Digimarc Corporation revenue growth decelerated to 4.4% in 2020 vs. 8.5% a year earliner
02/24/2021 • About Digimarc Corporation (
$DMRC) • By InTwits
Digimarc Corporation reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -120.9%
- Digimarc Corporation motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 was 0.0% while average EBITDA Margin was -116.4% for the sames years
- Digimarc Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.4%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: $1m in 2020, $1m in 2019, $1m in 2018, $2m in 2017, $2m in 2016
- The company has unprofitable business model: ROIC is -45.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Digimarc Corporation's Revenue increased on 4.4%. Revenue growth showed acceleration in 20Q4 - it increased 4.4% YoY. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased on 9.7 pp from -131% to -121% in 2020. During the last 5 years EBITDA Margin bottomed in 2018 at -148% and was growing since that time.
Gross Margin increased slightly on 1.9 pp from 65.0% to 66.9% in 2020. SG&A as a % of Revenue decreased on 8.6 pp from 140% to 132% in 2020. During 2016-2020 SG&A as a % of Revenue topped in 2019 at 140%.
Net Income margin increased on 7.2 pp from -143% to -136% in 2020. During the last 5 years Net Income margin bottomed in 2018 at -153% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In 2020 the company had CAPEX/Revenue of 4.3%. CAPEX/Revenue decreased on 4.4 pp from 8.7% in 2017 to 4.3% in 2020. Average CAPEX/Revenue for the last three years was 5.0%. CAPEX as a % of Revenue stuck to a declining trend at -1.2 pp per annum in the last 5 years.
Return on investment
The company operates at negative ROIC (-45.3%) and ROE (-66.0%). ROIC surged on 16.0 pp from -61.3% to -45.3% in 2020. ROE decreased on 4.1 pp from -62.0% to -66.0% in 2020. ROE followed a declining trend at -9.1 pp per annum in the last 5 years.
Leverage (Debt)
Debt level is 0.0x Net Debt / EBITDA and Debt / EBITDA. Debt jumped on 142% while cash surged on 75.7%.
Digimarc Corporation has no short term refinancing risk: cash is higher than short term debt (427.2%).
Management team
Bruce Davis is a Digimarc Corporation's CEO. Bruce Davis has spent 12 years with the company. Charles Beck is a Digimarc Corporation's CFO. Charles Beck has spent 7 years at the company.
Financial and operational results
FY ended 12/31/2020
Digimarc Corporation ($DMRC) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 21.793 | 25.213 | 21.192 | 22.987 | 23.990 | 4.4% |
| Gross Profit | 13.296 | 16.655 | 12.766 | 14.951 | 16.056 | 7.4% |
| SG&A | 20.186 | 26.316 | 29.037 | 32.215 | 31.555 | -2.0% |
| EBITDA | -19.463 | -24.139 | -31.381 | -30.033 | -29.011 | |
| Net Income | -21.672 | -25.771 | -32.506 | -32.840 | -32.537 | |
Balance Sheet
|
|---|
| Cash | 11.638 | 40.823 | 27.278 | 11.213 | 19.696 | 75.7% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.663 | 4.610 | 595.3% |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 2.435 | 2.890 | 18.7% |
Cash flow
|
|---|
| Capex | 1.837 | 2.188 | 1.292 | 1.055 | 1.020 | -3.3% |
Ratios
|
|---|
| Revenue growth | -1.8% | 15.7% | -15.9% | 8.5% | 4.4% | |
| EBITDA growth | 25.2% | 24.0% | 30.0% | -4.3% | -3.4% | |
|
|---|
| Gross Margin | 61.0% | 66.1% | 60.2% | 65.0% | 66.9% | 1.9% |
| EBITDA Margin | -89.3% | -95.7% | -148.1% | -130.7% | -120.9% | 9.7% |
| SG&A, % of revenue | 92.6% | 104.4% | 137.0% | 140.1% | 131.5% | -8.6% |
| Net Income Margin | -99.4% | -102.2% | -153.4% | -142.9% | -135.6% | 7.2% |
| CAPEX, % of revenue | 8.4% | 8.7% | 6.1% | 4.6% | 4.3% | -0.3% |
|
|---|
| ROIC | -35.1% | -34.1% | -48.2% | -61.3% | -45.3% | 16.0% |
| ROE | -34.8% | -33.1% | -46.8% | -62.0% | -66.0% | -4.1% |
Digimarc Corporation ($DMRC) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 6 | 6 | 6 | 6 | | 9.3% | 5.1% | -1.3% | 4.4% |
| EBITDA | -8 | -7 | -8 | -7 | | - | - | - | - |
| Net Income | -9 | -7 | -8 | -8 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 10 | 12 | 45 | 20 | | -57.8% | -64.0% | 177.0% | 75.7% |
| Short Term Debt | 1 | 3 | 4 | 5 | | -10.0% | 316.3% | 451.9% | 595.3% |
| Long Term Debt | 2 | 5 | 4 | 3 | | -21.5% | 78.6% | 50.6% | 18.7% |
Ratios
|
|---|
| Gross Margin | 64.5% | 67.5% | 66.5% | 69.5% | | 2.2% | 2.8% | -0.6% | 3.3% |
| EBITDA Margin | -132.8% | -102.9% | -131.6% | -117.8% | | 6.3% | 15.4% | -6.9% | 24.7% |
| Net Income Margin | -143.9% | -114.8% | -145.2% | -140.8% | | 5.6% | 13.5% | -12.1% | 22.5% |
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 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.9% | 15.2% | 19.5% | 14.7% |
|---|
| Digimarc Corporation ($DMRC) | - | 15.7% | -15.9% | 8.5% | 4.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 64.2% | 64.4% | 66.0% | 68.4% | 70.6% |
|---|
| Digimarc Corporation ($DMRC) | 61.0% | 66.1% | 60.2% | 65.0% | 66.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -4.7% | -3.3% | -3.3% | 4.5% | 7.7% |
|---|
| Digimarc Corporation ($DMRC) | -89.3% | -95.7% | -148.1% | -130.7% | -120.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| Digimarc Corporation ($DMRC) | 8.4% | 8.7% | 6.1% | 4.6% | 4.3% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -9.8% | -4.2% | -1.8% |
|---|
| Digimarc Corporation ($DMRC) | -35.1% | -34.1% | -48.2% | -61.3% | -45.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (54 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.2x |
|---|
