Digimarc Reports Third Quarter 2016 Financial Results
BEAVERTON, Ore., Nov. 2, 2016 /PRNewswire/ -- Digimarc Corporation (NASDAQ: DMRC) reported financial results for the third quarter ended September 30, 2016.
Third Quarter 2016 Financial Results
Revenue for the third quarter of 2016 totaled $5.6 million compared to $5.4 million in the same quarter a year-ago. The increase was primarily due to higher service revenue.
Operating expenses for the third quarter of 2016 totaled $8.7 million compared to $7.8 million in the third quarter of 2015. The increase was primarily due to higher investments in sales and marketing as the company continues to address important opportunities in market development and delivery for Digimarc Discover and Digimarc Barcode.
Operating loss for the third quarter of 2016 totaled $5.3 million compared to an operating loss of $4.5 million in the same quarter a year-ago. The higher operating loss was primarily due to higher operating expenses.
Net loss for the third quarter of 2016 totaled $5.2 million or $(0.55) per diluted share, compared to a net loss of $4.5 million or $(0.54) per diluted share in the third quarter of 2015.
At quarter-end, cash, cash equivalents and marketable securities totaled $66.3 million, compared to $31.9 million at June 30, 2016. The increase was due to proceeds from the sale of common stock in an underwritten public offering completed in August 2016.
Conference Call
Digimarc will hold a conference call later today (Wednesday, November 2, 2016) 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: 8340839
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 Digimarc Discover® software and the imperceptible Digimarc Barcode for automatically identifying and interacting with virtually any media. Digimarc Discover software 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 people and do all that visible barcodes do, but perform better. They 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. For more information and the latest news, please visit www.digimarc.com and follow on Twitter at @Digimarc.
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, 2015 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 |
Nine Month Information |
||||||
| September 30, |
September 30, |
September 30, |
September 30, |
||||
| 2016 |
2015 |
2016 |
2015 |
||||
| Revenue: |
|||||||
| Service |
$ 3,252 |
$ 3,072 |
$ 9,650 |
$ 9,808 |
|||
| Subscription |
1,417 |
1,561 |
4,374 |
4,947 |
|||
| License |
907 |
753 |
2,589 |
2,418 |
|||
| Total revenue |
5,576 |
5,386 |
16,613 |
17,173 |
|||
| Cost of revenue: |
|||||||
| Service |
1,455 |
1,204 |
4,288 |
4,279 |
|||
| Subscription |
600 |
808 |
1,856 |
2,428 |
|||
| License |
107 |
86 |
302 |
256 |
|||
| Total cost of revenue |
2,162 |
2,098 |
6,446 |
6,963 |
|||
| Gross profit: |
|||||||
| Service |
1,797 |
1,868 |
5,362 |
5,529 |
|||
| Subscription |
817 |
753 |
2,518 |
2,519 |
|||
| License |
800 |
667 |
2,287 |
2,162 |
|||
| Total gross profit |
3,414 |
3,288 |
10,167 |
10,210 |
|||
| Gross margin: |
|||||||
| Service |
55% |
61% |
56% |
56% |
|||
| Subscription |
58% |
48% |
58% |
51% |
|||
| License |
88% |
89% |
88% |
89% |
|||
| Percentage of gross profit to total revenue |
61% |
61% |
61% |
59% |
|||
| Operating expenses: |
|||||||
| Sales and marketing |
2,945 |
2,309 |
8,756 |
6,497 |
|||
| Research, development and engineering |
3,291 |
3,236 |
9,975 |
9,345 |
|||
| General and administrative |
2,039 |
1,847 |
6,185 |
6,033 |
|||
| Intellectual property |
394 |
367 |
1,290 |
1,025 |
|||
| Total operating expenses |
8,669 |
7,759 |
26,206 |
22,900 |
|||
| Operating loss |
(5,255) |
(4,471) |
(16,039) |
(12,690) |
|||
| Other income, net |
69 |
29 |
157 |
84 |
|||
| Loss before income taxes |
(5,186) |
(4,442) |
(15,882) |
(12,606) |
|||
| Provision for income taxes |
(12) |
(27) |
(34) |
(25) |
|||
| Net loss |
$ (5,198) |
$ (4,469) |
$ (15,916) |
$ (12,631) |
|||
| Earnings (loss) per common share: |
|||||||
| Loss per common share - basic |
$ (0.55) |
$ (0.54) |
$ (1.79) |
$ (1.56) |
|||
| Loss per common share - diluted |
$ (0.55) |
$ (0.54) |
$ (1.79) |
$ (1.56) |
|||
| Weighted average common shares outstanding - basic |
9,506 |
8,309 |
8,878 |
8,101 |
|||
| Weighted average common shares outstanding - diluted |
9,506 |
8,309 |
8,878 |
8,101 |
|||
| Digimarc Corporation |
|||
| Consolidated Balance Sheet Information |
|||
| (in thousands) |
|||
| (Unaudited) |
|||
| September 30, |
December 31, |
||
| 2016 |
2015 |
||
| Assets |
|||
| Current assets: |
|||
| Cash and cash equivalents (1) |
$ 24,647 |
$ 3,160 |
|
| Marketable securities (1) |
29,819 |
33,027 |
|
| Trade accounts receivable, net |
2,521 |
4,616 |
|
| Other current assets |
1,924 |
1,487 |
|
| Total current assets |
58,911 |
42,290 |
|
| Marketable securities (1) |
11,842 |
2,999 |
|
| Property and equipment, net |
3,443 |
3,010 |
|
| Intangibles, net |
6,459 |
6,613 |
|
| Goodwill |
1,114 |
1,114 |
|
| Other assets |
394 |
338 |
|
| Total assets |
$ 82,163 |
$ 56,364 |
|
| Liabilities and Shareholders' Equity |
|||
| Current liabilities: |
|||
| Accounts payable and other accrued liabilities |
$ 1,487 |
$ 1,657 |
|
| Deferred revenue |
1,605 |
3,023 |
|
| Total current liabilities |
3,092 |
4,680 |
|
| Deferred rent and other long-term liabilities |
949 |
226 |
|
| Total liabilities |
4,041 |
4,906 |
|
| Commitments and contingencies |
|||
| Shareholders' equity: |
|||
| Preferred stock |
50 |
50 |
|
| Common stock |
11 |
9 |
|
| Additional paid-in capital |
120,017 |
77,439 |
|
| Accumulated deficit |
(41,956) |
(26,040) |
|
| Total shareholders' equity |
78,122 |
51,458 |
|
| Total liabilities and shareholders' equity |
$ 82,163 |
$ 56,364 |
|
| (1) |
Aggregate cash, cash equivalents, short- and long-term marketable securities was $66,308 and $39,186 at September 30, 2016 and December 31, 2015, respectively. |
| Digimarc Corporation |
|||
| Consolidated Cash Flow Information |
|||
| (in thousands) |
|||
| (Unaudited) |
|||
| Nine Month Information |
|||
| September 30, |
September 30, |
||
| 2016 |
2015 |
||
| Cash flows from operating activities: |
|||
| Net loss |
$ (15,916) |
$ (12,631) |
|
| Adjustments to reconcile net loss to net cash used in operating activities: |
|||
| Depreciation and amortization and write-off of property and equipment |
1,016 |
930 |
|
| Amortization and write-off of intangibles |
876 |
794 |
|
| Change in allowance for doubtful accounts |
- |
16 |
|
| Stock-based compensation |
4,162 |
3,857 |
|
| Changes in operating assets and liabilities: |
|||
| Trade accounts receivable |
2,095 |
1,842 |
|
| Other current assets |
(437) |
(251) |
|
| Other assets |
(56) |
66 |
|
| Accounts payable and other accrued liabilities |
680 |
280 |
|
| Deferred revenue |
(1,407) |
(1,929) |
|
| Net cash used in operating activities |
(8,987) |
(7,026) |
|
| Cash flows from investing activities: |
|||
| Purchase of property and equipment |
(1,565) |
(747) |
|
| Capitalized patent costs |
(623) |
(646) |
|
| Maturity of marketable securities |
35,182 |
27,151 |
|
| Purchase of marketable securities |
(40,817) |
(25,786) |
|
| Net cash used in investing activities |
(7,823) |
(28) |
|
| Cash flows from financing activities: |
|||
| Issuance of common stock, net of issuance costs |
39,700 |
12,896 |
|
| Exercise of stock options |
476 |
1,321 |
|
| Purchase of common stock |
(1,879) |
(1,833) |
|
| Net cash provided by financing activities |
38,297 |
12,384 |
|
| Net increase in cash and cash equivalents (2) |
$ 21,487 |
$ 5,330 |
|
| Cash, cash equivalents and marketable securities at beginning of period |
39,186 |
39,072 |
|
| Cash, cash equivalents and marketable securities at end of period |
66,308 |
43,037 |
|
| (2) Net increase in cash, cash equivalents and marketable securities |
$ 27,122 |
$ 3,965 |
|
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SOURCE Digimarc Corporation
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