Digimarc(US:DMRC)2023-05-10 16:00Revenue Performance - Total revenue for the three-month period ended March 31, 2023, increased by $0.4 million, or 6%, to $7.8 million compared to $7.4 million in the same period in 2022[120] - Subscription revenue for the three-month period ended March 31, 2023, was $3.885 million, a 2% increase from $3.791 million in 2022[122] - Service revenue for the same period increased by $0.338 million, or 9%, to $3.958 million compared to $3.620 million in 2022[122] - Domestic revenue increased by $0.404 million, or 17%, to $2.767 million in Q1 2023 compared to $2.363 million in Q1 2022[126] - International revenue saw a slight increase of $0.028 million, or 1%, totaling $5.076 million in Q1 2023 compared to $5.048 million in 2022[126] - The government segment's total revenue increased by $0.388 million, or 11%, to $3.960 million in Q1 2023 compared to $3.572 million in Q1 2022[129] Profitability Metrics - Gross profit margin improved to 54% in Q1 2023 from 45% in Q1 2022[119] - Total gross profit for the three months ended March 31, 2023, increased by $0.9 million to $4.244 billion, a 27% increase compared to the same period in 2022[132] - Subscription gross profit rose by $0.3 million, reflecting higher subscription revenue and a favorable mix, resulting in a gross profit margin of 80%, up from 73%[131][133] - Service gross profit increased by $0.5 million, with a gross profit margin of 57%, up from 49%, due to higher service revenue and lower professional services costs[131][134] - Non-GAAP gross profit for the three months ended March 31, 2023, increased by $0.8 million to $5.715 million compared to $4.880 million for the same period in 2022[156] - Non-GAAP gross profit margin improved to 73% for the three months ended March 31, 2023, up from 66% in the same period in 2022[157] Operating Expenses - Total operating expenses decreased by $2.3 million, or 11%, to $19.0 million in Q1 2023 compared to $21.4 million in Q1 2022[121] - Sales and marketing expenses decreased by $1.647 million to $6.298 billion, a 21% reduction, representing 80% of total revenue[135][136] - Research, development, and engineering expenses increased by $1.735 million to $7.826 billion, accounting for 100% of total revenue[136][137] - General and administrative expenses decreased by $1.781 million to $4.627 billion, representing 59% of total revenue[140][142] - Non-GAAP operating expenses decreased by $1.6 million to $15.480 million for the three months ended March 31, 2023, compared to $17.042 million for the same period in 2022[158] Net Loss and Cash Flow - The company reported an operating loss of $188 thousand for Q1 2023, an improvement from a loss of $243 thousand in Q1 2022[119] - The net loss for the three months ended March 31, 2023, was $14.040 million, a reduction of 21% from the net loss of $17.781 million in the same period in 2022[162] - Cash, cash equivalents, and short-term marketable securities totaled $43.025 million as of March 31, 2023, down from $52.542 million as of December 31, 2022[159] - Net cash used in operating activities decreased by $3.112 million to $8.744 million for the three months ended March 31, 2023, compared to $11.856 million for the same period in 2022[162] - Cash flows provided by investing activities increased by $6.217 million for the three months ended March 31, 2023, compared to the same period in 2022[163] Future Outlook and Risks - The company anticipates incurring an additional $21.576 million in stock-based compensation expense through March 31, 2027, for outstanding awards[146] - A significant portion of the company's revenue is concentrated among a few customers, which poses a risk to future revenue stability[171] - The company believes it has one of the world's most extensive patent portfolios in digital watermarking and related fields, which could enhance its competitive advantage[171] - Future investments in research, development, and engineering of products and technology are anticipated to drive growth and market opportunities[171] - The company is participating in the HolyGrail 2.0 initiative, which is expected to demonstrate the utility of its products in the recycling industry[171] - The company is focused on international growth opportunities and plans to invest in these markets in the future[172] - The company anticipates variability in contracted arrangements due to changes in circumstances, which could affect revenue projections[172] - Future financial obligations are expected to be met within the coming fiscal year, indicating a stable liquidity position[172] - The company is monitoring capital market conditions and credit risk exposure, which could impact its cost of capital[172] - The company does not undertake any obligation to publicly update or revise forward-looking statements, emphasizing the uncertainty of future performance[174]