M&E Daily

Digimarc CEO: Interest in Digimarc Barcode Growing Among Retailers

A growing number of retailers are expressing interest in Digimarc Barcode as the technology company continues to roll out Barcode to existing retail customers including Walmart, according to Digimarc CEO Bruce Davis.

Digimarc’s bookings for its fourth quarter that started Oct. 1 already surpassed $1 million and that’s “a nice way to start the final quarter of the year,” he said Oct. 26 on an earnings call with analysts for the third quarter (ended Sept. 30). The company, however, expects “bookings will continue to be lumpy” for the foreseeable future as the Barcode market continues to develop.

The company, meanwhile, is “continuing efforts to tighten our focus on implementation in key accounts resulting in better internal alignment of resources and improving operational efficiency,” he said. Now that the company has “effectively established the basic value proposition” for Digimarc Barcode, “we need to get everyone comfortable with scaling our platform as a successor to conventional barcodes in mission-critical applications,” he said.

He again pointed out that the retail industry is “undergoing a major transformation” and “the major trends are favorable to us,” he told analysts, adding Barcode is “intended to mitigate the dilemma of how to offer low prices on the one hand and high engagement and convenience on the other.”

On-shelf availability of Digimarc Barcode at Wegmans stores “continues to increase,” and Digimarc is also “dedicating substantial resources to scaling our business” at Walmart stores, he said, but told analysts specific details of that work remained confidential. Regarding another large retailer that Digimarc referred to in its prior earnings call, but didn’t name, he said his company’s efforts to “demonstrate technical feasibility and supply chain readiness have been successful,” and Digimarc is “beginning production with a small number of SKUs” for that dealer’s stores “in the next few months and we have a plan to scale production from there.”

He also complained that Digimarc was “tired of doing free work” for consumer packaged goods (CPGs) manufacturers that “lack the direction and commitment” companies including client McCormick have demonstrated. Therefore, he said: “Going forward, we are letting all customers and prospects know we are no longer providing free trials and that we expect to be paid for what we provide. Those companies that are unwilling to do so can wait for us to demonstrate successful implementation of scale with their competitors.” But he said, “some opportunities for innovative CPG manufacturers to collaborate with leading retailers on a variety of initiatives are also being discussed.”

As part of Digimarc’s plans to expand its global presence, the company recently hired two executives, he noted. Ricoh executive Tetsuro “Ted” Takahashi was appointed country director, Japan, and will manage the adoption of Digimarc Barcode in the Japanese marketplace, while ex-L’Oréal and Mondelez executive Claudius Jaeger was named new sales director of Europe, where he will work from Digimarc’s Cologne, Germany, office and be responsible for the strategic introduction of Digimarc Barcode into Germany and the greater European marketplace.

The new Digimarc leaders “will help us to deliver timely, efficient and effective development in our initial foreign market expansion on the way to globalization of the Digimarc Intuitive Computing Platform,” Davis told analysts, adding: 
“The basic building blocks are in place to work with industry leaders in the U.S., Germany, and Japan to begin scaling the market.”

Digimarc reported third-quarter revenue grew to $8.7 million from $5.6 million a year ago, while its loss narrowed to $4.2 million (39 cents a share) from $5.2 million (55 cents a share). Shares in the company were trading 4.7% higher at $34.40 in afternoon trading Oct. 27.