Digimarc Reports First Quarter 2024 Financial Results
Annual Recurring Revenue(1) Increases 85%
Subscription Gross Profit Margin(2) Expands to 87%
“Q1 was another strong quarter for
First Quarter Financial Results
Subscription revenue for the first quarter of 2024 increased to
Service revenue for the first quarter of 2024 increased to
Total revenue for the first quarter of 2024 increased to
Gross profit margin for the first quarter of 2024 increased to 63% compared to 54% for the first quarter of 2023. Excluding amortization expense on acquired intangible assets, subscription gross profit margin increased to 87% from 80% while service gross profit margin slightly decreased to 56% from 57% for the first quarter of 2024 compared to the first quarter of 2023.
Non-GAAP gross profit margin for the first quarter of 2024 increased to 78% compared to 73% for the first quarter of 2023.
Operating expenses for the first quarter of 2024 decreased to
Non-GAAP operating expenses for the first quarter of 2024 decreased to
Net loss for the first quarter of 2024 was
Non-GAAP net loss for the first quarter of 2024 was
At
_______________ |
(1) Annual Recurring Revenue (ARR) is a company performance metric calculated as the aggregation of annualized subscription fees from all of our commercial contracts as of the measurement date. |
(2) Subscription Gross Profit Margin excludes amortization expense on acquired intangible assets. |
Conference Call
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: 201-689-8433
Conference ID number: 13743902
About
Forward-Looking Statements
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
Non-GAAP Financial Measures
This 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 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.
Consolidated Income Statement Information (in thousands, except per share amounts) (Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
2024 |
|
2023 |
||||
Revenue: |
|
|
|
|
|
|
||
Subscription |
|
$ |
5,762 |
|
|
$ |
3,885 |
|
Service |
|
|
4,176 |
|
|
|
3,958 |
|
Total revenue |
|
|
9,938 |
|
|
|
7,843 |
|
Cost of revenue: |
|
|
|
|
|
|
||
Subscription (1) |
|
|
747 |
|
|
|
795 |
|
Service (1) |
|
|
1,839 |
|
|
|
1,715 |
|
Amortization expense on acquired intangible assets |
|
|
1,140 |
|
|
|
1,089 |
|
Total cost of revenue |
|
|
3,726 |
|
|
|
3,599 |
|
Gross profit |
|
|
|
|
|
|
||
Subscription (1) |
|
|
5,015 |
|
|
|
3,090 |
|
Service (1) |
|
|
2,337 |
|
|
|
2,243 |
|
Amortization expense on acquired intangible assets |
|
|
(1,140 |
) |
|
|
(1,089 |
) |
Total gross profit |
|
|
6,212 |
|
|
|
4,244 |
|
Gross profit margin: |
|
|
|
|
|
|
||
Subscription (1) |
|
|
87 |
% |
|
|
80 |
% |
Service (1) |
|
|
56 |
% |
|
|
57 |
% |
Total |
|
|
63 |
% |
|
|
54 |
% |
|
|
|
|
|
|
|
||
Operating expenses: |
|
|
|
|
|
|
||
Sales and marketing |
|
|
5,536 |
|
|
|
6,298 |
|
Research, development and engineering |
|
|
6,741 |
|
|
|
7,826 |
|
General and administrative |
|
|
4,520 |
|
|
|
4,627 |
|
Amortization expense on acquired intangible assets |
|
|
272 |
|
|
|
260 |
|
Total operating expenses |
|
|
17,069 |
|
|
|
19,011 |
|
|
|
|
|
|
|
|
||
Operating loss |
|
|
(10,857 |
) |
|
|
(14,767 |
) |
Other income, net |
|
|
528 |
|
|
|
745 |
|
Loss before income taxes |
|
|
(10,329 |
) |
|
|
(14,022 |
) |
Provision for income taxes |
|
|
(9 |
) |
|
|
(18 |
) |
Net loss |
|
$ |
(10,338 |
) |
|
$ |
(14,040 |
) |
|
|
|
|
|
|
|
||
Loss per share: |
|
|
|
|
|
|
||
Loss per share — basic |
|
$ |
(0.50 |
) |
|
$ |
(0.70 |
) |
Loss per share — diluted |
|
$ |
(0.50 |
) |
|
$ |
(0.70 |
) |
Weighted average shares outstanding — basic |
|
|
20,730 |
|
|
|
20,093 |
|
Weighted average shares outstanding — diluted |
|
|
20,730 |
|
|
|
20,093 |
|
______________ | ||||||||
(1) Cost of revenue, Gross profit and Gross profit margin for Subscription and Service excludes amortization expense on acquired intangible assets. |
Reconciliation of GAAP to Non-GAAP Financial Measures (in thousands, except per share amounts) (Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
2024 |
|
2023 |
||||
GAAP gross profit |
|
$ |
6,212 |
|
|
$ |
4,244 |
|
Amortization of acquired intangible assets |
|
|
1,140 |
|
|
|
1,089 |
|
Amortization and write-off of other intangible assets |
|
|
138 |
|
|
|
144 |
|
Stock-based compensation |
|
|
253 |
|
|
|
238 |
|
Non-GAAP gross profit |
|
$ |
7,743 |
|
|
$ |
5,715 |
|
Non-GAAP gross profit margin |
|
|
78 |
% |
|
|
73 |
% |
|
|
|
|
|
|
|
||
GAAP operating expenses |
|
$ |
17,069 |
|
|
$ |
19,011 |
|
Depreciation and write-off of property and equipment |
|
|
(193 |
) |
|
|
(428 |
) |
Amortization of acquired intangible assets |
|
|
(272 |
) |
|
|
(260 |
) |
Amortization and write-off of other intangible assets |
|
|
(133 |
) |
|
|
(39 |
) |
Amortization of lease right of use assets under operating leases |
|
|
(87 |
) |
|
|
(166 |
) |
Stock-based compensation |
|
|
(2,578 |
) |
|
|
(2,638 |
) |
Non-GAAP operating expenses |
|
$ |
13,806 |
|
|
$ |
15,480 |
|
|
|
|
|
|
|
|
||
GAAP net loss |
|
$ |
(10,338 |
) |
|
$ |
(14,040 |
) |
Total adjustments to gross profit |
|
|
1,531 |
|
|
|
1,471 |
|
Total adjustments to operating expenses |
|
|
3,263 |
|
|
|
3,531 |
|
Non-GAAP net loss |
|
$ |
(5,544 |
) |
|
$ |
(9,038 |
) |
|
|
|
|
|
|
|
||
GAAP loss per share (diluted) |
|
$ |
(0.50 |
) |
|
$ |
(0.70 |
) |
Non-GAAP net loss |
|
$ |
(5,544 |
) |
|
$ |
(9,038 |
) |
Non-GAAP loss per share (diluted) |
|
$ |
(0.27 |
) |
|
$ |
(0.45 |
) |
Consolidated Balance Sheet Information (in thousands) (Unaudited) |
||||||||
|
|
|
|
|
||||
|
|
2024 |
|
2023 |
||||
ASSETS |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents (1) |
|
$ |
36,414 |
|
|
$ |
21,456 |
|
Marketable securities (1) |
|
|
12,511 |
|
|
|
5,726 |
|
Trade accounts receivable, net |
|
|
5,215 |
|
|
|
5,813 |
|
Other current assets |
|
|
3,802 |
|
|
|
4,085 |
|
Total current assets |
|
|
57,942 |
|
|
|
37,080 |
|
Property and equipment, net |
|
|
1,445 |
|
|
|
1,570 |
|
Intangibles, net |
|
|
26,720 |
|
|
|
28,458 |
|
|
|
|
8,576 |
|
|
|
8,641 |
|
Lease right of use assets |
|
|
3,930 |
|
|
|
4,017 |
|
Other assets |
|
|
1,106 |
|
|
|
786 |
|
Total assets |
|
$ |
99,719 |
|
|
$ |
80,552 |
|
|
|
|
|
|
|
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable and other accrued liabilities |
|
$ |
4,100 |
|
|
$ |
6,672 |
|
Deferred revenue |
|
|
5,256 |
|
|
|
5,853 |
|
Total current liabilities |
|
|
9,356 |
|
|
|
12,525 |
|
Long-term lease liabilities |
|
|
5,812 |
|
|
|
5,994 |
|
Other long-term liabilities |
|
|
80 |
|
|
|
106 |
|
Total liabilities |
|
|
15,248 |
|
|
|
18,625 |
|
|
|
|
|
|
|
|
||
Shareholders’ equity: |
|
|
|
|
|
|
||
Preferred stock |
|
|
50 |
|
|
|
50 |
|
Common stock |
|
|
21 |
|
|
|
20 |
|
Additional paid-in capital |
|
|
409,473 |
|
|
|
376,189 |
|
Accumulated deficit |
|
|
(322,106 |
) |
|
|
(311,768 |
) |
Accumulated other comprehensive loss |
|
|
(2,967 |
) |
|
|
(2,564 |
) |
Total shareholders’ equity |
|
|
84,471 |
|
|
|
61,927 |
|
Total liabilities and shareholders’ equity |
|
$ |
99,719 |
|
|
$ |
80,552 |
|
_______________ | ||||||||
(1) Aggregate cash, cash equivalents, and marketable securities was |
Consolidated Cash Flow Information (in thousands) (Unaudited) |
||||||||
|
|
Three Months Ended |
||||||
|
|
2024 |
|
2023 |
||||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
(10,338 |
) |
|
$ |
(14,040 |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and write-off of property and equipment |
|
|
193 |
|
|
|
428 |
|
Amortization of acquired intangible assets |
|
|
1,412 |
|
|
|
1,349 |
|
Amortization and write-off of other intangible assets |
|
|
271 |
|
|
|
183 |
|
Amortization of lease right of use assets under operating leases |
|
|
87 |
|
|
|
166 |
|
Stock-based compensation |
|
|
2,831 |
|
|
|
2,876 |
|
Decrease in allowance for doubtful accounts |
|
|
(17 |
) |
|
|
— |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Trade accounts receivable |
|
|
600 |
|
|
|
631 |
|
Other current assets |
|
|
273 |
|
|
|
1,766 |
|
Other assets |
|
|
(323 |
) |
|
|
(191 |
) |
Accounts payable and other accrued liabilities |
|
|
(2,624 |
) |
|
|
(910 |
) |
Deferred revenue |
|
|
(600 |
) |
|
|
(925 |
) |
Lease liability and other long-term liabilities |
|
|
(187 |
) |
|
|
(77 |
) |
Net cash provided by (used in) operating activities |
|
|
(8,422 |
) |
|
|
(8,744 |
) |
|
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchase of property and equipment |
|
|
(106 |
) |
|
|
(51 |
) |
Capitalized patent costs |
|
|
(106 |
) |
|
|
(112 |
) |
Proceeds from maturities of marketable securities |
|
|
3,501 |
|
|
|
10,247 |
|
Purchases of marketable securities |
|
|
(10,320 |
) |
|
|
(1,975 |
) |
Net cash provided by (used in) investing activities |
|
|
(7,031 |
) |
|
|
8,109 |
|
|
|
|
|
|
|
|
||
Cash flows from financing activities: |
|
|
|
|
|
|
||
Issuance of common stock, net of issuance costs |
|
|
32,218 |
|
|
|
— |
|
Purchase of common stock |
|
|
(1,781 |
) |
|
|
(656 |
) |
Repayment of loans |
|
|
(15 |
) |
|
|
(26 |
) |
Net cash provided by (used in) financing activities |
|
|
30,422 |
|
|
|
(682 |
) |
Effect of exchange rate on cash |
|
|
(11 |
) |
|
|
20 |
|
Net increase (decrease) in cash and cash equivalents (2) |
|
$ |
14,958 |
|
|
$ |
(1,297 |
) |
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Cash, cash equivalents and marketable securities at beginning of period |
|
|
27,182 |
|
|
|
52,542 |
|
Cash, cash equivalents and marketable securities at end of period |
|
|
48,925 |
|
|
|
43,025 |
|
(2) Net increase (decrease) in cash, cash equivalents and marketable securities |
|
$ |
21,743 |
|
|
$ |
(9,517 |
) |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240502576461/en/
Chief Financial Officer
Charles.Beck@digimarc.com
+1 503-469-4721
Source: