Digimarc(US:DMRC)2023-03-02 02:46Financial Data and Key Metrics Changes - The company achieved 85% year-over-year growth in first-year commercial bookings, totaling $19.1 million in 2022 [12] - Subscription revenue grew by 32% year-over-year, reaching $15.2 million in 2022, with subscription revenue accounting for over half of total revenue for the first time in a decade [32] - Total revenue for Q4 was $7.2 million, a 1% increase from $7.1 million in Q4 of the previous year [33] - The net loss per common share for Q4 was $0.62, compared to $0.50 in Q4 last year [36] Business Line Data and Key Metrics Changes - Service revenue remained flat year-over-year at $15 million, but is expected to increase in 2023 due to an extended contract with central banks [13] - Subscription revenue in Q4 represented 57% of total revenue, growing 13% from $3.6 million [33] - The company recorded a gross profit margin of 53% for Q4, down from 70% in the previous year, primarily due to amortization expenses from the acquisition of Everything [34] Market Data and Key Metrics Changes - The company is actively engaging in discussions with multiple brands and retailers regarding the adoption of its recycling solutions, indicating a growing market interest [9] - The serviceable addressable market for the retail experience product is significant enough to potentially drive profitability [27] Company Strategy and Development Direction - The company aims to digitize products globally, focusing on ease of business and guiding customers through their Digimarc journey [4][25] - A restructuring plan was announced to streamline operations and improve margins, involving a workforce reduction of approximately 17% [16][30] - The company is prioritizing product candidates with strong market drivers and network effects to enhance adoption and revenue growth [24][75] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future business prospects, emphasizing the importance of building a financially sustainable business [30] - The company is seeing momentum across all areas of its business and is focused on creating a market it is uniquely positioned to lead [37] - Management highlighted the importance of ongoing activity and intent from stakeholders, despite a lack of broad publicity regarding product launches [40] Other Important Information - The company ended the year with $52.5 million in cash and investments, having used $3.8 million during Q4 [36] - A significant portion of operating expenses in Q4 was attributed to the acquisition of Everything, with non-GAAP operating expenses rising to $14.3 million [35] Q&A Session Questions and Answers Question: What is the timeline for the recycle product to convert into revenue opportunities? - Management indicated hope for revenue generation from the recycle product within 2023, particularly in France and Canada [45] Question: How does the workforce reduction relate to business confidence? - Management clarified that the workforce reduction was not a reflection of business confidence but a necessary step for long-term sustainability [42][43] Question: Can you provide an update on the Walmart contract and its use case? - Management stated that while there may not be immediate publicity, there is ongoing activity and intent regarding the Walmart contract [70]