BEAVERTON, Ore., Feb. 24, 2021 /PRNewswire/ --
Digimarc Corporation (NASDAQ: DMRC), creator of the Digimarc
Platform for digital identification and detection, reported
financial results for the fourth quarter and fiscal year ended
December 31, 2020.
Fourth Quarter 2020 Financial Results
Revenue for the fourth quarter of 2020 increased four percent to
$5.6 million compared to $5.3 million in the fourth quarter of 2019.
Service revenue increased seven percent, reflecting growth in
services to Government and Retail customers. Subscription revenue
increased one percent, reflecting the impact of new bookings;
partially offset by the impact of a renegotiated contract with a
Retail supplier partner in the first quarter of 2020.
Operating expenses for the fourth quarter of 2020 decreased six
percent to $11.7 million compared to
$12.4 million in the same quarter a
year ago, reflecting lower travel and marketing costs.
Operating loss for the fourth quarter of 2020 decreased 12% to
$7.8 million compared to $8.9 million in the fourth quarter of 2019, due
to higher revenue and lower operating expenses.
Net loss for the fourth quarter of 2020 decreased 10% to
$7.8 million compared to a net loss
of $8.7 million in the fourth quarter
of 2019. GAAP loss per common share in the fourth quarter of 2020
was ($1.27) compared to GAAP loss per
common share of $(0.73) in the fourth
quarter of 2019. Non-GAAP loss per common share in the fourth
quarter of 2020 was $(0.51) compared
to non-GAAP loss per common share of $(0.73) in the fourth quarter of 2019. The loss
per common share in the fourth quarter of 2020 was impacted by a
non-cash $11.4 million adjustment
representing the intrinsic value of the Series B Convertible
Preferred Stock issued to TCM|Strategic Partners LLP that converted
to common stock in December 2020. The
impact of this adjustment is excluded in reporting non-GAAP loss
per common share as noted on the Consolidated Income Statement
Information attached.
Fiscal Year 2020 Financial Results
Revenue for fiscal year 2020 increased four percent to
$24.0 million compared to
$23.0 million in fiscal year 2019.
Service revenue increased five percent, reflecting growth in
services to Government and Retail customers. Subscription revenue
increased four percent, reflecting the impact of new bookings;
partially offset by the impact of a renegotiated contract with a
Retail supplier partner in the first quarter of 2020.
Operating expenses for fiscal year 2020 were essentially flat at
$48.9 million compared to
$48.7 million in fiscal year 2019,
reflecting higher compensation costs due to routine annual
compensation adjustments for employees and $0.8 million of severance paid in relation to the
July 2020 restructuring, offset by
lower travel and consulting costs.
Operating loss for fiscal year 2020 decreased three percent to
$32.8 million compared to
$33.7 million in fiscal year 2019,
due to higher revenue.
Net loss for fiscal year 2020 decreased one percent to
$32.5 million compared to a net loss
of $32.8 million in fiscal year 2019.
GAAP loss per common share in fiscal year 2020 was $(3.41) compared to GAAP loss per common share of
$(2.79) in fiscal year 2019. Non-GAAP
loss per common share in fiscal year 2020 was $(2.52) compared to non-GAAP loss per common
share of $(2.79) in fiscal year 2019.
The loss per common share in fiscal year 2020 was impacted by the
same $11.4 million non-cash
adjustment noted above. The impact of this adjustment is excluded
in reporting non-GAAP loss per common share as noted on the
Consolidated Income Statement Information attached.
At year-end, cash, cash equivalents and marketable securities
totaled $77.7 million compared to
$36.8 million at December 31, 2019.
Conference call
Digimarc will hold a conference call today (Wednesday, February 24, 2021) 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: 6768018
If you have any difficulty connecting with the conference call,
please contact Digimarc investor relations at +1 503-469-4826.
About Digimarc
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 takes industry beyond the barcode, providing 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 www.digimarc.com and
follow us on LinkedIn and Twitter to learn more about The
Barcode of Everything®.
Non-GAAP Financial Measure – Non-GAAP Loss per Common
Share
Digimarc Corporation prepares its consolidated financial
statements in conformity with accounting principles generally
accepted in the United States of
America (U.S. GAAP) and pursuant to accounting requirements
of the Securities and Exchange Commission (SEC). In an effort to
provide investors with additional information regarding the results
and to provide a meaningful period-over-period comparison of
Digimarc's financial performance, Digimarc sometimes uses non-U.S.
GAAP financial measures (NGFM) as defined by the SEC. In this press
release, Digimarc uses the NGFM, "Non-GAAP loss per common share."
Management uses this NGFM because it adjusts for certain
transactions management believes are not related to its core
business, such as the impact of a beneficial conversion feature on
preferred stock. Management uses this NGFM to evaluate Digimarc's
financial performance against internal budgets and targets.
Management believes that this NGFM is useful for evaluating
Digimarc's core operating results and facilitating comparison
across reporting periods. Management believes this NGFM should be
considered in addition to, and not in lieu of, GAAP financial
measures. Digimarc's NGFM may be different from the same NGFM used
by other companies.
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.
|
Digimarc
Corporation
|
|
Consolidated Income
Statement Information
|
|
(in thousands, except
per share amounts)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Month
Information
|
|
Twelve Month
Information
|
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
December 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Service
|
|
$
2,899
|
|
$
2,700
|
|
$
13,881
|
|
$
13,249
|
|
Subscription
|
|
2,654
|
|
2,619
|
|
10,109
|
|
9,738
|
|
Total
revenue
|
|
5,553
|
|
5,319
|
|
23,990
|
|
22,987
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue:
|
|
|
|
|
|
|
|
|
|
Service
|
|
1,136
|
|
1,283
|
|
5,827
|
|
6,013
|
|
Subscription
|
|
559
|
|
516
|
|
2,107
|
|
2,023
|
|
Total cost of
revenue
|
|
1,695
|
|
1,799
|
|
7,934
|
|
8,036
|
|
|
|
|
|
|
|
|
|
|
Gross
profit:
|
|
|
|
|
|
|
|
|
|
Service
|
|
1,763
|
|
1,417
|
|
8,054
|
|
7,236
|
|
Subscription
|
|
2,095
|
|
2,103
|
|
8,002
|
|
7,715
|
|
Total gross
profit
|
|
3,858
|
|
3,520
|
|
16,056
|
|
14,951
|
|
|
|
|
|
|
|
|
|
|
Gross
margin:
|
|
|
|
|
|
|
|
|
|
Service
|
|
61%
|
|
52%
|
|
58%
|
|
55%
|
|
Subscription
|
|
79%
|
|
80%
|
|
79%
|
|
79%
|
|
Percentage of gross
profit to total revenue
|
|
69%
|
|
66%
|
|
67%
|
|
65%
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Sales and
marketing
|
|
4,428
|
|
4,999
|
|
18,845
|
|
19,875
|
|
Research, development
and engineering
|
|
4,011
|
|
4,343
|
|
17,314
|
|
16,467
|
|
General and
administrative
|
|
3,253
|
|
3,053
|
|
12,710
|
|
12,340
|
|
Total operating
expenses
|
|
11,692
|
|
12,395
|
|
48,869
|
|
48,682
|
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(7,834)
|
|
(8,875)
|
|
(32,813)
|
|
(33,731)
|
|
|
|
|
|
|
|
|
|
|
Other income,
net
|
|
20
|
|
185
|
|
277
|
|
912
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(7,814)
|
|
(8,690)
|
|
(32,536)
|
|
(32,819)
|
|
|
|
|
|
|
|
|
|
|
Benefit
(provision) for income taxes
|
|
(2)
|
|
7
|
|
(1)
|
|
(21)
|
|
Net
loss
|
|
$
(7,816)
|
|
$
(8,683)
|
|
$
(32,537)
|
|
$
(32,840)
|
|
Beneficial conversion
feature
|
|
(11,443)
|
|
-
|
|
(11,443)
|
|
-
|
|
Net loss
attributable to common shares
|
|
$
(19,259)
|
|
$
(8,683)
|
|
$
(43,980)
|
|
$
(32,840)
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss)
per common share:
|
|
|
|
|
|
|
|
|
|
Loss per common
share - basic
|
|
$
(1.27)
|
|
$
(0.73)
|
|
$
(3.41)
|
|
$
(2.79)
|
|
Loss per common
share - diluted
|
|
$
(1.27)
|
|
$
(0.73)
|
|
$
(3.41)
|
|
$
(2.79)
|
|
Weighted average
common shares outstanding - basic
|
|
15,222
|
|
11,967
|
|
12,906
|
|
11,762
|
|
Weighted average
common shares outstanding - diluted
|
|
15,222
|
|
11,967
|
|
12,906
|
|
11,762
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to
Non-GAAP loss per common share:
|
|
|
|
|
|
|
|
|
|
GAAP net loss
attributable to common shares - basic and diluted
|
|
$
(19,259)
|
|
$
(8,683)
|
|
$
(43,980)
|
|
$
(32,840)
|
|
Beneficial conversion
feature on Series B preferred stock
|
|
(11,443)
|
|
—
|
|
(11,443)
|
|
—
|
|
Non-GAAP net loss
attributable to common shares - basic and diluted
|
|
$
(7,816)
|
|
$
(8,683)
|
|
$
(32,537)
|
|
$
(32,840)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP loss per
common share - basic
|
|
$
(0.51)
|
|
$
(0.73)
|
|
$
(2.52)
|
|
$
(2.79)
|
|
Non-GAAP loss per
common share - diluted
|
|
$
(0.51)
|
|
$
(0.73)
|
|
$
(2.52)
|
|
$
(2.79)
|
|
Weighted average
common shares outstanding - basic
|
|
15,222
|
|
11,967
|
|
12,906
|
|
11,762
|
|
Weighted average
common shares outstanding - diluted
|
|
15,222
|
|
11,967
|
|
12,906
|
|
11,762
|
|
Digimarc
Corporation
|
|
Consolidated Balance
Sheet Information
|
|
(in
thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents(1)
|
|
$
19,696
|
|
$
11,213
|
|
Marketable
securities(1)
|
|
58,032
|
|
25,604
|
|
Trade accounts
receivable, net
|
|
3,907
|
|
4,021
|
|
Other current
assets
|
|
2,197
|
|
2,456
|
|
Total current
assets
|
|
83,832
|
|
43,294
|
|
Property and
equipment, net
|
|
3,272
|
|
3,650
|
|
Intangibles,
net
|
|
6,612
|
|
6,670
|
|
Goodwill
|
|
1,114
|
|
1,114
|
|
Other
assets
|
|
2,198
|
|
2,660
|
|
Total
assets
|
|
$
97,028
|
|
$
57,388
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
other accrued liabilities
|
|
$
2,827
|
|
$
2,272
|
|
Note payable,
current
|
|
3,947
|
|
—
|
|
Deferred
revenue
|
|
3,002
|
|
3,172
|
|
Total current
liabilities
|
|
9,776
|
|
5,444
|
|
Lease liability and
other long-term liabilities
|
|
2,295
|
|
2,494
|
|
Note payable,
long-term
|
|
1,118
|
|
—
|
|
Total
liabilities
|
|
13,189
|
|
7,938
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Preferred
stock
|
|
50
|
|
50
|
|
Common
stock
|
|
17
|
|
12
|
|
Additional paid-in
capital
|
|
255,024
|
|
188,103
|
|
Accumulated
deficit
|
|
(171,252)
|
|
(138,715)
|
|
Total
shareholders' equity
|
|
83,839
|
|
49,450
|
|
|
|
|
|
|
Total liabilities
and shareholders' equity
|
|
$
97,028
|
|
$
57,388
|
|
|
|
|
|
|
|
|
|
|
|
(1) Aggregate cash,
cash equivalents and marketable securities was $77,728 and $36,817
at December 31, 2020 and 2019, respectively.
|
|
Digimarc
Corporation
|
|
Consolidated Cash
Flow Information
|
|
(in
thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Twelve Month
Information
|
|
|
December 31,
|
|
December 31,
|
|
|
2020
|
|
2019
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
Net loss
|
|
$
(32,537)
|
|
$
(32,840)
|
|
Adjustments to
reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
Depreciation,
amortization and write-off of property and equipment
|
|
1,531
|
|
1,449
|
|
Amortization and
write-off of intangibles
|
|
771
|
|
758
|
|
Amortization of right
of use assets under operating leases
|
|
470
|
|
447
|
|
Amortization of net
premiums and (discounts) on marketable securities
|
|
(204)
|
|
710
|
|
Stock-based
compensation
|
|
9,115
|
|
8,214
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
Trade accounts
receivable
|
|
114
|
|
(133)
|
|
Other current
assets
|
|
259
|
|
(356)
|
|
Other
assets
|
|
(8)
|
|
27
|
|
Accounts payable and
other accrued liabilities
|
|
512
|
|
702
|
|
Deferred
revenue
|
|
(199)
|
|
(41)
|
|
Lease liability and
other long-term liabilities
|
|
(170)
|
|
(639)
|
|
Net cash used in
operating activities
|
|
(20,346)
|
|
(21,702)
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Purchase of property
and equipment
|
|
(1,020)
|
|
(1,055)
|
|
Capitalized patent
costs
|
|
(612)
|
|
(659)
|
|
Maturity of
marketable securities
|
|
43,155
|
|
41,374
|
|
Purchase of
marketable securities
|
|
(75,379)
|
|
(51,310)
|
|
Net cash used in
investing activities
|
|
(33,856)
|
|
(11,650)
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Issuance of common
stock, net of issuance costs
|
|
38,603
|
|
19,615
|
|
Issuance of preferred
stock, net of issuance costs
|
|
16,888
|
|
—
|
|
Exercise of stock
options
|
|
5,922
|
|
1,178
|
|
Proceeds from note
payable
|
|
5,032
|
|
—
|
|
Purchase of common
stock
|
|
(3,760)
|
|
(3,506)
|
|
Net cash provided by
financing activities
|
|
62,685
|
|
17,287
|
|
|
|
|
|
|
Net increase
(decrease) in cash and cash equivalents(2)
|
|
$
8,483
|
|
$
(16,065)
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash
equivalents and marketable securities at beginning of
period
|
|
36,817
|
|
43,656
|
|
Cash, cash
equivalents and marketable securities at end of period
|
|
77,728
|
|
36,817
|
|
(2) Net increase
(decrease) in cash, cash equivalents and marketable
securities
|
|
$
40,911
|
|
$
(6,839)
|
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SOURCE Digimarc Corporation