Q3 2019 Earnings Call
Mr. Davis. Please proceed.
The call today will review Q3 financial results SCO significant business developments and market conditions to provide an update on execution strategy.
Most of his prepared remarks in Investor Relations section of website at <unk>. This workouts there.
Please note that we may make certain forward looking statements on this call.
Prepared remarks, we filed with the FCC and posted on our website under the heading safe Harbor statement regarding revenue recognition matters results of operations investments initiatives perspectives on business partners customers prospects industry trends a growth strategies.
Also will discuss from time to time information broader tools by channel partners, an actual potential customers.
Providing this information as we understand it was represented to US we do not verify nor votes for such information.
All such statements. Some information are subject to many assumptions risks uncertainties and trade some circumstances assumptions, we share about future performance represent important current estimate.
Actual results may vary materially from those expressed or implied by such statements.
Yes, we disclaim any obligation to revise or update statements or other information that would provide during this call to reflect events or circumstances that may arise after the date of the call.
Good morning, It makes about risk factors that may cause actual results could differ from expectations. Please see the company's filings with the FCC included in the Form 10-Q that will follow shortly and it links including my prepared remarks service provider for general information in the context only.
The content references not incorporated by reference and you should not considered part of this presentation.
Our final vote for such information.
Charles will not coming on the financial results, then I'll discuss significant business developments market conditions of execution strategy sorry, Thanks, Bruce good afternoon, everyone.
Q3 revenue increased 19% to 5.8 million from 4.9 million in the third quarter last year.
The increase was largely due to higher subscription revenue, which increased 48%, reflecting the impact of increase discover and barcode bookings over the past few quarters.
Service revenue was up 200000 during the quarter, reflecting the timing of program work with the central banks.
License revenue was essentially flat.
This government market bookings during the third quarter, roughly 95% higher than Q3 last year coming in at 1.1 million.
We expect to continue to experience lumpiness in quarterly bookings due to natural variations and timing in provisions of contracts during the early market development and expansion into adjacent says.
Gross margin for the quarter was 67% up from 61% last year, primarily reflecting the impact of higher subscription revenue.
Operating expenses increased by 3% from Q3 last year, primarily reflecting the impact of routine annual compensation adjustments where employees.
He is kept headcount relatively flat over the last two years.
We plan to make 15 to 20, new hires in the next six months to address growing demand and delivery requirements.
Net loss for Q3 was 7.8 million or 65 cents per diluted share versus a net loss of 8.3 million or 73 cents per diluted share in the third quarter last year.
I can higher revenues, partially offset by higher expenses.
We ended the quarter with 42.8 million in cash and investments.
Did not raise any capital under our ATM program during the third quarter. There was 9.7 million remaining on the 30 million authorized under the ATM program.
We will exercise customer care in determining the best course of action regarding the remainder of the authorization shouldn't change and relevant circumstances warrant resumption of sales under the program.
We invested 7.1 million of working capital during Q3, which is at the lower end of the range of 78 million, we provided on our last call.
During the quarter use 5.8 million of cash to fund operations and 500000 for capital expenditures.
We anticipate cash usage will be between $6 million to $7 million in the fourth quarter.
Cash usage is expected to be lower than Q3, largely due to timing of vendor payments in customer seats, which is consistent with our history.
We had some preliminary views of planning assumptions for 2020 to share.
We expect service revenue to be modestly higher end to vary quarter to quarter based on timing at one services are performed with a higher proportion of the work to occur in the first half a year [noise].
We expect license revenue to be flat.
Guardian revenue may trend down modestly as we continue to focus on maximizing contribution margin from this area of the business.
Discover and barcode bookings are expected to grow significantly in 2020 from both direct sales and channel cells.
Although we expect growth to continue a wide range of potential outcomes as possible for this area of the business.
We think the most likely outcome is continuing acceleration bookings consistent with our momentum three of market development.
When and how much bookings will accelerate due to tipping points the market remains hard to predict.
The range of potential outcomes is largely a function of the nature and timing of key account developments and the effective adoption by market leaders on the rest of the industry.
Given our assumptions about revenue composition, we expect margins will continue to expand reflecting higher concentration of discover and barcode revenue.
We expect operating expenses to be up high single digits to low double digits, reflecting the 15 to 20, new head count positions I previously mentioned.
Plus routine cost of living adjustments for existing employees.
For further discussion of our financial results and recent prospects for our business. Please see our Form 10-Q that we expect to fall shortly.
Bruce will now provide his comments, so significant business developments market conditions and execution of strategy.
Thanks, Charles before I dig into my remarks, this quarter I'd recommend to everyone that you get a copy of the script from our website an investor.
Section.
Lot of footnote center I think interesting.
Helpful context, so with that said our application developer community is blossoming.
It's important to keep in mind that were platform provider I will give you a flavor and expand the users will depart from today.
Our strategy has been and continues to be enabling a large community of developers to investor capital build applications on our platform. The strategy is intended to provide us with tremendous financial and operational leverage as we scale, we had a very busy quarter with lots of progress and many application areas and advancement with key customers and suppliers. There is a great deal.
A little innovation happening at the application layer, we are working hard to support our developers the premium today's report is emergence of the platform.
We made substantial progress during the quarter deliver under our multiyear contract with Walmart to enhance fresh product labels and private brand packaging and provide enabling infrastructure to enjoy the benefits of our platform based on enhancement of these media details of the Onramp to production for fresh product labels must remain confidential for the time.
The private brand program anticipate some here sort of all private label brands.
And began with food and consumables categories with plans to extend into general merchandise walmarts packaging suppliers are adding hundreds of enhanced items into Walmart supply chain monthly.
Just like a large number of enhanced packages on the Walmart shells by the end of the year products will go global brand suppliers are beginning to arrive in stores as well.
All these initiatives converge on improving store operations on the customer experience a recent kantar study indicated that the keys to success, our Mickey and simple shop and more cost effective Walmart stands to gain in both of these dimensions of performance with our platform Foster has continuing improvement of the customer experience.
Along these lines Walmart recently announced they're launching his scannable toward catalog. This holiday season. This is the first time customers will be able to interact with Wal marts toward catalog by using their smartphones shop products directly from the pages as Digimarc continues to grow our partnership with Walmart, we will find more innovative ways to help improve the shopping experience for their.
Customers, we envision many more opportunities for collaboration.
In support of this and other engagement opportunities Walmart has updated their mobile scanning using digimarc mobile SDK into their flagship bell for both iOS and Android.
We have another important catalog customer rolling out with our platform New point media is the parents of some of the most recognizable real estate publications across the U.S, and Canada, including homes and land magazine.
All the home images in the magazine or enable breezy identification by the homes land mobile application getting readers easy an immediate access to additional information about homes of interest in agents representing the properties.
Success of these endeavors could open the door to bringing digital experiences to the freestanding insert market.
Yours production of these uncertain mail and Sunday papers is nearly 200 billion pages per year containing over $500 billion of notional value of coupons.
We're also making excellent progress against in the private brand portfolio of a leading European retailer as with Walmart. We are discussing other uses of our platform to improve operations of customer experience.
Generally with respect to packaging rapidly increasing share of packards enhancement as being done by suppliers.
As this transition matures it gives more time to internal experts for research and development and training.
We have conducted more than 50 training. So far this year research activities have include advances in marker coder dry offset metal decoration plastic molding vending machines on fabrics.
There's a flurry of activity in recycling Holy Grail, one to sustainability awards at the past conference in September including overall winter.
Organization, Holy Grail, 2.0 is underway initiatives, making excellent progress with leadership reporting the more than 60 industry stakeholders will be participating including 20 brands more than 10 retailers. There is a video showing a presentation by the leader of the original Holy Grail project available on the web providing detailed update on.
Progress of his work Digimarc enhanced product we've shown in more than 10 exhibits at the recent case show the leading trade show for the plastics industry with over 200000 visitors.
From 165 countries.
The only rail project leaders from PNG, Tom Brown, and so as being their perspectives on how they believe digital Watermarking revolutionize recycling in a video interview at the show.
Segment into 20 minutes as available through a link provided in the script.
Tom or host an open house during the show on October 2200, 140 attendees executives from Tom or PNG burst drop and Digimarc welcome guess than mid presentations, followed by demonstrations of sorting using digimarc enhanced labels and substrates showing sorting. According to many important parameters like food versus non food.
Demonstrates is going very well generator generating many questions about the past commercialization.
Increasing momentum has also evidenced by the growing participation based leadership.
You can track these events on our web site.
We are having many interesting conversations with stakeholders about management structures that we best serve industry and facilitate rapid progress and mitigating the plastics crisis I.
Don't have a clear direction for you yet, but we continue to prefer a long term business model in which it administrator overseas development of global standards regulatory frameworks and license administration in this model, we would supply access to our platform and development testing compliance and consulting services much as we've been doing for the last 20 years to deter banknote.
Yes.
Leading consumer brands are announcing ambitions programs to improve the circular economy.
CNG sustainability initiative is known as ambition 2030 key goals include making all package recyclable or reusable keeping packaging promotions advancing recycling solutions for absorbent hygiene products and reducing the use of Virgin petroleum plastic Pepsico recently announced their first cheap sustainability officer and issued its first evergreen.
Bond yesterday seeking to raise $1 billion to finance green initiatives laid out by the company is 2018 sustainability report.
The other consumer brands are creating similar initiatives.
He is CEO leads the industry wide alliance and plastic waste that has 30 member companies.
Senator you'd all unrepresentative Lowenthal issued a press release yesterday updating their perspective on the government's Roland tackling the plastic ways crisis and reaffirming their attention to introduce what they call landmark legislation prior to year end that will turn up the heat on industry in early droughts circulated in July included a provision.
That industry can apply for grounds to improve research and the development of sustainable unsafe alternative products litter reduction wayson minimization and advanced methods for recycling and reuse.
There are many encouraging signs that are motivating us to increase resource allocation to this market opportunity. We are actively exploring sources of funding for market development.
In other developments, Microsoft recently added to retail dairy entered a newly renovated Tech center in Munich, Germany, featuring multiple demonstrations of the capabilities of our platform. The center provides a differentiated executive touchpoint that illustrates thought leadership and innovation across Microsoft's beat priority industries through immersive experiences of storytelling.
The gates was at the center design to spark inspired conversations creative ideas and new opportunities for customers and partners to work with Microsoft as their trusted industry advisor a digital partner the Digimarc area of features Digimarc barcode for easy checkout consumer engagement inventory management and a streamlined package journey.
We are supporting developers applying our platform to manufacturing quality control supply chain management food safety in manufacturing, we published a case study in September describing the results of field trials have improved manufacturing quality control of PNG using digimarc barcode. This underscores a significant problem revealed packaging World survey.
80% of manufacturers will report a problem with mislabeling this year.
We're making progress on supply chain initiative with a major produce supplier there are many serious industry problems in food safety logistics, we believe our platform could mitigate.
One six the all Americans.
Victimized by food contamination, the American food industry has a 55 billion dollar safety problem, 20% of seafood as mislabeled, presumably the trick consumers.
382, food recalls were required in 2018 alone in the us.
For years of contemplation on development it looks like modal driver licenses are making their debut.
EMEA supplier and most of the driver license issuance systems in America has developed a mobile driver license that incorporates our software Oklahoma is beta testing the program, we estimate the Tam for Digimarc for us driver's licenses to exceed $10 million annually.
In the audio visual space Akamai provider. The most pervasive highly distributed content delivery network has added edge based watermarking to its content distribution network from Nagra very matrix entered into three leading providers of Watermarking services, Nagra and bear matrix, our digimarc licensees Akamai is optimized water markets.
Solution provides a robust content and security solution addressing significant piracy risk in the media and entertainment industry I notice announcement, not so much Ford's immediate economic significance, but more as continuing evidence of the broadening relevance of our innovations long term potential may be significant.
We're still seeing innovation other areas as well.
The Adobe Max conferences happening next week in Los Angeles, you May have noticed our dress up your design theme for the show highlighted on our website homepage.
We had several of our partners will showcase applications of our platform for increasingly technology centric textile and men and materials designed community. The applications will span multiple media types, including sports in fashion apparel connected designs supporting consumer and enterprise customers. According to the ITC.
The smart clothing market.
Is predicted to surpassed 4 billion and revenues by 2024.
Please keep in mind that our model is true digimarc to focus on increasing access to our platform for developers.
Our job number one is to continue to improve the means to develop software and business processes to put Dayton into all forms of media and efficiently and reliable extract the data. This is an unprecedented innovation that we believe will transform the landscape for auto identification into ubiquity supporting applications benefiting many aspects of the globally.
Pardon me.
Environmental social and governance factors are increasingly affecting investment decisions DSG investing is estimated at 20 trillion dollars under management higher yields GE rated companies are being viewed as likely to generate higher profitability in a lower rated firms in the long term.
Our relevance to what BSG investors is becoming more obvious as our platform is used to reduce manufacturing defects and plastics and food waste.
Northland capital and initiated coverage recently with a focus on these areas of our business, we're committed to sustainability and product offerings and corporate operations and evermore mindful of the likelihood that algorithmic investors like Black rock and Vanguard may have scoring mechanism is key to these metrics, we're implementing strategies to improve our positioning on this factor with.
Active and passive investors.
Awareness of Digimarc has risen to high levels interest the strong we're working our way up the ITC priorities with retailers May Cpgs are now engaged across the range of relevant applications in manufacturing retail store operations on recycling.
Industry is still not gotten their arms around the Holy Grail their words not mine now, let's not the recycling one of consumer engagement, we're not going lindstrand for that the industry needs to deliver predictable high quality responses to scanning and the universal call to action.
The supply chain is becoming more receptive as we move to scale production with industry leaders.
They should not begin to assume more responsibility for application development of maintenance and system integration.
We are evolving our organization to better serve them tracking or significant progress and execution of strategy and concomitant market development.
Our mission is to improve and expand the basic function of the platform and the quality of our support for these suppliers.
This transition contemplated in our strategy is key to effective globalization.
Our European customers, a seminal case study for such expansion, even though in one of the initial geographic focus areas. We are working with a supplier in retail or on a potential adoption in a remote geography in another market and we got nice shout out from the association of Vietnam retailers.
The beauty in our financial model is the operational financial leverage of engaging and supporting new suppliers and other developers.
In terms of key takeaways.
Q3 bookings were up 95% over last year revenues were up nearly 20% from the same quarter a year ago subscription revenue was up 50%.
The bottom line improved by 7% cash uses was at the lower end of the projected range.
Our business with Walmart has already expanded beyond the contract announced in April .
Rob utility of our platforms are becoming more obvious is applications are being introduced a cost across a wide range of media.
So we see good examples include our second demonstration digimarc enhanced plastic materials sorting that occurred in October but more product samples 42 from 10 suppliers before a larger audience 140 people.
Two high volume print publications adopted our platform to facilitate e-commerce .
Enhance sports and fashion apparel will be showcased at Adobe Max.
Akamai has integrated three watermarking suppliers into their content distribution distribution network security architecture, Oklahoma began issuing mobile driver's licenses that use our platform for us on vacation.
Our end user focus is on earning the trust and respect of Walmart facilitate enterprise wide adoption of our platform and in the process spinning up massive capabilities in their supply chain.
We have more openness to collaboration from suppliers than ever before.
We have had a successful demonstration of our sorting capabilities in October .
Holy Grail, one two major awards and Holy Grail, two formation is progressing very well.
We do our best to keep you all well informed not everything that is noteworthy is properly communicated be present via press releases.
We recommend that you sign up for the Digimarc Digest news letter, which features of teachers, a monthly roundup of Digimarc news, along with blog articles videos partner highlights another industry topics.
If you haven't signed up to the news letter yet the link in the script allow you to do that.
You can also keep up with the department social media again to link is provided in the script.
You can read the October newsletter from a link in the script for recycling specific news we've created a separate section on our website, where you can find the latest information about our progress in that market.
We welcome your suggestions about how to continue to foster greater transparency and end up understanding of our progress.
Thats it for our prepared remarks, and now we'll open the call the questions.
Thank you Sir you ask your question at this time. Please press Star then the number one on your telephone keypad to remove yourself from the Q pressed upon key and we'll pause for just a moment to come out one day roster.
Correct.
Our first question is from the line of Robin and then with Janney Montgomery.
Thanks, very much for taking my question Bruce on the on the video from the case show you that you link in the transcript.
Developer from Procter and Gamble talked about the fact that they plan on announcing the new leadership for Holy Grail till sometime around Christmas traumatic how far behind after that would you guys should be able to talk about finalized pricing model and potential upfront payment from the group to get you guys more involved.
Or might not happen around the same time and I just have one follow up after that.
Okay.
Thanks for the question.
We.
We're exploring a lot of but different possibilities for financing our involvement done and I. Unfortunately can't give you a timetable nor a clear outcome from that I can only tell you that were very vigorously pursuing strategies for financing.
Involving lots of different opportunities.
If not linked.
Specifically to the formation of the of the group necessarily although I should note that could.
The source of funding or sorts of organization. The funding sources. So so we're very supportive of the only drilled two leadership and their development, but there are lot of moving parts right. Now is there it's really been a flurry of activity. This year it's been.
Quite amazing and so we're we're hoping that it all club.
Aggregates into a concerted action.
As promptly as possible under the leadership as given their estimation I wanted to think they can cut that down.
Okay, Great and just as a quick follow up on the same video game developer talks about launching in country trial.
Sounds like that would happen sometime in early Q4 2020.
Assuming that we're using a three meter scanner that that.
Basically takes care of gating issues.
And works as well as I wanted to have meter scanner does now and the trial is hopefully pretty quick does that mean, you should be in a position to start shining recycling deals as early as early 2021.
Well.
First as we say in our.
Safe Harbor at the front the of the script and all of our filings.
We don't bowed for with others say so so.
And then the on the others have their their plan in their prerogative them on their free to say what their life. So.
I'm not going to really comment on on on his views you and I see the same thing.
There with respect to commercialization.
The primary goals of.
Only rail to include figure out about the commercialization them I've outlined a couple of times of things that we think are involved in that.
And so we're we're trying to up our resource allocation. So that we won't be on the critical path. So we're ready to go as fast as the industry wants to go in and there is a again this enormous skew in cry and everyone announcing programs and people raise the money in the federal government sand they'll have some money available. So there's money out there we just got to go find it.
And we are determined to do so.
Pretty good thanks, Thanks for cancer appreciate it.
You bet.
And as a reminder, ladies and gentlemen that a star one if you would like to ask your question at this time.
And you do have a question from the line of Jeff Van Rhee with Craig Hallum.
Great. Thanks for taking my question.
Bruce a couple from me.
A lot of opportunities a lot of directions the platform.
Obviously has I don't know, if I'd say infinite, but almost infinite.
Potential use cases, if you boil it down in the pipeline can you just talked to me about the funnel and how you see your revenue funnel and what are the top items in that funnel I mean I think.
Prior questions from problems just talking about.
Recycling, but you've talked a lot about how will you got a lot of things in there what is the final look like at this point.
Yes, so our focus remains on the primary end investment thesis of retail and CPG.
Packaging and thermal labels on and that's in there we don't have.
A good surrogate that we might have an another market. So for instance, and driver license idea is the right supplier in primary supplier and in that marketplace and then yes.
Adobe Max will be showcasing.
A.
Provider of embellishments for for.
Sports merchandise.
Excellent supplier in that marketplace, and we'll be taking the lead.
In the retail space.
Because of the success, we've had and garnering opportunity at Walmart we will continue.
Substantial investment there and so the pipeline bundle that that we invested heavily will focus there.
The point of of the developments that are our percolating everywhere here is that.
We are providing platform and so think of the Lincoln operating system and.
It's meant to facility to facilitate the development of lots of applications.
We don't need to be involved in all of them and we don't want to be involved in all of them we want to facilitate.
Hi, guys that allow people to do those things and so when we're looking forward to up the upside opportunities of revenues and the funnel.
We will be having those kinds of things emerging.
As upside you might think of them a surprises we wouldn't.
But they are difficult to project because we are not directly involved in the customer relationships were just there to receive income and occasionally provide support. So so no change in the basic focus end user focus of our work right now and again overtime, we would like to be able to receded background. So I mentioned.
In my remarks.
For the first time in bias substantial margin.
Suppliers are doing more announcement than us.
And that is the strategy, but as that continues to evolve.
We should see acceleration in production.
Nice upside in our.
Revenues, but we will not be on that front line than those engagements as we are today with some under the existing retailers. So I hope that's helpful unresponsive.
Yes the.
This quarter I think you commented that you were engaged with 12 retailers that can come thermal at that point in time, how has that changed since your last set of comments.
I don't recall, a specific number from the last last call but.
We're we're trying to too.
Nox get as much engaged and pilots we have many of them I think about 25 total pilots not all of them are thermal.
But we're focused instead given that we've had enough pilots in my view.
Certainly we're not interested in doing proof of concept anymore, we're trying to expedited movement to production in order to.
Facilitate more rapidly.
The increase in our revenues.
And in order to bring the benefits to the customer quicker so as everybody becomes more capable as the suppliers become more capable the timeline to volumes should should shortened.
And and so.
I would suggest that did not focus too much on pilots, but more on a customer acquisition and we'll try to do a better job of getting customers to confess to doing business with his earlier.
If we can but in the case of our.
European retailers.
Uhhuh as well into production this skipped the pilot phase.
Altogether.
And so so.
View that as.
The necessary gate that we go through and market development, but we're at a stage now where we're recommending and wherever we can that.
Those either be.
Step on the way to production, where Theyre doing a limited rollout so think of the more like a limited rollout pilot implies there triangle because they don't know if they like it or not or.
Hopefully in past that up with our value arguments to retailers.
Okay, and and then with respect to the heads I think is that 15 to 20 heads.
What are you, adding where they're going to be within the business.
A lot of them or in development and delivery systems. So.
As the use of the platform expands its important for us.
To provide very high quality service to the but what we call the developer community, which are those suppliers typically more than the end users.
Other suppliers are in the enhancement of media and the detection of.
Smart Marco those are the two classes of suppliers if you'll like.
And so we expect that to grow significantly during.
2020.
So most of the headcount changes are intended to support that development in the business.
And I guess just lastly, it's.
Sort of to the higher level theme, if you will.
In the script I think you wanted you had to tag line I don't see it here exactly but essentially the emergence of the platform.
Why now why that team and why now.
Well, you and I have talked about that I've talked about that with many of our shareholders that.
When we started the commercialization of the platform people thought we were in the checkout business. You know are made the consumer engagement business and.
Kept trying to tell everybody that we are trying to facilitate such things that were not.
Necessarily doing some of the priming the pump or the early work in the direct connection to customers and that sort of counting packages wasn't.
Necessarily going to be the right measure what we've seen this year and particularly in Q3 is as I referred to at the blossoming of the platform that.
Driver licenses.
Cdns apparel.
All these things are happening, we're not getting into those businesses were not in those businesses, they're using our platform.
And that's why.
Good offer the expression of emerges and platforms like are you guys starting to get it now do you understand what I've been saying. This is this is really the strategy is for us to build a platform of unprecedented.
Value.
By being able to put.
Structured data into all forms of media.
And take it out again.
And then is that the foundation of many modern concepts of growth of the industry.
Well chronicled sorry.
The question here, but but thats, what I hope everyone starting to see and that's what I thought was the most important sort of theme mode. The quarter as Eitan organize my thoughts about the kinds of things to highlight for our shareholders.
Got it and then I guess just one last last comment I think you touched on the ATM, you'll revisit under certain circumstances, when and when it doesn't doesn't make.
Makes sense to use it and then obviously.
Prior quarter, you had a little more emphasis on strategic.
And potentially strategic funding just.
Any updated thoughts from a capital market standpoint about balancing ATM other sources of capital.
Tighter tie ups.
Until things that you're working on maybe even just a sense of if you've shifted one direction or another since last conversations.
In our last call, we said we had.
Put on hold for awhile and it wasn't merely pursuing strategic financing but.
It was a bunch of circumstances I didnt good detail.
And so the ATM to wonderful vehicle is available.
We've used the quite effectively and so we'll continue to evaluate circumstances.
Use it when we think it's in the best interest to the shareholders obviously.
There are there's plenty of opportunity for investment.
In the situation, we find ourselves and now.
And.
So were.
In terms of the general financing picture.
Pursuing financing specifically in the.
Recycling area, because we think that we couldn't do much more work there to facilitate more rapid progress.
And that in general our balance sheets in good shape.
Our cash usage in this past quarter was was modest in relation to the range that we proposed.
And and so the ATM is just one of those opportunities for.
Great and we're working capital.
Okay last one for me.
Last quarter, you called out that you had added.
To new customers within the.
Within the bookings number that you weren't at Liberty to talk about if you would probably be able to talk about before year end any ability to circle back and give a little more framework around those two customers were are broadly what the use cases, where.
I think.
Without getting too.
Two specific the their encompassed within the up.
The long list of the developments in the quarter here, so on the contracts or in the general application areas outlined in the script.
Okay, great. Thank you.
Yes.
And again, ladies and gentlemen of Star one if you would like to ask a question at this time.
Your next question is from the line and Jeff Bernstein with Cowen.
I had a few.
Questions in no particular order.
There was an article in the journey about.
The impact on the shopping experience of pickers doing picking for curbside pickup in home delivery.
In stores, they talked about the whole foods, but but actually they also mentioned wegmans.
As B pack did by having sort of pickers filling up the Isles.
It's mark barcode.
Having an impact on an improving.
The ability of these folks to do their jobs or what's what's going on a wegmans right now.
Well I don't want to.
Talk specifically about wegmans figures.
But I can say that generally.
Digimarc barcode for packaging facilities identification of IRT for everybody, including store associates and customers on robots.
That all all of the.
Major retailers.
Everywhere in the world are seeking to improve simultaneously the shopping experience on the store operations efficiency and so.
In order to improve store operations efficiency and customer convenience.
Store associates doing things that didn't used to do before in the Isles on some of the larger retailers that robots wandering around.
Well all data can contradict.
The ambition of having a great customer experience if it didnt really had customers. So so the the mitigation of the tension is efficiency.
Getting more efficient makes all of that stuff the most tolerability it can be.
Because the sorts those its can move faster the robots can be more effective and the consumers can actually do direct.
Assessment products on that even purchasing more effectively so so we think we're a really important element of the mix of what appears to be the future of physical retail, but you just described.
Okay. That's great can you can you talk about Japan, and what's going on.
There in terms of the the group for retailers, who I guess, there are a value and packaging companies that are evaluating technology.
Yes, but depending on the script. This time, because I had so much other stuff to to go through into them.
And yet we're actually making more progress in dependent I thought we could without very limited resources. So we have a number of programs ongoing there and we still have great support from the group over there, but as I complained in the last couple of quarterly.
Calls here.
Alan.
Serious resource constraint with respect to serving them better that frustrates me.
So so there is some R&D going on over there there are some limited deployments with some retailers.
There are some innovation going on akin to the notions.
Embodied in the theme this quarter or outside of those areas.
And so I'm still trying to find a means to better serve our customers on supplier partners over there.
But we are making progress.
Okay, Great and then you mentioned.
With regard to the Adobe Max show apparel connected designs and and Im wondering if is the aim there for essentially personalized apparel, how you take a picture someone and and sentry their Facebook page.
Or is it about recycling of textiles or both.
Both both in more so so there will be two.
Exhibits they're both involving suppliers.
And one will be sports jerseys on the other will be fashion.
Address.
And the applications.
Ranged from consumer engagement that has the ability to authenticate a particular.
All of this involves serialization at some some level in terms of the fashion piece of it with respect to the jerseys it wouldn't be able to engage.
The consumers all of the consumers the fans through the jerseys themselves to whatever.
Benefits the teams on the players want to deliver to them. So it's just becomes a beacon to feel like marketing beacon.
For the fans to engage in real time with their favorite teams in players.
In the fashion side of things our focus is on the supply chain.
The supply chain goes all the way through the emerging trend of resale of fashion.
On occasion and so.
As people are now looking for ways to garner more value when the fashion supply chain.
On occasion Ism is important so that someone to seeing them, but it goes fashion item could get exactly that items. They wanted to someone seeking to buys through resale legitimate item can have comfort thats authentic and not counterfeit.
The all of the materials can be linked back to their source in the.
The growing.
Concern about where things come from.
And then if you need.
To do a repair or some kind of.
Upticks in the right out of the trail back through.
The supply chain to the appropriate resources. So so it's.
Addressing the the what appears to be growing trend toward infusing technology into fashion, but but the range of applications is anticipated to be quite quite broad. So we're going to show some things there some ideas if you like.
But it's an emerging marketplace, we're demonstrating there.
And for the application developer community, Hey, if you want to have.
Structured data.
In.
All kinds of fabric, all kinds of apparel and other fabric.
Products, we can deliver so didn't touch we'll be happy to license our platform there.
Gotcha.
Lastly, you had a press release out with Berry plastics.
Talking about the Holy Grail.
Efforts, but is there anything more that you can say about how you're working with them and how they're working with customers.
Okay.
I don't think so very very.
Marbles Company Baird March World Class plastics.
Supplier and up so there are quite concerned as everyone knows about.
The circular economy, but they're also a great partner in another area, so they're working with us and packaging more generally.
And there are many things we think we can do with them. So.
As those things emerged most likely to emerge from them and that's again.
For.
Investors and analysts to appreciate that I expect more news to come from.
Third parties, if you like what I call end user customers and suppliers.
Then from us and it doesn't really make sense for re amplified through a press release and Thats why signing up for all of our content.
We'll be happy to put everyone in the mailing lists you'll get a much better.
Continuity and understanding of the business by those sources than they will buy waiting for us to cloud the press release on next door. So.
Varies as already as you have seen on taking the lead on talking about what they're doing we would expect them to continue to do that.
And so they will provide news on us, but we won't be again, that's sort of putting out a press release to talk about.
Okay. Thanks for the help.
Your next question comes from Robin net with Janney Montgomery.
Thanks for taking a follow up just wanted to know if there was any update you give us on the progress of Euro strategic which we've been talking about for a couple of quarters.
No it's still alone.
The thing that I can find that means comfortable means to talk about we.
Engaged with lots of companies and discussions so far but I'm trying to characterize them as is.
Not appropriate.
And so many ways, including affecting negotiations and so far so.
We.
Continued tickets, it's a very good idea for us at this stage of development and my thesis is that.
We don't want to have to build while others have but they have to will be wanting to deploy it for our benefit on reasonable terms for at all to make sense and I'm putting.
Vesmen requirement on that because we have.
Very large and growing number of companies that were doing business with and I want to have some special relationships with those who have we sources that I want to deploy on our behalf. So so the notion of investment.
He is.
To provide a working capital for us, but most importantly to get them to have skin in the game. So so the and you know also I think that.
Don't want a single Investor Im trying to.
Coordinate multiple investments, which makes it much more complicated than trying to find one so up so that's about all I think I can do in terms of update.
This is the Korea.
That's fair, Thanks, and just as a follow up what role do you see Gs one is having his digimarc grows and its end markets and various applications.
We maintain excellent relationships with the two largest just one member organizations us and Germany and.
They we adhere to their their standards whenever they are available.
One of the emerging opportunities for collaboration isn't plastics recycling, whether the standards and not yet established.
So we're having.
Lots conversations and.
Record ones with them about okay, what kind of information do we put into the payloads.
In the circular economy.
So so they're great partners for that.
By their nature don't drive business per se.
Marketing organization of the however, our.
They vary trusted supplier of.
Integrity for data structures. So there are a key to the effective deployment of our data carrier in these new markets in my view I don't want us trying to figure out what they are experts in and I'm very happy to have them on the team. So that they know what we're trying to do what people are expecting us to do and.
Our offering both advice and.
Initiatives, where appropriate to get those things squared away.
Great. Thanks for clarification buyers.
Yes.
At this time. This concludes our question and answer session I would now like to turn the call back over to Brian Davis. Please proceed.
Alright, great.
Thanks, very much everyone for participating today. We appreciate your continued support look forward to talking to you again.
I guess the next opportunity for us will be.
When we present at the Needham Conference.
I'm presuming that will be webcast.
Hopefully.
And and then we'll have our next.
Earnings call in February .
So thanks very much by doll.
This concludes today's call. Thank you, ladies and gentlemen for joining us for presentation. You may now disconnect.