BEAVERTON, OR -- (Marketwired) -- 02/19/15 --Digimarc Corporation (NASDAQ: DMRC) reported financial results for the fourth quarter and fiscal year ended December 31, 2014.
Fourth Quarter 2014 Operational Highlights
- Partnered with Shazam to enable comprehensive content discovery everywhere. The collaboration will add Digimarc print and audio identification to Shazam's mobile app, which has more than 500 million downloads and 100 million mobile monthly active users.
- Partnered with SGS International, a global leader in the digital imaging industry that serves top retailers and large consumer packaged goods companies, which became a certified service provider for the Digimarc© Barcode.
- Joined the GS1 US Solution Partner Program, which marked an important milestone in the market adoption of the Digimarc Barcode.
- Demonstrated new mobile payment software development kit at Money 20/20 for securely exchanging payment information between retailers and shoppers.
Fourth Quarter 2014 Financial Results
Revenue for the fourth quarter of 2014 totaled $5.9 million compared to $6.8 million in the same quarter a year-ago. The decrease was due to lower license revenue reflecting the scheduled completion of quarterly license fee payments from The Nielsen Company in the first quarter of 2014 and lower reported royalties from another licensee, partially offset by increases in subscription and service revenue.
Operating loss for the fourth quarter of 2014 totaled $4.2 million compared to an operating loss of $3.4 million in the same quarter a year-ago. The higher operating loss is largely due to lower license revenue, partially offset by lower operating expenses due to the completion of the licensing audit with Intellectual Ventures in January 2014.
Net loss for the fourth quarter of 2014 totaled $9.2 million or $(1.23) per diluted share compared to a net loss of $1.3 million or $(0.19) per diluted share in the fourth quarter of 2013. Net loss for the fourth quarter of 2014 included a $6.8 million noncash income tax charge to record a full valuation allowance against deferred tax assets as of December 31, 2014. Excluding this charge, net loss would have been $2.4 million or $(0.32) per diluted share.
Cash, cash equivalents and marketable securities increased by $14.4 million, from $24.7 million at September 30, 2014 to $39.1 million at December 31, 2014. The increase reflects the sale of 684,215 shares of common stock during the quarter, which generated cash proceeds of $16.3 million, less cash used in operations of $0.8 million.
Full Year 2014 Results
Revenue for 2014 was $25.7 million compared to $35.0 million in 2013. The decrease was due to lower license revenue reflecting the scheduled completion of the quarterly license fee payments from Intellectual Ventures in the second quarter of 2013 and from The Nielsen Company in the first quarter of 2014. Outside of licensing, revenue for 2014 was up $0.7 million compared to 2013, reflecting higher subscription revenue from Digimarc Discover and Digimarc Guardian products.
Operating loss for 2014 totaled $15.2 million compared to an operating loss of $2.4 million in 2013. The higher operating loss is largely due to lower license revenue. Operating expenses were higher in 2014 reflecting continued investment in the company's product development and sales growth initiatives, mainly focused on Digimarc Discover and Barcode.
Net loss for 2014 totaled $15.8 million or $(2.22) per diluted share compared to a net loss of $0.5 million or $(0.10) per diluted share in 2013. Net loss for 2014 included a $6.8 million noncash income tax charge to record a full valuation allowance against deferred tax assets as of December 31, 2014. Excluding this charge, the net loss for 2014 would have been $9.1 million or $(1.27) per diluted share.
Conference Call
Digimarc will hold a conference call later today (Thursday, February 19, 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 telephone number below at least five minutes prior to the scheduled start time:
Number: 866-562-9934
Conference ID: 27179680
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 a leading innovator and provider of consumer engagement, media management, and security solutions that create digital identities for all forms of media and many everyday objects. Digimarc's digital IDs are imperceptible to humans and enable computers, networks and devices like mobile phones to better "see, hear and understand" brand impressions and other objects of interest. Digimarc has built an extensive intellectual property portfolio with patents in digital watermarking, content identification and management, media and object discovery to enable ubiquitous computing and related technologies. Digimarc develops solutions, licenses its intellectual property, and provides development services to business partners across a range of industries. For more information and the latest news, visit www.digimarc.com or 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 subscription revenue, increased investments in product development and sales growth 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 Twelve-Month Information
-------------------------- --------------------------
December 31, December 31, December 31, December 31,
2014 2013 2014 2013
------------ ------------ ------------ ------------
Revenue:
Service $ 2,868 $ 2,650 $ 11,727 $ 11,631
Subscription 1,843 1,350 6,203 5,591
License 1,152 2,826 7,728 17,742
------------ ------------ ------------ ------------
Total revenue 5,863 6,826 25,658 34,964
Cost of revenue:
Service 1,270 1,260 5,077 5,327
Subscription 860 643 3,020 2,491
License 83 93 334 387
------------ ------------ ------------ ------------
Total cost of
revenue 2,213 1,996 8,431 8,205
Gross profit:
Service 1,598 1,390 6,650 6,304
Subscription 983 707 3,183 3,100
License 1,069 2,733 7,394 17,355
------------ ------------ ------------ ------------
Total gross
profit 3,650 4,830 17,227 26,759
Gross margin:
Service 56% 52% 57% 54%
Subscription 53% 52% 51% 55%
License 93% 97% 96% 98%
Percentage of
gross profit to
total revenue 62% 71% 67% 77%
Operating expenses:
Sales and
marketing 2,044 1,822 7,974 6,144
Research,
development and
engineering 3,262 3,450 13,711 12,274
General and
administrative 2,042 2,635 8,972 9,624
Intellectual
property 506 313 1,793 1,129
------------ ------------ ------------ ------------
Total operating
expenses 7,854 8,220 32,450 29,171
Operating loss (4,204) (3,390) (15,223) (2,412)
Other income, net 4 28 55 109
------------ ------------ ------------ ------------
Loss before income
taxes (4,200) (3,362) (15,168) (2,303)
(Provision) benefit
for income taxes (4,969) 2,077 (652) 1,796
------------ ------------ ------------ ------------
Net loss $ (9,169) $ (1,285) $ (15,820) $ (507)
============ ============ ============ ============
Earnings (loss) per
common share:
Earnings (loss) per
common share -
basic $ (1.23) $ (0.19) $ (2.22) $ (0.10)
Earnings (loss) per
common share -
diluted $ (1.23) $ (0.19) $ (2.22) $ (0.10)
Weighted average
common shares
outstanding -
basic 7,453 6,913 7,187 6,866
Weighted average
common shares
outstanding -
diluted 7,453 6,913 7,187 6,866
Cash dividends
declared per common
share: $ - $ 0.11 $ 0.22 $ 0.44
Digimarc Corporation
Consolidated Cash Flow Information
(in thousands)
(Unaudited)
Twelve-Month Information
--------------------------
December 31, December 31,
2014 2013
------------ ------------
Cash flows from operating activities:
Net loss $ (15,820) $ (507)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization of property and
equipment 974 742
Amortization and write-off of intangibles 1,340 1,247
Change in allowance for doubtful accounts (23) 45
Gain on reversal of contingent merger
consideration - (190)
Stock-based compensation 5,403 4,502
Deferred income taxes 2,085 (715)
Tax benefit (expense) from stock-based awards - (855)
Excess tax benefit from stock-based awards - (201)
Changes in operating assets and liabilities:
Trade accounts receivable, net 1,316 (1,667)
Other current assets (1,028) (342)
Other assets 192 (404)
Accounts payable and other accrued
liabilities (635) 124
Deferred revenue (537) 1,694
------------ ------------
Net cash provided by (used in) operating
activities (6,733) 3,473
Cash flows from investing activities:
Purchase of property and equipment (1,399) (1,644)
Capitalized patent costs and purchased
intellectual property (1,190) (1,098)
Sale or maturity of marketable securities 78,174 55,627
Purchase of marketable securities (79,971) (54,590)
------------ ------------
Net cash used in investing activities (4,386) (1,705)
Cash flows from financing activities:
Issuance of common stock, net of issuance
costs 15,989 -
Exercise of stock options 1,487 -
Purchase of common stock (2,392) (1,822)
Cash dividends paid (1,654) (3,202)
Excess tax benefit from stock-based awards - 201
------------ ------------
Net cash provided by (used in) financing
activities 13,430 (4,823)
------------ ------------
Net increase (decrease) in cash and cash
equivalents (1) $ 2,311 $ (3,055)
============ ============
Cash, cash equivalents and marketable
securities at beginning of period 34,964 39,056
Cash, cash equivalents and marketable
securities at end of period 39,072 34,964
------------ ------------
(1) Net increase (decrease) in cash, cash
equivalents and marketable securities $ 4,108 $ (4,092)
============ ============
Digimarc Corporation
Consolidated Balance Sheet Information
(in thousands)
(Unaudited)
December 31, December 31,
2014 2013
------------ ------------
Assets
Current assets:
Cash and cash equivalents (2) $ 6,122 $ 3,811
Marketable securities (2) 32,201 25,851
Trade accounts receivable, net 4,545 5,838
Other current assets 2,611 1,658
------------ ------------
Total current assets 45,479 37,158
Marketable securities (2) 749 5,302
Property and equipment, net 2,976 2,395
Intangibles, net 6,720 6,709
Goodwill 1,114 1,114
Deferred tax assets, net - 3,949
Other assets 378 570
------------ ------------
Total assets $ 57,416 $ 57,197
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and other accrued
liabilities $ 1,379 $ 1,560
Deferred revenue 3,660 4,218
------------ ------------
Total current liabilities 5,039 5,778
Deferred rent and other long-term liabilities 203 496
------------ ------------
Total liabilities 5,242 6,274
Commitments and contingencies
Shareholders' equity:
Preferred stock 50 50
Common stock 8 7
Additional paid-in capital 60,222 41,498
Retained earnings (accumulated deficit) (8,106) 9,368
------------ ------------
Total shareholders' equity 52,174 50,923
------------ ------------
Total liabilities and shareholders' equity $ 57,416 $ 57,197
============ ============
(2) Aggregate cash, cash equivalents, short- and long-term marketable
securities was $39,072 and $34,964 at December 31, 2014 and December 31,
2013, respectively.
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
