Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - Digimarc CORP | dmrc-ex992_140.htm |
| 8-K - 8-K - Digimarc CORP | dmrc-8k_20201028.htm |
Exhibit 99.1
Digimarc Reports Third Quarter 2020 Financial Results
Beaverton, Ore. – October 28, 2020 – 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.
Company contact:
D.J. Vogt
Sr. Director, Corporate Communications
dj.vogt@digimarc.com
+1 503-469-4762
###
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.
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 |
|
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. |
|
|||||||
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 |
) |
###