Digimarc Corporation CAPEX dropped on 41.0% and Revenue dropped on 15.9%
02/21/2019 • About Digimarc Corporation (
$DMRC) • By InTwits
Digimarc Corporation reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Digimarc Corporation is a company in decline: 2018 revenue growth was -15.9%, 5 years revenue CAGR was -9.5%
- The company operates at negative EBITDA Margin: -148.1%
- Digimarc Corporation spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -89.1%
- Digimarc Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.8%. At the same time it's in pair with industry average of 3.6%
- CAPEX is quite volatile: $2m in 2018, $3m in 2017, $2m in 2016, $4m in 2015, $6m in 2014
- The company has unprofitable business model: ROIC is -48.2%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue dropped on 15.9%. Annual revenue decline showed slowdown in 18Q4 - revenue increased on 7.6%. During 2014-2018 Revenue growth topped in 2017 at 15.7%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.6 pp from 0.32% to 1.9% in FY2018. EBITDA Margin declined at -22.1 pp per annum in 2014-2018.
Gross Margin decreased on 5.8 pp from 66.1% to 60.2% in 2018. SG&A as a % of Revenue jumped on 32.6 pp from 104% to 137% in 2018. SG&A as a % of Revenue followed a growing trend at 16.9 pp per annum in 2014-2018.
Net Income margin dropped on 51.2 pp from -102% to -153% in 2018. Net Income margin declined at -20.5 pp per annum in 2014-2018.
Investments (CAPEX, working capital and M&A)
Digimarc Corporation's CAPEX/Revenue was 6.1% in 2018. The company's CAPEX/Revenue increased slightly on 0.61 pp from 5.5% in 2015 to 6.1% in 2018. It's average level of CAPEX/Revenue for the last three years was 7.7%. During the last 5 years CAPEX as a % of Revenue topped in 2017 at 8.7%.
Return on investment
The company operates at negative ROIC (-48.2%) and ROE (-46.8%). ROIC dropped on 14.1 pp from -34.1% to -48.2% in 2018. ROE dropped on 13.7 pp from -33.1% to -46.8% in 2018.
Leverage (Debt)
The company has no debt. Cash dropped on 33.2%.
Management team
Bruce Davis is a the company's CEO. Bruce Davis is a founder and has spent 11 years with the company. The company's CFO is Charles Beck. Charles Beck has 5 years tenure at the company.
Financial and operational results
FY ended 12/31/2018
Digimarc Corporation ($DMRC) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 25.658 | 22.189 | 21.793 | 25.213 | 21.192 | -15.9% |
| Gross Profit | 17.227 | 13.242 | 13.296 | 16.655 | 12.766 | -23.4% |
| SG&A | 16.946 | 17.229 | 20.186 | 26.316 | 29.037 | 10.3% |
| EBITDA | -12.909 | -15.544 | -19.463 | -24.139 | -31.381 | |
| Net Income | -15.820 | -17.934 | -21.672 | -25.771 | -32.506 | |
Balance Sheet
|
|---|
| Cash | 6.122 | 3.160 | 11.638 | 40.823 | 27.278 | -33.2% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 1.399 | 1.218 | 1.837 | 2.188 | 1.292 | -41.0% |
Ratios
|
|---|
| Revenue growth | -26.6% | -13.5% | -1.8% | 15.7% | -15.9% | |
| EBITDA growth | 2,951.8% | 20.4% | 25.2% | 24.0% | 30.0% | |
|
|---|
| Gross Margin | 67.1% | 59.7% | 61.0% | 66.1% | 60.2% | -5.8% |
| EBITDA Margin | -50.3% | -70.1% | -89.3% | -95.7% | -148.1% | -52.3% |
| SG&A, % of revenue | 66.0% | 77.6% | 92.6% | 104.4% | 137.0% | 32.6% |
| Net Income Margin | -61.7% | -80.8% | -99.4% | -102.2% | -153.4% | -51.2% |
| CAPEX, % of revenue | 5.5% | 5.5% | 8.4% | 8.7% | 6.1% | -2.6% |
|
|---|
| ROIC | -29.5% | -34.7% | -35.1% | -34.1% | -48.2% | -14.1% |
| ROE | -30.9% | -34.6% | -34.8% | -33.1% | -46.8% | -13.7% |
Digimarc Corporation ($DMRC) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 6 | 5 | 5 | 5 | | -7.8% | -2.7% | -43.4% | 7.6% |
| EBITDA | -8 | -8 | -8 | -8 | | | | | |
| Net Income | -8 | -8 | -8 | -8 | | | | | |
Balance Sheet
|
|---|
| Cash | 48 | 35 | 34 | 27 | | 268.9% | 2.4% | 31.9% | -33.2% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 61.1% | 59.5% | 60.6% | 59.8% | | -1.0% | -2.6% | -15.5% | 2.1% |
| EBITDA Margin | -139.4% | -143.0% | -163.9% | -147.8% | | -42.7% | -27.5% | -120.6% | 17.6% |
| Net Income Margin | -144.5% | -147.8% | -169.8% | -153.3% | | -42.4% | -23.5% | -120.9% | 19.0% |
Peers in Application Software
Below you can find Digimarc Corporation benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 14.9% | 15.2% |
|---|
| Digimarc Corporation ($DMRC) | | -13.5% | -1.8% | 15.7% | -15.9% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.9% | 64.2% | 64.4% | 66.1% |
|---|
| Digimarc Corporation ($DMRC) | 67.1% | 59.7% | 61.0% | 66.1% | 60.2% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.1% | -9.4% | -4.7% | -3.3% | -3.2% |
|---|
| Digimarc Corporation ($DMRC) | -50.3% | -70.1% | -89.3% | -95.7% | -148.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 2.9% | 2.3% | 2.4% |
|---|
| Digimarc Corporation ($DMRC) | 5.5% | 5.5% | 8.4% | 8.7% | 6.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -9.3% |
|---|
| Digimarc Corporation ($DMRC) | -29.5% | -34.7% | -35.1% | -34.1% | -48.2% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
