
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| Liabilities and Shareholders' Equity |
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| Current liabilities: |
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| Accounts payable and other accrued liabilities |
$ | 1,631 | $ | 1,519 | ||||
| Deferred revenue |
1,928 | 2,562 | ||||||
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| Total current liabilities |
3,559 | 4,081 | ||||||
| Long-term liabilities |
479 | 525 | ||||||
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| Total liabilities |
4,038 | 4,606 | ||||||
| Commitments and contingencies |
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| Shareholders’ equity: |
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| Preferred stock |
50 | 50 | ||||||
| Common stock |
7 | 7 | ||||||
| Additional paid-in capital |
33,448 | 49,609 | ||||||
| Retained earnings |
6,696 | 1,493 | ||||||
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| Total shareholders’ equity |
40,201 | 51,159 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 44,239 | $ | 55,765 | ||||
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| (1) | Aggregate cash, cash equivalents, short- and long-term marketable securities was $31,216 and $45,944 at September 30, 2011 and December 31, 2010. |
Digimarc Corporation
Cash Flow Information
(in thousands)
(Unaudited)
| Three-Month Information | Nine-Month Information | |||||||||||||||
| September
30, 2011 |
September
30, 2010 |
September
30, 2011 |
September
30, 2010 |
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| Cash flows from operating activities: |
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| Net income (loss) |
$ | 639 | $ | (1,460 | ) | $ | 5,203 | $ | 1,420 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
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| Depreciation and amortization, property and equipment |
165 | 135 | 474 | 430 | ||||||||||||
| Amortization, intangibles |
32 | 22 | 86 | 54 | ||||||||||||
| Stock-based compensation |
1,057 | 782 | 3,038 | 2,287 | ||||||||||||
| Net loss from joint ventures |
695 | 558 | 1,930 | 1,576 | ||||||||||||
| Deferred income tax benefit |
(200 | ) | — | (2,633 | ) | — | ||||||||||
| Tax benefit from stock-based awards |
291 | — | 792 | — | ||||||||||||
| Excess tax benefits from stock-based compensation |
(291 | ) | — | (792 | ) | — | ||||||||||
| Changes in operating assets and liabilities: |
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| Trade accounts receivable, net |
(574 | ) | (708 | ) | 61 | 469 | ||||||||||
| Other current assets |
(165 | ) | 35 | 131 | (111 | ) | ||||||||||
| Other assets, net |
30 | (15 | ) | 34 | (35 | ) | ||||||||||
| Accounts payable and other accrued liabilities |
118 | 456 | 73 | (63 | ) | |||||||||||
| Deferred revenue |
(229 | ) | 166 | (641 | ) | (180 | ) | |||||||||
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| Net cash provided by (used in) operating activities |
1,568 | (29 | ) | 7,756 | 5,847 | |||||||||||
| Cash flows from investing activities: |
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| Purchase of property and equipment |
(255 | ) | (107 | ) | (612 | ) | (236 | ) | ||||||||
| Capitalized patent costs |
(232 | ) | (277 | ) | (525 | ) | (811 | ) | ||||||||
| Investments in joint ventures |
(700 | ) | (700 | ) | (2,100 | ) | (2,100 | ) | ||||||||
| Sale or maturity of marketable securities |
6,536 | 34,251 | 60,304 | 78,965 | ||||||||||||
| Purchase of marketable securities |
(6,674 | ) | (33,687 | ) | (49,797 | ) | (83,256 | ) | ||||||||
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| Net cash provided by (used in) investing activities |
(1,325 | ) | (520 | ) | 7,270 | (7,438 | ) | |||||||||
| Cash flows from financing activities: |
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| Issuance of common stock |
822 | — | 1,555 | 8 | ||||||||||||
| Purchase of common stock |
(3,947 | ) | (15 | ) | (21,594 | ) | (40 | ) | ||||||||
| Excess tax benefit from stock-based awards |
291 | — | 792 | — | ||||||||||||
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| Net cash used in financing activities |
(2,834 | ) | (15 | ) | (19,247 | ) | (32 | ) | ||||||||
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| Net decrease in cash and cash equivalents (2) |
$ | (2,591 | ) | $ | (564 | ) | $ | (4,221 | ) | $ | (1,623 | ) | ||||
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| Cash equivalents and marketable securities at beginning of period |
33,669 | 46,582 | 45,944 | 42,786 | ||||||||||||
| Cash equivalents and marketable securities at end of period |
31,216 | 45,454 | 31,216 | 45,454 | ||||||||||||
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| (2) Net increase (decrease) in cash, cash equivalents and marketable securities |
$ | (2,453 | ) | $ | (1,128 | ) | $ | (14,728 | ) | $ | 2,668 | |||||
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