Beaverton, Ore. – August 3, 2022 – Digimarc Corporation (NASDAQ: DMRC) reported financial results for the second quarter ended June 30, 2022.
Second Quarter 2022 Financial Results
Revenue for the second quarter of 2022 increased 23% to $7.7 million compared to $6.3 million in the second quarter of 2021. The increase in revenue primarily reflects the contribution of subscription and service revenue post acquisition from the EVRYTHNG Product Cloud and $0.6 million of higher service revenue from HolyGrail 2.0 recycling projects, partially offset by $0.3 million less subscription revenue as a result of sunsetting our Piracy Intelligence product. Changes in foreign currency exchange rates also negatively impacted revenue for the three month period ended June 30, 2022.
Gross profit for the second quarter of 2022 decreased 5% to $4.0 million compared to $4.2 million in the second quarter of 2021. The decrease in gross profit was primarily due to $1.1 million of amortization expense recognized on the developed technology intangible asset acquired in the EVRYTHNG acquisition, partially offset by higher subscription and service revenue.
Non-GAAP gross profit for the second quarter of 2022 increased 21% to $5.5 million compared to $4.6 million in the second quarter of 2021.
Operating expenses for the second quarter of 2022 decreased 4% to $18.9 million compared to $19.7 million in the second quarter of 2021. The decrease primarily reflects $7.5 million of costs recognized in the second quarter of 2021 associated with the Separation Agreement we entered into with our former chief executive officer in April 2021 and severance costs incurred with organizational changes we made in June 2021, partially offset by $4.2 million of EVRYTHNG operating expenses post acquisition and $2.5 million of higher compensation costs due to higher headcount and annual compensation adjustments.
Non-GAAP operating expenses for the second quarter of 2022 increased $2.4 million to $15.0 million compared to $12.6 million in the second quarter of 2021.
Net loss for the second quarter of 2022 was $14.6 million or $(0.75) loss per common share compared to $15.4 million or $(0.94) loss per common share in the second quarter of 2021.
Non-GAAP net loss for the second quarter of 2022 was $9.2 million or $(0.47) loss per common share compared to $8.0 million or $(0.49) loss per common share in the second quarter of 2021.
At June 30, 2022, cash, cash equivalents, marketable securities totaled $68.4 million compared to $41.6 million at December 31, 2021.
Digimarc will hold a conference call today (Wednesday, August 3, 2022) to discuss these results and provide an update on market conditions and execution of strategy. CEO Riley McCormack, CFO Charles Beck and CLO Joel Meyer 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: 877-407-0832
International Number: +1 201-689-8433
Conference ID: 13731423
If you have any difficulty connecting with the conference call, please contact Lara Burhenn.
Director, Corporate Communications
Digimarc Corporation (NASDAQ: DMRC) is a global leader in product digitization, delivering business value across industries through unique identifiers and cloud-based solutions. A trusted partner in deterring digital counterfeiting of global currency for more than 20 years, Digimarc illuminates a product's journey to provide intelligence and promote a prosperous, safer, and more sustainable world. With Digimarc, you can finally see everything. And when you see everything, you can achieve anything. For more information, visit us at digimarc.com.
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, 2021, 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.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures: Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP loss per common share (diluted). See below for a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. These non-GAAP financial measures are an important measure of our operating performance because they allow management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing non-cash and non-recurring activities that affect comparability. Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons.
Digimarc believes that providing these non-GAAP financial measures, together with the reconciliation to GAAP, helps management and investors make comparisons between us and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules. These non-GAAP financial measures are not measurements of financial performance or liquidity under GAAP. In order to facilitate a clear understanding of its consolidated historical operating results, investors should examine Digimarc’s non-GAAP financial measures in conjunction with its historical GAAP financial information, and investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, GAAP financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results.