EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Company Contacts:

Michael McConnell

Chief Financial Officer

503-469-4652

mmcconnell@digimarc.com

Scott Liolios or Matt Glover

Liolios Group, Inc.

Investor Relations for Digimarc

949-574-3860

info@liolios.com

FOR IMMEDIATE RELEASE

Digimarc Reports First Quarter 2011 Financial Results

Beaverton, Ore. — April 25, 2011 — Digimarc Corporation (NASDAQ: DMRC) reported financial results for the first quarter ended March 31, 2011.

Revenues for the first quarter 2011 decreased 11% to $9.1 million from $10.2 million in the same quarter a year ago. The decrease in revenues was primarily due to a one-time $4.5 million payment from Arbitron in Q1 last year, while the 2011 quarter reflects $3 million of new revenues from the Intellectual Ventures relationship and increased license revenues from some of our long term licensees.

Operating income for the first quarter 2011 was $1.4 million, compared to $4.2 million in the first quarter of 2010. The decrease primarily reflects lower revenues as described above, higher product development and marketing expenses associated with the launch of Digimarc Discover, and litigation expenses associated with the Verance matter.

Net income for the quarter was $0.9 million or $0.12 per diluted share, which included Digimarc’s share of the net loss of $0.5 million from its joint ventures with Nielsen. This compares to a net income of $3.8 million or $0.51 per diluted share in the first quarter of 2010, which also included Digimarc’s share of the net loss of $0.5 million from the company’s joint ventures with Nielsen.

At March 31, 2011, cash and cash equivalents and marketable securities totaled $33.1 million, down from $45.9 million at December 31, 2010 primarily due to the $15 million stock buyback from Koninklijke Philips Electronics N.V. (NYSE: PHG) in January.

According to CEO Bruce Davis, “We got off to a nice start to the year. Our operating performance was in line with our expectations. We were pleased to be able to negotiate the purchase of a substantial number of our shares from Philips in January. The Company launched the beta program for Digimarc Discover, the seeing/hearing platform for mobile devices, in February, which will run through May 31st. The response has been encouraging. There are many interesting opportunities in the pipeline.”


Conference Call

Digimarc will hold a conference call later today (Monday, April 25, 2011) to discuss first quarter 2011. Chairman and CEO, Bruce Davis and CFO, Mike McConnell 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 call will be simulcast via a link available on Digimarc’s home page at www.digimarc.com, and will be available for replay until May 9, 2011. Thereafter, the webcast will be archived at www.digimarc.com/investors/events.asp.

About Digimarc

Digimarc Corporation (NASDAQ: DMRC), based in Beaverton, Oregon, is a leading innovator and provider of enabling technologies that create digital identities for all forms of media and many everyday objects. The embedded digital IDs are imperceptible to humans, but not to computers, networks and devices like mobile phones, which can now use cameras and microphones as sensory inputs to “see, hear and understand” the world around them within the context of their environment. Digimarc has built an extensive intellectual property portfolio with patents in digital watermarking, content identification and management, media and object discovery to enable ubiquitous computing, and related technologies. Digimarc develops solutions, licenses its intellectual property, and provides development services to business partners across a range of industries. For more information, please visit www.digimarc.com.

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 Digimarc’s investment in marketing and research and development associated with the launch of Digimarc Discover, increases in license revenues from long term licensees, opportunities in Digimarc’s pipeline, 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 are set forth in the company’s Form 10-K for the year ended December 31, 2010 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

Income Statement Information

(in thousands, except per share amounts)

(Unaudited)

 

     Three-Month Information  
     March 31,
2011
    March 31,
2010
 

Revenue:

    

Service

   $ 3,069      $ 3,514   

License & subscription

     6,022        6,678   
                

Total revenue

     9,091        10,192   

Cost of revenue:

    

Service

     1,584        1,800   

License & subscription

     65        57   
                

Total cost of revenue

     1,649        1,857   

Gross profit:

    

Service

     1,485        1,714   

License & subscription

     5,957        6,621   
                

Total gross profit

     7,442        8,335   

Percentage of gross profit to revenues:

    

Service

     48     49

License & subscription

     99     99

Percentage of gross profit to total revenue

     82     82

Operating expenses:

    

Sales and marketing

     1,102        741   

Research, development and engineering

     1,775        1,259   

General and administrative

     2,847        1,885   

Intellectual property

     301        257   
                

Total operating expenses

     6,025        4,142   

Operating income

     1,417        4,193   

Net loss from joint ventures

     (537     (457

Interest income, net

     58        61   
                

Income before provision for income taxes

     938        3,797   

Provision for income taxes

     —          (21
                

Net income

   $ 938      $ 3,776   
                

Earnings per share:

    

Net income per share - basic

   $ 0.14      $ 0.53   

Net income per share - diluted

   $ 0.12      $ 0.51   

Weighted average shares outstanding - basic

     6,864        7,096   

Weighted average shares outstanding - diluted

     7,505        7,387   


Digimarc Corporation

Balance Sheet Information

(in thousands)

(Unaudited)

 

     March 31,
2011
     December 31,
2010
 

Assets

     

Current assets:

     

Cash and cash equivalents (1)

   $ 7,423       $ 6,340   

Marketable securities (1)

     21,421         28,441   

Trade accounts receivable, net

     2,725         3,481   

Other current assets

     812         1,345   
                 

Total current assets

     32,381         39,607   

Marketable securities (1)

     4,264         11,163   

Property and equipment, net

     1,342         1,330   

Intangibles, net

     2,288         2,174   

Investments in joint ventures

     1,192         1,029   

Other assets, net

     408         462   
                 

Total assets

   $ 41,875       $ 55,765   
                 

Liabilities and Shareholders’ Equity

     

Current liabilities:

     

Accounts payable and other accrued liabilities

   $ 1,652       $ 1,519   

Deferred revenue

     2,324         2,562   
                 

Total current liabilities

     3,976         4,081   

Long-term liabilities

     510         525   
                 

Total liabilities

     4,486         4,606   

Commitments and contingencies

     

Shareholders’ equity:

     

Preferred stock

     50         50   

Common stock

     7         7   

Additional paid-in capital

     34,901         49,609   

Retained earnings

     2,431         1,493   
                 

Total shareholders’ equity

     37,389         51,159   
                 

Total liabilities and shareholders’ equity

   $ 41,875       $ 55,765   
                 

 

(1) Aggregate cash, cash equivalents, short- and long-term marketable securities was $33,108 and $45,944 at March 31, 2011 and December 31, 2010.


Digimarc Corporation

Cash Flow Information

(in thousands)

(Unaudited)

 

     Three-Month Information  
     March 31,
2011
    March 31,
2010
 

Cash flows from operating activities:

    

Net income

   $ 938      $ 3,776   

Adjustments to reconcile net income to net cash provided by operating activities:

    

Depreciation and amortization, property and equipment

     153        153   

Amortization, intangibles

     26        13   

Stock-based compensation

     986        740   

Net loss from joint ventures

     537        457   

Changes in operating assets and liabilities:

    

Trade accounts receivable, net

     756        720   

Other current assets

     533        132   

Other assets, net

     54        14   

Accounts payable and other accrued liabilities

     119        (431

Deferred revenue

     (239     (193
                

Net cash provided by operating activities

     3,863        5,381   

Cash flows from investing activities:

    

Purchase of property and equipment

     (165     (71

Capitalized patent costs

     (129     (236

Investments in joint ventures

     (700     (700

Sale or maturity of marketable securities

     42,234        17,756   

Purchase of marketable securities

     (28,315     (18,743
                

Net cash provided by (used in) investing activities

     12,925        (1,994

Cash flows from financing activities:

    

Issuance of common stock

     —          8   

Purchase of common stock

     (15,705     (22
                

Net cash used in financing activities

     (15,705     (14
                

Net increase in cash and cash equivalents (2)

   $ 1,083      $ 3,373   
                

Cash equivalents and marketable securities at beginning of period

     45,944        42,786   

Cash equivalents and marketable securities at end of period

     33,108        47,146   
                

(2)    Net increase (decrease) in cash, cash equivalents and marketable securities

   $ (12,836   $ 4,360   
                

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