Digimarc Reports Fourth Quarter and Full Year 2012 Financial Results

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Digimarc Reports Fourth Quarter and Full Year 2012 Financial Results

2012 Operating Income Improved 128% Over 2011 on 23% Higher Revenues; Company Declares Quarterly Dividend of $0.11 per Share

BEAVERTON, Ore.--(BUSINESS WIRE)-- Digimarc Corporation (NAS: DMRC) reported financial results for the fourth quarter and fiscal year ended December 31, 2012.


Fourth Quarter 2012 Results

Revenues for the fourth quarter 2012 increased 4% to $9.3 million from $8.9 million in the same quarter a year ago. The increase was primarily attributable to higher licensing revenues from Verance and Intellectual Ventures ("IV") as well as initial revenues for one month from Attributor Corporation, partially offset by the elimination of revenues from the suspension of operations of the Nielsen joint ventures in Q1 2012.

Operating income for the fourth quarter 2012 increased 60% to $1.9 million from $1.2 million in the same year-ago quarter. The increase reflects higher revenues and lower operating expenses.

Net income for the fourth quarter 2012 was $1.1 million or $0.14 per diluted share compared to $0.5 million or $0.06 per diluted share in the fourth quarter of 2011. The improvement in net income reflects increased revenues.

Full Year 2012 Results

Revenues in 2012 increased 23% to a record $44.4 million from $36.0 million in 2011. The improvement was driven primarily by the $8 million past due royalties payment from Verance received in Q1 2012 and from increased license payments from IV and Verance, partially offset by lower revenues from the suspension of the company's joint ventures with Nielsen.

Operating income in 2012 increased 128% to $14.6 million from $6.4 million in 2011. The improvement reflects increased revenues, partially offset by slightly higher operating expenses as a result of the company's recent acquisition of Attributor Corporation in December 2012.

Net income in 2012 increased 46% to $8.3 million or $1.12 per diluted share from $5.7 million or $0.76 per diluted share in 2011. The improvement primarily reflects increased revenues. Net income for 2011 includes losses from the suspended joint ventures as well as the reversal of the valuation allowance against deferred tax assets.

At December 31, 2012, cash, cash equivalents and marketable securities totaled $39.1 million, up from $33.4 million at December 31, 2011. This increase is net of the $5.4 million paid in connection with the Attributor acquisition.

On February 20, 2013, Digimarc declared a quarterly dividend of $0.11 per share on the outstanding common shares, payable on March 11, 2013 to shareholders of record at the close of business on March 4, 2013. The aggregate amount of the quarterly dividend payment is expected to be approximately $800,000.

An updated investor presentation is available on Digimarc's website at: http://www.digimarc.com/investors/presentations.

Conference Call

Digimarc will hold a conference call later today (Thursday, February 21, 2013) to discuss these results. The company's 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 broadcast live via webcast at www.digimarc.com/investors and www.earnings.com, and will be available for replay until March 7, 2013. Thereafter, the webcast will be archived and available on Digimarc'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 listen-only telephone number below at least 5-10 minutes prior to the scheduled start time:

Listen-Only Number: 866-562-9934
Conference ID#: 10340926
 

If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

About Digimarc

Digimarc Corporation (NAS: 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 increases in services and license and subscription revenues, 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, 2012 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 InformationTwelve-Month Information
December 31,December 31,December 31,December 31,
 2012  2011  2012  2011 
Revenue:
Service$2,519$3,053$10,792$12,395
License & subscription 6,795  5,872  33,583  23,644 
Total revenue9,3148,92544,37536,039
 
Cost of revenue:
Service1,3731,7755,9176,638
License & subscription 275  81  591  299 
Total cost of revenue1,6481,8566,5086,937
 
Gross profit:
Service1,1461,2784,8755,757
License & subscription 6,520  5,791  32,992  23,345 
Total gross profit7,6667,06937,86729,102
 
Gross margin:
Service45%42%45%46%
License & subscription96%99%98%99%
Total revenue82%79%85%81%
 
Operating expenses:
Sales and marketing9131,0513,8274,336
Research, development and engineering2,2771,7108,7417,327
General and administrative2,2262,8399,4579,956
Intellectual property 329  268  1,248  1,094 
Total operating expenses5,7455,86823,27322,713
 
Operating income1,9211,20114,5946,389
 
Net loss from joint ventures-(784)(1,107)(2,714)
Interest income, net 40  46  179  195 
 
Income before income taxes1,96146313,6663,870
 
(Provision) benefit for income taxes (907) (10) (5,394) 1,786 
Net income$1,054 $453 $8,272 $5,656 
 
Earnings per common share:
Net income per common share - basic$0.15$0.07$1.16$0.84
Net income per common share - diluted$0.14$0.06$1.12$0.76
Weighted average common shares outstanding - basic6,7916,6996,7576,741
Weighted average common shares outstanding - diluted6,9667,2796,9897,430
 
Cash dividends declared per common share:$0.11$-$0.33$-
 
    
Digimarc Corporation
Balance Sheet Information
(in thousands)
(Unaudited)
 
 
December 31,December 31,
20122011
Assets
Current assets:
Cash and cash equivalents (1)$6,866$3,419
Marketable securities (1)25,40322,244
Trade accounts receivable, net4,2163,502
Other current assets 1,016 1,306
Total current assets37,50130,471
Marketable securities (1)6,7877,715
Property and equipment, net1,4531,395
Intangible assets, net6,7212,808
Goodwill1,114-
Investments in joint ventures-415
Deferred tax assets, net3,5892,634
Other assets 166 355
Total assets$57,331$45,793
 
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and other accrued liabilities$1,143$952
Deferred revenue 2,512 2,660
Total current liabilities3,6553,612
Deferred rent and other long-term liabilities 673 464
Total liabilities4,3284,076
 
Commitments and contingencies
 
Shareholders' equity:
Preferred stock5050
Common stock77
Additional paid-in capital39,86934,511
Retained earnings 13,077 7,149
Total shareholders' equity53,00341,717
 
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