Digimarc(US:DMRC)2021-11-15 17:54Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $6.4 million, up 12% from $5.8 million in Q3 2020 [6] - Service revenue increased 17% from $3.4 million to $3.9 million, driven by higher commercial services related to HolyGrail 2.0 Projects [6] - Subscription revenue rose 4% from $2.4 million to $2.5 million, reflecting higher revenue from commercial customers [7] - Total commercial bookings were $3 million, up 60% from $1.8 million in Q3 2020 [7] - Net loss for Q3 was $2.9 million or $0.17 per share, compared to a net loss of $8.4 million or $0.68 per share in Q3 2020 [9] Business Line Data and Key Metrics Changes - Operating expenses for the quarter were $12.2 million, flat compared to Q3 2020 [7] - The company received a $5.1 million gain in other income due to the forgiveness of a Paycheck Protection Program loan [8] Market Data and Key Metrics Changes - EVRYTHNG's annual contract value (ACV) for the first half of 2021 was $3.2 million, a 29% increase from $2.5 million in the first half of 2020 [17] - As of September 30, 2021, EVRYTHNG's product annual recurring revenue (ARR) was $4.9 million [18] Company Strategy and Development Direction - The acquisition of EVRYTHNG is seen as a transformative step, combining unique identification technology with advanced traceability solutions [21][26] - The company aims to become a product-led organization, focusing on high-margin, scalable solutions that address large and growing markets [37][41] - The rationale for the acquisition includes enhancing product offerings, expanding market presence, and leveraging synergies between the two companies [30][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth potential of the combined company, highlighting the increasing demand for digitization of physical items [72] - The company is optimistic about the future, citing strong customer interest and the potential for significant market expansion [75] Other Important Information - The structure of the EVRYTHNG acquisition includes an initial consideration of $50 million in common stock and warrants, with potential additional consideration based on performance metrics [10][12] - The company plans to maintain a hiring strategy post-acquisition, indicating confidence in future growth opportunities [35] Q&A Session Summary Question: Can you discuss the patents that are coming with EVRYTHNG? - EVRYTHNG has a small portfolio of patents related to digital content redirection and authentication, which complement Digimarc's existing methodologies [56] Question: Are there any new contracts with major clients like Walmart or Procter & Gamble? - The company noted a 60% growth in bookings but could not disclose specific client names due to confidentiality [58] Question: How can digital watermarking be integrated with artificial intelligence? - Digital watermarking provides deterministic inputs that enhance AI systems, making them more effective in training and application [60][61] Question: Can you elaborate on the PAC and FOBP offerings? - Both offerings were developed in response to customer needs, with significant interest already shown by large clients [66][67] Question: What is the growth rate outlook for EVRYTHNG? - Management expressed confidence in the growth trajectory, supported by customer diligence and a healthy demand pipeline [71][72]