Digimarc Corporation

Good afternoon and thank you for participating in today's conference call. Now I'll turn the call over to Chief Legal Officer, Mr. Bob Chamness. Sir, please proceed.

Welcome to our Q2 conference call. Riley McCormick, our CEO, Charles Beck, our CFO, and Tim Price, our Chief Revenue Officer, are with me. On the call today, we will provide a review of Q2 financial results and an update on the business followed by a question and answer forum. We have posted our prepared remarks in the investor relations section of our website, and we'll 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. Charles will now comment on our Q2 financial results.

Thank you, Bob, and good afternoon, everyone. Revenue for the second quarter was $6.3 million, down 3% from $6.5 million in Q2 last year. Service revenue decreased 3% from $3.9 million to $3.8 million, reflecting lower government services due to timing of program work with the central banks, partially offset by higher commercial services related to Holy Grail 2.0 projects. Subscription revenue decreased 5% from $2.6 million to $2.5 million, reflecting lower revenue from digital media customers. Revenue from government customers was $3.8 million, down 5% from $4 million in Q2 last year, reflecting the timing of program work with the central banks. For the 2021 fiscal year, we still expect revenue from the central banks to grow modestly from fiscal 2020. Revenue from commercial customers was 2.5 million, essentially flat with Q2 last year. Commercial services were higher due to new Holy Grail 2.0 project work, offset by lower commercial subscriptions from digital media customers. Total commercial bookings were 2.3 million, up 13% from 2.1 million in Q2 last year. The increase in bookings reflected new bookings in several areas of the business. During the quarter, we signed our first major contract associated with the Holy Grail 2.0 program. The project is centered around phase two semi-industrial tests, which is the next step in the Holy Grail 2.0 roadmap. The contract is expected to contribute nearly a million dollars of bookings and revenues during 2021. Due to the timing and structure of this contract, there were no bookings recognized in the second quarter. As we promised in the last earnings call, we have again included a table within this script that shows relevant booking and revenue details under both our prior and new market segments. Gross margin for the quarter was 67%, consistent with Q2 last year. Service margins improved 1%, while subscription margins declined 1%. Operating expenses for the quarter were $19.7 million, compared to $11.9 million in Q2 last year. The increase is almost entirely related to non-recurring costs of $7.5 million incurred during the quarter associated with the separation agreement we entered into in April with our former CEO, as well as severance costs incurred for organizational changes we made in June. The $7.5 million is comprised of $5 million of non-cash stock-based compensation expense and $2.5 million of cash-related expenses, most of which will be paid out over a two-year period. Excluding these non-recurring costs, operating expenses increased 2% to $12.2 million, reflecting higher consulting and legal costs, partially offset by lower recurring compensation costs. We anticipate operating expenses for the third quarter will range from $12.1 million to $12.6 million. Net loss for Q2 was $15.4 million, or $0.94 per common share, versus a net loss of $7.5 million, or $0.62 per common share, in Q2 last year. Excluding the $7.5 million of non-recurring costs I referenced earlier, net loss was $7.9 million or $0.48 per common share. We ended the quarter with $61.1 million in cash and investments. We used $9.6 million of cash and investments during the quarter, which included $2.4 million of cash to repurchase shares in satisfaction of required tax withholding on the stock awards associated with the separation agreement with our former CEO. Our application for forgiveness of the $5 million Paycheck Protection Program loan is still in process of being reviewed by the Small Business Administration. We do not have any visibility on when they may complete their review. For further discussion of our financial results and risks and prospects for our business, please see our Form 10-Q that we expect to file shortly. Riley and Tim will now provide a business update. Thanks, Charles.

As I mentioned last quarter, across the whole company, we are questioning every assumption and being patient to come up with the right answers. Good enough, and this is the way it has always been done, are no longer answers we need to accept. Nothing has shaken our belief in the following very simple fact. 2022 and beyond will be much better if we take the time to do things right today, acting with the wonderful freedom to plan, not react. As this is our number one priority and where we as a management team and we as a company are spending most of our time, I want to use the bulk of this call discussing what exactly that means. I fully appreciate there are some investors who might find this boring, but there are no shortcuts to repeatable and scalable. Moreover, every call we do for the next decade will bear the results of how we're organizing ourselves today. For those investors who get that results are a function of input and process, I'm happy to provide this color. not only is it by far the most important thing we're doing right now but its impact will affect our shared investment for years to come before i get to that i want to make clear that we still believe that as we are building and getting ready to drop the spacex engine into the race car our existing engine is going to deliver strong results for 2021. we fully realize our first half bookings did not reflect that fact all i will say on this All I will say on that is the year is not yet done. While we are much more focused on 2022 and beyond, that does not mean that we are not focused on 2021 at all. Stay tuned. I had mentioned on the last call I was going to have Tim Price, our CRO, and Kelly Haggerty, our CPO, on today's call to give you all some color on how they are building our 2022 and beyond engine. As you might have noticed during Bob's introductory remarks, Tim is indeed with us today, and in a bit, I'm going to turn the call over to him so he can give you an update on our go-to-market build. Kelly, however, is no longer at the company. He has resigned for personal reasons. I got to know Kelly from the board and then was fortunate enough to overlap with him for a brief period of time when I became CEO. I think the world of Kelly is a professional. However, I think even more highly of him as a person and wish him all the best going forward. He has been available as a part-time consultant as we finish up our CPO search, and his input has been invaluable. I also want to give a big shout-out to the entire product team, led in the interim by Chris Sheridan. We are in the midst of a transformation to a product company as a stepping stone to becoming a true solution provider. And Kelly's departure, while handled in the most professional of ways, frankly did not come at the ideal time. But setbacks happen. Resilient organizations overcome those setbacks and use adversity to bond and get stronger. So like I said, I want to give a big shout out to the entire product team for making fantastic progress in getting us to where we need to be. All of your hard, smart teamwork is noted and it's appreciated. We also executed a reorganization toward the end of June, breaking down silos and streamlining our company, removing non-aerodynamic corners from our race car. Marketing has been combined with sales, and already we are seeing the wonderful synergies that come from having a single go-to-market team. We moved our professional services group as well as our education and training team to research, thus platinum plating the tip of the spear by uniting these three key components in one functional group. We moved our infrastructure partner relationships to product, uniting in one place the natural build-by-partner decision that product needs to be driving. When we find our CPO, engineering will be reporting to him or her. Product and engineering don't exist one without the other, and for this company to be truly scalable, they need to have a direct line without any side taps. That fact will not be clearly codified. And then finally, as you all saw in yesterday's press release, Munoz Sanuta has joined the executive team as VP ESG Engagement and Corporate Communications. She will be driving our ESG strategy from the executive level, ensuring our commitment to ESG is not a passing fancy, but core to our very DNA. She will also be in charge of all stakeholder engagement and corporate communications, including, among other stakeholder relations, investor relations. In addition to the reorganization, we also reexamined all aspects of our sustainability initiative as if it were day one, holding an offsite to make sure our actions were driven by the careful mapping of all the stakeholders and the strongest influencers. During this two-day intensive process, we came to the obvious conclusion that there are many wonderful benefits our technology is capable of providing the world, in addition to the one front of mind to most of you, improving plastic sortation. While we continue to make great progress on plastic sortation, both from a technology as well as a business perspective, and our confidence has increased from already high levels that we are indeed the solution to this global problem, what the off-site showed us is we are capable of doing so much more while at the same time also improving plastic sortation. And thus, we are now embarking on doing that so much more. Importantly, these additional benefits are directly related to, and additive to, our existing work in plastic sortation. We are not reinventing the wheel, but strengthening the wheel to provide additional benefits. The new path we are charting in sustainability isn't the result of a loss of focus, but instead the exact opposite. By increasing our focus and asking ourselves the question we are asking company-wide, what if, why not? We are augmenting the solution we will provide, and thus the value we will add. We have also embarked upon a new methodology for meetings and 360 communications, laser-focused on getting to and then maintaining company-wide clarity on where we are going and how we are getting there. Tech is fast. Tech is Darwinian. Thus, tech requires being nimble. And being nimble requires company-wide cross-functional clarity. To climb the mountains we will climb, this is table stakes, and we are anteing up. Finally, we will be having our first ever annual product strategy meeting in September, where product will tell us, not based on SAUs or RSS feeds, but on the real research and the resulted data they are now finally empowered to provide, where they believe we should be spending our most precious resource, engineering time. As an executive team, we will then place those bets. As a side note, you might have noticed we have stopped using the tagline, the barcode of everything. While we will eventually get to everything, if we don't start with some things, we will be the code of nothing. I want to be clear, the height of the mountain we will climb has not changed in the slightest. If anything, it has grown taller. What has changed, however, is by tackling the climbing stages, we will not only ascend the mountain in a more scalable, higher margin way, but perhaps as importantly, we will be much faster in putting real distance between us and base camp. And so with the conclusion of the annual product strategy process, while I don't want to understate the work it will always take to climb to the levels we are targeting, the new engine will be dropped in the race car and we can focus less on transformation and more on execution. We will be able to begin to harvest the fruits of years of world-class, world-changing work, finally unleashed by our taking the time to reimagine everything and plan our path, not react to distractions. I want to turn the call over to Tim now, who will discuss the work he and his team are doing on our go-to-market strategy.

Thank you, Riley, and hello, everybody. Over the past four or five months, we have embarked upon a journey of change, most notably an intense focus on process, methodology, and culture, all of which are essential ingredients for success. In this case, success equals predictable results and the ability to scale. Per Riley's earlier comments, we have been thoughtful in our approach, taking time to plan and exercising patience to get the right answers. Swapping out the engine mid-race is difficult, but I know we are up to the challenge. We must be very calculated in our approach. We want to perfect the new engine while making sure we get every last mile out of the current one. We are driving our internal sales and marketing systems to a whole new level. Our systems support our processes, yielding sales-enabling functionality. On top of our systems and processes, we have implemented a sales methodology, which is actually a company-wide methodology, Miller-Hyman Strategic Selling, that now supports how we address and process our sales engagements. This is for both new and existing customers. It is a common framework and language we all use to speak efficient, enabling, and transparent. I wanted to take a moment to call out some key progress that we have made over the past five months. Progress that will get us predictable results and give us the ability to scale. Progress that will deliver success. The first thing we've done is created two core teams within sales, sales enablement and sales execution. This has given us greater focus and will allow us to iterate and grow faster. Our sales enablement team consists of sales engineering, subject matter experts, customer success, and sales development reps. Our sales execution team is comprised of our quota-carrying team members and is broken into three core teams, our enterprise sales team, channel sales team, and digital media sales. Digital media sales is a new group, leveraging what we used to refer to as our media business, which includes our digital images, digital documents, and piracy intelligence product lines. Besides having real, unexploited revenue generation promise as a standalone, this is also a strong cross-sell opportunity builder for our enterprise sales team. The next thing we've done is we've moved from a global sales quota and commission to individual quotas and commission. This will drive greater individual team member accountability and more predictable results. Next, we have implemented a forecast Friday call to track all sales opportunities, and it is attended by a cross-functional team, including executives. This leads to increased visibility and accountability. Next, we are holding quarterly business reviews, QBRs, with each sales rep to go over their accounts and prospects to help foresee and remove blockers and deliver predictable revenue. Sales and marketing teams have both been trained in Miller-Hyman's strategic selling methodology, and large account management processing training will occur in Q4 of this year at our annual global sales and marketing meeting. In addition, we have trained and certified our sales engineering team in Demo to Win, a world-class demo and presentation skills training module. Working with product and finance, or currently we are working with product and finance on new pricing models. No discounting. Our goal state, which is a goal state for great companies, is to be easy to buy from, easy to sell for. Our pricing must make sense and simultaneously maximize our value add. Next, we are interviewing agencies for enhanced messaging, positioning, and go-to-market assistance. We need loud and proud messaging for our vision, solutions, and products. Lastly, we are fully reimagining the National Retail Federation show in January 2022, including speaking engagements, more clarity around our core messaging, and much more focus on customer and partner events and meetings. We have made great progress in short time, but we are focused even more on where we are going. We are putting the finishing touches on a really fast engine and excited to produce the results. As we like to say, let's win. Thank you, and I will now turn the call back over to Riley.

Thanks, Tim. As a company, we've been focused on running the existing engine as hard as it can be run, something that will be important over the next couple quarters as we fully get the new engine up to speed. And I want to be very clear here. That doesn't mean there isn't some amazing prospects for real company-changing opportunities in our existing engine. As I said on the last call, we are going to make this hot swap in such a way that if we didn't just tell you we were going to do it, you wouldn't have known that it happened. Tim and his team, in collaboration with the entire DigiMark team, have done an amazing job of keeping the lights on while the whole organization has been planning how exactly it is we are going to shoot the lights out. But I do want to highlight something that has just been incredible to see. In great tech companies, there's always a natural contention between maximizing today's results and setting oneself up to make tomorrow that much better. Harvest some now or harvest more later. And saying something I don't imagine I'll ever say again, I strongly believe the most impressive thing about this quarter from a sales perspective is the deals we didn't close. Deals that for a variety of reasons, for a variety of reasons, including not having our tech exactly where we want it, either for us or for our customers, we put on pause. Delaying short-term gratification for the long-term win takes courage. It takes a belief in a roadmap and a belief in team, a belief in where we are going and who will get us there. That is exactly what our sales organization did this quarter. And so I want to use this very public forum to deliver a very personal message to our entire sales organization. I know it's tough to kneel on the two-yard line and not score that touchdown. Your actions are appreciated. I'm so thankful for how you didn't for one second think about anything but team. You made a confident decision in prioritizing team and, more importantly, trusting your teammates. I hope you each fully and completely know that the belief will pay off for us many times over in the coming quarters. As I started off this call by saying, the planning we are now close to finishing up might strike some as boring. And like all of you, I can't wait until we are spending these calls discussing the real progress we are making in the market, not internally. But all of the above, in addition to a lot of other important initiatives and accomplishments too numerous to mention on this call, are the foundation upon which all of our future progress will be built. As an executive tank team, we stressed the organization because there was open-ended instructions would take all the time necessary, but not one second more. And it responded wonderfully. I want to thank all my teammates for being such amazing dual trackers, focused not only on the why not, what if, but also the here's how. We are setting up the foundation for our next many years, and while of course we'll always be tweaking and optimizing the engine, we are close to putting away the blueprints and starting our test runs. We're building something really special here at this company, something that we all realize outsiders will only believe when we start demolishing lab records. As always, judge us on the results. One last thing before we open the call up for questions. I do want to alert everyone we'll be filing a Form S3 with the SEC shortly to register the shares TCM Strategic Partners bought last September. This is a normal process that will allow these shares to be freely tradable once the one-year lock has passed. The truth is, however, I have zero intent of selling a single share anytime soon, or much more importantly, anywhere near these levels. There's just too much good yet to come. Like our two previous calls, we'll be taking questions from anyone interested in asking one. Operator?

Thank you, sir. To ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile the Q&A roster. Our first question is from Jeff Van Ree with Craig Hallam Capital.

Hey, Jeff. Hey, how's it going? This is actually Aaron on for Jeff. Yeah, thanks for taking my question. First question I have, so you alluded to becoming the barcode of something looking at other avenues besides plastic sortation. Just interested in a little more color there, where you're seeing progress, anything top of mind, a couple areas, if you can give any more color.

Absolutely. After APS, Aaron, we're happy to share that with you. So APS is the annual product strategy. So historically, we have been trying to figure out exactly how best to use our technology based on where customers have been taking us. That is changing. We are a product company. We're becoming a solutions company. We need to let product do the time to perform that research, collect the data, and tell us where we need to be going. So obviously, I mean, you know, I guess a little bit of a spoiler here. Yes, sustainability will be one of those product lines. But stay tuned. After APS, we'll be more than happy to share with you guys exactly where we are going from a product perspective. And in addition, as Tim alluded to, I also encourage you to come to NRF. You'll see a lot more there.

Fair enough, fair enough. Another question for me. Just curious on any updates on the retail side of things, specifically around the relationship with Walmart. Any color you can provide there?

Obviously, we're not going to talk about any customer in particular, but as I said in the last call, Walmart is a wonderful, forward-looking company. If you look at the overlap of where they want to go and what we can provide, there's a lot of overlap. If there's any major retailer that we would want to be close to, Walmart is that retailer. So we're excited to continue to develop that relationship.

Good deal. And then one more for me if it's okay. Just curious, you mentioned bookings. aren't where you want them to be at the midpoint here, so there's a lot of room left in the year. Just curious what it takes to get to that triple-digit booking growth that we talked about previously. What do you see happening to get us there? Close deals. Fair enough. Easy enough. All right. Cool. Thanks. That's it for me. Thanks, Eric.

Our next question is from Jeff Bernstein with Cowan.

Just wondering if you have an update at all on laser serialization and whether that looks like you're going to be able to do that.

So we can absolutely do it. There's no question about whether we can do it. The question is, where does that fit in our product roadmap? Again, stay tuned for APS. Again, going back to the point, the fastest way to leave base camp, the fastest way to put real distance on a bookings basis between where we've been and where we are going is to focus, right? There is anything that is not made by hand or not made by Mother Nature, we can do. The question is, where do we start? And that has to be driven by research and not whims, not customers saying, hey, can I wave a sow in front of your face and get you to pivot the whole engineering organization to go follow that? So there's nothing we can't do. At least there's nothing I don't believe that we've come across we can't do besides what's made by mother nature or made by hand. And there's a lot of ways to embed our code, right? Laser ablation is just one of those ways. Whether that will be an area of key focus for us, we'll let you know after APS. Gotcha.

Okay. And then... You know, the potential for the significant bookings growth this year was in part driven by sort of fallout from COVID and supply chain weaknesses that potential customers had. And I think produced some applications that you even felt were worthy of Digimar going after. Has that kind of continued? Are you actually, you know, getting some ideas from customers that you think are going to survive the APS filter? Or just give us a little bit of color on that.

So a big part of the APS filter, what product does is voice a customer, right? So we might be the 230 smartest people in the world, but if we just stop our ideation with us, we're going to fail. So there is a lot of research. When I talk about research, it's not research internal to DigiMark. It's research with the world. We're 230 people. There are 7.6 billion people we've got to sell to. So that voice of customer is a huge part of product. Product work and obviously product-driving APS.

And then lastly, just a quick update. Japan groceries seem to be starting to move forward a little bit. Just wondering what the update is there and if you can say anything also about how Netto is progressing.

Yeah, so we don't like to talk about individual customers, obviously, right? That's their business. To talk about the great way to anger a customer is to talk about their own business. So, I mean, Netto is doing great. They're a great customer of ours. We'll leave it at that. I don't know... The Japanese grocery, I don't know if it's a grocery reference you made. I'm not familiar with us having talked about that. No, not by name. Yeah. No, no, not by name.

Generally. I think that there was a lead customer there. I believe you have a relationship with a very dominant packaging player over there and just sort of wondering where that is.

Yeah, so we're not going to talk about any customer. All I'll say is, you know, we have a lot of value to add to a lot of different customers. I would say something that maybe I'll turn it over to Tim and talk about the pipeline in Japan. You know, it seems like it's waking up. Seems like there's some great opportunities there. But what's really important, Jeff, is closing deals, not pipeline. Yeah. Is there anything you want to say on Japan in general?

I would say that, you know, to double down on the APS strategy, that that's going to be very illuminating and very instructive for our go-to-market there. So I do think that will increase as a result of our APS.

Awesome. Thanks, sir. Thank you. Thanks, Jeff.

And again, that is star one. If you would like to ask a question at this time, your next question is from Robin Nip with Janie Montgomery.

Thanks for taking the call, Riley. Hey, so I felt like I was listening to the Field of Dreams introduction, build it and they will come, honestly. Hey, Robin, I don't know how to take that, but thank you, I think. Take it in a good way. So my question is actually a hard right turn from plastics, more towards global packaging. I had the occasion yesterday listening to Phil Stafford and John Dwyer from Westrock talking about the opportunities there and the fact that global packaging is a $450 billion business today, and yet five years from now, nearly 20% of the packaging is going to be targeting the anti-counterfeit market. Now, you know, to me, this is a no-brainer for us, but how do we get there? Hmm.

I'm trying to decide how to answer that question, Robin. What I want to say first of all is stay tuned for APS. APS is a big stepping stone in where we are going from there. That delivers the product. And then in general, leaving alone any specific product line, I think you heard from Tim how we're going to get there. Tim is going to take what product does and get it to market and get the bookings. Interesting insight, Robin.

So just as a follow-up then, when I think about invisible digital watermarks versus a QR code, and everybody sees a QR code, they know how the QR code can bring a call to action there. But if they don't even see an invisible watermark on an object, how do we get that same call to action?

So are you talking about for product authentication, or are you talking about just in general for consumer engagement?

Both, actually. When we're talking about Counterfeit, you know, deterrence when we're talking about the pursuit of finding more information about a product. Talking about just getting the whole story out there about a digital watermark that's invisible to the naked eye. I think we have to be doing a better job of telling the story.

Who's we? DigiMark?

Yes, sir.

Yeah, so a couple ways to answer that, right? We will be the solutions provider to both. Let me parse your question a couple different ways. When it comes to product authentication brand protection, that is really up to the customer whether they want covert or over, correct? And so there's plenty of ways to do call to action, right? You don't need to say scan this QR code or even have the QR code be the call to action. You can put a call to action on there saying – Scan this image, or there's ways to use QR codes complementary to us, and I don't want to get too far down this path. I'm not worried about it when there's a specific application, because sometimes it's not having a universal call to action that provides a lot of value. Okay, so that's on the brand protection, product authentication. When you're talking overall consumer engagement, I'll give you my personal belief, thesis to be verified, which is the term we use internally here, meaning it's just a belief. I can't wait until product to tell me what the truth is. I don't think consumer engagement, standalone broad consumer engagement, is really a compelling use case for our technology until we get much more ubiquity. Right? There's call to action. There's a native reader. Again, thesis to be verified. I could be 100% wrong. This is one person's opinion. There's 7.6 billion people whose opinion matters a lot more than mine because they're the ones with the money to buy our product. I believe... that consumer engagement stand on the broad. QR does a great job. You know, we don't need to go out and say we have no competition. I'm a big believer in coopetition, and I'm a big believer there are sometimes better solutions for a specific solve than whatever a certain company has. That's okay. There's plenty of room left for us.

Fair enough. Thanks. Appreciate your time.

And, Rob, you know, I'm going to put one little postscript on that. That's also the advantage of being a platform, right, where – The beautiful thing is if we architect our products and our solutions correctly, if consumer engagement is a nice to have, that's an add-on, okay, right? So even take sustainability, right? So if we're solving real problems in sustainability and there is a way to get consumer engagement to help the front of that funnel, okay, right? But standalone consumer engagement, right? I just don't see it. Again, thesis to be verified will know a lot more when product tells me, it tells all of us what the research and what the truth is. Fair enough. Thanks. Thanks, Robin.

Your next question is from Ari Blaine with Uptalk.

Hi, guys. Thanks for taking the call. Riley, in a previous call, you had mentioned that the company had sufficient cash and did not need to raise any additional capital. And I was just wondering if that's still the case and really to prevent any further dilution.

Sure.

I don't believe I said that on the call.

Are you talking about the press release I put out before I joined the board?

Yes.

Yeah. So obviously, I'm not going to update. I spent about 10 minutes last call talking about the futility of giving guidance out a certain number of quarters, right, for various reasons, right? We're a small company. I mean, there's so many ways that customers can choose to engage with us with a light enterprise licensor, et cetera. I will tell you this. So the comment you're referring to I made before I joined the board as a private investor. Any comment I make now as CEO, as a board member, has a lot more of a forward-looking guidance to it. I will tell you that of all the things that keep me awake at night here, our access to capital or need for that capital, I'm not worried about that. That is a bridge. If we need to cross, we will cross it. It's just not something that I think about. I mean, there is... Multiple different ways that plays out, right? So there is, as you know, we have 100% built, basically 100% contribution margin in our business. It doesn't take a whole lot of new business to get this company at least a much reduced cash flow, let alone to break even our profit flow, right? There's other ways to raise money outside of dilutive deals. And then lastly, the third option is potentially, would there be a need to sell shares in the future? Sure, but not anytime soon. And after we've proven a lot where I would believe the stock price would be a lot higher. I am the single largest shareholder in this company. If I thought dilution were a real issue, I'd be thinking about it already. I'm not worried about it.

Okay. Excellent. And the second question I had for you was in regard to some of the deals that didn't consummate this quarter. Are those deals potentially still on the table for the next few quarters? Absolutely. Great.

If you notice, Ari, I said the sales organization put a pause. They didn't give up. We didn't walk away.

Understood. Thank you very much, guys. Thanks, Ari.

And your next question is from Harvey Mordecai, a private investor.

Hi, Riley.

Hey, Harvey.

How are you doing? Good. Can you enlighten us a little bit about your having brought Ravi on board and where you see him being utilized?

Oh, yes. So, yeah. Thrilled, absolutely thrilled to have somebody of Ravi's caliber, both raw intelligence, character, and also his professional visibility. Let's be honest here, right? He is a very high-profile executive in the tech industry. He's a thought leader. He's a thought leader not just on tech issues, but on workplace issues. One of the... early conversations, and it was a couple of months process during the interview process to bring Robbie on board, and he said so many insightful things. I was about four minutes into my original conversation with him. I was giving him a brief background of what we do, and he said something that was just so brilliant and insightful. I knew after four minutes of talking to him, he needed to be on our board. Fortunately, he agreed eventually, but he's a thought leader in this space. He's extremely well-connected. He's got wonderful introductions he can make for us as a company. He has time to give to us. You know, we are blessed, and I'm going to say this. I'm going to broaden that beyond Robbie, right? We are blessed with an incredible board. We have a world-class board. We have a board much better than the company size we are today. Now, we're going to grow into it, and we're going to prove them right for taking these early bets on us. But there is so much that we ask of all of our board members. And what's amazing is not only have they delivered, they come back and say, what else can we be doing? So Ravi is just the latest in addition to what's just an absolutely fantastic board.

Has he ever been on a board where his company ended up acquiring that company?

I have no idea.

Okay. Yesterday's conference with West Rocks and everything was very excellent. Do we ever get to know how many people are actually listening to that and what kind of results are we seeing from it? We do.

Are you asking us to share that with you?

Say again?

We get to see that, absolutely. Are you asking us to share that with you?

Yeah, I mean, do we get to know how many people are actually watching this, listening to it, and is it productive?

Absolutely productive. Wonderful. Incredible engagement. That's why we're having them. I mean, Tim, do you want to talk about all we're doing with our webinars and that whole process?

Yeah, it's a great strategy, especially in today's marketing world and getting mind share from people. And no more white papers and blog posts. We want to give people an experience. And that webinar you listened to yesterday with one of our channel partner sales leaders, Phil, and Westrock, is a great example of that interactive spirit of learning about experiential learning. And we have several other webinars that are on our website, and there's going to be, you know, dozens covering all the various topics, especially coming out of APS, not only topics that are relevant in our industry, but, you know, topics around our products. So very productive. As you probably know, everything is measurable in sales and marketing these days vis-a-vis Salesforce automation and marketing automation solutions. So we're watching that, you know, very, very closely. And, you know, we're doing those activities as, you know, lead generation. So, yeah, most definitely looking for those to be productive. And we will rinse and repeat all day once we find good topics.

Great. Last thing is I've been around long enough that I've enjoyed receiving dividends from DigiMark. And I was just wondering if you have any time frames as to when we might experience getting a dividend again.

When we're profitable. Actually, that was kind of said flippantly. I actually think dividends are a horrible, inefficient use of capital, right? Why do the double taxation of dividends Dividends, you know, the real owners of stocks should want us to buy back stock so that every single share that they own is a higher and higher percentage of the company every time we redeploy the capital to reduce the share count. So actually, let me answer that question. I was doing a little flip when I said we're profitable. The answer is probably never you'll get a dividend, but maybe. Let us first focus on reducing the cash burn. The next step, we'll get to breakeven. Then we'll get to profitable. Then we can retire a ton of stock. And then we can cross that bridge. How does that sound, Harvey?

Sounds terrific. Look forward to it. Thanks so much. Thank you.

At this time, this concludes our question and answer session. I'll now turn the call back over to Riley McCormick. Sir, please proceed.

Well, thank you very much, everybody, for your time. And stay tuned. We'll be back. Thank you.

This concludes today's call. Thank you, ladies and gentlemen, for joining us today for our presentation. You may now disconnect.