PR Newswire | Apr 28, 2021 04:06PM EDT

04/28 15:05 CDT

Digimarc Reports First Quarter 2021 Financial Results BEAVERTON, Ore., April 28, 2021

BEAVERTON, Ore., April 28, 2021 /PRNewswire/ -- Digimarc Corporation (NASDAQ: DMRC), creator of the Digimarc Platform for digital identification and detection, reported financial results for the first quarter ended March 31, 2021.

First Quarter 2021 Financial ResultsRevenue for the first quarter of 2021 increased eight percent to $6.7 million compared to $6.2 million in the first quarter of 2020. Service revenue increased one percent, reflecting growth in services to Commercial1 customers, partially offset by a decrease in services to a Government customer as a result of timing of program work. Subscription revenue increased 19%, reflecting the impact of a new contract with a Commercial customer.

Operating expenses for the first quarter of 2021 decreased four percent to $12.6 million compared to $13.0 million in the same quarter a year-ago, reflecting lower travel, compensation and marketing costs.

Operating loss for the first quarter of 2021 decreased nine percent to $8.2 million compared to $9.1 million in the first quarter of 2020, due to higher revenue and lower operating expenses.

Net loss for the first quarter of 2021 decreased eight percent to $8.2 million or $(0.50) per diluted share compared to net loss of $8.9 million or $(0.74) per diluted share in the same quarter a year-ago.

At quarter-end, cash, cash equivalents, short- and long-term marketable securities totaled $70.7 million compared to $77.7 million at December 31, 2020.

Conference callDigimarc will hold a conference call today (Wednesday, April 28, 2021) to discuss these results and provide an update on market conditions and execution of strategy. President and CEO Riley McCormack 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 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: 866-562-9934International Number: 706-679-0638Conference ID: 9483867

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

About DigimarcDigimarc 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 us at digimarc.com on LinkedIn and follow us on Twitter @digimarc to learn more about The Barcode of Everything(r).

Forward-looking statementsExcept 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.

^1 Commercial includes customers previously categorized as Retail and Media aswell as a small number of customers previously categorized as Government. Thechange in categorization was made to better align with the structure of oursales and delivery organization and is a more accurate representation of how weview and manage our business. Management will provide comparative informationunder the new and old reporting structure for each quarter of fiscal 2021 and2020, along with additional bookings disclosure not historically provided, inthe earnings call transcripts, starting with this quarter. These transcriptsare posted on our website.

Digimarc Corporation

Consolidated Income Statement Information

(in thousands, except per share amounts)

(Unaudited)

Three Month Information

March 31, March 31,

2021 2020

Revenue:

Service $ 3,784 $ 3,738

Subscription 2,916 2,451

Total revenue 6,700 6,189

Cost of revenue:

Service 1,570 1,684

Subscription 791 514

Total cost of revenue 2,361 2,198

Gross profit:

Service 2,214 2,054

Subscription 2,125 1,937

Total gross profit 4,339 3,991

Gross margin:

Service 59% 55%

Subscription 73% 79%

Percentage of gross profit to total revenue 65% 64%

Operating expenses:

Sales and marketing 4,941 5,246

Research, development and engineering 4,131 4,433

General and administrative 3,493 3,367

Total operating expenses 12,565 13,046

Operating loss (8,226) (9,055)

Other income, net 10 142

Loss before income taxes (8,216) (8,913)

Benefit (provision) for income taxes (6) 5

Net loss $ (8,222) $(8,908)

Earnings (loss) per common share:

Loss per common share - basic $ (0.50) $ (0.74)

Loss per common share - diluted $ (0.50) $ (0.74)

Weighted average common shares outstanding - basic 16,333 12,037

Weighted average common shares outstanding - diluted 16,333 12,037

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)

March 31, December 31,

2021 2020

Assets

Current assets:

Cash and cash equivalents^(1) $ 4,705 $ 19,696

Marketable securities^(1) 65,796 58,032

Trade accounts receivable, net 4,141 3,907

Other current assets 1,978 2,197

Total current assets 76,620 83,832

Marketable securities^(1) 159 -

Property and equipment, net 3,144 3,272

Intangibles, net 6,609 6,612

Goodwill 1,114 1,114

Other assets 2,502 2,198

Total assets $ 90,148 $ 97,028

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable and other accrued liabilities $ 3,008 $ 2,827

Note payable, current 4,799 3,947

Deferred revenue 2,943 3,002

Total current liabilities 10,750 9,776

Lease liability and other long-term liabilities 2,325 2,295

Note payable, long-term 280 1,118

Total liabilities 13,355 13,189

Commitments and contingencies

Shareholders' equity:

Preferred stock 50 50

Common stock 17 17

Additional paid-in capital 256,200 255,024

Accumulated deficit (179,474) (171,252)

Total shareholders' equity 76,793 83,839

Total liabilities and shareholders' equity $ 90,148 $ 97,028

(1) Aggregate cash, cash equivalents, short- and long-term marketablesecurities was $70,660 and $77,728 at March 31, 2021 and December 31, 2020,respectively.

Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)

Three Month Information

March 31, March 31,

2021 2020

Cash flows from operating activities:

Net loss $ (8,222) $(8,908)

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

Depreciation, amortization and write-off of property and equipment 363 374

Amortization and write-off of intangibles 177 201

Amortization of right of use assets under operating leases 118 117

Amortization of net premiums and (discounts) on marketable securities (266) 97

Stock-based compensation 2,010 2,195

Changes in operating assets and liabilities:

Trade accounts receivable (612) 62

Other current assets 219 338

Other assets (44) 19

Accounts payable and other accrued liabilities 501 61

Deferred revenue (55) (146)

Lease liability and other long-term liabilities (177) (159)

Net cash used in operating activities (5,988) (5,749)

Cash flows from investing activities:

Purchase of property and equipment (317) (235)

Capitalized patent costs (159) (137)

Maturity of marketable securities 17,494 11,594

Purchase of marketable securities (25,151) (6,407)

Net cash provided by (used in) investing activities (8,133) 4,815

Cash flows from financing activities:

Issuance of common stock, net of issuance costs - 574

Exercise of stock options - 135

Purchase of common stock (870) (738)

Net cash used in financing activities (870) (29)

Net decrease in cash and cash equivalents^(2) $(14,991) $ (963)

Cash, cash equivalents and marketable securities at beginning of period 77,728 36,817

Cash, cash equivalents and marketable securities at end of period 70,660 30,570

(2) Net decrease in cash, cash equivalents and marketable securities $ (7,068) $(6,247)

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SOURCE Digimarc Corporation