Beaverton, Ore. – February 24, 2021 – 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.
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.
Chief Financial Officer
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.
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.