Digimarc Corp (DMRC) 2023 Q1 法說會逐字稿

Greetings, and welcome to the Digimarc Corporation First Quarter 2023 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. At this time, it is my pleasure to turn the call over to Joel Meyer. Sir, the floor is yours.

您好，歡迎參加 Digimarc Corporation 2023 年第一季度財務業績電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。此時，我很高興將電話轉給喬爾·邁耶。先生，地板是你的了。

Thank you, Karen. Welcome to our Q1 conference call. Riley McCormack, our CEO; and Charles Beck, our CFO, are with me on the call. On the call today, we will provide a business update and discuss Q1 2023 financial results. This will be followed by a question-and-answer forum. We have posted our prepared remarks in the Investor Relations section of our website and will archive this webcast there.

謝謝你，凱倫。歡迎參加我們的第一季度電話會議。萊利·麥科馬克，我們的首席執行官；我們的首席財務官查爾斯·貝克 (Charles Beck) 與我一起參加了電話會議。在今天的電話會議上，我們將提供業務更新並討論 2023 年第一季度的財務業績。隨後將舉行問答論壇。我們已在網站的投資者關係部分發布了準備好的評論，並將在此存檔此網絡廣播。

Before we begin, let me remind everyone that today's discussion contains forward-looking statements that have risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially.

在開始之前，我要提醒大家，今天的討論包含前瞻性陳述，存在風險和不確定性。請參閱我們的新聞稿，了解有關可能導致實際結果出現重大差異的特定風險因素的更多信息。

Riley will now provide a business update.

萊利現在將提供業務更新。

Thank you, Joe, and hello, everyone. Our goal is to digitize the world's products. To accomplish this, we must be easy to begin doing business with and excellently guiding customers along their Digimarc journey. These simple truths drive everything that we do. We have 2 distinct ways of going to market.

謝謝你，喬，大家好。我們的目標是使世界產品數字化。為了實現這一目標，我們必須輕鬆地開始與客戶開展業務，並出色地引導客戶完成他們的 Digimarc 之旅。這些簡單的真理驅動著我們所做的一切。我們有兩種不同的進入市場的方式。

On the direct sales side, by building a growing number of our own accretive products upon our world-leading product digitization engine, the Digimarc Illuminate Platform. We are not only ensuring a customer is able to solve the problem that brought them to us today, but also providing them a frictionless path to solve the problems they want to solve tomorrow. Moreover, because our products are accretive, which means that the stand-alone value they provide is increased by the adoption of additional Digimarc products, this frictionless path forward not just solve new problems, it compounds returns for all products existing and new.

在直銷方面，通過在我們世界領先的產品數字化引擎 Digimarc Illuminate 平台上構建越來越多的我們自己的增值產品。我們不僅確保客戶能夠解決他們今天遇到的問題，而且還為他們提供一條順暢的路徑來解決他們明天想要解決的問題。此外，由於我們的產品具有增值性，這意味著它們提供的獨立價值會通過採用其他 Digimarc 產品而增加，這種無摩擦的前進道路不僅解決了新問題，而且還為所有現有產品和新產品帶來了複合回報。

On the channel sales side, by licensing the Digimarc Illuminate Platform to a growing number of value-added resellers or VARs, we not only gained quickly scalable and high-margin revenue as our VARs go-to-market with our own products and services built upon our world-leading product digitization platform. We also increased the amount of items that are digitized using our technology. This creates an ever-increasing number of upsell and cross-sell opportunities for both us and our VARs.

在渠道銷售方面，通過將 Digimarc Illuminate 平台授權給越來越多的增值經銷商或 VAR，隨著我們的 VAR 憑藉我們自己構建的產品和服務進入市場，我們不僅獲得了快速可擴展和高利潤的收入基於我們世界領先的產品數字化平台。我們還增加了使用我們的技術進行數字化的物品數量。這為我們和我們的增值經銷商創造了越來越多的追加銷售和交叉銷售機會。

You might recognize these words as they are verbatim from our last earnings call. These words describe where we are going and how we are going to get there and thus are worth repeating, especially as I appreciate that we are a much different company than we were just a short while ago.

您可能會認出這些詞，因為它們是我們上次財報電話會議上逐字逐句記錄的。這些話描述了我們要去哪里以及我們將如何到達那裡，因此值得重複，特別是當我意識到我們是一家與不久前截然不同的公司時。

Last quarter, after providing this preamble, I spent the rest of the call discussing a few of our products. This quarter, I want to spend time discussing our platform because both technologically and commercially, our Digimarc Illuminate Platform is quite literally foundational to everything we do.

上個季度，在提供了這個序言之後，我在電話會議的其餘時間裡討論了我們的一些產品。本季度，我想花時間討論我們的平台，因為無論是技術上還是商業上，我們的 Digimarc Illuminate 平台都是我們所做的一切的基礎。

As mentioned earlier, each of our products is built upon our Digimarc Illuminate Platform. This allows each of them to benefit from the unique and powerful capabilities that comprise our best-in-class product digitization platform and also allows them to add accretive value to each other. These 2 facts are key contributors to our extremely wide moats and thus, it is our platform that ultimately powers our product success.

如前所述，我們的每款產品均基於我們的 Digimarc Illuminate 平台構建。這使他們每個人都能夠從構成我們一流的產品數字化平台的獨特而強大的功能中受益，並且還使他們能夠相互增加增值。這兩個事實是我們極其廣泛的護城河的關鍵貢獻者，因此，我們的平台最終推動了我們產品的成功。

Moving to our Q1 results, while simply a 1-quarter snapshot, the majority of both our new logos and our upsells were Digimarc Illuminate customers, including 1 VAR that signed a 6-figure deal. This VAR is a large company and a category leader, and we are excited they have begun their Digimarc journey. We are already in discussions with them about licensing additional capacity as they educate their end customers on the value of product digitization.

轉向我們的第一季度業績，雖然只是 1 季度的快照，但我們的新徽標和追加銷售的大部分都是 Digimarc Illuminate 客戶，其中包括簽署了 6 位數交易的 1 VAR。該 VAR 是一家大公司，也是行業領導者，我們很高興他們已經開始了 Digimarc 之旅。我們已經在與他們討論許可額外容量的問題，因為他們教育最終客戶產品數字化的價值。

Q1 also saw us sign another new VAR who came to us in response to one of their competitors having a product that is powered by the Digimarc Illuminate Platform and their realization they need our product digitization hyperscaler to compete.

第一季度我們還簽署了另一位新的 VAR，該 VAR 來找我們是為了回應他們的競爭對手擁有一款由 Digimarc Illuminate 平台提供支持的產品，並意識到他們需要我們的產品數字化超大規模器來競爭。

And then, of course, there's the Digimarc Illuminate deal we announced today, a $32 million, 5-year contract to protect the authenticity of precious metals, critical building materials, and a national deposit return system or DRS for recycling. There are 5 things about this deal I want to highlight.

當然，還有我們今天宣布的 Digimarc Illuminate 交易，這是一份價值 3200 萬美元、為期 5 年的合同，旨在保護貴金屬、關鍵建築材料的真實性，以及用於回收的國家存款返還繫統或 DRS。關於這筆交易，我想強調 5 件事。

First, of course, is the size of the deal, both in terms of revenue and duration. Charles will give a bit more detail about this contract in a minute, but this deal provides our newest VAR the ability to use the Digimarc Illuminate Platform as a key component in 3 of its products, each of which is targeted at 1 of the 3 end markets I just mentioned. Due to our customers' confidence in our platform and their confidence in their ability to build wonderful products on top of our platform. They signed a 5-year license for each of their products, rollout of which will occur in a staggered fashion for the rest of this calendar year.

首先，當然是交易的規模，包括收入和持續時間。 Charles 將在一分鐘內提供有關該合同的更多詳細信息，但該交易使我們最新的 VAR 能夠使用 Digimarc Illuminate 平台作為其 3 個產品的關鍵組件，每個產品都針對 3 個終端中的 1 個我剛才提到的市場。由於我們的客戶對我們的平台的信心，以及他們對自己在我們的平台上構建精彩產品的能力的信心。他們為每種產品簽署了為期 5 年的許可證，這些產品將在今年剩餘時間內分批推出。

Second, there is upside to this contract beyond the $32 million. This upside comes from 2 different areas, an increase in the amount of capacity needed for any of these 3 products or an increase in the amount of capacity needed because of the launch of additional products. One such additional product is far enough along to be scoped within the contract and if it were to proceed, provide meaningful upside to the headline dollar amount. We believe there are likely to be other product opportunities even beyond this fourth product, a view shared by our valued customer. At the risk of understatement, we are excited to partner with them as they continue their Digimarc journey.

其次，這份合同除了 3200 萬美元之外還有其他好處。這一優勢來自兩個不同的領域，即這 3 種產品中任何一種產品所需容量的增加，或者由於推出其他產品而所需容量的增加。一種這樣的附加產品已經足夠成熟，可以納入合同範圍，如果繼續進行，將為整體美元金額提供有意義的上漲空間。我們相信，除了第四種產品之外，還可能存在其他產品機會，這是我們尊貴客戶的共同觀點。冒著輕描淡寫的風險，我們很高興能與他們合作，幫助他們繼續他們的 Digimarc 之旅。

Third, 2 of the products covered by this deal, the one protecting the authenticity of precious metals and the one protecting the authenticity of critical building materials, represents the first use of our platform in the security printing market. The security printing market is a greenfield opportunity for us in the commercial side of our business and one where our moat is not just the unique capabilities of our platform, but the credibility, reputation and expertise we have earned while working with the world's Central Banks for these last 24 years. We don't talk a lot about our team working with the Central Banks because we can't talk a lot about that team for the amazing work they do. But across all of our commercial activities and especially as we enter the world of security printing, this team's history of absolute excellence provides us a moat as deep and as wide as any other we enjoy.

第三，本次交易涵蓋的兩種產品，即保護貴金屬真實性的產品和保護關鍵建築材料真實性的產品，代表了我們的平台在安全印刷市場的首次使用。安全印刷市場對我們業務的商業方面來說是一個全新的機會，我們的護城河不僅是我們平台的獨特功能，而且是我們在與世界各國央行合作過程中贏得的信譽、聲譽和專業知識。這過去24年。我們不會過多談論我們與央行合作的團隊，因為我們無法過多談論該團隊所做的出色工作。但在我們所有的商業活動中，特別是當我們進入安全印刷領域時，這個團隊絕對卓越的歷史為我們提供了一條與我們所享有的任何其他團隊一樣深和寬的護城河。

Fourth, the third product covered by this deal, the one guarding the integrity of a national deposit return system represents our entry into an important and exciting new market adjacency. Our ability to help power a more circular world doesn't begin and end with Digimarc Recycle. Our entry into the quickly growing DRS market has 3 important implications; It provides synergistic benefits to Digimarc Recycle and vice versa, it increases the TAM of our overall opportunity in recycling, and it allows us to make an even more profound impact on our planet.

第四，該交易涵蓋的第三種產品，即保護國家存款返還繫統完整性的產品，代表著我們進入了一個重要且令人興奮的新市場鄰接區。我們幫助打造更加循環的世界的能力並非以 Digimarc Recycle 開始和結束。我們進入快速增長的 DRS 市場有 3 個重要意義：它為 Digimarc Recycle 提供協同效益，反之亦然，它增加了我們在回收方面的整體機會的 TAM，並使我們能夠對我們的星球產生更深遠的影響。

Fifth, the 3 products being powered by Digimarc Illuminate aligned perfectly with our purpose. We highlight a product's journey to provide trusted intelligence and promote prosperous, precious metals, safer, critical building materials and more sustainable DRS world. Our greatest strength always has been, is and always will be our people. For a lot of our team, it is their belief and our purpose that drives them to excel. On a personal note, I find it pretty darn cool this single deal covers all 3.

第五，由 Digimarc Illuminate 提供支持的 3 款產品與我們的目標完美契合。我們強調產品的旅程，以提供值得信賴的情報並促進繁榮的貴金屬、更安全、關鍵的建築材料和更可持續的 DRS 世界。我們最大的力量過去、現在、將來都是我們的員工。對於我們團隊的許多人來說，他們的信念和我們的目標驅使他們取得卓越成就。就我個人而言，我發現這一單筆交易涵蓋了所有 3 個方面，真是太酷了。

I will now turn the call over to Charles to discuss our financial results.

我現在將把電話轉給查爾斯，討論我們的財務業績。

Thank you, Riley, and hello, everyone. Before I dive into our Q1 financial results, I want to provide some more details on the financial impact of the large new revenue contract Riley mentioned. As a reminder, the annual minimum contract value is $6 million per year with a contract term for the 3 products each spanning 5 years. The contract provides additional payments from the customer if they require more capacity on our Digimarc Illuminate Platform.

謝謝你，萊利，大家好。在深入了解第一季度財務業績之前，我想提供一些有關賴利提到的大型新收入合同的財務影響的更多細節。需要提醒的是，年度最低合同價值為每年 600 萬美元，這 3 種產品的合同期限均為 5 年。如果客戶在我們的 Digimarc Illuminate 平台上需要更多容量，則該合同規定客戶需支付額外費用。

The first-year commercial booking will be $5.1 million in the second quarter as the contract was signed in April. The contract provides the customer the ability to use our platform for each of its 3 products, each with different start dates and payment dates. As a result, $900,000 of the initial $6 million annual fee is payable after the 12-month anniversary of the contract effective date. These fees are noncancelable but given the timing of when the payments are due, they do not meet the definition of first year bookings.

由於合同於 4 月份簽署，第一年第二季度的商業預訂額將為 510 萬美元。該合同使客戶能夠使用我們平台的 3 種產品，每種產品都有不同的開始日期和付款日期。因此，初始 600 萬美元年費中的 90 萬美元應在合同生效日期 12 個月週年後支付。這些費用不可取消，但考慮到付款到期的時間，它們不符合第一年預訂的定義。

It's important to note the remaining $900,000 will not be reported as a first year booking in subsequent quarters due to the way we calculate and report this metric. The fact that we are signing more and more multiyear committed deals has been reducing the value of our reported first year bookings number as the out years of multiyear deals never show up in a reported booking number, whereas a renewal would. This is a wonderful trend for our business that we are heavily pursuing, but it comes at a cost of understanding our underlying growth to all of you. We are evaluating additional metrics to share in the future that will better capture our true underlying growth rate.

請務必注意，由於我們計算和報告此指標的方式，剩餘的 900,000 美元不會在後續季度中報告為第一年預訂。事實上，我們簽署了越來越多的多年承諾交易，這降低了我們報告的第一年預訂數量的價值，因為多年交易的結束年份永遠不會出現在報告的預訂數量中，而續約則會出現。這對我們的業務來說是一個極好的趨勢，我們正在大力追求，但這是以大家無法了解我們的潛在增長為代價的。我們正在評估未來分享的其他指標，以更好地捕捉我們真實的潛在增長率。

Now on to our Q1 financial results. There are 4 important trends I want to highlight before digging deeper. During the first quarter, we generated 21% subscription revenue growth on our current products. We realized 80% subscription gross profit margins, and we significantly reduced our recurring operating expenses. As a result, we saw a significant reduction in the level of cash usage, which we expect to continue to improve through the year.

現在來看我們第一季度的財務業績。在深入研究之前，我想強調 4 個重要趨勢。第一季度，我們當前產品的訂閱收入增長了 21%。我們實現了 80% 的訂閱毛利率，並且顯著降低了經常性運營費用。因此，我們看到現金使用水平大幅下降，我們預計這一情況將在今年繼續改善。

First year commercial bookings were $2.3 million during the first quarter compared to $3.8 million in Q1 last year. Bookings in Q1 last year included $900,000 for HolyGrail project work related to Phase 2, which is now complete and $300,000 related to our former Piracy Intelligence product. Excluding these 2 one-off items, first year commercial bookings would have been $2.6 million in Q1 last year. The timing of contract renewals also impacted the trend in bookings year-over-year as we had two 6-figure contracts that renewed in early Q2 this year instead of Q1, both with sizable upsells.

第一季度首年商業預訂額為 230 萬美元，而去年第一季度為 380 萬美元。去年第一季度的預訂包括與第二階段相關的 HolyGrail 項目工作的 900,000 美元，該項目現已完成，以及與我們以前的盜版情報產品相關的 300,000 美元。排除這兩個一次性項目，去年第一季度的第一年商業預訂額將為 260 萬美元。合同續籤的時間也影響了同比預訂的趨勢，因為我們有兩份價值 6 位數的合同是在今年第二季度初而不是第一季度續籤的，兩者都有相當大的銷量增長。

Total revenue for the quarter was $7.8 million, an increase of $400,000 or 6% from $7.4 million in Q1 last year. Excluding revenue from our former Piracy Intelligence product, revenue increased $1 million or 15% year-over-year. Subscription revenue, which accounted for 50% of total revenue for the quarter grew 2% from $3.8 million to $3.9 million. Adjusting for the sunsetting of our Piracy Intelligence product I just mentioned, subscription revenue actually increased $700,000 or 21%. As a reminder, Piracy Intelligence revenue in the second quarter of 2022 was $300,000, but after that, it essentially went to 0. So this headwind to reported year-over-year growth rates will go away in the second half of 2023.

該季度總收入為 780 萬美元，比去年第一季度的 740 萬美元增加了 40 萬美元，即 6%。不包括我們以前的盜版情報產品的收入，收入增加了 100 萬美元，同比增長 15%。佔本季度總收入 50% 的訂閱收入增長了 2%，從 380 萬美元增至 390 萬美元。根據我剛才提到的盜版情報產品的停用進行調整，訂閱收入實際上增加了 70 萬美元，即 21%。需要提醒的是，2022 年第二季度的盜版情報收入為 30 萬美元，但此後基本上變為 0。因此，報告的同比增長率的這一阻力將在 2023 年下半年消失。

Service revenue grew 9% from $3.6 million to $4 million. The increase is due to a larger annual budget from the Central Banks for project work in 2023 than 2022, which includes both higher billing rates and project dollars. We expect service revenue from the Central Banks to grow over 10% this year from last year.

服務收入增長了 9%，從 360 萬美元增至 400 萬美元。這一增長是由於中央銀行為 2023 年項目工作提供的年度預算比 2022 年更大，其中包括更高的計費費率和項目資金。我們預計今年中央銀行服務收入比去年增長10%以上。

Subscription gross profit margin improved from 73% in Q1 last year to 80% in Q1 this year. The large increase year-over-year reflects two positive trends. First, a favorable mix of subscription revenue to our newer products, which carry higher gross profit margins than our legacy products. Second, as we foreshadowed on the last earnings call, our product infrastructure costs are declining, even with increased usage by customers on our platform. We expect these trends to continue, resulting in further expansion to our subscription gross profit margins. On the last earnings call, I stated we expected to drive our subscription gross profit margins to north of 80% in 2023. After the first quarter, we are nearly there with room for continued margin expansion. This is an important development to note given our focus on growing subscription revenue.

訂閱毛利率從去年第一季度的73%提高到今年第一季度的80%。同比大幅增長反映了兩個積極趨勢。首先，我們的新產品的訂閱收入具有有利的組合，這些產品的毛利率比我們的傳統產品更高。其次，正如我們在上次財報電話會議上所預示的那樣，即使客戶在我們平台上的使用量增加，我們的產品基礎設施成本仍在下降。我們預計這些趨勢將持續下去，從而進一步擴大我們的訂閱毛利率。在上次財報電話會議上，我表示我們預計到 2023 年將訂閱毛利率提高到 80% 以上。第一季度之後，我們已經接近實現利潤率持續擴張的空間。鑑於我們專注於增加訂閱收入，這是一個值得注意的重要進展。

Service gross profit margin improved from 49% in Q1 last year to 57% in Q1 this year. The increase reflects lower professional services costs this quarter. as we have streamlined our operations function since the acquisition in January last year. We anticipate service gross profit margin to remain in the mid-50s on average going forward with some fluctuation quarter-to-quarter depending on labor mix.

服務毛利率從去年一季度的49%提升至今年一季度的57%。這一增長反映了本季度專業服務成本的下降。因為自去年一月收購以來我們已經精簡了我們的運營職能。我們預計服務毛利率平均將保持在 50 多歲左右，季度與季度之間會出現一些波動，具體取決於勞動力結構。

Operating expenses for the quarter were $19 million compared to $21.4 million in Q1 last year. Included in the $19 million of operating expenses was a onetime cash severance costs of $1.5 million and $600,000 of stock compensation costs as a result of our previously announced restructuring plan this past February. Excluding these onetime costs, operating expenses would have been $16.9 million representing a 21% decline from Q1 last year. As you will recall, Q1 last year included costs related to the EVRYTHNG acquisition and integration as well as higher headcount-related costs than as compared to today.

本季度的運營費用為 1,900 萬美元，而去年第一季度的運營費用為 2,140 萬美元。 1,900 萬美元的運營費用中包括 150 萬美元的一次性現金遣散費和 60 萬美元的股票補償費用，這些費用是我們今年 2 月份宣布的重組計劃造成的。排除這些一次性成本，運營費用將為 1,690 萬美元，比去年第一季度下降 21%。您可能還記得，去年第一季度包括與 EVRYTHNG 收購和整合相關的成本，以及與今天相比更高的員工相關成本。

Non-GAAP operating expenses for the quarter were $15.5 million compared to $17 million in Q1 last year. Included in the $15.5 million was onetime cash severance costs of $1.5 million as a result of the February restructuring plan. Excluding the onetime costs, non-GAAP operating expenses would have been $14 million, representing an 18% decline from Q1 last year.

本季度非 GAAP 運營費用為 1,550 萬美元，而去年第一季度為 1,700 萬美元。 1550 萬美元中包括因 2 月份重組計劃而產生的 150 萬美元一次性現金遣散費。不包括一次性成本，非 GAAP 運營費用將為 1,400 萬美元，比去年第一季度下降 18%。

As a reminder, the restructuring of our business, which has now been completed, will result in approximately $8 million of annual expense savings with $7.4 million of those savings being cash-related costs. We continue to be focused on ways to further reduce our non-headcount-related costs and drive greater efficiency across the organization. We are working to streamline our processes and leverage new technologies to provide for greater scale without having to make material new investments in headcount.

提醒一下，我們的業務重組現已完成，每年將節省約 800 萬美元的費用，其中 740 萬美元是與現金相關的成本。我們繼續關注如何進一步降低與員工無關的成本並提高整個組織的效率。我們正在努力簡化流程並利用新技術來擴大規模，而無需在人員方面進行重大新投資。

Net loss per common share for the quarter was $0.70 versus $1.03 in Q1 last year. Non-GAAP net loss per share, which excludes noncash and nonrecurring items, was $0.45 versus $0.69 in Q1 last year. We ended the quarter with $43 million in cash and investments. We used $9.5 million of cash investments during the quarter compared to $16.7 million in Q1 last year. Included though, in the $9.5 million is $1.5 million of onetime cash severance costs. Excluding the onetime costs, cash usage would have been $8 million, a considerable reduction in the trend of cash usage from last year. We anticipate that cash usage will continue to decline in 2023 as we continue to grow our revenue reduce our product infrastructure costs and focus on continued operating efficiencies.

本季度普通股每股淨虧損為 0.70 美元，而去年第一季度為 1.03 美元。非 GAAP 每股淨虧損（不包括非現金和非經常性項目）為 0.45 美元，去年第一季度為 0.69 美元。本季度結束時，我們擁有 4300 萬美元的現金和投資。我們在本季度使用了 950 萬美元的現金投資，而去年第一季度為 1670 萬美元。不過，950 萬美元中包括 150 萬美元的一次性現金遣散費。除去一次性成本，現金使用量為800萬美元，與去年相比現金使用量趨勢大幅減少。我們預計，隨著我們收入的持續增長、產品基礎設施成本的降低以及對持續運營效率的關注，2023 年現金使用量將繼續下降。

For further discussion of our financial results and risks and prospects for our business, please see our Form 10-Q that will be filed with the SEC.

有關我們的財務業績、風險和業務前景的進​​一步討論，請參閱我們將向 SEC 提交的 10-Q 表格。

I will now turn the call back over to Riley for final remarks.

我現在將把電話轉回給萊利，讓其作最後發言。

Thanks, Charles. In thinking how I wanted to end this call, I realized that how I ended the last call also still rings true word for word. This consistency and message is made possible by an incredible team all rowing in the same direction, aligned in their focus on changing the world. I also realize that by dedicating today's prepared remarks to talk about our platform, it is possible, one might question what's going on with our products, similar to it being possible, but leaving the last call the inverse concern could have been true and recent events would have quickly proven unfounded.

謝謝，查爾斯。在思考我想如何結束這次通話時，我意識到我如何結束上一次通話仍然一字不差。這種一致性和信息是由一支令人難以置信的團隊實現的，他們都朝著同一個方向划船，一致致力於改變世界。我還意識到，通過今天準備好的發言來談論我們的平台，人們可能會質疑我們的產品發生了什麼，類似於這是可能的，但留下最後一個電話，相反的擔憂可能是真實的，最近發生的事件很快就會被證明是毫無根據的。

I am just going to end this call like I began it, reiterating what I said just a few months ago with added emphasis on one key area, I perhaps didn't emphasize enough last time. 2022 saw us set the foundation for the years ahead and we are excited to continue to build upon that foundation in 2023 and beyond. We are seeing momentum across all areas of our business and are hard at work continuing to increase that momentum as we create a market that is unique -- that we are uniquely positioned to lead for years to come. A market that at scale has the opportunity to be as large, if not larger, than the other legs of the digital transformation tool.

我將像開始時一樣結束這次通話，重申我幾個月前所說的話，並強調一個關鍵領域，我上次可能強調得不夠。 2022 年，我們為未來奠定了基礎，我們很高興能夠在 2023 年及以後繼續在此基礎上繼續發展。我們看到了我們業務各個領域的發展勢頭，並且正在努力工作，繼續增強這種勢頭，因為我們創造了一個獨特的市場——我們在未來幾年擁有獨特的領導地位。規模化的市場有機會與數字化轉型工具的其他部分一樣大，甚至更大。

There are trillions of items produced each year and our goal is to sell multiple Digimarc products into each of them, adding exponentially accretive value as we digitize the world's products.

每年生產數万億件產品，我們的目標是向每件產品銷售多種 Digimarc 產品，隨著我們對世界產品進行數字化，價值將呈指數級增長。

Karen, we will now open up the call for questions.

凱倫，我們現在開始提問。

(Operator Instructions) And we'll take our first question from Jeff Van Rhee from Craig-Hallum.

（操作員說明）我們將回答來自 Craig-Hallum 的 Jeff Van Rhee 的第一個問題。

Several, obviously, a lot going on here. Maybe Riley, just to start with the use cases. I mean, you hit them pretty quickly, but go a little deeper. What are you doing in each of these 3 cases? Because there in some ways, similar but in more ways that are not similar. Just talk a little deeper about what exactly you're doing in each of those use cases.

顯然，這裡發生了很多事情。也許萊利，只是從用例開始。我的意思是，你打得很快，但要深入一點。對於這 3 種情況，您分別在做什麼？因為在某些方面相似，但在更多方面不相似。只需更深入地討論一下您在每個用例中到底在做什麼。

Yes, sure. And I will to the extent we can, obviously, when it comes to authentication and product authentication. Customers don't really like us talking too much about it. But on the precious metals and the critical building materials, we are -- the customer is using Illuminate to protect the packaging of those items. And then on the DRS, it's similar. It's using Illuminate to digitize items products that would be part of a DRS system.

是的，當然。顯然，在認證和產品認證方面，我會盡我們所能。客戶不太喜歡我們談論太多。但對於貴金屬和關鍵建築材料，我們——客戶正在使用 Illuminate 來保護這些物品的包裝。然後在 DRS 上，情況也類似。它使用 Illuminate 對屬於 DRS 系統一部分的物品進行數字化。

Is this -- when you say protect packaging, are you talking about serialization, so each individual package is individually identified or just authenticity, generally speaking.

當您說保護包裝時，您是在談論序列化嗎？一般來說，每個單獨的包裝都是單獨識別的，或者只是真實性。

I really don't want to go into exactly what they're doing. There's a lot of wonderful capabilities in Illuminate that any of our VARs could take advantage of to build their own products. again, so if you're familiar with all of the capabilities in Illuminate, they have access to Illuminate and they're building their own products using those capabilities.

我真的不想深入了解他們在做什麼。 Illuminate 有很多出色的功能，我們的任何 VAR 都可以利用它們來構建自己的產品。再次強調，如果您熟悉 Illuminate 中的所有功能，他們就可以訪問 Illuminate，並使用這些功能構建自己的產品。

Yes. Yes, that's some of the challenges. It's very diverse in terms of what it does, but I appreciate the privacy requirements. Charles, in terms of the contract itself, forgive me, but maybe you could revisit the rev rec, is this going to be ratable? And then I was unclear. You said a little bit about the bookings and the recognition of the bookings, but I'm curious on the cash collection and the revenue recognition.

是的。是的，這就是一些挑戰。它的功能非常多樣化，但我很欣賞隱私要求。查爾斯，就合同本身而言，請原諒我，但也許您可以重新審視轉速記錄，這是否可以評級？然後我就不清楚了。您談到了一些關於預訂和預訂確認的問題，但我對現金收取和收入確認感到好奇。

Yes. So we're working through the revenue recognition right now. I would suspect that it's going to generally be ratable there are 3 different products, though, that start at different points in time. So you're not just going to be able to take the $6 million and ratably take it from there because each of the projects -- products are phased and that's the same with the cash. And that's why $900,000 of the cash falls outside of the first 12 months of the contract and therefore, doesn't meet our definition of a first year booking...

是的。所以我們現在正在處理收入確認。我懷疑它通常會被評價，但有 3 種不同的產品，它們在不同的時間點開始。因此，你不僅僅能夠拿走 600 萬美元，並從那裡按比例拿走，因為每個項目 - 產品都是分階段的，這與現金相同。這就是為什麼 900,000 美元的現金不在合同的前 12 個月內，因此不符合我們對第一年預訂的定義......

Okay. So $900,000 in case. I expect so $5.1 million of the cash comes in year 1?

好的。因此，以防萬一，需要花費 90 萬美元。我預計第一年將有 510 萬美元現金？

Correct. And then revenue will ramp as those products come online.

正確的。隨著這些產品上線，收入將會增加。

Okay. And the time lines -- I mean, obviously, we've got to build the model. Can you give us some sense of timing on when these 3 are going to layer in? How do we approach that?

好的。時間線——我的意思是，顯然，我們必須建立模型。你能給我們一些關於這三者何時分層的時間安排嗎？我們如何處理這個問題？

Well, the majority of it is being paid in the first year. So it's -- all of the products are starting within 1 year.

嗯，其中大部分是在第一年支付的。所以，所有產品都將在一年內推出。

Okay. Al right. And...

好的。好吧。和...

Or less than 1 year.

或者不到1年。

Yes. Okay. Got it. And then, obviously, you're not naming the VAR, but these are pretty diverse use cases. I mean, I don't know, just like how many other VARs are there similar to this? This is, I don't know, a unique customer. I'm trying to understand exactly what their practice is.

是的。好的。知道了。然後，顯然，你沒有命名 VAR，但這些都是非常不同的用例。我的意思是，我不知道，還有多少其他類似的VAR？我不知道，這是一個獨特的客戶。我試圖準確地了解他們的做法是什麼。

Anybody who has -- who creates -- touches the product packaging ecosystem, Jeff, is a potential VAR for us. So there's a ton of VARs out there that we haven't even begun to talk to yet.

傑夫，任何接觸過、創造過產品包裝生態系統的人都是我們潛在的增值經銷商。因此，我們還沒有開始接觸大量的 VAR。

Okay. Okay. And just to be clear, the $6 million roughly a year is...

好的。好的。需要明確的是，每年大約 600 萬美元是......

And that something you might want to follow up. I mean think about -- yes, there are trillions and trillions of items produced every year. Each of those are produced with a broad ecosystem, right? So there's just a ton. I'll leave it at that.

您可能想要跟進的事情。我的意思是想想——是的，每年生產數万億的物品。每一個都是在廣泛的生態系統中產生的，對嗎？所以只有一噸。我就這樣吧。

(Operator Instructions) And we'll take our next question from Robin Knipp from Janney Montgomery.

（操作員說明）我們將回答 Janney Montgomery 的 Robin Knipp 提出的下一個問題。

Great quarter. Are you able to share with us any more insight as to which country this national deposit return system for recycling is referring to?

很棒的季度。您能否與我們分享更多關於這個國家回收押金返還制度是指哪個國家的信息？

No, we've shared what we can share, unfortunately.

不，不幸的是，我們已經分享了我們可以分享的內容。

Okay. So got to get on a plane and travel the world with my Digimarc staff. Okay. Thanks. Once again, great quarter.

好的。所以我要和我的 Digimarc 員工一起登上飛機環遊世界。好的。謝謝。再次，偉大的季度。

And we'll take our next question from Matt Collard from PCB Advisory.

我們將回答來自 PCB Advisory 的 Matt Collard 的下一個問題。

Riley. Charles. Great quarter. Congratulations. Could you -- Riley, could you talk for a little bit with the maturing of these VAR relationships. You started signing them last year and you're continuing to sign them. And obviously, it sounds from the tone of the call, the activity continues to spike. So in these VAR discussions, how is there enthusiasm? Or how is there interest in the Illuminate or the products that Digimarc offers changing? And I guess I'm interested in where I'm going with this is it seems like a lot of these deals have minimum contracts, and then I don't -- you mentioned service addressable markets on top of that. I'm just trying to see how -- what their enthusiasm or how their enthusiasm is growing.

萊利。查爾斯.很棒的季度。恭喜。萊利，您能談談 VAR 關係的成熟嗎？你從去年開始簽下他們，而且你會繼續簽下他們。顯然，從通話的語氣來看，活動繼續激增。那麼在這些VAR討論中，熱情如何呢？或者對 Illuminate 或 Digimarc 提供的產品的興趣有何變化？我想我對我要做什麼很感興趣，因為似乎很多交易都有最低合同，但我沒有——除此之外，你還提到了服務可尋址市場。我只是想看看他們的熱情如何，或者他們的熱情如何增長。

Yes, it's growing. I mean it's -- if you think about our most likely VAR candidates and some of them are publicly known, right? These are people in the packaging space that what we have currently in Illuminate, what we're building in Illuminate, it's a full-time job, right? And so the ability to have a hyperscaler. I think I used the word hyperscaler during the prepared remarks on purpose. I think people -- most people think of hyperscalers as an AWS as of your -- as CPU and memory hyperscalers. We're a product digitization hyperscaler. For people who don't have the capacity or the interest or for whatever reason, where they don't want to invest in the platform to build their own platform for product digitization but produce packaging, produce products and realize this is a trend. We're a great outsourced partner of theirs. They can license our platform just like anybody can license AWS or Azure or GCP and build their own products and services on top of it.

是的，它正在增長。我的意思是——如果你考慮一下我們最有可能的 VAR 候選人，其中一些是眾所周知的，對嗎？這些人是我們目前在 Illuminate 中擁有的包裝領域的人員，我們正在 Illuminate 中構建的東西，這是一份全職工作，對吧？因此擁有超大規模的能力。我想我在準備好的發言中故意使用了“超大規模”這個詞。我認為人們——大多數人將超大規模企業視為您的 AWS——CPU 和內存超大規模企業。我們是一家產品數字化超大規模企業。對於那些沒有能力、沒有興趣或者出於某種原因的人來說，他們不想投資平台來建立自己的產品數字化平台，而是生產包裝、生產產品並意識到這是一種趨勢。我們是他們優秀的外包合作夥伴。他們可以許可我們的平台，就像任何人都可以許可 AWS、Azure 或 GCP 一樣，並在此基礎上構建自己的產品和服務。

So it's scenario of great excitement, and it's a mutually beneficial win, win, win. Actually for us, for the VAR and for the end customers. I talked a little bit, Matt, in the last call I think actually, you and I discussed it in the Q&A on the last call, but it's pretty exciting.

所以這是一個非常令人興奮的場景，這是一個互惠互利的雙贏、雙贏、雙贏。實際上對於我們、VAR 和最終客戶而言。馬特，我在上次通話中談了一點，實際上，我和你在上次通話的問答中討論了這個問題，但這非常令人興奮。

Great. And I guess to build on that, it seems like the enthusiasm from the VARs is we looked at historically, obviously, we've got this HolyGrail effort kind of looming, if you will, and as shareholders were all looking towards the endgame where there'll be some legislative support for recycling and for extended producer responsibilities and all that. But it doesn't seem like all the VARs are coming to you with much different propositions, much different challenges that need solutions versus thinking ahead towards that end game?

偉大的。我想在此基礎上，我們從歷史上看，VAR的熱情似乎是我們所看到的，顯然，如果你願意的話，我們的聖杯努力迫在眉睫，而且股東們都在期待最後的比賽，在那裡將為回收和擴大生產者責任等提供一些立法支持。但似乎並不是所有的 VAR 都會向你提出不同的建議、不同的挑戰，需要解決方案，而不是提前思考最終的結果？

Yes. So Digimarc Recycle is a product we've built on our platform. So again, just taking a quick step back, right? Digimarc Illuminate Platform contains all of our capabilities, right? Everything we can do. We either license their platform to the VARs to build their own product services or that's what we use internally to build our own -- our products and services. So Digimarc Recycle is a product that we build. That is something that we'll be offering directly to the world's brands and retailers. So -- they're different and I talked a little bit in the last call, right? Where our VARs license our platform, they're not reselling our products. We sell our products direct to the world's brands and retailers.

是的。因此，Digimarc Recycle 是我們在我們的平台上構建的產品。再說一遍，只是快速後退一步，對嗎？ Digimarc Illuminate Platform 包含我們所有的功能，對吧？我們能做的一切。我們要么將他們的平台授權給增值經銷商來構建他們自己的產品服務，要么我們在內部使用該平台來構建我們自己的產品和服務。因此 Digimarc Recycle 是我們打造的產品。這是我們將直接向世界各地的品牌和零售商提供的服務。所以——他們是不同的，我在上次通話中談了一點，對吧？如果我們的增值經銷商授權我們的平台，他們不會轉售我們的產品。我們將產品直接銷售給世界各地的品牌和零售商。

(Operator Instructions) And we'll take our next question from [Harvey Mordka].

（操作員說明）我們將接受 [Harvey Mordka] 的下一個問題。

Based on our low share price right now in the large moat that we have and the extensive patent library? Is there anybody taking a look at us as far as an acquisition?

基於我們目前的低股價、我們擁有的護城河和廣泛的專利庫？有人關注我們的收購嗎？

Harvey, I think every time you're on the call, you asked the same question. The answer is no.

哈維，我想你每次打電話時都會問同樣的問題。答案是不。

Nobody is looking yet. Okay.

還沒有人在尋找。好的。

And we'll take another question from Jeff Van Rhee from Craig-Hallum.

我們將回答 Craig-Hallum 的 Jeff Van Rhee 提出的另一個問題。

You commented on the restructuring and the reduced cash burn expectations. Can you put some numbers around that? How should we think about the remainder of the year in terms of cash burn?

您對重組和減少現金消耗的預期發表了評論。你能給出一些數字嗎？我們應該如何看待今年剩餘時間的現金消耗？

Yes, Jeff, I mean, we don't give exact guidance what I can do is kind of broad strokes, right? So we've got growing revenue, we've got margin expansion and we've got about $8 million lower run rate in OpEx. Those are the different...

是的，傑夫，我的意思是，我們沒有給出確切的指導，我能做的只是粗略的描述，對吧？因此，我們的收入不斷增長，利潤率不斷擴大，運營支出運行率降低了約 800 萬美元。這些是不同的...

Okay. And then Riley, you commented on the VARs, you can sell product or you can sell platform. This is a platform to the VAR to build applications. What's the -- to the extent they have to go build something yet, what does that look like?

好的。然後萊利，您對 VAR 進行了評論，您可以銷售產品，也可以銷售平台。這是 VAR 構建應用程序的平台。就他們必須去建造一些東西而言，那是什麼樣子的？

It depends on each relationship, right? It's -- I think Jeff, maybe the best way to picture is just picture what AWS and Azure and GCP offer people, right? It's outsourced, it's a hyperscaler for compute and for memory. And some people build really, really intricate products and services on top of those and some people build very little. So it really depends on the VAR and the products that they want to build.

這取決於每段關係，對嗎？我認為傑夫，也許最好的描述方式就是描述 AWS、Azure 和 GCP 為人們提供的服務，對嗎？它是外包的，是計算和內存的超大規模器。有些人在此基礎上構建了非常非常複雜的產品和服務，而有些人則構建得很少。所以這實際上取決於 VAR 和他們想要製造的產品。

Okay. And then -- from a margin standpoint, I think I know the answer, but if you're selling this to the VAR and you're not providing any of the service, then this is just a pure licensing deal. There's no other. So this should be almost pure gross margin?

好的。然後——從利潤的角度來看，我想我知道答案，但如果你把它賣給 VAR 並且你不提供任何服務，那麼這只是一個純粹的許可交易。沒有其他的了。那麼這應該幾乎是純毛利率？

Yes. I mean there's obviously costs. So the way we meter out that access to our platform is -- well, we meter out our access, right? So we have cost of goods sold of the platform. But you're right. The nice thing about the VAR, there's a lot of wonderful things about the VAR channel as a go-to-market channel. But among them is quick ability to ramp, right? These are VARs are -- they're building something internally and then a lot of times, they have hundreds and hundreds of customers that they're going to roll it out to, but it's also extremely high margin.

是的。我的意思是，這顯然是有成本的。因此，我們計量對我們平台的訪問的方式是——好吧，我們計量我們的訪問，對吧？所以我們有平台的商品銷售成本。但你是對的。 VAR 的好處在於，VAR 渠道作為進入市場的渠道有很多美妙之處。但其中之一就是快速提升的能力，對嗎？這些是增值經銷商——他們在內部構建一些東西，然後很多時候，他們有成百上千的客戶，他們將把它推廣給他們，但它的利潤率也非常高。

And we'll take our next question from [Kevin Hanrahan] from KMH.

我們將接受 KMH 的 [Kevin Hanrahan] 提出的下一個問題。

Charles, I had a question about the NOL. I know you did your 10-K recently. If you have that number, could you update us? And if you don't have it, could you give me that number offline?

Charles，我有一個關於 NOL 的問題。我知道你最近完成了 10 公里。如果您有該號碼，可以更新我們嗎？如果您沒有，可以給我這個離線號碼嗎？

Yes, I don't have the number memorize so -- also you know.

是的，我沒有記住這個號碼——你也知道。

(Operator Instructions) And there appear to be no further questions at this time. I'll turn the floor back to Mr. McCormack for closing remarks.

（操作員說明） 目前似乎沒有進一步的問題。我將請麥科馬克先生致閉幕詞。

Well, thank you, Karen, and thank you, everybody. Hope you have a great rest of your day. Take care.

好吧，謝謝你，凱倫，也謝謝大家。希望您今天休息愉快。小心。

Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.

謝謝。女士們、先生們，今天的電話會議到此結束。我們感謝您的參與。此時您可以斷開線路，祝您度過愉快的一天。