BEAVERTON, OR--(Marketwired - Oct 28, 2015) -  Digimarc Corporation (NASDAQ: DMRC) reported financial results for the third quarter ended September 30, 2015.

Revenue for the third quarter of 2015 totaled $5.4 million compared to revenue of $6.9 million in the same quarter a year-ago. The decrease reflects $1.6 million of lower license revenue due to the end of payments from Verance Corporation in the fourth quarter of 2014, partially offset by growth in subscription revenue.

Operating expenses for the third quarter of 2015 decreased 4% to $7.8 million from $8.0 million in the same quarter a year-ago. The decrease was due to lower spending in research, development and engineering and general and administrative, partially offset by higher investment in sales and marketing related to market development and delivery of Digimarc Discover and Barcode.

Operating loss for the third quarter of 2015 totaled $4.5 million compared to an operating loss of $3.2 million in the same quarter a year-ago. The higher operating loss is due to lower license revenue. 

Net loss for the third quarter of 2015 totaled $4.5 million or $(0.54) per diluted share, compared to a net loss of $2.0 million or $(0.28) per diluted share in the third quarter of 2014. The higher net loss is largely due to $1.6 million lower license revenue in the third quarter of this year and $1.3 million of income tax benefits recognized in the third quarter of last year.

Cash, cash equivalents and marketable securities totaled $43.0 million at September 30, 2015, compared to $34.0 million at June 30, 2015. The increase reflects the sale of 341,949 shares of common stock during the quarter, which generated net proceeds of $12.9 million, less cash used in operations of $2.7 million.

Conference Call
 Digimarc will hold a conference call later today (Wednesday, October 28, 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 number below at least five minutes prior to the scheduled start time:

Toll-Free Number: 866-562-9934 
International Number: 706-634-1493 
Conference ID: 27179683

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 the inventor of the Digimarc Barcode. The Digimarc Barcode enables industrial scanners, smartphones, tablets, and other computer interfaces to reliably, efficiently and economically identify traditional barcoded items, along with many other media objects. Digimarc Barcodes are imperceptible to humans and do all that visible barcodes do, but even better, and can be applied to virtually all forms of media. These remarkable capabilities have allowed Digimarc and its business partners to supply a wide range of patented consumer engagement, media management, and security solutions across multiple consumer and government industry sectors. Digimarc owns an extensive intellectual property portfolio with patents in digital watermarking, content identification and management, media object discovery, and intuitive computing more generally. Digimarc develops and delivers solutions, licenses its intellectual property, and provides development services to business partners across a range of industries. For more information and the latest news, please visit www.digimarc.com and 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 growth in subscription revenue, lower license revenue, lower spending in research, development and engineering and general and administrative and higher investment in sales and marketing, 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     Nine-Month Information  
 September 30,    September 30,    September 30,    September 30,  
 2015    2014    2015    2014  
Revenue:                              
  Service $ 3,072     $ 3,155     $ 9,808     $ 8,859  
  Subscription   1,561       1,452       4,947       4,360  
  License   753       2,320       2,418       6,576  
    Total revenue   5,386       6,927       17,173       19,795  
                               
Cost of revenue:                              
  Service   1,204       1,224       4,279       3,807  
  Subscription   808       812       2,428       2,160  
  License   86       84       256       250  
    Total cost of revenue   2,098       2,120       6,963       6,217  
                               
Gross profit:                              
  Service   1,868       1,931       5,529       5,052  
  Subscription   753       640       2,519       2,200  
  License   667       2,236       2,162       6,326  
    Total gross profit   3,288       4,807       10,210       13,578  
                               
Gross margin:                              
  Service   61 %     61 %     56 %     57 %
  Subscription   48 %     44 %     51 %     50 %
  License   89 %     96 %     89 %     96 %
    Percentage of gross profit to total revenue   61 %     69 %     59 %     69 %
                               
Operating expenses:                              
  Sales and marketing   2,309       1,999       6,497       5,930  
  Research, development and engineering   3,236       3,499       9,345       10,449  
  General and administrative   1,847       2,183       6,033       6,929  
  Intellectual property   367       366       1,025       1,287  
    Total operating expenses   7,759       8,047       22,900       24,595  
                               
Operating loss   (4,471 )     (3,240 )     (12,690 )     (11,017 )
                               
Other income, net   29       3       84       50  
                               
Loss before income taxes   (4,442 )     (3,237 )     (12,606 )     (10,967 )
                               
(Provision) benefit for income taxes   (27 )     1,252       (25 )     4,316  
Net loss $ (4,469 )   $ (1,985 )   $ (12,631 )   $ (6,651 )
                               
Earnings (loss) per common share:                              
Loss per common share - basic $ (0.54 )   $ (0.28 )   $ (1.56 )   $ (0.95 )
Loss per common share - diluted $ (0.54 )   $ (0.28 )   $ (1.56 )   $ (0.95 )
  Weighted average common shares outstanding - basic   8,309       7,176       8,101       7,097  
  Weighted average common shares outstanding - diluted   8,309       7,176       8,101       7,097  
                               
Cash dividends declared per common share: $ -     $ -     $ -     $ 0.22  
                               
                               
                               
Digimarc Corporation  
Consolidated Balance Sheet Information  
(in thousands)  
(Unaudited)  
             
             
   September 30,    December 31,  
   2015    2014  
Assets                
 Current assets:                
    Cash and cash equivalents (1)   $ 11,452     $ 6,122  
    Marketable securities (1)     31,585       32,201  
    Trade accounts receivable, net     2,687       4,545  
    Other current assets     2,862       2,611  
     Total current assets     48,586       45,479  
  Marketable securities (1)     -       749  
  Property and equipment, net     2,852       2,976  
  Intangibles, net     6,723       6,720  
  Goodwill     1,114       1,114  
  Other assets     312       378  
     Total assets   $ 59,587     $ 57,416  
                 
Liabilities and Shareholders' Equity                
 Current liabilities:                
    Accounts payable and other accrued liabilities   $ 1,814     $ 1,379  
    Deferred revenue     1,642       3,660  
     Total current liabilities     3,456       5,039  
  Deferred rent and other long-term liabilities     210       203  
     Total liabilities     3,666       5,242  
                   
  Commitments and contingencies                
                   
  Shareholders' equity:                
    Preferred stock     50       50  
    Common stock     9       8  
    Additional paid-in capital     76,599       60,222  
    Accumulated deficit     (20,737 )     (8,106 )
     Total shareholders' equity     55,921       52,174  
                       
     Total liabilities and shareholders' equity   $ 59,587     $ 57,416  
(1) Aggregate cash, cash equivalents, short- and long-term marketable securities was $43,037 and $39,072 at September 30, 2015 and December 31, 2014, respectively.
   
   
   
Digimarc Corporation  
Consolidated Cash Flow Information  
(in thousands)  
(Unaudited)  
             
    Nine-Month Information  
   September 30,    September 30,  
   2015    2014  
Cash flows from operating activities:                
  Net loss   $ (12,631 )   $ (6,651 )
  Adjustments to reconcile net loss to net cash used in operating activities:                
    Depreciation, amortization and write-off of property and equipment     930       708  
    Amortization and write-off of intangibles     794       916  
    Changes in allowance for doubtful accounts     16       (13 )
    Stock-based compensation     3,857       4,085  
    Deferred income taxes     -       (2,874 )
  Changes in operating assets and liabilities:                
    Trade accounts receivable     1,842       2,000  
    Other current assets     (251 )     (1,559 )
    Other assets     66       160  
    Accounts payable and other accrued liabilities     280       (340 )
    Deferred revenue     (1,929 )     (2,338 )
      Net cash used in operating activities     (7,026 )     (5,906 )
                 
Cash flows from investing activities:                
  Purchase of property and equipment     (747 )     (1,010 )
  Capitalized patent costs     (646 )     (922 )
  Maturity of marketable securities     79,985       47,961  
  Purchase of marketable securities     (78,620 )     (38,840 )
      Net cash provided by (used in) investing activities     (28 )     7,189  
                 
Cash flows from financing activities:                
  Issuance of common stock, net of issuance costs     12,896       (124 )
  Exercise of stock options     1,321       1,319  
  Purchase of common stock     (1,833 )     (1,931 )
  Cash dividends paid     -       (1,654 )
      Net cash provided by (used in) financing activities     12,384       (2,390 )
                 
      Net increase (decrease) in cash and cash equivalents (2)   $ 5,330     $ (1,107 )
                 
                 
  Cash, cash equivalents and marketable securities at beginning of period     39,072       34,964  
  Cash, cash equivalents and marketable securities at end of period     43,037       24,736  
(2) Net increase (decrease) in cash, cash equivalents and marketable securities   $ 3,965     $ (10,228 )