Attached files
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| 8-K - 8-K - Digimarc CORP | d38486d8k.htm |
Exhibit 99.1
Digimarc Reports Third Quarter 2015 Financial Results
Beaverton, Ore. — October 28, 2015 — Digimarc Corporation (NASDAQ: DMRC) reported financial results for the third quarter ended September 30, 2015.
Revenue for the third quarter of 2015 totaled $5.4 million compared to revenue of $6.9 million in the same quarter a year-ago. The decrease reflects $1.6 million of lower license revenue due to the end of payments from Verance Corporation in the fourth quarter of 2014, partially offset by growth in subscription revenue.
Operating expenses for the third quarter of 2015 decreased 4% to $7.8 million from $8.0 million in the same quarter a year-ago. The decrease was due to lower spending in research, development and engineering and general and administrative, partially offset by higher investment in sales and marketing related to market development and delivery of Digimarc Discover and Barcode.
Operating loss for the third quarter of 2015 totaled $4.5 million compared to an operating loss of $3.2 million in the same quarter a year-ago. The higher operating loss is due to lower license revenue.
Net loss for the third quarter of 2015 totaled $4.5 million or $(0.54) per diluted share, compared to a net loss of $2.0 million or $(0.28) per diluted share in the third quarter of 2014. The higher net loss is largely due to $1.6 million lower license revenue in the third quarter of this year and $1.3 million of income tax benefits recognized in the third quarter of last year.
Cash, cash equivalents and marketable securities totaled $43.0 million at September 30, 2015, compared to $34.0 million at June 30, 2015. The increase reflects the sale of 341,949 shares of common stock during the quarter, which generated net proceeds of $12.9 million, less cash used in operations of $2.7 million.
Conference Call
Digimarc will hold a conference call later today (Wednesday, October 28, 2015) 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 at www.digimarc.com/investors/investor-events-and-webcasts.
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: 706-634-1493
Conference ID: 27179683
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 the Digimarc Barcode. The Digimarc Barcode 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 humans and do all that visible barcodes do, but even better, and 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. Digimarc develops and delivers solutions, licenses its intellectual property, and provides development services to business partners across a range of industries. For more information and the latest news, please visit www.digimarc.com and follow us on Twitter @DigimarcCorp.
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 growth in subscription revenue, lower license revenue, lower spending in research, development and engineering and general and administrative and higher investment in sales and marketing, 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 will be set forth in the company’s Form 10-K for the year ended December 31, 2014 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.
Company Contacts:
Charles Beck
Chief Financial Officer
503-469-4721
Charles.Beck@digimarc.com
Matt Glover
Liolios Group, Inc.
Investor Relations for Digimarc
949-574-3860
DMRC@liolios.com
Digimarc Corporation
Consolidated Income Statement Information
(in thousands, except per share amounts)
(Unaudited)
| Three-Month Information | Nine-Month Information | |||||||||||||||
| September 30, 2015 |
September 30, 2014 |
September 30, 2015 |
September 30, 2014 |
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| Revenue: |
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| Service |
$ | 3,072 | $ | 3,155 | $ | 9,808 | $ | 8,859 | ||||||||
| Subscription |
1,561 | 1,452 | 4,947 | 4,360 | ||||||||||||
| License |
753 | 2,320 | 2,418 | 6,576 | ||||||||||||
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| Total revenue |
5,386 | 6,927 | 17,173 | 19,795 | ||||||||||||
| Cost of revenue: |
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| Service |
1,204 | 1,224 | 4,279 | 3,807 | ||||||||||||
| Subscription |
808 | 812 | 2,428 | 2,160 | ||||||||||||
| License |
86 | 84 | 256 | 250 | ||||||||||||
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| Total cost of revenue |
2,098 | 2,120 | 6,963 | 6,217 | ||||||||||||
| Gross profit: |
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| Service |
1,868 | 1,931 | 5,529 | 5,052 | ||||||||||||
| Subscription |
753 | 640 | 2,519 | 2,200 | ||||||||||||
| License |
667 | 2,236 | 2,162 | 6,326 | ||||||||||||
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| Total gross profit |
3,288 | 4,807 | 10,210 | 13,578 | ||||||||||||
| Gross margin: |
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| Service |
61 | % | 61 | % | 56 | % | 57 | % | ||||||||
| Subscription |
48 | % | 44 | % | 51 | % | 50 | % | ||||||||
| License |
89 | % | 96 | % | 89 | % | 96 | % | ||||||||
| Percentage of gross profit to total revenue |
61 | % | 69 | % | 59 | % | 69 | % | ||||||||
| Operating expenses: |
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| Sales and marketing |
2,309 | 1,999 | 6,497 | 5,930 | ||||||||||||
| Research, development and engineering |
3,236 | 3,499 | 9,345 | 10,449 | ||||||||||||
| General and administrative |
1,847 | 2,183 | 6,033 | 6,929 | ||||||||||||
| Intellectual property |
367 | 366 | 1,025 | 1,287 | ||||||||||||
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| Total operating expenses |
7,759 | 8,047 | 22,900 | 24,595 | ||||||||||||
| Operating loss |
(4,471 | ) | (3,240 | ) | (12,690 | ) | (11,017 | ) | ||||||||
| Other income, net |
29 | 3 | 84 | 50 | ||||||||||||
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| Loss before income taxes |
(4,442 | ) | (3,237 | ) | (12,606 | ) | (10,967 | ) | ||||||||
| (Provision) benefit for income taxes |
(27 | ) | 1,252 | (25 | ) | 4,316 | ||||||||||
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| Net loss |
$ | (4,469 | ) | $ | (1,985 | ) | $ | (12,631 | ) | $ | (6,651 | ) | ||||
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| Earnings (loss) per common share: |
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| Loss per common share - basic |
$ | (0.54 | ) | $ | (0.28 | ) | $ | (1.56 | ) | $ | (0.95 | ) | ||||
| Loss per common share - diluted |
$ | (0.54 | ) | $ | (0.28 | ) | $ | (1.56 | ) | $ | (0.95 | ) | ||||
| Weighted average common shares outstanding - basic |
8,309 | 7,176 | 8,101 | 7,097 | ||||||||||||
| Weighted average common shares outstanding - diluted |
8,309 | 7,176 | 8,101 | 7,097 | ||||||||||||
| Cash dividends declared per common share: |
$ | — | $ | — | $ | — | $ | 0.22 | ||||||||
Digimarc Corporation
Consolidated Balance Sheet Information
(in thousands)
(Unaudited)
| September 30, 2015 |
December 31, 2014 |
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| Assets |
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| Current assets: |
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| Cash and cash equivalents (1) |
$ | 11,452 | $ | 6,122 | ||||
| Marketable securities (1) |
31,585 | 32,201 | ||||||
| Trade accounts receivable, net |
2,687 | 4,545 | ||||||
| Other current assets |
2,862 | 2,611 | ||||||
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| Total current assets |
48,586 | 45,479 | ||||||
| Marketable securities (1) |
— | 749 | ||||||
| Property and equipment, net |
2,852 | 2,976 | ||||||
| Intangibles, net |
6,723 | 6,720 | ||||||
| Goodwill |
1,114 | 1,114 | ||||||
| Other assets |
312 | 378 | ||||||
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| Total assets |
$ | 59,587 | $ | 57,416 | ||||
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| Liabilities and Shareholders’ Equity |
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| Current liabilities: |
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| Accounts payable and other accrued liabilities |
$ | 1,814 | $ | 1,379 | ||||
| Deferred revenue |
1,642 | 3,660 | ||||||
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| Total current liabilities |
3,456 | 5,039 | ||||||
| Deferred rent and other long-term liabilities |
210 | 203 | ||||||
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| Total liabilities |
3,666 | 5,242 | ||||||
| Commitments and contingencies |
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| Shareholders’ equity: |
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| Preferred stock |
50 | 50 | ||||||
| Common stock |
9 | 8 | ||||||
| Additional paid-in capital |
76,599 | 60,222 | ||||||
| Accumulated deficit |
(20,737 | ) | (8,106 | ) | ||||
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| Total shareholders’ equity |
55,921 | 52,174 | ||||||
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| Total liabilities and shareholders’ equity |
$ | 59,587 | $ | 57,416 | ||||
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| (1) | Aggregate cash, cash equivalents, short- and long-term marketable securities was $43,037 and $39,072 at September 30, 2015 and December 31, 2014, respectively. |
Digimarc Corporation
Consolidated Cash Flow Information
(in thousands)
(Unaudited)
| Nine-Month Information | ||||||||
| September 30, 2015 |
September 30, 2014 |
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| Cash flows from operating activities: |
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| Net loss |
$ | (12,631 | ) | $ | (6,651 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: |
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| Depreciation, amortization and write-off of property and equipment |
930 | 708 | ||||||
| Amortization and write-off of intangibles |
794 | 916 | ||||||
| Changes in allowance for doubtful accounts |
16 | (13 | ) | |||||
| Stock-based compensation |
3,857 | 4,085 | ||||||
| Deferred income taxes |
— | (2,874 | ) | |||||
| Changes in operating assets and liabilities: |
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| Trade accounts receivable |
1,842 | 2,000 | ||||||
| Other current assets |
(251 | ) | (1,559 | ) | ||||
| Other assets |
66 | 160 | ||||||
| Accounts payable and other accrued liabilities |
280 | (340 | ) | |||||
| Deferred revenue |
(1,929 | ) | (2,338 | ) | ||||
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| Net cash used in operating activities |
(7,026 | ) | (5,906 | ) | ||||
| Cash flows from investing activities: |
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| Purchase of property and equipment |
(747 | ) | (1,010 | ) | ||||
| Capitalized patent costs |
(646 | ) | (922 | ) | ||||
| Maturity of marketable securities |
79,985 | 47,961 | ||||||
| Purchase of marketable securities |
(78,620 | ) | (38,840 | ) | ||||
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| Net cash provided by (used in) investing activities |
(28 | ) | 7,189 | |||||
| Cash flows from financing activities: |
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| Issuance of common stock, net of issuance costs |
12,896 | (124 | ) | |||||
| Exercise of stock options |
1,321 | 1,319 | ||||||
| Purchase of common stock |
(1,833 | ) | (1,931 | ) | ||||
| Cash dividends paid |
— | (1,654 | ) | |||||
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| Net cash provided by (used in) financing activities |
12,384 | (2,390 | ) | |||||
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| Net increase (decrease) in cash and cash equivalents (2) |
$ | 5,330 | $ | (1,107 | ) | |||
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| Cash, cash equivalents and marketable securities at beginning of period |
39,072 | 34,964 | ||||||
| Cash, cash equivalents and marketable securities at end of period |
43,037 | 24,736 | ||||||
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| (2) Net increase (decrease) in cash, cash equivalents and marketable securities |
$ | 3,965 | $ | (10,228 | ) | |||
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