SOURCE: Digimarc Corp.

Digimarc Corp.

July 22, 2015 16:05 ET

Digimarc Reports Second Quarter 2015 Financial Results

BEAVERTON, OR--(Marketwired - Jul 22, 2015) - Digimarc Corporation (NASDAQ: DMRC) reported financial results for the second quarter ended June 30, 2015.

Revenue for the second quarter of 2015 totaled $5.8 million compared to revenue of $5.7 million in the same quarter a year-ago. The increase in revenue was due to growth in service and subscription revenue, partially offset by lower license revenue related to the end of the quarterly royalty payments from Verance Corporation in the fourth quarter of 2014.

Operating expenses for the second quarter of 2015 decreased 9% to $7.4 million from $8.2 million the same quarter a year-ago. The decrease was due to lower spending in research and development, partially offset by higher investment in sales and marketing as the company is focused on market development and delivery for Digimarc Discover and Barcode. Legal and third-party consulting costs were also lower during the second quarter of 2015.

Operating loss for the second quarter of 2015 totaled $4.0 million compared to an operating loss of $4.5 million in the same quarter a year-ago. The improvement was largely due to lower operating expenses. 

Net loss for the second quarter of 2015 totaled $4.0 million or $(0.50) per diluted share, compared to a net loss of $2.7 million or $(0.38) per diluted share in the second quarter of 2014. The larger net loss was due to income tax benefits recognized during the second quarter of last year.

Cash, cash equivalents and marketable securities totaled $34.0 million at June 30, 2015, compared to $37.1 million at March 31, 2015.

Conference Call
Digimarc will hold a conference call later today (Wednesday, July 22, 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: 27179682

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 increases in service and subscription revenue, decreased spending for research and development, increased investments in market development and delivery initiatives, 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.

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,  
    2015     2014     2015     2014  
Revenue:                                
  Service   $ 3,235     $ 2,716     $ 6,736     $ 5,704  
  Subscription     1,670       1,496       3,386       2,908  
  License     893       1,451       1,665       4,256  
    Total revenue     5,798       5,663       11,787       12,868  
                                 
Cost of revenue:                                
  Service     1,497       1,169       3,075       2,583  
  Subscription     866       699       1,620       1,348  
  License     86       84       170       167  
    Total cost of revenue     2,449       1,952       4,865       4,098  
                                 
Gross profit:                                
  Service     1,738       1,547       3,661       3,121  
  Subscription     804       797       1,766       1,560  
  License     807       1,367       1,495       4,089  
    Total gross profit     3,349       3,711       6,922       8,770  
                                 
Gross margin:                                
  Service     54 %     57 %     54 %     55 %
  Subscription     48 %     53 %     52 %     54 %
  License     90 %     94 %     90 %     96 %
    Percentage of gross profit to total revenue     58 %     66 %     59 %     68 %
                                 
Operating expenses:                                
  Sales and marketing     2,098       2,052       4,188       3,931  
  Research, development and engineering     3,025       3,404       6,109       6,950  
  General and administrative     1,980       2,326       4,186       4,747  
  Intellectual property     291       387       658       921  
    Total operating expenses     7,394       8,169       15,141       16,549  
                                 
Operating loss     (4,045 )     (4,458 )     (8,219 )     (7,779 )
                                 
Other income, net     32       21       55       48  
                                 
Loss before income taxes     (4,013 )     (4,437 )     (8,164 )     (7,731 )
                                 
Benefit for income taxes     1       1,757       2       3,065  
Net loss   $ (4,012 )   $ (2,680 )   $ (8,162 )   $ (4,666 )
                                 
Earnings (loss) per common share:                                
Loss per common share - basic   $ (0.50 )   $ (0.38 )   $ (1.02 )   $ (0.68 )
Loss per common share - diluted   $ (0.50 )   $ (0.38 )   $ (1.02 )   $ (0.68 )
  Weighted average common shares outstanding - basic     8,029       7,113       7,995       7,057  
  Weighted average common shares outstanding - diluted     8,029       7,113       7,995       7,057  
                                 
Cash dividends declared per common share:   $ -     $ 0.11     $ -     $ 0.22  
                                 
                                 
                                 
Digimarc Corporation  
Consolidated Balance Sheet Information  
(in thousands)  
(Unaudited)  
             
             
    June 30,     December 31,  
    2015     2014  
Assets                
  Current assets:                
    Cash and cash equivalents (1)   $ 4,047     $ 6,122  
    Marketable securities (1)     29,999       32,201  
    Trade accounts receivable, net     3,020       4,545  
    Other current assets     2,575       2,611  
      Total current assets     39,641       45,479  
  Marketable securities (1)     -       749  
  Property and equipment, net     2,786       2,976  
  Intangibles, net     6,728       6,720  
  Goodwill     1,114       1,114  
  Other assets     304       378  
      Total assets   $ 50,573     $ 57,416  
                 
Liabilities and Shareholders' Equity                
  Current liabilities:                
    Accounts payable and other accrued liabilities   $ 1,387     $ 1,379  
    Deferred revenue     2,290       3,660  
      Total current liabilities     3,677       5,039  
  Deferred rent and other long-term liabilities     219       203  
      Total liabilities     3,896       5,242  
                 
  Commitments and contingencies                
                 
  Shareholders' equity:                
    Preferred stock     50       50  
    Common stock     9       8  
    Additional paid-in capital     62,886       60,222  
    Accumulated deficit     (16,268 )     (8,106 )
      Total shareholders' equity     46,677       52,174  
                 
      Total liabilities and shareholders' equity   $ 50,573     $ 57,416  
                 
(1) Aggregate cash, cash equivalents, short- and long-term marketable securities was $34,046 and $39,072 at June 30, 2015 and December 31, 2014, respectively.
 
 
 
Digimarc Corporation  
Consolidated Cash Flow Information  
(in thousands)  
(Unaudited)  
             
    Six-Month Information  
    June 30,     June 30,  
    2015     2014  
Cash flows from operating activities:                
  Net loss   $ (8,162 )   $ (4,666 )
  Adjustments to reconcile net loss to net cash used in operating activities:                
    Depreciation, amortization and write-off of property and equipment     604       459  
    Amortization and write-off of intangibles     520       606  
    Changes in allowance for doubtful accounts     16       (17 )
    Stock-based compensation     2,480       2,631  
    Deferred income taxes     -       (1,621 )
  Changes in operating assets and liabilities:                
    Trade accounts receivable     1,509       2,164  
    Other current assets     36       (1,412 )
    Other assets     74       84  
    Accounts payable and other accrued liabilities     (160 )     (291 )
    Deferred revenue     (1,285 )     (1,984 )
      Net cash used in operating activities     (4,368 )     (4,047 )
                 
Cash flows from investing activities:                
  Purchase of property and equipment     (324 )     (579 )
  Capitalized patent costs     (428 )     (561 )
  Maturity of marketable securities     39,144       32,376  
  Purchase of marketable securities     (36,193 )     (25,810 )
    Net cash provided by investing activities     2,199       5,426  
                 
Cash flows from financing activities:                
  Exercise of stock options     1,129       1,176  
  Purchase of common stock     (1,035 )     (1,440 )
  Cash dividends paid     -       (1,654 )
    Net cash provided by (used in) financing activities     94       (1,918 )
                 
    Net decrease in cash and cash equivalents (2)   $ (2,075 )   $ (539 )
                 
                 
  Cash, cash equivalents and marketable securities at beginning of period     39,072       34,964  
  Cash, cash equivalents and marketable securities at end of period     34,046       27,859  
(2) Net decrease in cash, cash equivalents and marketable securities   $ (5,026 )   $ (7,105 )

Contact Information

  • Company Contacts:
    Charles Beck
    Chief Financial Officer
    503-469-4721
    Email Contact

    Matt Glover
    Liolios Group, Inc.
    Investor Relations for Digimarc
    949-574-3860
    Email Contact