Digimarc Corporation (NASDAQ:DMRC) Q4 2019 Earnings Conference Call - Final Transcript

Feb 26, 2020 • 05:00 pm ET


Digimarc Corporation (NASDAQ:DMRC) Q4 2019 Earnings Conference Call - Final Transcript


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Charles Beck

the Central Banks. Market bookings during the fourth quarter were 1.3 million, down from 1.8 million in Q4 last year. The decrease was due to sudden and unexpected corporate cost-cutting and one of our supplier partners, developing supply chain applications, leading the renegotiation of our contract with them. That contract contributed 1.3 million to bookings in Q4 last year.

We expect the Q1 booking from revised contract that is being negotiated. We expect that the new contract will have less fixed and more variable element in its predecessor, yielding lower short-term bookings and revenues with higher potential upside. Once things are settled, I will provide additional details. This does not affect in our retail business. This developer focuses on supply chain improvements. Gross margin for the quarter was 66%, up from 60% last year, primarily reflecting the impact of higher market revenue. Operating expenses increased by 9% from Q4 last year, primarily reflecting routine annual compensation and benefit adjustments for our employees and increased headcount to address growing demand and delivery requirements. Net loss for Q4 was $8.7 million or $0.73 per diluted share versus a net loss of $8 million or $0.70 per diluted share in the fourth quarter last year, reflecting higher operating expenses. We ended the quarter with $36.8 million in cash and investments. We did not raise any capital under our ATM program during the fourth quarter. There is $9.7 million remaining of the $30 million authorized. We will exercise customary care and determining the best course of action regarding the remainder of the authorization should circumstances warrant resumption of sales into the program.

We invested $6 million of working capital during Q4, which was at the low end of the range of $6 million to $7 million we provided in our last call, largely due to favorable timing of cash receipts and payments. We used $5.6 million of cash to fund operations and $500,000 for capital expenditures. We anticipate operating expenses in the first quarter to be between $13.6 million and $13.8 million. The roughly 10% project increase in operating expenses over the fourth quarter reflects the impact of routine annual cost of living adjustments for employees, increased headcount and quarter-specific costs for NRF, other sales and marketing initiatives and the year-end audit. We expect that cash usage will be between $7 million to $8 million in Q1, reflecting the reversal of the favorable timing of cash receipts and payments we saw in Q4, and the impact of the quarter-specific costs, I just mentioned. We expect our average cash usage for the remainder of 2020 to be at a lower run rate than we are projecting for the first quarter and will continue to vary quarter-to-quarter depending on timing of cash receipts and payments.

Turning to results for the full year. Market revenue increased 105% over last year to $4.9 million. Total revenue increased 8% to $23 million from $21.2 million last year. The effect of doubling market revenue was partially offset by Guardian revenue,