Digimarc Corporation (NASDAQ:DMRC) Q3 2023 Results Conference Call November 6, 2023 5:00 PM ET

Company Participants

Joel Meyer - Chief Legal Officer

Riley McCormack - CEO

Charles Beck - CFO

Conference Call Participants

James Ricchiuti - Needham & Company

Jeff Van Rhee - Craig-Hallum Capital

Operator

Greetings, and welcome to the Digimarc Corporation Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Joel Meyer, Chief Legal Officer. Thank you. You may begin.

Joel Meyer

Thank you. Welcome to our Q3 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 Q3 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.

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. Riley will now provide a business update.

Riley McCormack

Thank you, Joel, and hello everyone.

Q3 was another strong quarter for Digimarc. While Charles will provide a more detailed discussion on the financial results during his remarks, there are two metrics I want to highlight at the top of the call because their absolute levels as well as our expectation they will get even stronger are important markers of our progress in building a high quality, high growth, and highly cash flow generative business.

First, we grew our annual recurring revenue, or ARR, 54% year-over-year. As mentioned during the last few earnings calls, first year bookings has become a less relevant metric as our focus is on growing our recurring and high-margin subscription revenue, and signing those customers to multi-year deals. Our decision to begin reporting our quarter-end ARR reflects our desire to provide investors transparency into the results of that focus as well as a greater understanding of our true underlying growth. And while a 54% year-over-year growth rate is objectively high, we believe we are capable of more. In fact, while it is still early in the current quarter, we expect our year-over-year ARR growth in Q4 will be noticeably greater than it was in Q3.