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

Thank you, and welcome to our Q3 conference call. Riley McCormack, our CEO; and Charles Beck, our CFO, are with me on the call. I'm also pleased to introduce Niall Murphy, the CEO and Co-Founder of EVRYTHNG, who will be available for questions during the course of the call. We are hosting this call from London, England at the corporate headquarters of EVRYTHNG. On the call today, we will provide an overview of the EVRYTHNG acquisition, and our path forward as a combined company. We will also discuss Q3 financial results and provide a business update. 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 discussions contain 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 Q3 financial results and discuss the financial aspects of the EVRYTHNG acquisition.

Thank you, Bob, and hello, everyone. Today is a monumental day for the company as we join forces with the amazing team at EVRYTHNG. Before I get into that, I want to provide a quick summary of Q3 financial results. Revenue for the third quarter was $6.4 million, up 12% from $5.8 million in Q3 last year. Service revenue increased 17% from $3.4 million to $3.9 million, reflecting higher commercial services related to HolyGrail 2.0 Projects. Subscription revenue increased 4% from $2.4 million to $2.5 million, reflecting higher revenue from commercial customers. Total commercial bookings were $3 million, up 60% from $1.8 million in Q3 last year. Operating expenses for the quarter were $12.2 million, flat with Q3 last year, reflecting higher consulting and recruiting costs, offset by severance costs incurred in Q3 last year for organizational changes we made in July 2020. In September, we received confirmation from our lender that our Paycheck Protection Program loan was forgiven. This resulted in a $5.1 million gain in other income in Q3 upon forgiveness of the loan. Net loss for Q3 was $2.9 million or $0.17 per common share versus a net loss of $8.4 million or $0.68 per common share in Q3 last year. Excluding the $5.1 million gain from the forgiveness of our PPP loan, the net loss for Q3 was $8 million or $0.48 per common share. We ended the quarter with $52.5 million in cash and investments. We used $8.6 million of cash and investments during the quarter, of which $7.5 million was from operating activities and capital expenditures. For further discussion of our financial results and risks and prospects for our business, please see our Form 10-Q that we will file shortly. Now back to the EVRYTHNG transaction. I want to first highlight a few important…

Thanks, Charles. I want to use the bulk of my prepared remarks to discuss the EVRYTHNG acquisition and the results of our first annual product strategy meeting because both events have set our company on a different trajectory. And while we realize that it might only be through the passage of time in the marking of business travel that the true delta will be fully appreciated. I cannot stress enough how wonderfully impactful we believe these events will prove to be. As we say internally, we are not going through a transition for the transformation. For those of you who have followed the Digimarc’s story for a while, EVRYTHNG is a company you likely know well. They have been a valuable go-to-market partner for 5 years, and we share multiple customers who have realized themselves something we are today permanently [indiscernible]. Our 2 companies just make so much sense together. For those of you not as familiar with EVRYTHNG, they pioneered and are the market leader in the category out of the product Cloud. At its core, the product Cloud provides a cloud-based digital twin for any physical item. From birth to rebirth, this digital twin or active digital identity records an analog item's journey, allowing a tremendous amount of knowledge and insights to be gained. Data heretofore uncaptured is now easily accessible, analyzable and actionable, powering true digital transformation. And items ADI allows an analog item to be born digital enabling it to enjoy all the informational and business transformational advantages that digital items have enjoyed for years. Today, some of the world's most respected companies are using the EVRYTHNG product cloud to gather and applied data from and about their products as these items move through the supply chain, powering solutions such as traceability, product authentication and consumer…

[Operator Instruction] Your first question comes from the line of Harvey Mordka with -- he's a private investor.

Can you discuss the patents that are coming with EVRYTHNG?

Niall, do you want to take that?

EVRYTHNG has a small portfolio of patents pertaining to the redirection of digital content from physical identities on products and various aspects of digital authentication, utilizing data science methods. These patterns, we believe, are very complementary with the identification methodologies that Digimarc already has, and it's a substantial portfolio.

Also, are reaching any new contracts with a Walmart or Procter & Gamble, Wegmans? I haven't seen anything that indicates some new additional cash flow.

You are considering 60% growth in bookings anything, Hardy for the quarter.

I guess I'm not saying it.

I realized that, there's not a whole lot we can share with names and logos. I think that goes for almost every company in the world, so.

[Operator Instructions] Your next question comes from the line of Robin Knipp with Janney Montgomery.

I’ve been on a number of webinars of late all involving digital watermarks. So I must confess, I cannot remember which one it was that I've heard this, but Riley, can you talk a little bit about how digital watermarking can be incorporated with artificial intelligence? And where this most recent acquisition may take us in that capacity?

So depending -- so artificial intelligence is a big area. What artificial intelligence is trying to do is take inputs and come up to an answer, right? We have a deterministic input. So we can make any artificial intelligence system better by providing as opposed to looking for 3 or 5 or 7 probabilistic inputs, we provide deterministic. We allow artificial intelligence to be easy when we're present. There's also an application of our technology because one of the areas of artificial intelligence -- one of the difficulties of building artificial intelligence system is training that system, right? A lot of the time that's done through human means actually looking at 10,000 photos of an item and trying to determine what it is. We can provide that easy mechanism for training artificial intelligence. And I'm going to turn it over to Niall to talk a little bit about machine learning and the predictive business intelligence that EVRYTHNG brings to us.

Thanks, Riley. So yes, the product cloud is able to collect data points from physical items using the deterministic identities on those item as they move through a value chain, for example, and then apply real-time analytical technologies, including machine learning methods with those data points to derive application conclusions. And the combination of trustable input data points from the tracking of items with the predictive or analytical analysis of those elements in real time is able to create powerful application benefits. From current application point of view, EVRYTHNG is in a preproduction mode and a variety of predictor methods, specifically applying traceability data points in the supply chain, where one gains partial data samples from a subset of products in the supply chain, for example, to build predictions of a potential, for example, integrity threats for parallel trade within a supply chain. And so these techniques are currently in test mode, not in production mode.

Yes. But if you think about that, obviously, there's a lot that programmatic learning can do in supply chain. But when you're dealing, for example, bad actors, product authentication predictive, staying ahead of what they might be coming up with next is huge. And that's just -- I mean, if I were to list every single complementary overlap between these 2 companies, it would be a 5-hour conference call, Robin, but this is just another area where it's as we were both digging into each other like outlook another fit. It's amazing.

Your next question comes from the line of Jeff Bernstein with Cowen.

Can you just talk, Riley, about both the PAC and FOBP offerings? And give a little color around why those are ones that you're particularly interested, the level of customer interest or the problems to be solved that are at the forefront, et cetera? Any color you can add.

Sure. So I mean, as I mentioned, all of our solutions were things that -- ideas generated by the customers and we then did the research. We're going to have a lot more on this as we begin to start marketing the solution. So Jeff, I'm going to ask you to bear with us to get our product market research out and out of the world and show them why we are this a valuable solution here. But both of these were areas where customers came to us. I think I mentioned this on the April call, where customers would come to us and say, "I think if I understanding your technology, this could be an unlock for us." And we have multiple customers on this front that have already started, they haven't waited. I mean, what's amazing about this, we're pre-version 1.0. We're still in beta, I guess, you could call it. We have paying customers. Fortune very high up. I'm not going to get into specifics, but very large customers who have come to us and said, you guys have a differentiated solve here. And what we've done is said, you know what, yes, you're right, we do. And let's go productize this and we'll make solution out of this, let's go to this market. It is a large market. I mean it's in the billions of dollars per year. The area in which we play is growing, I believe, from these numbers, 30%, 40%. But all of that market research, I take with a little bit of grain of salt because it's sort of like what was the online book market before Amazon got into it, right? We are a differentiated solved by ourselves. Us plus EVRYTHNG is a double differentiated solve. So whatever the market research numbers, and we'll share all these with you when again as we get our marketing behind all this out, Take it with a grain of salt because I think we're going to be adding -- we are going to be growing the market simply by our presence.

And then just on EVRYTHNG. So I'm just assuming this is a cloud-native capability, elastic, et cetera, et cetera.

Niall here. Absolutely. Yes, cloud-based platform, we operate multiple cloud infrastructures on a completely dynamic basis around the world to meet our global customer needs and handle a pretty large volume of variable transactional data.

[Operator Instructions] Your next question comes from the line of Jeff Van Rhee with Craig Hallum Capital.

This is Aaron on for Jeff. Just a few questions here for us. So first, on the EVRYTHNG deal. So just kind of curious to get a sense of the visibility to the growth rate acceleration. I think you mentioned kind of the 20% to 25% range over the first half of the year, obviously, assuming that, that goes materially higher. So what's the conviction and confidence there?

From our side or from EVRYTHNG side? So I will tell you, Aaron, that we have done customer diligence calls. We have gone through the pipeline, what the ultimate close rate is, I guess, the future will tell us. But this is a high-growing business that is growing, that is inflecting. What that ultimate rate ends up being, we will see. And I would say I think that I don't want to speak for Niall, but this is a target that they set as an ARR. And so they have -- again, it's impossible to predict close rate, Aaron, and it's the world's messier that's just on a spreadsheet trying to forecast these things out, but obviously, you have some comfort in getting there. And we validated that by going through their pipeline and talking to the customers. Niall, do you want to take about it?

Yes. And I'll second your comments, Riley. I think that the market space for digitization of physical items, global consumer brands appetite to be able to build this competence into their operating models is only accelerating, and we certainly see a healthy level of demand in the pipeline. The uncertainty factors are rate of conversion. And I guess we'll see, but we feel good about our outlook.

Yes. And we share -- this is -- look, acquisitions are risky, right? It's -- you're acquiring another business. I can tell you that -- as I mentioned, we've been a go-to-market partner with EVRYTHNG for 5 years. We have plenty of shared customers. We know where the trajectory for those businesses are, I mean they're sharing with both of us independently. Now I guess they're sharing with us together or once the acquisition closes. The customer calls that we did with EVRYTHNG’s customers glowing. I mean it was incredible to hear these well-respected gigantic companies talking about what EVRYTHNG team has done. So we shall see. And I guess not just what they've done but also the increasing need they have for more of what EVRYTHNG’s done.

And then on the bookings number, obviously, material acceleration sequentially and year-over-year. Just any more color you can give on kind of use cases where the strength is in those booking numbers?

Sure. Yes. Probably the biggest component there is the work that we're doing with HolyGrail, so that work continues to increase. And then we're also seeing, as Riley had indicated, some increased interest in the PAC area, the product authentication. Those are the 2 primary contributors to the growth.

Which is, again, just highlighting that. I mean we haven't even officially launched Version 1.0 PAC. We're beta and it's already seeing inflection.

And then last for us. Any update on thermal that been deployed and you're still looking to move ahead with package marketing speed checkout?

I assume you meant -- you mean Walmart?

Yes, just the thermal [indiscernible]

Is that what you're talking about when you talk about thermal, in general? I'm sorry?

Yes. It's just largely that product offering.

Yes. So you heard thermal was not one of the product solutions that we talked about going forward. Now so we have -- with the Walmart as was originally said in that original contract, thermal was part of that contract. They have what they need if they want to roll it out. Of course, for all of our existing customers we will support everything that we have sold them. What's wonderful about all of the work in our existing customers for all the products at our existing customers have, they are all synergistic with where we were going. So we will standardize for -- when we're talking about going forward, the post APS is where we're focused going forward, our go-to-market strategy going forward. And so thermal is not an area that we are going to be proactively selling going forward. We will support any customers who have our current customers in that area. And like I said, this is -- what we are building going forward, our solutions are really just different ways of putting together our tools. We need to advance our tools for all of our existing go-forward solutions. So any existing customer will be brought along because we'll continue to do that work. But thermal is not an area we're focused on going forward, go-to-market strategy.

At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Riley McCormack. Sir, please proceed.

Well, thank you, everybody. I know this is a different day and a different time slot than we normally do these calls, but we had a couple of things we had to get signed before we could do our call, so we appreciate you guys bearing with us. But hopefully, you guys share the excitement that hopefully you heard from us today. I think these -- both the APS but also this combination with EVRYTHNG is truly transformative, and we can't wait to show you guys the results of that. So thanks, everybody. Have a great rest of your day.

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