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

Feb 26, 2020 • 05:00 pm ET

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

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Q & A
Operator
Operator

[Operator Instructions] And your first question comes from the line of Mike Cikos with Needham & Company.

Analyst
Mike Cikos

Hi guys thanks for taking the questions today. I appreciate it.I wanted to ask you about this contract renegotiation that you guys are working through right now. Can you give us a sense of, like, were there any bookings that came through on this contract Q4, that was just at a hold until you guys go through this renegotiation process?

Executive
Bruce Davis

Yes. There were no bookings in Q4 related to that contract. We're hoping to wrap that contract in Q1, which would then result in booking.

Analyst
Mike Cikos

Okay. And then just for clarity here, it says that there's going to be less fixed, more variable is the expectation for that contract. So I guess the anticipation then is that lower short-term bookings and revenues in the near term. Can you help us understand what's the greater upside potential from that contract that was confused by that comment?

Executive
Bruce Davis

The prior contract had a fixed fee. And the new contract has a lower fixed fee with a variable component in order to allow us to be paid more for growth in that business.

Analyst
Mike Cikos

I see. And then one more, if I may. Just coming back to the Walmart with the system integration issues that you guys are facing, it doesn't seem like it's anything on your end there. But what gives you the confidence in being able to start delivering those labels during Q2 to stores? Is it customer conversations there? Just anything there would be helpful.

Executive
Bruce Davis

Yes, it's a regular developer updates, the nearly daily updates that I personally have received that give me the confidence.

Analyst
Mike Cikos

All right, I'll jump back in the queue. Thank you guys.

Executive
Bruce Davis

All right.

Operator
Operator

[Operator Instructions] And your next question comes from the line of Jeff Van Rhee with Craig-Hallum.

Analyst
Rudy Kessinger

Hey, guys, this is Rudy on for Jeff. A couple of questions from me. I want to start with NATO. I think a couple of quarters ago, you guys said you were expecting to be a 3,000 SKUs by the end of the year, I think it's higher article the other day, or may have been in the prepared remarks, you said it was 2,000 currently. And then also, I'm curious if there's anything that you guys have learned from that rollout. Are the registers on in the stores? Or are there any ROI metrics that you guys could share what maybe anything seen from it? Just any additional color there would be great.

Executive
Bruce Davis

Okay. First, with respect to us saying 3,000 NATO of them, I'm pretty confident no one here said that. So you may have read it somewhere from someone else. And so it's more than 2,000 today, which is more than I think anyone would have expected in the short-term that we've been working with them. And it evidences maturation of our delivery capabilities, and that was done by suppliers, not us even better. In terms of how it's