美國
證券和交易委員會
華盛頓特區 20549
表格
（標記一）
截至本季度末
或者
過渡期從 到
委託文件編號：001-39866
數字標識公司
(根據其章程規定的註冊人準確名稱)
| | | |
| （國家或其他管轄區的 公司成立或組織） | （IRS僱主 唯一識別號碼） |
（總部地址）（郵政編碼）
(
(Registrant’電話號碼（包括區號）
根據法案第12（b)條註冊的證券： 根據法案第12(g)條註冊的證券：NONE。
| 每種類別的證券 | 交易標的 | 名稱爲每個註冊的交易所: | ||
| | | 該 |
用勾號標識: (1) 在過去的12個月內，提交了《證券交易法》第13條或第15(d)條所要求提交的所有報告。(或對於註冊者要求提交這些報告的更短期間)(2) 在過去的90天內一直遵守報告要求。
檢查標記註明註冊人是否在過去12個月內（或對於註冊人需要提交此類文件的較短期限內）按照《規則S-T》405條所規定的每個互動數據文件都提交了。
用勾號表示註冊申報人是大型快速文件報告人、加速文件報告人、非加速文件報告人、小型報告公司還是新興增長公司。請參閱《交易所法》第120億.2條中對「大型快速文件報告人」、「加速文件報告人」、「小型報告公司」和「新興增長公司」的定義。
| 大型加速文件申報人 | ☐ | 加速文件申報人 | ☐ |
| | ☒ | 更小的報告公司 | |
| 新興成長公司 | |
如果是新興成長型公司，在選中複選標記的同時，如果公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則，則表明該公司已選擇不使用根據證券交易法第13(a)條提供的任何新的或修訂後的財務會計準則的延長過渡期來符合新的或修訂後的財務會計準則。☐
請用勾選標記來指示註冊者是否是殼公司（如《交易所法》規則120億.2所定義）。 是
截至2024年11月8日 從UBS AG轉移到UBS瑞士銀行股份有限公司
| 項目1。 |
||
| 2024年9月30日三個月和九個月合併運營綜合損益表 截至2024年9月30日三個月和九個月的合併運營綜合損益表和2023年 |
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| 項目2. |
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| 項目 3。 |
30 | |
| 項目4. |
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| 項目1。 |
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| 項目1A。 |
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| 項目2. |
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| 項目6。 |
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合併資產負債表
(以千爲單位，除每股數據外)
(未經審計)
| 9月30日, | 2023年12月31日, | |||||||
| 2024 | 2023 | |||||||
| 資產 | ||||||||
| 流動資產： | ||||||||
| 現金及現金等價物 | $ | $ | ||||||
| 可交易證券 | ||||||||
| 應收貿易賬款，淨額 | ||||||||
| 其他流動資產 | ||||||||
| 總流動資產 | ||||||||
| 物業和設備，淨值 | ||||||||
| 無形資產，淨額 | ||||||||
| 商譽 | ||||||||
| 租賃資產 | ||||||||
| 其他資產 | ||||||||
| 總資產 | $ | $ | ||||||
| 負債及股東權益 | ||||||||
| 流動負債: | ||||||||
| 應付賬款和其他應計負債 | $ | $ | ||||||
| 遞延收入 | ||||||||
| 總流動負債 | ||||||||
| 開多期權負債 | ||||||||
| 其他長期負債 | ||||||||
| 總負債 | ||||||||
| 承諾和 contingencies（注意 15） | ||||||||
| 股東權益： | ||||||||
| 優先股 (面值 $ 每股 已授權，1618250已發行。 於2024年9月30日和2023年12月31日發行和流通的股份 | ||||||||
| 普通股（面值 $ 每股 已授權，1618250已發行。 和 2024年9月30日和2023年12月31日分別發行和流通股份 | ||||||||
| 追加實收資本 | ||||||||
| 累積赤字 | ( | ) | ( | ) | ||||
| 累計其他綜合損失 | ( | ) | ( | ) | ||||
| 股東權益合計 | ||||||||
| 負債和股東權益總計 | $ | $ | ||||||
附註是這些合併財務報表的一部分。
綜合損失和營業收入綜合表
(以千爲單位，除每股數據外)
(未經審計)
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 收入： | ||||||||||||||||
| 認購 | $ | $ | $ | $ | ||||||||||||
| 服務 | ||||||||||||||||
| 總營業收入 | ||||||||||||||||
| 營業成本： | ||||||||||||||||
| 認購 (1) | ||||||||||||||||
| 服務 (1) | ||||||||||||||||
| 已收購無形資產的攤銷費用 | ||||||||||||||||
| 總成本費用 | ||||||||||||||||
| 毛利潤 | ||||||||||||||||
| 運營費用： | ||||||||||||||||
| 銷售和營銷 | ||||||||||||||||
| 研究、開發和工程 | ||||||||||||||||
| 一般和行政 | ||||||||||||||||
| 已收購無形資產的攤銷費用 | ||||||||||||||||
| 租賃權益資產和租賃改良的減值 | ||||||||||||||||
| 總營業費用 | ||||||||||||||||
| 營業損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 其他收入，淨額 | ||||||||||||||||
| 稅前損失 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 所得稅準備金 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 淨虧損 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 每股虧損: | ||||||||||||||||
| 基本每股虧損 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 每股虧損-稀釋 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| 基本加權平均股本 | ||||||||||||||||
| 攤薄加權平均股本 | ||||||||||||||||
| 綜合虧損： | ||||||||||||||||
| 未實現的投資收益（虧損），稅後淨額爲$ | $ | $ | $ | ( | ) | $ | ||||||||||
| 外幣兌換調整，淨稅額爲$ | ( | ) | ||||||||||||||
| 其他綜合收益（損失） | $ | $ | ( | ) | $ | $ | ||||||||||
| 淨虧損 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| 全面損失 | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
(1) 訂閱和服務的營業成本不包括對取得的無形資產的攤銷費用。
附註是這些合併財務報表的一部分。
股東合併報表’股票
(以千爲單位)
(未經審計)
| 累計 |
||||||||||||||||||||||||||||||||
| 額外的 |
其他 |
總計 |
||||||||||||||||||||||||||||||
| 優先股 |
普通股 |
實收股本 |
累計 |
綜合 |
股東的 |
|||||||||||||||||||||||||||
| 股份 |
金額 |
股份 |
金額 |
資本 |
虧損 |
虧損 |
股權 |
|||||||||||||||||||||||||
| 截至2024年9月30日的三個月 |
||||||||||||||||||||||||||||||||
| 2024年6月30日餘額 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| 限制性股票單位的認股權發放 |
||||||||||||||||||||||||||||||||
| 放棄限制性普通股 |
( |
) | ||||||||||||||||||||||||||||||
| 購買普通股 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 基於股票的補償 |
— | — | ||||||||||||||||||||||||||||||
| 市場交易證券未實現收益（損失） |
— | — | ||||||||||||||||||||||||||||||
| 外幣轉化調整 |
— | — | ||||||||||||||||||||||||||||||
| 淨虧損 |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 2024年9月30日的結餘 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| 截至2023年9月30日的三個月 |
||||||||||||||||||||||||||||||||
| 2023年6月30日的餘額 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| 限制性股票單位的認股權發放 |
||||||||||||||||||||||||||||||||
| 放棄限制性普通股 |
( |
) | ||||||||||||||||||||||||||||||
| 購買普通股 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 基於股票的補償 |
— | — | ||||||||||||||||||||||||||||||
| 外幣轉化調整 |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 淨虧損 |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 2023年9月30日的餘額 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| 截至2024年9月30日的九個月 |
||||||||||||||||||||||||||||||||
| 2023年12月31日餘額 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| 普通股發行 |
||||||||||||||||||||||||||||||||
| 限制性普通股發行 |
||||||||||||||||||||||||||||||||
| 限制性股票單位的認股權發放 |
||||||||||||||||||||||||||||||||
| 績效限制性股票單位的分配 |
||||||||||||||||||||||||||||||||
| 放棄限制性普通股 |
( |
) | ||||||||||||||||||||||||||||||
| 購買普通股 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 基於股票的補償 |
— | — | ||||||||||||||||||||||||||||||
| 市場交易證券未實現收益（損失） |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 外幣轉化調整 |
— | — | ||||||||||||||||||||||||||||||
| 淨虧損 |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 2024年9月30日的結餘 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| 截至2023年9月30日的九個月 |
||||||||||||||||||||||||||||||||
| 2022年12月31日的餘額 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
| 普通股發行 |
||||||||||||||||||||||||||||||||
| 限制性普通股發行 |
||||||||||||||||||||||||||||||||
| 限制性股票單位的認股權發放 |
||||||||||||||||||||||||||||||||
| 績效限制股票單位的分配 |
— | — | — | — | — | — | ||||||||||||||||||||||||||
| 放棄限制性普通股 |
( |
) | ||||||||||||||||||||||||||||||
| 購買普通股 |
( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 基於股票的補償 |
— | — | ||||||||||||||||||||||||||||||
| 市場交易證券未實現收益（損失） |
— | — | ||||||||||||||||||||||||||||||
| 外幣轉化調整 |
— | — | ||||||||||||||||||||||||||||||
| 淨虧損 |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||||||
| 2023年9月30日的餘額 |
$ | $ | $ | $ | ( |
) | $ | ( |
) | $ | ||||||||||||||||||||||
附註是這些合併財務報表的一部分。
合併現金流量表
(以千爲單位)
(未經審計)
| 截至9月30日的九個月 |
||||||||
| 2024 |
2023 |
|||||||
| 經營活動現金流量： |
||||||||
| 淨虧損 |
$ | ( |
) | $ | ( |
) | ||
| 調整爲淨損失到經營活動現金流量淨使用： |
||||||||
| 物業和設備的折舊及減值 |
||||||||
| 取得的無形資產攤銷 |
||||||||
| 其他無形資產的攤銷及減值 |
||||||||
| 營運租賃下使用權資產的攤銷 |
||||||||
| 基於股票的補償 |
||||||||
| 租賃權益資產和租賃改良的減值 |
||||||||
| 壞賬準備的增加（減少） |
||||||||
| 運營資產和負債的變化： |
||||||||
| 應收賬款 |
( |
) | ( |
) | ||||
| 其他流動資產 |
( |
) | ||||||
| 其他資產 |
( |
) | ||||||
| 應付賬款和其他應計負債 |
( |
) | ||||||
| 遞延收入 |
( |
) | ||||||
| 租賃負債和其他長期負債 |
( |
) | ||||||
| 經營活動產生的淨現金流量 |
( |
) | ( |
) | ||||
| 投資活動現金流量： |
||||||||
| 購置固定資產等資產支出 |
( |
) | ( |
) | ||||
| 資本化專利費用 |
( |
) | ( |
) | ||||
| 可市場出售證券到期款 |
||||||||
| 購買有市場流通的證券 |
( |
) | ( |
) | ||||
| 投資活動產生的淨現金流量 |
( |
) | ||||||
| 融資活動的現金流： |
||||||||
| 普通股股份發行淨額（扣除發行成本） |
||||||||
| 購買普通股 |
( |
) | ( |
) | ||||
| 償還的貸款 |
( |
) | ( |
) | ||||
| 籌集資金的淨現金流量 |
( |
) | ||||||
| 匯率期貨影響現金流 |
( |
) | ||||||
| 現金及現金等價物的淨增加（減少） |
( |
) | ||||||
| 期初現金及現金等價物餘額 |
||||||||
| 期末現金及現金等價物 |
$ | $ | ||||||
| 現金流信息的補充披露： |
||||||||
| 現金收到（支付）所得稅，淨額 |
$ | ( |
) | $ | ( |
) | ||
| 非現金活動的補充計劃: |
||||||||
| 應付賬款中的物業和設備及專利成本 |
$ | $ | ||||||
| 以股票爲基礎的補償資本化到軟件和專利成本中 |
$ | $ | ||||||
| 以租賃債務獲取的租賃權益資產 |
$ | $ | ||||||
附註是這些合併財務報表的一部分。
基本報表附註
(以千爲單位，除每股數據外)
(未經審計)
1. 業務描述及重大會計政策
業務描述
俄勒岡州的一家公司Digimarc是數字水印技術的先驅和全球領導者。差不多 30 多年來，Digimarc在數字水印方面的創新和知識產權已應用於基於其基礎的解決方案中 一 或以下兩者 二 事物：實物和數字物品的識別和身份驗證，通常是大規模的，而且通常是其他識別或身份驗證方法不起作用或根本行不通的地方。
數字標識 Illuminate 平台是一個獨特的 saas-雲計算 平台，旨在提供數字連接的工具，它提供了先進數字水印和動態二維碼的應用工具，軟件（數字雙胞胎）使各種系統和設備能夠與這些數據載體互動，並且提供一個集中平台用於捕捉關於數字互動的見解以及基於這些信息自動化活動。
數字標識產品套件建立在數字標識Illuminate平台之上，以驅動一個可被信任和可擴展的生態系統，以滿足自動化、真實性、可持續性以及客戶trust和連接等特定業務需求。所有板塊的產品彼此互補，結合在一起時提供指數級的優勢。通過使客戶能夠創建並連接數字雙胞胎與物理和數字項目，數字標識的產品提供了許多好處，包括：
| • | 數字標識自動化通過將微不可見的數字水印嵌入產品、標籤和包裝，Digimarc Automate 提高了產品檢驗，這些水印可以被標準視覺系統檢測到。這顯著減少了混合錯誤和錯誤標記，確保了生產、履行和分銷設施的更高準確性和效率，而無需額外支付特殊墨水或硬件成本。通過實現實時數據分析和最小化人爲錯誤，Digimarc Automate 增強了質量保證，減少了浪費，並降低了產品召回的風險，讓品牌獲得競爭優勢。 |
| • | 數字標識 Engage 激活產品和多媒體，創建並利用與消費之間的互動、完全擁有的通信-半導體渠道。數字標識提供動態二維碼和超鏈接，根據多種因素如時間和地點或先前行爲，提供基於多種消費體驗的上下文重定向能力。通過在單一視圖中連接物理和數字世界的互動，爲品牌帶來了強大的新能力和洞察。 |
| • | 數字標識Recycle 通過將產品和包裝數字化，利用數字水印技術，提高了回收材料的質量和數量。結合消費者參與能力，品牌可以利用直接的數字通信渠道。此外，一個基於雲的從未見過的消費後數據記錄提供了對價值鏈各方的新見解，包括品牌、設施運營商和生產者責任組織（「PROs」）。 |
| • | 數字標識零售體驗 提供更智能、互聯的包裝，支持下一代零售結賬系統，包括結賬效率（更快的掃描）和結賬效果（減少損耗）、優化的運營流程、愛文思控股消費互動體驗、遵從即將出台的行業標準，以及強大的 第一個-方數據和消費洞察。 |
| • | 數碼標識驗證 支持在物理世界和數字世界中進行身份驗證，以確保在線互動可以信任，並且真實產品和數字資產是真實且位於正確位置。 數字標識的技術通過提供獨家、隱蔽的數字水印和/或動態 QR 碼以及基於雲的產品身份驗證信息記錄來保護數字圖像、音頻、產品包裝、禮品卡和其他物理物品。此外，消費者參與能力提供了一個直接的、數字通信通道。 |
中期合併財務報表
我們的重要會計政策詳述在我們的年度報告的「業務描述和重要會計政策摘要」中 1: 表格中「業務描述和重要會計政策摘要」的說明 10年度報告中，報告格式爲 2023年12月31日，該報告已提交給美國證券交易委員會（SEC） 年29, 2024（「倉庫服務期」）。2023 年度報告）。
附帶的中期合併基本報表根據公司的記錄編制而成，未經審計，在管理層的意見中包括所有必要的調整（僅包括正常的週期性調整），以公正反映所呈現期間的財務狀況和業務結果。 根據美國通用會計準則（"GAAP"）編制的財務報表通常包括的某些信息和註釋披露按照證券交易委員會的規則和條例進行了濃縮或省略。
這些中期綜合財務報表應與年度報告中包含的經審計的綜合財務報表一同閱讀。2023 這些綜合財務報表顯示的中期業績結果不可避免地指示了全年的業績結果。 在測試商譽減值時，公司可以選擇 這些綜合財務報表顯示的中期業績結果不可避免地指示了全年的業績結果。
合併原則
合併基本報表包括數字標識及其全資子公司的帳戶。所有板塊間交易和餘額已予以消除。
已發佈的會計公告但 不 尚未採納
在 2023年11月，FASB發佈了會計準則更新("ASU") 財務會計準則委員會（「FASB」）發佈了會計準則更新（「ASU」） No. 2023-07 “報告單元分析（主題 280《改進可報告細分披露》。ASU要求在中期和年度披露重要細分費用，這些費用定期提供給首席經營決策者（"CODM"），並納入報告的細分利潤或損失中，要求在中期披露有關報告細分的利潤或損失和資產，這是目前每年要求的，要求披露CODM的職位和頭銜，明確了實體可披露多個細分利潤或損失的情況，幷包括其他披露要求。這一權威指南將在公司的截至 除了對套期保值關係選擇的某些可選做法。公司已評估了相關指引，並不會對其基本報表產生重大影響。 年度和在 第一個 財政年度結尾的四分之一 所有根據本協議應支付給高管的補償和福利將受到聯邦、州或地方法律規定的有關薪酬、福利和公司向僱員支付的可報銷費用的所有所得稅和其他就業稅的扣繳和報告的約束。高管應對根據本協議應支付的金額適用的所有稅收負責。對中期時段，允許提前採納。公司目前正在評估這一新標準對公司披露的影響。
在 FASB於2023年12月發佈了會計準則更新"ASU" 《金融工具-信用損失》以引入新的準則，用於對其範疇內的工具的信貸損失進行會計處理。ASU No. 2023-09“所得稅（主題740) - 對所得稅披露的改善”。這一ASU要求對所得稅披露進行更大的分解，主要包括所得稅率的調節和所繳納的所得稅。該權威指導將從公司結束的財年開始生效， 所有根據本協議應支付給高管的補償和福利將受到聯邦、州或地方法律規定的有關薪酬、福利和公司向僱員支付的可報銷費用的所有所得稅和其他就業稅的扣繳和報告的約束。高管應對根據本協議應支付的金額適用的所有稅收負責。允許提前採用。公司目前正在評估這一新標準對公司披露的影響。
在 2024年11月， 《金融工具-信用損失》以引入新的準則，用於對其範疇內的工具的信貸損失進行會計處理。ASU No. 2024-03 「收入表費用的細分」。《ASU》要求新的表格披露在相關收入表項目內細分規定的費用類別。這一權威指引將從截至公司財年結束的時候生效。 2027年12月31日結束的年度週期內生效， 和 第一個 截至財政年度的四分之一 2028年12月31日。 對中期時段，允許提前採納。公司目前正在評估該新準則對公司披露的影響。
2. 金融工具的公允價值
公司的金融工具的估計公允價值，包括現金等價物、應收賬款、應付賬款和其他應計負債，因這些工具的短期性質而與其賬面價值大致相符。公司的可交易證券被分類爲可供出售，並按公允價值報告。未實現持有收益和損失不計入收益，並在合併資產負債表中的「累計其他綜合損失」中扣除稅款報告，直到實現爲止。實現的收益和損失被包含在合併運營報表中的「其他收入，淨額」中，並根據特定識別方法確定出售的可交易證券的成本。
公司’其現金等價物和可交易證券的公允價值層級如下：
| 2024年9月30日 | 一級 | 二級 | 三級 | 總計 | ||||||||||||
| 貨幣市場證券 | $ | $ | $ | $ | ||||||||||||
| 商業本票 | ||||||||||||||||
| 聯邦機構通知 | ||||||||||||||||
| 美國國債 | ||||||||||||||||
| 總計 | $ | $ | $ | $ | ||||||||||||
| 2023年12月31日 | 一級 | 二級 | 三級 | 總計 | ||||||||||||
| 貨幣市場證券 | $ | $ | $ | $ | ||||||||||||
| 商業本票 | ||||||||||||||||
| 美國國債 | ||||||||||||||||
| 聯邦機構注意事項 | ||||||||||||||||
| 總計 | $ | $ | $ | $ | ||||||||||||
截至目前，公司的現金等價物和可交易證券的公允價值到期。 2024年9月30日，如下所示：
| 期限按時段劃分 | ||||||||||||||||||||
| 少於 | 1-5 | 5-10 | 超過 | |||||||||||||||||
| 總計 | 1年 | 年 | 年 | 10年 | ||||||||||||||||
| 貨幣等價物和可交易證券 | $ | $ | $ | $ | $ | |||||||||||||||
公司將購買時原始到期日爲
天或更短的所有高度流動的可交易證券視爲現金等價物。 90現金等價物包括商業本票、聯邦機構票據、美國國債和貨幣市場證券總計 $ 現金等價物包括商業本票、聯邦機構票據、美國國債和貨幣市場證券，總計 $現金等價物包括商業本票、聯邦機構票據、美國國債和貨幣市場證券，總計 $
3. 營業收入確認
公司主要通過軟件訂閱和軟件開發服務獲得營業收入。適用的收入確認標準根據每個履約義務分別考慮，如下所示：
| • | 訂閱營業收入主要來自公司saas-雲計算平台和產品的訂閱費，較少部分來自軟件產品的許可費。大多數訂閱合同是定期的，提前支付並在訂閱期限內確認，通常是 to 年的時間內確認爲費用。 |
| • | 服務收入主要包括通過提供軟件開發服務獲得的營業收入，較少部分來自專業服務。大多數軟件開發合同以時間和材料協議的形式結構化。服務的營業收入通常在服務執行時確認。服務完成後的賬單一般在 一個月內發出。 |
客戶安排 可以 包括多個履約義務，如軟件訂閱、軟件產品和專業服務。如果它們是不同的，公司會分開覈算單個產品和服務。爲了確定交易價格，公司考慮合同條款和公司的慣例業務操作。一些合同 可以 包括可變報酬。在這種情況下，公司會根據可能的考慮金額區間中的加權概率金額總和來估計可變報酬的金額。作爲這一評估的一部分，公司將評估任何受限制的可變報酬金額，如果是的話，公司將 在測試商譽減值時，公司可以選擇 將其包括在交易價格中。根據各自的獨立銷售價格，將對特定產品和服務之間的考慮款額進行分配。對於那些 在測試商譽減值時，公司可以選擇 單獨銷售時，公司根據合理可獲得信息來估計獨立銷售價格，包括市場條件、影響公司的具體因素以及關於客戶的信息。對於獨立的產品和服務，公司通常在交付給客戶時確認與這些履約責任相關的營業收入。能夠獨立的產品和服務會與其他產品或服務結合，直到確定了一個明顯的履約責任。 在測試商譽減值時，公司可以選擇 能夠獨立的產品會與其他產品或服務結合，直到確定一個明顯的履約責任。
在合併運營報表中確認的所有營業收入被視爲來自客戶合同的營業收入。
下表提供了有關公司單一報告部門按主要目標市場分類的營業收入信息：
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 商業: | ||||||||||||||||
| 認購 | $ | $ | $ | $ | ||||||||||||
| 服務 | ||||||||||||||||
| 商用總計 | $ | $ | $ | $ | ||||||||||||
| 政府： | ||||||||||||||||
| 認購 | $ | $ | $ | $ | ||||||||||||
| 服務 | ||||||||||||||||
| 政府總計 | ||||||||||||||||
| 總計 | $ | $ | $ | $ | ||||||||||||
公司擁有來自與客戶合同的合同資產，這些資產在合併資產負債表中被分類爲「交易應收賬款」。見附註 8以獲取有關交易應收賬款的更多信息。
公司擁有來自資本化合同獲取成本的合同資產，這些資產在合併資產負債表中被分類爲「其他流動資產」和「其他資產」。這些合同獲取成本是按照與其相關的合同所認可的營業收入的比例確認的。
下表提供有關合同資產的信息：
| 9月30日, | 2023年12月31日, | |||||||
| 2024 | 2023 | |||||||
| 合同獲取成本，目前 | $ | $ | ||||||
| 合同獲取成本，開多 | ||||||||
| 總計 | $ | $ | ||||||
公司在合併資產負債表中將與客戶簽訂的合同所產生的合同負債分類爲「遞延收入」。 遞延收入包括提前收費的訂閱和服務費用，對應的履約義務已 在測試商譽減值時，公司可以選擇 已履行。
下表提供有關合同負債的信息：
| 9月30日, | 2023年12月31日, | |||||||
| 2024 | 2023 | |||||||
| 遞延收入，流動 | $ | $ | ||||||
| 長期遞延營業收入 | ||||||||
| 總計 | $ | $ | ||||||
本公司於2023年12月31日和2022年12月31日的三個月內確認的股權獎勵支出爲
未滿足或部分滿足的合同義務的交易價格總額爲$
4. 片段信息
地理信息
公司的營業收入來自於一個報告部門：產品數字化解決方案。 營業收入主要通過軟件訂閱和軟件開發服務在這個部門產生。公司通過銷售人員和合作夥伴在美國和非美國國家推廣其產品。
根據「賬單地址」的地理區域營業收入如下：
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 國內 | $ | $ | $ | $ | ||||||||||||
| 國際 (1) | ||||||||||||||||
| 總計 | $ | $ | $ | $ | ||||||||||||
| (1) | 來自各國中央銀行的營業收入，被歸類爲國際營業收入。向該客戶按國家報告營業收入是 在測試商譽減值時，公司可以選擇 可行的。 |
重大客戶
以下客戶佔總營業收入的 10% 或更多：
| 截至9月30日的三個月 | 截至9月30日的九個月 | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| 客戶 A | | | | | ||||||||||||
| 客戶 B | | * | | * | ||||||||||||
| 客戶 C | * | | | | ||||||||||||
| * | 少於 10% |
按地區劃分的長期資產
按地區劃分的長期資產如下：
| 9月30日, | 2023年12月31日, | |||||||
| 2024 | 2023 | |||||||
| 美國 | $ | $ | ||||||
| 歐洲 | ||||||||
| 總計 | $ | $ | ||||||
5. Stock-Based Compensation
Stock-based compensation includes expense charges for all stock-based awards to employees and directors. These awards include restricted stock awards, restricted stock units, and performance restricted stock units.
Stock-based compensation expense related to internal labor is capitalized to software and patent costs based on direct labor hours charged to capitalized software and patent costs.
Determining Fair Value
Restricted Stock Awards
The fair value of restricted stock awards (“RSA”) that vest upon meeting a service condition is based on the fair market value of the Company’s common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally to years for employee grants and to years for director grants.
Restricted Stock Units
The fair value of restricted stock unit (“RSU”) awards that vest upon meeting a service condition is based on the fair market value of the Company’s common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally to years for employee grants.
Performance Restricted Stock Units
The fair value of performance restricted stock unit (“PRSU”) awards that vest upon meeting a service condition and a performance condition, such as the Company exceeding a future annual recurring revenue target, is determined based on the fair market value of the Company's common stock on the date of the grant, adjusted for probability of achievement of the performance criteria as of each reporting date (measurement date), and is recognized on a straight-line basis over the service period of the award, which is generally years for employee grants. The probability of achievement is subject to judgment, and could change from period to period, impacting the amount of expense to be recognized.
The fair value of performance restricted stock units awards that vest upon meeting a service condition and a market condition, such as the Company exceeding shareholder returns as compared to an index of peer companies, is determined on the date of grant (measurement date) using the Monte Carlo valuation model. The Company recognizes the fair value of the award on a straight-line basis over the service period of the award, which is generally years for employee grants.
The following inputs are used in the Monte Carlo valuation model to estimate the fair value:
Stock Price. The stock price represents the fair market value of the Company’s common stock on the date of the grant.
Expected Volatility. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock based on historical prices over the most recent period commensurate with the term of the award.
Risk-Free Interest Rate. The Company determines the risk-free interest rate using current U.S. treasury yields for bonds with a maturity commensurate with the term of the award.
Monte Carlo valuation inputs:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Stock price | $ | $ | $ | $ | ||||||||||||
| Expected volatility | % | % | ||||||||||||||
| Risk-free interest rate | % | % | ||||||||||||||
Stock-Based Compensation
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Stock-based compensation: | ||||||||||||||||
| Cost of revenue | $ | $ | $ | $ | ||||||||||||
| Sales and marketing | ||||||||||||||||
| Research, development and engineering | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||
| Capitalized to software and patent costs | ||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | ||||||||||||
The following table sets forth total unrecognized compensation costs related to non-vested stock-based awards granted under the Company’s stock incentive plan:
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Total unrecognized compensation costs | $ | $ | ||||||
Total unrecognized compensation costs will be adjusted for any future forfeitures if and when they occur.
The Company expects to recognize the total unrecognized compensation costs as of September 30, 2024, for all non-vested stock-based awards over weighted average periods through September 30, 2028, as follows:
| RSAs | RSUs | PRSUs | ||||||||||
| Weighted average period (in years) | ||||||||||||
As of September 30, 2024, under the Company’s stock incentive plan, an additional
Restricted Stock Awards Activity
The following table presents the unvested RSA activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Three Months Ended September 30, 2024: | Shares | Fair Value | ||||||
| Unvested balance at June 30, 2024 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at September 30, 2024 | $ | |||||||
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Nine Months Ended September 30, 2024: | Shares | Fair Value | ||||||
| Unvested balance at December 31, 2023 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at September 30, 2024 | $ | |||||||
The fair value of RSAs vested is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Fair value of RSAs vested | $ | $ | $ | $ | ||||||||||||
Restricted Stock Units Activity
The following table presents the unvested RSU award activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Three Months Ended September 30, 2024: | Shares | Fair Value | ||||||
| Unvested balance at June 30, 2024 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at September 30, 2024 | $ | |||||||
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Nine Months Ended September 30, 2024: | Shares | Fair Value | ||||||
| Unvested balance at December 31, 2023 | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at September 30, 2024 | $ | |||||||
The fair value of RSU awards vested is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Fair value of RSU awards vested | $ | $ | $ | $ | ||||||||||||
Performance Restricted Stock Units Activity
The following table presents the unvested PRSU award activity:
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Three Months Ended September 30, 2024: | Shares | Fair Value | ||||||
| Unvested balance at June 30, 2024 | $ | |||||||
| Granted | $ | |||||||
| Vested | $ | |||||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at September 30, 2024 | $ | |||||||
| Weighted | ||||||||
| Average | ||||||||
| Number of | Grant Date | |||||||
| Nine Months Ended September 30, 2024: | Shares | Fair Value | ||||||
| Unvested balance at December 31, 2023 | $ | |||||||
| Change in units based on performance expectations | $ | |||||||
| Granted | $ | |||||||
| Vested | ( | ) | $ | |||||
| Forfeited | ( | ) | $ | |||||
| Unvested balance at September 30, 2024 | $ | |||||||
The fair value of PRSU awards vested is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Fair value of PRSU awards vested | $ | $ | $ | $ | ||||||||||||
6. Shareholders’ Equity
Registered Direct Offering
On February 24, 2024, the Company entered into purchase agreements with certain investors providing for the issuance and sale by the Company of
7. Earnings Per Share
The Company calculates basic and diluted earnings per share in accordance with Accounting Standards Codification (“ASC”) No. 260, “Earnings Per Share,” using the treasury stock method.
Basic earnings per common share excludes dilution and is calculated by dividing earnings by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing earnings by the weighted-average number of common shares, as adjusted for the potentially dilutive effect of unvested RSUs and PRSUs. RSAs are included in shares outstanding on the date of grant.
The following table reconciles earnings (loss) per share:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Basic Earnings (Loss) per Share: | ||||||||||||||||
| Net loss — basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding — basic | ||||||||||||||||
| Basic loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Diluted Earnings (Loss) per Share: | ||||||||||||||||
| Net loss — diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted average shares outstanding — diluted | ||||||||||||||||
| Diluted loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The following table indicates the stock equivalents related to unvested RSUs and PRSUs that were anti-dilutive and excluded from diluted earnings (loss) per share calculations:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Anti-dilutive shares due to: | ||||||||||||||||
| Exercise prices higher than the average market price | ||||||||||||||||
| Net loss | ||||||||||||||||
8. Trade Accounts Receivable
Trade Accounts Receivable
Trade accounts receivables are recorded at the contractual or invoiced amount.
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Trade accounts receivable, current | $ | $ | ||||||
| Trade accounts receivable, long-term | ||||||||
| Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Trade accounts receivable, net | $ | $ | ||||||
| Unpaid deferred revenue included in trade accounts receivable | $ | $ | ||||||
Allowance for Doubtful Accounts
The Company’s accounts receivables are subject to concentrations of credit risk. The Company maintains an allowance for its doubtful accounts receivable to reflect any estimated credit losses. The allowance is established in accordance with the current expected credit loss model, which requires the estimation of expected credit losses over the contractual life of financial assets. The allowance is calculated using a forward-looking probability-weighted approach based on historical loss experience, current economic conditions, and reasonable and supportable forecasts. The Company records the allowance in “general and administrative” expense in the Consolidated Statements of Operations, up to the amount of revenue recognized to date for each account. Any incremental allowance is recorded as an offset to “deferred revenue” in the Consolidated Balance Sheets. Account receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success.
Unpaid Deferred Revenue
The unpaid deferred revenue that is included in trade accounts receivable is billed in accordance with the provisions of the contracts with the Company’s customers.
Major Customers
The following customers accounted for 10% or more of trade accounts receivable, net:
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Company A | % | % | ||||||
| Company B | % | * | ||||||
| Company C | * | % | ||||||
| * | Less than 10% |
9. Property and Equipment
Property and equipment are stated at cost. Repairs and maintenance are charged to expense when incurred.
Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, generally to years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the lease term.
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Office furniture and fixtures | $ | $ | ||||||
| Software | ||||||||
| Equipment | ||||||||
| Leasehold improvements | ||||||||
| Gross property and equipment | ||||||||
| Less accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
10. Goodwill
The Company performs its annual goodwill impairment test during the second quarter of each fiscal year or whenever events or changes in circumstances indicate that the carrying value may exceed the fair value. If the carrying value exceeds the estimated fair value, an impairment is recorded. The Company operates as a single reporting unit. The Company estimates the fair value of its single reporting unit using a market approach, which takes into account the Company’s market capitalization plus an estimated control premium. impairment charges were recorded for the nine months ended September 30, 2024 and 2023.
| Balance at December 31, 2023 | $ | |||
| Currency translation adjustments | ||||
| Balance at September 30, 2024 | $ |
11. Intangibles
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, but generally approximates seventeen years.
Amortization of intangible assets acquired is calculated using the straight-line method over the estimated useful lives of the assets.
| Estimated Life | September 30, | December 31, | ||||||||||
| (years) | 2024 | 2023 | ||||||||||
| Capitalized patent costs | $ | $ | ||||||||||
| Intangible assets acquired: | ||||||||||||
| Purchased intellectual property | ||||||||||||
| Developed technology | ||||||||||||
| Customer relationships | ||||||||||||
| Gross intangible assets | ||||||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||||||
| Intangibles, net | $ | $ | ||||||||||
The amortization of capitalized patent costs, purchased intellectual property, and developed technology is recorded in “cost of revenue” and the amortization of customer relationships is recorded in “operating expenses” in the Consolidated Statements of Operations.
Amortization expense on intangible assets was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Amortization expense | $ | $ | $ | $ | ||||||||||||
For intangible assets recorded at September 30, 2024, the estimated future aggregate amortization expense for the years ending December 31, 2024 through December 31, 2028 is as follows:
| Amortization | ||||
| As of September 30, 2024 | Expense | |||
| Remaining in 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
12. Leases
The Company accounts for leases in accordance with ASC 842, “Leases.”
The Company entered into a sublease agreement and lease extension agreement for office space in Beaverton, Oregon in February 2022 to move the Company’s corporate headquarters. The term of the sublease and lease extension runs through September 2030, with remaining rent payments as of September 30, 2024, totaling $
The lease term of the Company’s former corporate headquarters in Beaverton, Oregon ended in March 2024, with
All of the Company’s leases are operating leases. The following table provides additional details of leases presented in the Consolidated Balance Sheets:
| September 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Lease right of use assets | $ | $ | ||||||
| Lease liabilities, current | $ | $ | ||||||
| Lease liabilities, long-term | $ | $ | ||||||
| Weighted-average remaining life (in years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
The current lease liabilities are included in “accounts payable and other accrued liabilities” in the Consolidated Balance Sheets.
The carrying value of the lease right of use assets is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.
Operating lease expense is included in “operating expenses” in the Consolidated Statements of Operations and in “cash flows from operating activities” in the Consolidated Statements of Cash Flows. The operating leases include variable lease payments, which are included in operating lease expense. Additional details of the Company’s operating leases are presented in the following table:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Operating lease expense | $ | $ | $ | $ | ||||||||||||
| Cash paid for operating leases | $ | $ | $ | $ | ||||||||||||
The table below reconciles the aggregate cash payment obligations for the next five years and total of the remaining years for the operating lease liability recorded in the Consolidated Balance Sheets as of September 30, 2024:
| Cash | ||||
| Payment | ||||
| As of September 30, 2024 | Obligations | |||
| Remaining in 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total lease payments | ||||
| Imputed interest | ( | ) | ||
| Total minimum lease payments | $ | |||
13. Other Income
The following table provides activity in other income, net:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Interest income | $ | $ | $ | $ | ||||||||||||
| Refundable tax credit | ||||||||||||||||
| Foreign currency gains (losses) | ( | ) | ( | ) | ( | ) | ||||||||||
| Other income (loss) | ||||||||||||||||
| Total other income, net | $ | $ | $ | $ | ||||||||||||
14. Income Taxes
The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the nine months ended September 30, 2024 and 2023 was
The valuation allowance against net deferred tax assets as of September 30, 2024, was $
An excess tax deficiency of $
An excess tax benefit of $
15. Commitments and Contingencies
Certain of the Company’s product and services agreements include an indemnification provision for claims from third parties relating to the Company’s intellectual property. Such indemnification provisions are accounted for in accordance with ASC 450 “Contingencies.” To date, there have been no claims made under such indemnification provisions.
The Company is subject from time to time to other legal proceedings and claims arising in the ordinary course of business. At this time, the Company does not believe that the resolution of any such matters will have a material adverse effect on its financial position, results of operations or cash flows.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements relating to future events or the future financial performance of Digimarc that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. See the discussion regarding forward-looking statements included in this Quarterly Report on Form 10-Q under the caption “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.”
The following discussion should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Readers are also urged to carefully review and consider the disclosures made in Part II, Item 1A (“Risk Factors”) of this Quarterly Report on Form 10-Q and in the audited consolidated financial statements and related notes included in our 2023 Annual Report, and other reports and filings we have made with the SEC.
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Company,” “Digimarc,” “we,” “our,” and “us” refer to Digimarc Corporation.
All dollar amounts within the tables below are in thousands. The percentages within the tables may not sum to 100% due to rounding.
Digimarc, Digimarc Barcode, The Barcode of Everything, Barcode of Everything, and the circle-d logo are registered trademarks of Digimarc Corporation. EVRYTHNG and EVRYTHNG PRODUCT CLOUD are registered trademarks of EVRYTHNG Limited (“EVRYTHNG”), a wholly owned subsidiary of Digimarc.
Overview
Digimarc, an Oregon corporation, is a pioneer and global leader in digital watermarking technologies. For nearly 30 years, Digimarc innovations and intellectual property in digital watermarking have been deployed in solutions built upon one or both of the following two things: the identification and the authentication of physical and digital items, often at massive scale, and often where other methods of identification or authentication don’t work well or don’t work at all.
The Digimarc Illuminate platform is a distinctive SaaS cloud-based platform for digital connectivity that provides the tools for the application of advanced digital watermarks and dynamic QR codes, software (digital twins) that enables various systems and devices to interact with those data carriers, and a centralized platform for capturing insights about digital interactions and automating activities based on that information.
The Digimarc product suite is built on top of the Digimarc Illuminate platform to power a trusted and scalable ecosystem that can address specific business needs in areas like automation, authenticity, sustainability, and customer trust and connectivity. All of the Company’s products are complementary to each other, providing exponential benefits when combined. By enabling customers to create and connect digital twins to physical and digital items, Digimarc’s products provide many benefits including:
| • |
Digimarc Automate improves product inspection by embedding imperceptible digital watermarks into products, labels, and packaging, which are detectable by standard vision systems. This significantly reduces mixing errors and mislabeling, ensuring higher accuracy and efficiency in production, fulfillment, and distribution facilities without additional costs for special inks or hardware. By enabling real-time data analysis and minimizing human error, Digimarc Automate enhances quality assurance, reduces waste, and lowers the risk of product recalls, giving brands a competitive edge. |
| • |
Digimarc Engage activates products and multimedia to create and leverage an interactive, fully owned communications channel directly with consumers. Digimarc delivers dynamic QR codes and hyperlinks that provide contextual redirection capabilities for multiple consumer experiences based on a variety of factors such as time and location or previous behavior. Connecting engagements across the physical and digital worlds in a singular view results in powerful new capabilities and insights for brands. |
| • |
Digimarc Recycle increases the quality and quantity of recycled materials by digitizing products and packaging with digital watermarking technology. Coupled with consumer engagement capabilities, brands can leverage a direct, digital communications channel. Plus, a cloud-based record of never-before-seen post-consumption data provides new insights that benefit stakeholders across the value chain, including brands, facility operators, and Producer Responsibility Organizations (“PROs”). |
| • | Digimarc Retail Experience delivers smarter, connected packaging that supports next-generation retail checkout systems, including checkout efficiency (faster scanning) and checkout effectiveness (reduced shrinkage), optimized operational processes, advanced consumer engagement experiences, compliance with upcoming industry standards, and the collection of powerful first-party data and consumer insights. |
| • |
Digimarc Validate supports authentication in the physical and digital worlds to help ensure online interactions can be trusted and that real products and digital assets are genuine and in the right place. Digimarc’s technology protects digital images, audio, product packaging, gift cards, and other physical items by delivering exclusive, covert digital watermarks and/or dynamic QR codes and a cloud-based record of product authentication information. In addition, consumer engagement capabilities provide a direct, digital communications channel. |
Digimarc has maintained a relationship with a consortium of central banks for nearly 30 years, providing trusted technology to help deter digital counterfeiting of currency. The relationship was the first commercially successful large-scale use of our technologies and protects billions of banknotes in circulation globally.
Our intellectual property contains many innovations in digital watermarking, content and object recognition, product authentication, and related fields. To protect our inventions, we have implemented an extensive intellectual property protection program that relies on a combination of patent, copyright, trademark and trade secret laws, and nondisclosure agreements and other contracts. As a result, we believe we have one of the world’s most extensive patent portfolios in digital watermarking and related fields, with approximately 820 U.S. and foreign patents granted and applications pending as of September 30, 2024. The patents in our portfolio each have a life of approximately 20 years from the patent’s effective filing date.
Critical Accounting Policies and Estimates
Detailed information about our critical accounting policies and estimates is set forth in Part III, Item 15 of our 2023 Annual Report (“Exhibits and Financial Statement Schedules”), in “Note 1: Description of Business and Summary of Significant Accounting Policies,” which is incorporated by reference into this Quarterly Report on Form 10-Q.
Results of Operations
The following table presents Consolidated Statements of Operations data for the periods indicated as a percentage of total revenue. Unless stated otherwise, all references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations relate to the three and nine month periods ended September 30, 2024, and all changes discussed with respect to such periods reflect changes compared to the three and nine month periods ended September 30, 2023.
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| Percentages are percent of total revenue |
||||||||||||||||
| Revenue: |
||||||||||||||||
| Subscription |
56 | % | 53 | % | 58 | % | 52 | % | ||||||||
| Service |
44 | % | 47 | % | 42 | % | 48 | % | ||||||||
| Total revenue |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
| Cost of revenue: |
||||||||||||||||
| Subscription (1) |
8 | % | 8 | % | 7 | % | 9 | % | ||||||||
| Service (1) |
17 | % | 22 | % | 17 | % | 22 | % | ||||||||
| Amortization expense on acquired intangible assets |
12 | % | 13 | % | 12 | % | 13 | % | ||||||||
| Total cost of revenue |
38 | % | 42 | % | 36 | % | 44 | % | ||||||||
| Gross profit |
62 | % | 58 | % | 64 | % | 56 | % | ||||||||
| Operating expenses: |
||||||||||||||||
| Sales and marketing |
60 | % | 60 | % | 56 | % | 66 | % | ||||||||
| Research, development and engineering |
69 | % | 70 | % | 67 | % | 79 | % | ||||||||
| General and administrative |
51 | % | 49 | % | 46 | % | 52 | % | ||||||||
| Amortization expense on acquired intangible assets |
3 | % | 3 | % | 3 | % | 3 | % | ||||||||
| Impairment of lease right of use assets and leasehold improvements |
— | — | — | 1 | % | |||||||||||
| Total operating expenses |
183 | % | 182 | % | 172 | % | 202 | % | ||||||||
| Operating loss |
(120 | )% | (124 | )% | (108 | )% | (145 | )% | ||||||||
| Other income, net |
7 | % | 5 | % | 6 | % | 7 | % | ||||||||
| Loss before income taxes |
(114 | )% | (119 | )% | (102 | )% | (138 | )% | ||||||||
| Provision for income taxes |
(— | )% | (1 | )% | (— | )% | (— | )% | ||||||||
| Net loss |
(114 | )% | (119 | )% | (102 | )% | (138 | )% | ||||||||
| (1) |
Cost of revenue for Subscription and Service excludes Amortization expense on acquired intangible assets. |
Summary
Total revenue for the three month period ended September 30, 2024, increased $0.4 million, to $9.4 million, compared to $9.0 million for the corresponding three month period ended September 30, 2023. The increase in revenue primarily reflects $0.4 million of higher subscription revenue, which includes higher subscription revenue from new and existing commercial contracts, partially offset by the delayed timing in the anticipated renewal of a commercial contract.
Total revenue for the nine month period ended September 30, 2024, increased $4.2 million, to $29.8 million, compared to $25.6 million for the corresponding nine month period ended September 30, 2023. The increase in revenue primarily reflects $4.0 million of higher subscription revenue, which includes higher subscription revenue from new and existing commercial contracts, partially offset by the delayed timing in the anticipated renewal of a commercial contract, and $0.2 million of higher service revenue.
Total operating expenses for the three month period ended September 30, 2024, increased $0.9 million, to $17.3 million, compared to $16.4 million for the corresponding three month period ended September 30, 2023. The increase in operating expenses primarily reflects $0.6 million of cash severance costs in 2024 and $0.4 million of lower labor costs allocated to cost of revenue due to the amount and mix of billable labor hours incurred.
Total operating expenses for the nine month period ended September 30, 2024, decreased $0.3 million, to $51.2 million, compared to $51.5 million for the corresponding nine month period ended September 30, 2023. The decrease in operating expenses primarily reflects $0.4 million of lower depreciation and amortization costs, $0.3 million of lower cash compensation costs, and $0.3 million of lower lease impairment expense, partially offset by $0.3 million of higher professional services and consulting costs. The decrease in cash compensation costs primarily reflects $1.5 million of cash severance costs in 2023, partially offset by $0.6 million of cash severance costs in 2024 and $0.5 million of lower cash labor costs allocated to cost of revenue due to the amount and mix of billable labor hours incurred.
Revenue
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Revenue: |
||||||||||||||||||||||||||||||||
| Subscription |
$ | 5,252 | $ | 4,811 | $ | 441 | 9 | % | $ | 17,394 | $ | 13,374 | $ | 4,020 | 30 | % | ||||||||||||||||
| Service |
4,191 | 4,183 | 8 | — | % | 12,366 | 12,193 | 173 | 1 | % | ||||||||||||||||||||||
| Total |
$ | 9,443 | $ | 8,994 | $ | 449 | 5 | % | $ | 29,760 | $ | 25,567 | $ | 4,193 | 16 | % | ||||||||||||||||
| Revenue (as % of total revenue): |
||||||||||||||||||||||||||||||||
| Subscription |
56 | % | 53 | % | 58 | % | 52 | % | ||||||||||||||||||||||||
| Service |
44 | % | 47 | % | 42 | % | 48 | % | ||||||||||||||||||||||||
| Total |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||
Subscription
Subscription revenue consists primarily of revenue earned from subscription fees for access to our SaaS platform and products and, to a lesser extent, licensing fees for our software products. The majority of subscription contracts are recurring, paid in advance and recognized over the term of the subscription, which is typically one to three years.
The $0.4 million increase in subscription revenue for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects higher subscription revenue from new and existing commercial contracts, partially offset by the delayed timing in the anticipated renewal of a commercial contract.
The $4.0 million increase in subscription revenue for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects higher subscription revenue from new and existing commercial contracts, partially offset by the delayed timing in the anticipated renewal of a commercial contract.
Service
Service revenue consists primarily of revenue earned from the performance of software development services and, to a lesser extent, professional services. The majority of software development contracts are structured as time and materials agreements. Revenue for services is generally recognized as the services are performed. Billing for services rendered generally occurs within one month after the services are provided. Service contracts can range from days to several years in length. Our contract with the Central Banks, which accounts for the majority of our service revenue, has a contract term through December 31, 2029. The contract is subject to work plans that are reviewed and agreed upon quarterly. The contract provides for predetermined billing rates, which are adjusted annually to account for cost of living variables, and provides for the reimbursement of third party costs incurred to support the work plans.
Service revenue for the three month period ended September 30, 2024 remained flat, compared to the corresponding three month period ended September 30, 2023, primarily reflecting $0.4 million of higher service revenue from HolyGrail recycling projects, partially offset by $0.2 million of lower government service revenue due to timing of program work with the Central Banks.
The $0.2 million increase in service revenue for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects higher government service revenue due to timing of program work with the Central Banks.
Revenue by geography
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Revenue by geography: |
||||||||||||||||||||||||||||||||
| Domestic |
$ | 2,004 | $ | 2,921 | $ | (917 | ) | (31 | )% | $ | 8,349 | $ | 8,541 | $ | (192 | ) | (2 | )% | ||||||||||||||
| International |
7,439 | 6,073 | 1,366 | 22 | % | 21,411 | 17,026 | 4,385 | 26 | % | ||||||||||||||||||||||
| Total |
$ | 9,443 | $ | 8,994 | $ | 449 | 5 | % | $ | 29,760 | $ | 25,567 | $ | 4,193 | 16 | % | ||||||||||||||||
| Revenue (as % of total revenue): |
||||||||||||||||||||||||||||||||
| Domestic |
21 | % | 32 | % | 28 | % | 33 | % | ||||||||||||||||||||||||
| International |
79 | % | 68 | % | 72 | % | 67 | % | ||||||||||||||||||||||||
| Total |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||
Domestic
The $0.9 million decrease in domestic revenue for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects $0.7 million of lower subscription revenue, which includes the impact of the delayed timing in the anticipated renewal of a commercial contract with a domestic customer, partially offset by higher subscription revenue from new and existing commercial contracts with domestic customers.
The $0.2 million decrease in domestic revenue for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects $0.1 million of lower subscription revenue, which includes the impact of the delayed timing in the anticipated renewal of a commercial contract with a domestic customer, partially offset by higher subscription revenue from new and existing commercial contracts with domestic customers.
International
The $1.4 million increase in international revenue for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects $1.1 million of higher subscription revenue from new and existing commercial contracts with international customers.
The $4.4 million increase in international revenue for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects $4.1 million of higher subscription revenue from new and existing commercial contracts with international customers and $0.2 million of higher government service revenue due to timing of program work with the Central Banks.
Revenue by market
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Commercial: |
||||||||||||||||||||||||||||||||
| Subscription |
$ | 4,952 | $ | 4,511 | $ | 441 | 10 | % | $ | 16,494 | $ | 12,474 | $ | 4,020 | 32 | % | ||||||||||||||||
| Service |
430 | 213 | 217 | 102 | % | 864 | 849 | 15 | 2 | % | ||||||||||||||||||||||
| Total Commercial |
$ | 5,382 | $ | 4,724 | $ | 658 | 14 | % | $ | 17,358 | $ | 13,323 | $ | 4,035 | 30 | % | ||||||||||||||||
| Government: |
||||||||||||||||||||||||||||||||
| Subscription |
$ | 300 | $ | 300 | $ | — | — | % | $ | 900 | $ | 900 | $ | — | — | % | ||||||||||||||||
| Service |
3,761 | 3,970 | (209 | ) | (5 | )% | 11,502 | 11,344 | 158 | 1 | % | |||||||||||||||||||||
| Total Government |
$ | 4,061 | $ | 4,270 | $ | (209 | ) | (5 | )% | $ | 12,402 | $ | 12,244 | $ | 158 | 1 | % | |||||||||||||||
| Total |
$ | 9,443 | $ | 8,994 | $ | 449 | 5 | % | $ | 29,760 | $ | 25,567 | $ | 4,193 | 16 | % | ||||||||||||||||
| Revenue (as % of total revenue): |
||||||||||||||||||||||||||||||||
| Commercial |
57 | % | 53 | % | 58 | % | 52 | % | ||||||||||||||||||||||||
| Government |
43 | % | 47 | % | 42 | % | 48 | % | ||||||||||||||||||||||||
| Total |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||||||||
Commercial
The $0.7 million increase in commercial revenue for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects $0.4 million of higher commercial subscription revenue, which includes higher subscription revenue from new and existing commercial contracts, partially offset by the delayed timing in the anticipated renewal of a commercial contract, and $0.4 million of higher service revenue from HolyGrail recycling projects.
The $4.0 million increase in commercial revenue for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects $4.0 million of higher commercial subscription revenue, which includes higher subscription revenue from new and existing commercial contracts, partially offset by the delayed timing in the anticipated renewal of a commercial contract.
Government
The $0.2 million decrease in government revenue for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects lower government service revenue due to timing of program work with the Central Banks.
The $0.2 million increase in government revenue for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects higher government service revenue due to timing of program work with the Central Banks.
Annual Recurring Revenue (“ARR”)
| As of |
As of |
Dollar |
Percent |
|||||||||||||
| September 30, |
September 30, |
Increase |
Increase |
|||||||||||||
| 2024 |
2023 |
(Decrease) |
(Decrease) |
|||||||||||||
| ARR |
$ | 18,674 | $ | 19,559 | $ | (885) | (5) | % | ||||||||
ARR decreased $0.9 million, or 5% from September 30, 2023 to September 30, 2024, reflecting a $5.8 million decrease due to the delayed timing in the anticipated renewal of a commercial contract, partially offset by new annual recurring revenue from entry into new commercial subscription contracts and increased subscription fees on existing commercial contracts.
We provide an ARR performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources has increased in recent years. ARR is calculated as the aggregation of annualized subscription fees from all of our commercial contracts as of the measurement date. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with, or to replace, either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.
Cost of revenue
Subscription. Cost of subscription revenue primarily includes:
| • |
internet cloud hosting costs and image search data fees to support our subscription products; and |
| • |
amortization of capitalized patent costs and patent maintenance fees. |
Service. Cost of service revenue primarily includes:
| • |
compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our software developers, quality assurance personnel, professional services team and other personnel where we bill our customers for time and materials costs; |
| • |
payments to outside contractors that are billed to customers; |
| • |
charges for equipment directly used by customers; |
| • |
depreciation for equipment and software directly used by customers; and |
| • |
travel costs that are billed to customers. |
Amortization expense on acquired intangible assets includes:
| • |
amortization expense recognized on the developed technology intangible asset acquired in the EVRYTHNG acquisition. |
Gross profit
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Gross Profit: |
||||||||||||||||||||||||||||||||
| Subscription (1) |
$ | 4,517 | $ | 4,113 | $ | 404 | 10 | % | $ | 15,189 | $ | 11,110 | $ | 4,079 | 37 | % | ||||||||||||||||
| Service (1) |
2,553 | 2,245 | 308 | 14 | % | 7,228 | 6,572 | 656 | 10 | % | ||||||||||||||||||||||
| Amortization expense on acquired intangible assets |
(1,173 | ) | (1,135 | ) | (38 | ) | (3 | )% | (3,445 | ) | (3,346 | ) | (99 | ) | (3 | )% | ||||||||||||||||
| Total |
$ | 5,897 | $ | 5,223 | $ | 674 | 13 | % | $ | 18,972 | $ | 14,336 | $ | 4,636 | 32 | % | ||||||||||||||||
| Gross Profit Margin: |
||||||||||||||||||||||||||||||||
| Subscription (1) |
86 | % | 85 | % | 87 | % | 83 | % | ||||||||||||||||||||||||
| Service (1) |
61 | % | 54 | % | 58 | % | 54 | % | ||||||||||||||||||||||||
| Total |
62 | % | 58 | % | 64 | % | 56 | % | ||||||||||||||||||||||||
| (1) |
Gross Profit and Gross Profit Margin for Subscription and Service excludes Amortization expense on acquired intangible assets. |
The $0.7 million increase in total gross profit for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects $0.4 million of higher subscription revenue and $0.2 million of lower costs of revenue.
The $4.6 million increase in total gross profit for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects $4.0 million of higher subscription revenue, and $0.4 million of lower costs of revenue.
The increase in subscription gross profit margin, excluding amortization expense on acquired intangible assets, for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects higher subscription revenue.
The increase in subscription gross profit margin, excluding amortization expense on acquired intangible assets, for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects higher subscription revenue combined with a favorable mix of subscription revenue.
The increase in service gross profit margin, excluding amortization expense on acquired intangible assets, for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects a favorable mix of service revenue in 2024.
The increase in service gross profit margin, excluding amortization expense on acquired intangible assets, for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects higher professional service costs incurred in 2023 and a favorable mix of service revenue in 2024.
Operating expenses
Sales and marketing
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Sales and marketing |
$ | 5,637 | $ | 5,366 | $ | 271 | 5 | % | $ | 16,789 | $ | 16,770 | $ | 19 | — | % | ||||||||||||||||
| Sales and marketing (as % of total revenue) |
60 | % | 60 | % | 56 | % | 66 | % | ||||||||||||||||||||||||
Sales and marketing expenses consist primarily of:
| • |
compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our sales, marketing, product, operations and customer support personnel; |
| • |
travel and market research costs, and costs associated with marketing programs, such as trade shows, public relations and new product launches; |
| • |
professional services, consulting and outside contractor costs for sales and marketing and product initiatives; and |
| • |
the allocation of facilities and information technology costs. |
The $0.3 million increase in sales and marketing expenses for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects:
| • |
cash severance costs of $0.6 million in 2024; partially offset by |
| • |
lower cash compensation costs of $0.2 million primarily reflecting lower headcount, net of annual compensation adjustments. |
The changes in sales and marketing expenses for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects:
| • |
cash severance costs of $0.6 million in 2024; |
| • |
lower labor costs allocated to cost of revenue of $0.4 million due to the amount and mix of billable labor hours incurred; and |
| • |
higher stock compensation costs of $0.3 million; partially offset by |
| • |
cash severance costs of $0.6 million in 2023; and |
| • |
lower professional services and consulting costs of $0.4 million. |
Research, development and engineering
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Research, development and engineering |
$ | 6,488 | $ | 6,308 | $ | 180 | 3 | % | $ | 19,873 | $ | 20,295 | $ | (422 | ) | (2 | )% | |||||||||||||||
| Research, development and engineering (as % of total revenue) |
69 | % | 70 | % | 67 | % | 79 | % | ||||||||||||||||||||||||
Research, development and engineering expenses consist primarily of:
| • |
compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our software developers and quality assurance personnel; |
| • |
payments to outside contractors for software development services; |
| • |
the purchase of materials and services for product development; and |
| • |
the allocation of facilities and information technology costs. |
The $0.2 million increase in research, development and engineering expenses for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects:
| • |
higher cash headcount costs of $0.2 million, primarily reflecting annual compensation adjustments. |
The $0.4 million decrease in research, development and engineering expenses for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects:
| • |
cash severance costs of $0.8 million in 2023; and |
| • |
lower stock compensation costs of $0.4 million; partially offset by |
| • |
higher professional and consulting costs of $0.6 million. |
General and administrative
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| General and administrative |
$ | 4,861 | $ | 4,433 | $ | 428 | 10 | % | $ | 13,695 | $ | 13,412 | $ | 283 | 2 | % | ||||||||||||||||
| General and administrative (as % of total revenue) |
51 | % | 49 | % | 46 | % | 52 | % | ||||||||||||||||||||||||
We incur general and administrative costs in the functional areas of finance, legal, human resources, intellectual property, executive and board of directors. Costs for facilities and information technology are also managed as part of the general and administrative processes and are allocated to this area as well as sales and marketing and research, development and engineering.
General and administrative expenses consist primarily of:
| • |
compensation, benefits and incentive compensation in the form of cash and stock-based compensation and related costs of our general and administrative personnel; |
| • |
third party and professional fees associated with legal, accounting and human resources functions; |
| • |
costs associated with being a public company; |
| • |
third party costs, including filing and governmental regulatory fees and outside legal fees and translation costs, related to the filing and maintenance of our intellectual property; and |
| • |
infrastructure and centralized costs for facilities and information technology. |
| • |
higher professional services and consulting costs of $0.3 million; and |
| • |
higher compensation costs of $0.2 million, primarily reflecting annual compensation adjustments; partially offset by |
| • |
lower depreciation and amortization costs of $0.2 million. |
| • |
higher stock compensation of $0.2 million; and |
| • |
higher other costs of $0.2 million; partially offset by |
| • |
lower depreciation and amortization expense of $0.2 million. |
Amortization expense on acquired intangible assets
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Amortization expense on acquired intangible assets |
$ | 280 | $ | 272 | $ | 8 | 3 | % | $ | 823 | $ | 800 | $ | 23 | 3 | % | ||||||||||||||||
| Amortization expense on acquired intangible assets (as % of total revenue) |
3 | % | 3 | % | 3 | % | 3 | % | ||||||||||||||||||||||||
Amortization expense on acquired intangible assets relates to amortization expense recognized on the customer relationships intangible asset acquired in the EVRYTHNG acquisition.
The increases in amortization expense on acquired intangible assets reflect the impact of changes in foreign currency exchange rates.
Impairment of lease right of use assets and leasehold improvements
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Impairment of lease right of use assets and leasehold improvements |
$ | — | $ | — | $ | — | — | % | $ | — | $ | 250 | $ | (250 | ) | (100 | )% | |||||||||||||||
| Impairment of lease right of use assets and leasehold improvements (as % of total revenue) |
— | % | — | % | — | % | 1 | % | ||||||||||||||||||||||||
The $0.3 million decrease in impairment of lease right of use assets and leasehold improvements relates to an impairment charge recorded for the nine months ended September 30, 2023 on our former corporate headquarters in Beaverton, Oregon. The lease on our former corporate headquarters expired on March 31, 2024.
Stock-based compensation
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Cost of revenue |
$ | 154 | $ | 310 | $ | (156 | ) | (50 | )% | $ | 563 | $ | 866 | $ | (303 | ) | (35 | )% | ||||||||||||||
| Sales and marketing |
688 | 606 | 82 | 14 | % | 2,198 | 1,930 | 268 | 14 | % | ||||||||||||||||||||||
| Research, development and engineering |
648 | 658 | (10 | ) | (2 | )% | 1,911 | 2,269 | (358 | ) | (16 | )% | ||||||||||||||||||||
| General and administrative |
1,212 | 1,118 | 94 | 8 | % | 3,267 | 3,081 | 186 | 6 | % | ||||||||||||||||||||||
| Total |
$ | 2,702 | $ | 2,692 | $ | 10 | — | % | $ | 7,939 | $ | 8,146 | $ | (207 | ) | (3 | )% | |||||||||||||||
The changes in stock-based compensation expense for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023 were insignificant.
The decrease in stock-based compensation expense for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects $0.6 million of stock-based severance costs incurred in 2023 and the reversal of stock compensation expense of $0.4 million on unvested stock awards that were forfeited, partially offset by a higher value of employee equity awards.
We anticipate incurring an additional $16.0 million in stock-based compensation expense through September 30, 2028, for stock awards outstanding as of September 30, 2024.
Other income, net
| Three Months Ended September 30, |
Dollar |
Percent |
Nine Months Ended September 30, |
Dollar |
Percent |
|||||||||||||||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||||||||||||||
| Other income, net |
$ | 617 | $ | 478 | 139 | 29 | % | $ | 1,868 | $ | 1,870 | (2 | ) | — | % | |||||||||||||||||
| Other income, net (as % of total revenue) |
7 | % | 5 | % | 6 | % | 7 | % | ||||||||||||||||||||||||
The increase in other income, net for the three month period ended September 30, 2024, compared to the corresponding three month period ended September 30, 2023, primarily reflects higher interest income.
The changes in other income, net for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, primarily reflects lower refundable tax credits, partially offset by higher interest income.
Income Taxes
The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the nine month periods ended September 30, 2024 and 2023 was 0%. Our effective tax rate is significantly lower than our statutory tax rate because we have a valuation allowance recorded against our deferred tax assets.
The valuation allowance against deferred tax assets as of September 30, 2024, was $104.1 million, an increase of $8.9 million from $95.3 million as of December 31, 2023.
We continually assess the applicability of a valuation allowance against our deferred tax assets. Based upon the positive and negative evidence available as of September 30, 2024, and largely due to the cumulative loss incurred by us over the last several years, which is considered a significant piece of negative evidence when assessing the realizability of deferred tax assets, a valuation allowance is recorded against our deferred tax assets. We will not record tax benefits on any future losses until it is determined that those tax benefits will be realized. Future reversals of the valuation allowance would result in a tax benefit in the period recognized.
Non-GAAP Financial Measures
The following discussion and analysis includes both financial measures in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that exclude amounts that are not normally excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, GAAP financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Our management uses and relies on Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP loss per share (diluted), which are all non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods.
Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.
We define Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP loss per share (diluted) excluding the adjustments in the table below. These non-GAAP financial measures are an important measure of our operating performance because they allow management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing non-cash and non-recurring activities that can affect comparability.
We have included a reconciliation of our financial measures calculated in accordance with GAAP to the most comparable non-GAAP financial measures. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between us and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definitions being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.
The following table presents a reconciliation of Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP loss per share (diluted) for the three and nine months ended September 30, 2024 and 2023:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2024 |
2023 |
2024 |
2023 |
|||||||||||||
| GAAP gross profit |
$ | 5,897 | $ | 5,223 | $ | 18,972 | $ | 14,336 | ||||||||
| Amortization of acquired intangible assets |
1,173 | 1,135 | 3,445 | 3,346 | ||||||||||||
| Amortization and write-off of other intangible assets |
136 | 143 | 410 | 433 | ||||||||||||
| Stock-based compensation |
154 | 310 | 563 | 866 | ||||||||||||
| Non-GAAP gross profit |
$ | 7,360 | $ | 6,811 | $ | 23,390 | $ | 18,981 | ||||||||
| Non-GAAP gross profit margin |
78 | % | 76 | % | 79 | % | 74 | % | ||||||||
| GAAP operating expenses |
$ | 17,266 | $ | 16,379 | $ | 51,180 | $ | 51,527 | ||||||||
| Depreciation and write-off of property and equipment |
(179 | ) | (223 | ) | (570 | ) | (911 | ) | ||||||||
| Amortization of acquired intangible assets |
(280 | ) | (272 | ) | (823 | ) | (800 | ) | ||||||||
| Amortization and write-off of other intangible assets |
(77 | ) | (228 | ) | (241 | ) | (276 | ) | ||||||||
| Amortization of lease right of use assets under operating leases |
(90 | ) | (94 | ) | (263 | ) | (426 | ) | ||||||||
| Stock-based compensation |
(2,548 | ) | (2,382 | ) | (7,376 | ) | (7,280 | ) | ||||||||
| Impairment of lease right of use assets and leasehold improvements |
— | — | — | (250 | ) | |||||||||||
| Non-GAAP operating expenses |
$ | 14,092 | $ | 13,180 | $ | 41,907 | $ | 41,584 | ||||||||
| GAAP net loss |
$ | (10,754 | ) | $ | (10,723 | ) | $ | (30,362 | ) | $ | (35,386 | ) | ||||
| Total adjustments to gross profit |
1,463 | 1,588 | 4,418 | 4,645 | ||||||||||||
| Total adjustments to operating expenses |
3,174 | 3,199 | 9,273 | 9,943 | ||||||||||||
| Non-GAAP net loss |
$ | (6,117 | ) | $ | (5,936 | ) | $ | (16,671 | ) | $ | (20,798 | ) | ||||
| GAAP loss per share (diluted) |
$ | (0.50 | ) | $ | (0.53 | ) | $ | (1.43 | ) | $ | (1.76 | ) | ||||
| Non-GAAP net loss |
$ | (6,117 | ) | $ | (5,936 | ) | $ | (16,671 | ) | $ | (20,798 | ) | ||||
| Non-GAAP loss per share (diluted) |
$ | (0.29 | ) | $ | (0.29 | ) | $ | (0.79 | ) | $ | (1.03 | ) | ||||
Non-GAAP gross profit for the three months ended September 30, 2024, increased by $0.5 million compared to the three months ended September 30, 2023. The increase primarily reflects higher subscription revenue.
Non-GAAP gross profit for the nine months ended September 30, 2024, increased by $4.4 million compared to the nine months ended September 30, 2023. The increase primarily reflects higher subscription revenue.
Non-GAAP gross profit margin for the three months ended September 30, 2024, increased to 78% compared to 76% for the three months ended September 30, 2023. The increase primarily reflects higher subscription revenue.
Non-GAAP gross profit margin for the nine months ended September 30, 2024, increased to 79% compared to 74% for the nine months ended September 30, 2023. The increase primarily reflects higher subscription revenue combined with a favorable mix of subscription revenue.
Non-GAAP operating expenses for the three months ended September 30, 2024, increased by $0.9 million compared to the three months ended September 30, 2023. The increase primarily reflects $0.6 million of cash severance costs and $0.2 million of lower cash labor costs allocated to cost of revenue due to the amount and mix of billable labor hours incurred.
Non-GAAP operating expenses for the nine months ended September 30, 2024, increased by $0.3 million compared to the nine months ended September 30, 2023. The increase primarily reflects $0.3 million of higher professional service and consulting costs and $0.1 million of higher other costs, partially offset by lower cash compensation costs of $0.3 million. The decrease in cash compensation costs primarily reflects $1.5 million of cash severance costs in 2023, partially offset by $0.6 million of cash severance costs in 2024, and $0.5 million of lower cash labor costs allocated to cost of revenue due to the amount and mix of billable labor hours incurred.
Liquidity and Capital Resources
| September 30, |
December 31, |
|||||||
| 2024 |
2023 |
|||||||
| Working capital |
$ | 35,412 | $ | 24,555 | ||||
| Current ratio (1) |
4.8:1 | 3:1 | ||||||
| Cash, cash equivalents and short-term marketable securities |
$ | 33,686 | $ | 27,182 | ||||
| Long-term marketable securities |
— | — | ||||||
| Total cash, cash equivalents and marketable securities |
$ | 33,686 | $ | 27,182 | ||||
| (1) |
The current ratio is calculated by dividing total current assets by total current liabilities. |
The $6.5 million increase in cash, cash equivalents and marketable securities at September 30, 2024, from December 31, 2023, resulted primarily from:
| • |
net proceeds from the issuance of common stock; partially offset by |
| • |
cash used in operations; |
| • |
purchases of common stock related to tax withholding in connection with the vesting of restricted stock, restricted stock units, and performance restricted stock units; and |
| • |
purchases of property and equipment and capitalized patent costs. |
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and trade accounts receivable. We place our cash and cash equivalents with major banks and financial institutions and at times deposits may exceed insured limits. Marketable securities include commercial paper, federal agency notes, money market securities, and U.S. treasuries. Our investment policy requires our portfolio to be invested to ensure that the greater of $3.0 million or 7% of the invested funds will be available within 30 days’ notice.
Other than cash used for operating needs, which may include short-term marketable securities, our investment policy limits our credit exposure to any one financial institution or type of financial instrument by limiting the maximum of 5% of our cash and cash equivalents and marketable securities or $1.0 million, whichever is greater, to be invested in any one issuer except for the U.S. government, U.S. federal agencies and U.S.-backed securities, which have no limits, at the time of purchase. Our investment policy also limits our credit exposure by limiting to a maximum of 40% of our cash and cash equivalents and marketable securities, or $15.0 million, whichever is greater, to be invested in any one industry category (e.g., financial, energy, etc.) at the time of purchase. As a result, we believe our credit risk associated with cash and investments to be minimal.
A decline in the market value of any security that is deemed to be other-than-temporary is charged to earnings. To determine whether an impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until a market price recovery and evidence indicating that the cost of the investment is recoverable outweighs evidence to the contrary. There have been no other-than-temporary impairments identified or recorded by us for the three and nine months ended September 30, 2024 and 2023.
Cash flows from operating activities
The components of cash flows used in operating activities were:
| Nine Months Ended September 30, |
Dollar |
Percent |
||||||||||||||
| 2024 |
2023 |
Increase/(Decrease) |
Increase/(Decrease) |
|||||||||||||
| Net loss |
$ | (30,362 | ) | $ | (35,386 | ) | $ | (5,024 | ) | (14 | )% | |||||
| Non-cash items |
13,787 | 14,588 | 801 | 5 | % | |||||||||||
| Changes in operating assets and liabilities |
(5,762 | ) | 4,119 | 9,881 | 240 | % | ||||||||||
| Net cash used in operating activities |
$ | (22,337 | ) | $ | (16,679 | ) | $ | 5,658 | 34 | % | ||||||
Cash flows used in operating activities for the nine month period ended September 30, 2024, increased by $5.7 million, compared to the corresponding nine month period ended September 30, 2023, primarily as a result of $9.9 million from unfavorable timing of changes in operating assets and liabilities, and $0.8 million of lower non-cash items included in net loss, partially offset by $5.0 million lower net loss. The unfavorable timing of changes in operating assets and liabilities are largely due to the timing of customer billings and receipts, and the amount and timing of collecting the refundable tax credits. The change in non-cash items primarily reflects lower depreciation and write-off of property and equipment, lower impairment of lease right of use assets and leasehold improvements, and lower stock-based compensation.
Cash flows from investing activities
Cash flows from investing activities for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, decreased by $20.4 million. The decrease primarily reflects higher purchases of marketable securities, and lower net proceeds from maturities of marketable securities.
Cash flows from financing activities
Cash flows from financing activities for the nine month period ended September 30, 2024, compared to the corresponding nine month period ended September 30, 2023, increased by $31.4 million. The increase primarily reflects the $32.2 million of net cash proceeds raised from our registered direct stock offering in February 2024, partially offset by higher purchases of common stock.
Future Cash Expectations
We believe that our current cash, cash equivalents, and marketable securities balances will satisfy our projected working capital and capital expenditure requirements for at least the next 12 months.
Registered Direct Offering
On February 24, 2024, we entered into purchase agreements with certain investors providing for the issuance and sale by us of 929 thousand shares of our common stock in a registered direct stock offering. The common shares were offered at a price of $35.00 per share, and the gross cash proceeds to us were $32.5 million. We incurred $0.3 million of legal costs related to the offering. The closing of the registered direct offering occurred on February 27, 2024.
Shelf Registration
On June 23, 2023, we filed a new shelf registration statement on Form S-3 that included $34.6 million of unsold securities from our prior shelf registration statement filed on June 5, 2020. The new shelf registration statement became effective on July 19, 2023, and expires on July 19, 2026. Under the new shelf registration statement, we may sell securities in one or more offerings up to $100.0 million. As of September 30, 2024, $67.5 million remained available under the new shelf registration statement.
We may sell shares under the shelf registration and/or use similar or other financing means to raise working capital in the future, if necessary, to support continued investment in our growth initiatives. We may also raise capital in the future to fund acquisitions and/or investments in complementary businesses, technologies or product lines. If it becomes necessary to obtain additional financing, we may not be able to do so, or if these funds are available, they may not be available on satisfactory terms.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933. Words such as “may,” “might,” “plan,” “should,” “could,” “expect,” “anticipate,” “intend,” “believe,” “project,” “forecast,” “estimate,” “continue,” and variations of such terms or similar expressions are intended to identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements, and investors are cautioned not to place undue reliance on such statements. We believe that the following factors, among others (including those described in Item 1A. “Risk Factors” of our 2023 Annual Report), could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us. Forward-looking statements include but are not limited to statements relating to:
| • |
the concentration of most of our revenue among few customers; |
| • |
trends and sources of future revenue; |
| • |
anticipated successful advocacy of our technology by our partners; |
| • |
the terms and timing of anticipated contract renewals; |
| • |
our belief regarding the global deployment of our products; |
| • |
our beliefs regarding potential outcomes of participating in the HolyGrail initiative and the utility of our products in the recycling industry; |
| • |
our future level of investment in our business, including investment in research, development and engineering of products and technology, development of our intellectual property, sales growth initiatives and development of new market opportunities; |
| • |
anticipated expenses, costs, margins, provision for income taxes and investment activities in the foreseeable future; |
| • |
our assumptions and expectations related to stock awards; |
| • |
our belief that we have one of the world’s most extensive patent portfolios in digital watermarking and related fields; |
| • |
anticipated effect of our adoption of accounting pronouncements; |
| • |
our beliefs regarding our critical accounting policies; |
| • |
our expectations regarding the impact of accounting pronouncements issued but not yet adopted; |
| • |
anticipated revenue to be generated from current contracts, renewals, and as a result of new programs; |
| • |
our estimates, judgments and assumptions related to impairment testing; |
| • |
variability of contracted arrangements in response to changes in circumstances underlying the original contractual arrangements; |
| • |
business opportunities that could require that we seek additional financing and our ability to do so; |
| • |
the size and growth of our markets and our assumptions and beliefs related to those markets; |
| • |
the existence of international growth opportunities and our future investment in such opportunities; |
| • |
our expected short-term and long-term liquidity positions; |
| • |
our capital expenditure and working capital requirements and our ability to fund our capital expenditure and working capital needs through cash flow from operations or financing; |
| • |
our expectations regarding our ability to meet future financial obligations as they become due within the coming fiscal year; |
| • |
the effect of computerized trading on our stock price; |
| • |
capital market conditions, our expectations regarding credit risk exposure, interest rate volatility and other limitations on the availability of capital, which could have an impact on our cost of capital and our ability to access the capital markets; |
| • |
our use of cash, cash equivalents and marketable securities in upcoming quarters and the possibility that our deposits of cash and cash equivalents with major banks and financial institutions may exceed insured limits; |
| • |
the strength of our competitive position and our ability to innovate and enhance our competitive differentiation; |
| • |
our beliefs related to our existing facilities; |
| • |
protection, development and monetization of our intellectual property portfolio; |
| • |
our beliefs related to our relationship with our employees and the effect of increasing diversity within our workforce; |
| • |
our beliefs regarding cybersecurity incidents; |
| • |
our beliefs related to certain provisions in our bylaws and articles of incorporation; and |
| • |
our beliefs related to legal proceedings and claims arising in the ordinary course of business. |
We believe that the risk factors specified above and the risk factors contained in 2023 Part I, Item 1A. “Risk Factors” of our 2023 Annual Report, among others, could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf. Investors should understand that it is not possible to predict or identify all risk factors and that there may be other factors that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements made by us or by persons acting on our behalf apply only as of the date of this Quarterly Report on Form 10-Q. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of the filing of this Quarterly Report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act), under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective.
Changes in Controls
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three month period ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We are subject from time to time to legal proceedings and claims arising in the ordinary course of business. At this time, we do not believe that the resolution of any such matters will have a material adverse effect on our financial position, results of operations or cash flows.
Our business, financial condition, results of operations and cash flows may be affected by a number of factors. Detailed information about risk factors that may affect Digimarc’s actual results are set forth in Part I, Item 1A: “Risk Factors” of our 2023 Annual Report. The risks and uncertainties described in our 2023 Annual Report are those risks of which we are aware and that we consider to be material to our business. If any of those risks and uncertainties develop into actual events, our business, financial condition, results of operations or cash flows could be materially adversely affected. In that case, the trading price of our common stock could decline. As of September 30, 2024, there have been no material changes to the risk factors previously disclosed in our 2023 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(c) Purchases of Equity Securities by the Issuer and Affiliated Purchases
We repurchase shares of common stock in satisfaction of required withholding of income tax liability in connection with the vesting of restricted stock, restricted stock units and performance restricted stock units.
The following table sets forth information regarding purchases of our equity securities during the three month period ended September 30, 2024:
| (d) |
||||||||||||||||
| (c) |
Approximate |
|||||||||||||||
| Total number |
dollar value |
|||||||||||||||
| of shares |
of shares that |
|||||||||||||||
| (a) |
(b) |
purchased as |
may yet be |
|||||||||||||
| Total number |
Average price |
part of publicly |
purchased |
|||||||||||||
| of shares |
paid per |
announced plans |
under the plans |
|||||||||||||
| Period |
purchased (1) |
share (1) |
or programs |
or programs |
||||||||||||
| Month 1 |
||||||||||||||||
| July 1, 2024 to July 31, 2024 |
— | $ | — | — | $ | — | ||||||||||
| Month 2 |
||||||||||||||||
| August 1, 2024 to August 31, 2024 |
21,315 | $ | 26.01 | — | $ | — | ||||||||||
| Month 3 |
||||||||||||||||
| September 1, 2024 to September 30, 2024 |
68 | $ | 27.40 | — | $ | — | ||||||||||
| Total |
21,383 | $ | 26.01 | — | $ | — | ||||||||||
| (1) |
Shares of common stock withheld (purchased) by us in satisfaction of required withholding of income tax liability upon vesting of restricted stock, restricted stock units and performance restricted stock units. |
| Exhibit Number |
Exhibit Description |
|
|
|
||
| 31.1 |
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer |
|
| 31.2 |
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer |
|
| 32.1 |
||
| 32.2 |
||
| 101.INS |
Inline XBRL Instance Document |
|
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
| 104 |
Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: November 14, 2024 |
DIGIMARC CORPORATION |
||
| By: |
/s/ CHARLES BECK |
||
| CHARLES BECK |
|||
| Chief Financial Officer |
|||
| (Duly Authorized Officer and Principal Financial and Accounting Officer) |
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