Digimarc(US:DMRC)2022-05-13 02:28Financial Data and Key Metrics Changes - First year commercial bookings were $3.8 million, up 50% from Q1 2021, with EVRYTHNG contributing $600,000 [9] - Revenue for Q1 was $7.4 million, an 11% increase from $6.7 million in Q1 last year, with EVRYTHNG contributing $1.5 million [11] - Gross profit margin for Q1 was 45%, down from 65% in Q1 last year, primarily due to $1.2 million of amortization expense from the EVRYTHNG acquisition [14] - Operating expenses for the quarter were $21.4 million, up $8.8 million from Q1 last year, with EVRYTHNG adding $4.6 million [15] - Net loss per common share for the quarter was $1.03 compared to $0.50 in Q1 last year [18] - Non-GAAP net loss per common share was $0.69 versus $0.34 in Q1 last year [19] Business Line Data and Key Metrics Changes - Subscription revenue increased 30% from $2.9 million to $3.8 million, with EVRYTHNG contributing $1.2 million [12] - Service revenue decreased 4% from $3.8 million to $3.6 million, with EVRYTHNG contributing $300,000 [13] Market Data and Key Metrics Changes - Organic first year commercial bookings growth was 28% versus the prior period a year ago, increasing to 42% when excluding the Piracy Intelligence bookings [23] Company Strategy and Development Direction - The company is focused on becoming a product-led organization, emphasizing the importance of long-term transformation over short-term distractions [25][28] - The launch of integrated products, such as Digimarc Recycle and Digimarc Brand Integrity, is a key part of the company's strategy moving forward [24][30] - The company aims to leverage the success of Digimarc Recycle to drive adoption across various geographies and substrates beyond plastic [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, indicating that the current bookings growth is just the beginning of a longer-term S-curve of growth [75] - The Phase 2 results of the Holy Grail project were described as eye-opening, leading to increased interest from stakeholders [53] Other Important Information - The acquisition of EVRYTHNG closed on January 3, 2022, and has had a significant impact on both revenue and expenses [4] - The company ended the quarter with $24.9 million in cash and investments, having raised $58.3 million in early April through a registered direct offering [19][20] Q&A Session Summary Question: What are the next phases of the test underway in Europe? - Management indicated that the Holy Grail project is not their trial, and they can only share results once they are public [51] Question: Can you elaborate on leveraging this in other geographies and substrates? - Management noted that the Phase 2 results have led to more serious conversations with stakeholders interested in exploring solutions beyond Europe and plastic [52] Question: How do you feel about accelerating the process with other initiatives? - Management confirmed that the EVRYTHNG acquisition has benefited other products and that they are focused on accelerating bookings growth [57][61] Question: Can you provide color on the final acquisition cost for EVRYTHNG? - The transaction costs paid on behalf of EVRYTHNG shareholders were $4 million, with no expectation of a second payout as the Product ARR minimum was not hit [71] Question: What is the target for bookings growth? - Management expects multiple years of high enduring revenue growth, indicating that they are at the beginning of their growth S-curve [75]