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Digimarc Reports Second Quarter 2017 Financial Results
[July 26, 2017]

Digimarc Reports Second Quarter 2017 Financial Results


BEAVERTON, Ore., July 26, 2017 /PRNewswire/ -- Digimarc Corporation (NASDAQ: DMRC), the inventor of the Digimarc Discover® platform featuring the Digimarc Barcode for automatically identifying and interacting with virtually any media, reported financial results for the second quarter ended June 30, 2017.

Digimarc The Barcode of Everything(TM) (PRNewsFoto/Digimarc Corporation)

Second Quarter 2017 Financial Results
Revenue for the second quarter of 2017 totaled $5.6 million compared to $5.5 million in the same quarter a year-ago.

Operating expenses for the second quarter of 2017 totaled $10.5 million compared to $8.7 million in the second quarter of 2016. The increase was primarily due to higher investment in sales, marketing, and engineering as the company continues to address important opportunities in market development and delivery of Digimarc Discover and Digimarc Barcode.

Operating loss for the second quarter of 2017 totaled $7.1 million compared to an operating loss of $5.3 million in the same quarter a year-ago. The higher operating loss was due to higher operating expenses. 

Net loss for the second quarter of 2017 totaled $6.9 million or $(0.68) per diluted share, compared to a net loss of $5.3 million or $(0.62) per diluted share in the second quarter of 2016.

At quarter-end, cash, cash equivalents and marketable securities totaled $67.8 million, compared to $56.2 million at March 31, 2017. The increase was due to $17.7 million of net proceeds from the sale of common stock in a registered direct offering completed during the quarter.

Conference Call
Digimarc will hold a conference call later today (Wednesday, July 26, 2017) 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: 8340850

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

About Digimarc
Digimarc Corporation (NASDAQ: DMRC) is a pioneer in the automatic identification of everyday objects such as product packaging and virtually any media, including print, images and audio. Based on the Intuitive Computing Platform (ICP™), Digimarc provides innovative and comprehensive automatic recognition technologies to simplify search, and transform information discovery through unparalleled reliability, efficiency and security. Digimarc has a global patent portfolio, which includes over 1,100 granted and pending patents. These innovations include state-of-the-art identification technology, Digimarc Barcode, as well as Digimarc Discover® software for barcode scanning, and more. Digimarc is based in Beaverton, Oregon, with technologies deployed by major retailers and consumer brands, central banks, U.S. states, film companies and professional sports franchises, among others. Visit digimarc.com and follow us @digimarc to learn more about The Barcode of Everything™.

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, 2016 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,


2017


2016


2017


2016

Revenue:








   Service

$  3,253


$  3,148


$   6,949


$   6,398

   Subscription

1,420


1,494


2,865


2,957

   License

914


815


1,864


1,682

      Total revenue

5,587


5,457


11,678


11,037









Cost of revenue:








   Service

1,464


1,401


3,099


2,833

   Subscription

534


594


1,090


1,256

   License

122


99


240


195

      Total cost of revenue

2,120


2,094


4,429


4,284









Gross profit:








   Service

1,789


1,747


3,850


3,565

   Subscription

886


900


1,775


1,701

   License

792


716


1,624


1,487

      Total gross profit

3,467


3,363


7,249


6,753









Gross margin:








   Service

55%


55%


55%


56%

   Subscription

62%


60%


62%


58%

   License

87%


88%


87%


88%

      Percentage of gross profit to total revenue

62%


62%


62%


61%









Operating expenses:








   Sales and marketing

3,997


2,856


7,989


5,811

   Research, development and engineering

3,936


3,379


7,395


6,684

   General and administrative

2,239


1,976


4,624


4,146

   Intellectual property

345


462


737


896

      Total operating expenses

10,517


8,673


20,745


17,537









Operating loss

(7,050)


(5,310)


(13,496)


(10,784)









Other income, net

116


42


234


88









Loss before income taxes

(6,934)


(5,268)


(13,262)


(10,696)









Benefit (provision) for income taxes

(9)


(15)


101


(22)

Net loss

$ (6,943)


$ (5,283)


$(13,161)


$(10,718)









Earnings (loss) per common share:








Loss per common share - basic

$   (0.68)


$   (0.62)


$    (1.29)


$    (1.25)

Loss per common share - diluted

$   (0.68)


$   (0.62)


$    (1.29)


$    (1.25)

   Weighted average common shares outstanding - basic

10,266


8,587


10,214


8,560

   Weighted average common shares outstanding - diluted

10,266


8,587


10,214


8,560


 

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)










June 30,


December 31,


2017


2016

Assets




Current assets:




Cash and cash equivalents (1)

$        34,242


$         11,638

Marketable securities (1)

33,513


44,496

Trade accounts receivable, net 

3,897


5,078

Other current assets 

1,858


1,695

Total current assets 

73,510


62,907

Marketable securities (1)

-


4,392

Property and equipment, net 

3,846


3,570

Intangibles, net 

6,416


6,422

Goodwill

1,114


1,114

Other assets

281


331

Total assets 

$        85,167


$         78,736





Liabilities and Shareholders' Equity




Current liabilities:




Accounts payable and other accrued liabilities

$          1,731


$          1,523

Deferred revenue

2,121


2,923

Total current liabilities 

3,852


4,446

Deferred rent and other long-term liabilities

1,029


956

Total liabilities 

4,881


5,402





Commitments and contingencies








Shareholders' equity:




   Preferred stock

50


50

   Common stock

11


11

   Additional paid-in capital

141,123


120,985

   Accumulated deficit

(60,898)


(47,712)

Total shareholders' equity 

80,286


73,334





Total liabilities and shareholders' equity 

$        85,167


$         78,736


(1) Aggregate cash, cash equivalents, short- and long-term marketable securities was $67,755 and $60,526 at June 30, 2017 and December 31, 2016, respectively.

 


Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)






Six Month Information


June 30,


June 30,


2017


2016

Cash flows from operating activities:




  Net loss

$ (13,161)


$ (10,718)

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




    Depreciation, amortization and write-off of property and equipment

664


688

    Amortization and write-off of intangibles

486


639

    Stock-based compensation

3,093


2,707

  Changes in operating assets and liabilities:




      Trade accounts receivable

1,181


2,139

      Other current assets

(163)


52

      Other assets

50


36

      Accounts payable and other accrued liabilities

336


109

      Deferred revenue

(835)


(917)

        Net cash used in operating activities

(8,349)


(5,265)





Cash flows from investing activities:




    Purchase of property and equipment

(938)


(755)

    Capitalized patent costs

(406)


(436)

    Maturity of marketable securities

28,636


22,467

    Purchase of marketable securities

(13,261)


(8,819)

        Net cash provided by investing activities

14,031


12,457





Cash flows from financing activities:




    Issuance of common stock, net of issuance costs

17,702


-

    Exercise of stock options

568


309

    Purchase of common stock

(1,348)


(1,104)

        Net cash provided by (used in) financing activities

16,922


(795)





        Net increase in cash and cash equivalents (2)

$ 22,604


$   6,397









     Cash, cash equivalents and marketable securities at beginning of period

60,526


39,186

     Cash, cash equivalents and marketable securities at end of period

67,755


31,935

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

$   7,229


$  (7,251)

 

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SOURCE Digimarc Corporation


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