Digimarc (DMRC) Q4 2022 earnings summary

Executive summary

• FY2022 revenue rose 14% to $30.2 million, while net loss widened to $59.8 million from $34.8 million, reflecting continued investment and EVRYTHNG integration.

• EVRYTHNG expanded the product-cloud offering; commercial revenue grew 31%, and multi-year Walmart and Central Banks agreements strengthened the contract base.

Financial highlights

• Revenue was $30.2 million, up $3.7 million YoY; subscription revenue rose 32% to $15.2 million, while service revenue was essentially flat at $15.0 million.

• Gross profit fell 14% to $15.3 million; gross margin was 51% versus 67%, including $4.4 million of acquired-intangible amortization.

• Operating loss widened to $61.8 million from $39.9 million; net loss was $59.8 million versus $34.8 million, and diluted loss per share was $3.12 versus $2.11.

• Adjusted for specified non-cash and non-recurring items, non-GAAP gross profit was $21.3 million and margin 70%; non-GAAP net loss was $38.6 million, or $2.02 per diluted share.

• Operating cash use was $44.4 million, compared with $26.1 million in 2021.

Outlook and guidance

• Contract backlog was at least $44 million at Dec. 31, 2022, versus $29 million a year earlier; approximately $24 million was expected to be recognized in 2023.

• Cash and marketable securities of $52.5 million were expected to cover projected working capital and capital expenditures for at least 12 months.

• The Feb. 2023 workforce plan targeted a ~17% reduction, with estimated one-time cash charges of $1.5 million and stock compensation charges of $0.6 million; expected annual cash savings were $7.4 million.