Digimarc Reports Second Quarter 2021 Financial Results

<br /> Digimarc Reports Second Quarter 2021 Financial Results<br />

PR Newswire


BEAVERTON, Ore.

,

Aug. 5, 2021

/PRNewswire/ —

Digimarc

Corporation (NASDAQ: DMRC) reported financial results for the second quarter ended

June 30, 2021

.


Second Quarter 2021 Financial Results


Revenue for the second quarter of 2021 decreased three percent to

$6.3 million

compared to

$6.5 million

in the second quarter of 2020, reflecting lower revenue from Government services and Commercial subscriptions, partially offset by higher Commercial services revenue.

Operating expenses for the second quarter of 2021 increased 65% to

$19.7 million

compared to

$11.9 million

in the same quarter a year ago, reflecting non-recurring costs of

$7.5 million

incurred during the three month period ended

June 30, 2021

. These costs were associated with the Separation Agreement and General Release we entered into on

April 12, 2021

with our former chief executive officer, as well as severance costs incurred for organizational changes we made in

June 2021

. Excluding the

$7.5 million

of non-recurring costs, operating expenses increased 2% to

$12.2 million

, reflecting higher consulting and legal costs, partially offset by lower recurring compensation costs.

Operating loss for the second quarter of 2021 increased 105% to

$15.4 million

compared to

$7.5 million

in the second quarter of 2020, due primarily to higher operating expenses. Excluding the

$7.5 million

of non-recurring costs noted above, operating loss increased 5% to

$7.9 million

.

Net loss for the second quarter of 2021 increased 107% to

$15.4 million

or

$(0.94)

per diluted share compared to net loss of

$7.5 million

or

$(0.62)

per diluted share in the same quarter a year ago. Excluding the

$7.5 million

of non-recurring costs noted above, net loss increased 6% to

$7.9 million

, or

$(0.48)

per diluted share.

At quarter-end, cash, cash equivalents, short- and long-term marketable securities totaled

$61.1 million

compared to

$77.7 million

at

December 31, 2020

.


Conference call


Digimarc will hold a conference call today (

Thursday, August 5, 2021

) to discuss these results and provide an update on market conditions and execution of strategy. CEO

Riley McCormack

, CFO

Charles Beck

, CLO Robert Chamness and CRO Tim Price 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 to ask a question, 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: 2188966

If you have any difficulty connecting with the conference call, please contact Digimarc investor relations team at +1 503-469-4826.


About Digimarc


Digimarc Corporation (NASDAQ: DMRC) is a pioneer and leader in digital watermarking solutions and the automatic identification of media, including packaging, commercial print, digital images, audio and video. Digimarc helps customers drive efficiency, accuracy and security across physical and digital supply chains. Visit us at

digimarc.com

on

LinkedIn

and follow us on Twitter

@digimarc

to learn more.


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, 2020

, 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,



2021



2020



2021



2020



Revenue:


Service


$    3,791


$  3,892


$    7,575


$    7,630


Subscription


2,487


2,605


5,403


5,056


Total revenue


6,278


6,497


12,978


12,686



Cost of revenue:


Service


1,515


1,601


3,085


3,285


Subscription


534


512


1,325


1,026


Total cost of revenue


2,049


2,113


4,410


4,311



Gross profit:


Service


2,276


2,291


4,490


4,345


Subscription


1,953


2,093


4,078


4,030


Total gross profit


4,229


4,384


8,568


8,375



Gross margin:


Service


60%


59%


59%


57%


Subscription


79%


80%


75%


80%


Percentage of gross profit to total revenue


67%


67%


66%


66%



Operating expenses:


Sales and marketing


6,277


4,633


11,218


9,879


Research, development and engineering


4,213


4,208


8,344


8,641


General and administrative


9,175


3,081


12,668


6,448


Total operating expenses


19,665


11,922


32,230


24,968



Operating loss


(15,436)


(7,538)


(23,662)


(16,593)



Other income, net


18


79


28


221



Loss before income taxes


(15,418)


(7,459)


(23,634)


(16,372)



Benefit (provision) for income taxes


(4)


(2)


(10)


3



Net loss


$ (15,422)


$ (7,461)


$ (23,644)


$ (16,369)



Earnings (loss) per common share:



Loss per common share – basic


$     (0.94)


$   (0.62)


$     (1.44)


$     (1.36)



Loss per common share – diluted


$     (0.94)


$   (0.62)


$     (1.44)


$     (1.36)


Weighted average common shares outstanding – basic


16,430


12,108


16,382


12,073


Weighted average common shares outstanding – diluted


16,430


12,108


16,382


12,073


Digimarc Corporation


Consolidated Balance Sheet Information


(in thousands)


(Unaudited)



June 30,



December 31,



2021



2020



Assets



Current assets:


Cash and cash equivalents

(1)


$         21,358


$         19,696


Marketable securities

(1)


39,592


58,032


Trade accounts receivable, net


4,590


3,907


Other current assets


1,805


2,197



Total current assets


67,345


83,832


Marketable securities

(1)


157




Property and equipment, net


3,082


3,272


Intangibles, net


6,606


6,612


Goodwill


1,114


1,114


Other assets


2,244


2,198



Total assets


$         80,548


$         97,028



Liabilities and Shareholders’ Equity



Current liabilities:


Accounts payable and other accrued liabilities


$           4,428


$           2,827


Note payable, current


5,091


3,947


Deferred revenue


2,659


3,002



Total current liabilities


12,178


9,776


Lease liability and other long-term liabilities


3,128


2,295


Note payable, long-term




1,118



Total liabilities


15,306


13,189


Commitments and contingencies


Shareholders’ equity:


Preferred stock


50


50


Common stock


17


17


Additional paid-in capital


260,071


255,024


Accumulated deficit


(194,896)


(171,252)



Total shareholders’ equity


65,242


83,839



Total liabilities and shareholders’ equity


$         80,548


$         97,028


(1) Aggregate cash, cash equivalents, short- and long-term marketable securities was $61,107 and $77,728 at June 30, 2021 and December 31, 2020, respectively.


Digimarc Corporation


Consolidated Cash Flow Information


(in thousands)


(Unaudited)


Six Month Information



June 30,



June 30,



2021



2020


Cash flows from operating activities:


Net loss


$ (23,644)


$ (16,369)


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


Depreciation, amortization and write-off of property and equipment


717


745


Amortization and write-off of intangibles


345


431


Amortization of right of use assets under operating leases


240


233


Amortization of net premiums and (discounts) on marketable securities


(498)


96


Stock-based compensation


8,747


4,522


Changes in operating assets and liabilities:


Trade accounts receivable


(950)


445


Other current assets


392


361


Other assets


(19)


85


Accounts payable and other accrued liabilities


1,859


(155)


Deferred revenue


(331)


(500)


Lease liability and other long-term liabilities


656


24


Net cash used in operating activities


(12,486)


(10,082)


Cash flows from investing activities:


Purchase of property and equipment


(569)


(456)


Capitalized patent costs


(290)


(311)


Maturity of marketable securities


49,722


26,439


Purchase of marketable securities


(30,941)


(19,490)


Net cash provided by investing activities


17,922


6,182


Cash flows from financing activities:


Proceeds from note payable




5,032


Issuance of preferred stock, net of issuance costs




574


Exercise of stock options




135


Purchase of common stock


(3,774)


(1,120)


Net cash provided by (used in) financing activities


(3,774)


4,621


Net increase in cash and cash equivalents

(2)


$    1,662


$       721


Cash, cash equivalents and marketable securities at beginning of period


77,728


36,817


Cash, cash equivalents and marketable securities at end of period


61,107


30,493


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


$ (16,621)


$   (6,324)

Cision
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SOURCE Digimarc Corporation