DSS, Inc.

For Q1 2018, aggregated revenues decreased 8% year over year. Printed Products revenue was $3.9 million, down 11%, while digital authentication products and services, including AuthentiGuard, were $177,000, up 172% year over year. Total cost and expenses decreased 3%, and the company reported a net loss of $406,000. Management said adjusted EBITDA was still positive for the eighth consecutive quarter, though lower than Q1 2017. Looking ahead, the company emphasized continued investment in Asia-Pacific and AuthentiGuard, but did not give formal next-quarter or full-year revenue/EPS guidance on the call.

CEO Jeff Ronaldi framed the quarter around two strategic priorities: accelerating AuthentiGuard and expanding into Asia-Pacific. He said Hong Kong is a key base for counterfeiting-related opportunities and described active sales calls across Hong Kong, China, Malaysia, the Philippines, India, and Australia. He was upbeat about the company’s ability to integrate into customer supply chains with minimal disruption and about the blockchain-related research project with the Hong Kong R&D Centre.

CFO Phil Jones focused on the mixed operating picture and the balance sheet. He said the revenue decline was largely due to timing after a very strong Q4 in Printed Products, while technology sales rose sharply; he also noted costs fell 3% despite higher professional fees and R&D tied to litigation, Asia hiring, and the blockchain project. On the balance sheet, he said unrestricted cash was $3.7 million and net current assets were $8.1 million as of March 31, 2018, and he described the approximately $3.7 million debt as expected to be settled through a patent transfer, with an estimated $3.3 million gain on extinguishment.

There was no substantive analyst Q&A because no questions were asked. Management did not face follow-up on the revenue decline, Asia expansion costs, or the debt settlement issue. The call ended after brief closing remarks from management and IR.