Digimarc (DMRC) Q4 2021 earnings summary

Executive summary

• Revenue rose 11% to $26.5m, led by Commercial growth; net loss widened to $34.8m and operating loss to $39.9m.

• Commercial adoption, partner execution and customer concentration remain central to growth prospects, while available cash and securities were expected to fund less than 12 months of operations absent growth, warrant proceeds or cost actions.

Financial highlights

• FY2021 revenue was $26.520m, up 11% YoY; service revenue rose 8% to $15.006m and subscription revenue rose 14% to $11.514m.

• Gross profit increased 11% to $17.743m; gross margin held at 67%, with service margin at 58% and subscription margin at 78% versus 79% in 2020.

• Operating expenses rose 18% to $57.609m and operating loss widened to $39.866m; excluding $6.2m of non-recurring separation costs, expenses increased 5% to $51.4m.

• Net loss was $34.759m versus $32.537m; diluted loss per share was $2.11 versus $3.41.

• Other income included a $5.094m gain from PPP loan forgiveness; excluding this one-time gain, reported results remained loss-making.

Outlook and guidance

• Backlog under contracts at Dec. 31, 2021 was a minimum $29m, down from $31m a year earlier; approximately $16m was expected to be recognized as revenue in 2022.

• Revenue from the Central Banks contract is supported through Dec. 2024, with a five-year extension option by mutual agreement; work plans are reviewed quarterly.

• Cash and marketable securities of $41.618m were expected to fund projected operations for less than 12 months if revenue did not grow as expected, EVRYTHNG warrant proceeds were not collected, or costs were not contained.

• Additional capital plans include revenue growth, EVRYTHNG warrant exercise, partnerships, collaborations, equity or debt financing, or cost containment if funding is unavailable.