Beaverton, Ore. — February 24, 2010 — Digimarc Corporation (NASDAQ: DMRC) today announced its fourth quarter and full year 2009 financial results. Revenues for the fourth quarter were $5.5 million, 19% higher than revenues of $4.7 million in the comparable period of 2008. The higher revenues primarily reflect the benefit from previously announced appropriations for federal defense projects. The Company's net loss for the fourth quarter was $(0.6) million or $(0.08) per fully diluted share compared to $(0.3) million or $(0.05) per fully diluted share in the comparable period of 2008. The net loss in the current period reflects lower interest income from the Company's cash investments and losses from its early stage joint ventures with The Nielsen Company.
Revenues for the year ended December 31, 2009 were $19.1 million, 4% lower than the combined Digimarc and predecessor operations in 2008 reflecting the impact of general economic conditions in the marketplace and to a lesser extent deferral of some federal business contemplated for 2009 into the first half of 2010. Net loss for the year ended December 31, 2009 was $(2.8) million, or $(0.39) per fully diluted share, compared to net income for the combined Digimarc and predecessor operations of $1.5 million, or pro-forma $0.21 per fully diluted share, for 2008. The results reflect a full year of operating expenses as a stand-alone public company where the majority of the prior year benefited from proportional allocations of various shared-services common costs of our predecessor and the secure identity business that was sold to a third party ("Old Digimarc").
The company generated Adjusted EBITDA in the fourth quarter of $0.2 million, or 3% of revenues, compared to $0.1 million, or 2% of revenues in the comparable three-month period of 2008. Adjusted EBITDA for the year of $(0.2) million, or (1) % of revenues, compared to $2.7 million, or 14% of revenues for the combined Digimarc and predecessor operations for 2008, where the prior year benefited from the proportional allocations of various shared-services common costs of Old Digimarc. Digimarc calculates Adjusted EBITDA by adjusting net income (loss) for the effects of interest, taxes, depreciation, amortization and non-cash expenditures for stock compensation. The reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP measure, is included at the end of this release.
Digimarc reported backlog at year-end of approximately $42 million. The company also reported that its cash, cash equivalents and short-term marketable securities were approximately $43 million at December 31, 2009, a $3 million decrease from $46 million at December 31, 2008 resulting primarily from the investment in joint ventures with Nielsen of $1.1 million, and purchases of $1.6 million made pursuant to the Company's stock buyback program.
"Digimarc shareholders enjoyed another good year of growth in value in 2009. Reflecting obviously challenging economic times for our business partners and licensees, our revenues came in roughly the same as those in 2008," said Bruce Davis, Chairman and CEO. "Notwithstanding the flat revenues in 2009, we achieved positive operating cash flow and ended the year with a strong balance sheet with more than $40 million of cash and no debt. We believe we are well positioned for the year ahead."
Digimarc will hold its fourth quarter earnings conference call on Wednesday, February 24, 2010 at 8 a.m. PT / 11 a.m. ET. The call will be open to the general public and the media, and will be broadcast live by webcast at www.digimarc.com and www.earnings.com. The webcast may be accessed at the company's website, www.digimarc.com, by clicking on the "Q4 2009 Digimarc Earnings Conference Call" webcast link on the "Events and Webcasts" page within the "Investors" section. This webcast will be available for later listening at both sites for two weeks following the live call. Thereafter, the webcast will be archived and available at www.digimarc.com/investors/events.asp.
Digimarc Corporation (NASDAQ:DMRC), based in Beaverton, Oregon, is a provider of enabling technologies that create digital identities for all forms of media and many everyday objects that are imperceptible to humans, but not to computers. These technologies help computers to better process sensory data as the industry evolves toward more intuitive and pervasive computing. For more information, please visit us at www.digimarc.com to learn more.
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 regarding our backlog and our positioning for the year ahead 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 is set forth in the Company's Form 10-K for the year ended December 31, 2009 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.
Explanation of Financial Information Presented
The financial information presented combines the periods through August 1, 2008, referred to as "carve-out" financial information from Old Digimarc's digital watermarking business, or predecessor, with the periods after that date, for Digimarc, or successor, to arrive at year-to-date totals for comparative purposes. It is important to note that the financial information in the carve-out financial statements does not include all of the expenses that would have been incurred had the predecessor been a separate, stand alone public entity. As such, the predecessor financial information does not reflect the financial position, results of operations and cash flows of Digimarc's current business, had the predecessor operated as a separate, stand alone public entity during the periods presented in the carve-out financial statements. Additionally, the carve-out financial statements include proportional allocations of various shared services common costs of Old Digimarc because specific identification of these expenses was not practicable. Operating costs of Digimarc on a stand alone basis have been higher than those allocated to the predecessor operations under the shared services methodology applied in the carve-out financial statements. Consequently, the financial position, results of operations and cash flows reflected in the carve-out financial statements may not be indicative of those that would have been achieved had the predecessor operated as a separate, stand alone entity for the periods reflected in the carve-out financial statements.
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