Greetings, and welcome to the Digimarc Corporation Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn this conference over to your host, Mr. Joel Meyer, Chief Legal Officer. Sir, please proceed.

Welcome to our Q2 conference call. Riley McCormack, our CEO; and Charles Beck, our CFO, are with me on the call. On the call today, we will discuss Q2 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 Web site and will 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, Joel, and hello, everyone. First year commercial bookings were 2.2 million during the quarter compared to 2.3 million in Q2 2021. Bookings in Q2 last year included 800 thousand from our Piracy Intelligence product that we are nearly complete in winding down. We are not signing any new Piracy Intelligence deals and we have now effectively exited most of our legacy customer contracts. Excluding Piracy Intelligence, our first year commercial bookings increased 700,000 or 44%. As a reminder, we are now selling a combined solution of Digimarc watermarks and the EVRYTHNG Product Cloud, which makes it impractical to provide a breakout of bookings and revenue for each. Revenue for the second quarter was 7.7 million, up 23% from 6.3 million in Q2 last year, reflecting growth in both subscription and service revenue. Subscription revenue grew 30% in the quarter from 2.5 million to 3.2 million. Keep in mind there are two offsetting factors impacting our year-over-year growth, the addition of subscription revenue from EVRYTHNG, offset by the decline in subscription revenue from sunsetting our Piracy Intelligence product. As we previewed last quarter, the sunsetting of the Piracy Intelligence product was going to have a meaningful impact on subscription revenue starting in Q2, which it did. The product was generating 600,000 of revenue per quarter before we started exiting, and now that we are more than halfway through that process, our revenue was only 300,000 in the second quarter. We expect this revenue to be insignificant going forward as we finalize the wind down process. These offsetting factors, as well as the vagaries of revenue recognition rules that have an impact on our reported revenue at this stage in our growth, is why we believe first year bookings is the best leading indicator of growth of our business. As…

Thanks, Charles. A quarter into our relaunch, I'm pleased with where we are as well as our direction of travel. I want to use today's call to share where we stand, where we're going and importantly, provide some examples of progress between those two points. I've mentioned in the past why we made the move from selling tools to selling products. I won't reiterate that here. But driving this journey is our internal mantra that we must be easy to begin doing business with, and excellent at guiding customers along their Digimarc journey. Our goal is simple. We want to digitize the world's products, and in doing so allow our customers to complete their digital transformation journey, a journey many are pursuing but can't complete if their products remain stuck solely in the analog world. In deciding what products to build, we are focusing on those that address large and growing problems, and hence allow us to participate in large and growing markets. We are prioritizing our efforts by applying the lens of whether our platform, upon which all our products are built, provides significant technological differentiation. We are being purposeful in making sure our products are accretive to each other, which means that the value a customer unlocks from any single Digimarc product is greater the more Digimarc products to which they subscribe. And we are fortunate, because based on the almost unlimited applicability of our platform, we believe we will be productizing new functionality for years, and in many cases the spark of those new products will be prospect-led demand. But we also realize we will never have a monopoly on all the good ideas, or the best avenue with which to address all potential customers' problems. While we will constantly add new products to our product suite,…

At this time, we will be conducting a question-and-answer session. [Operator Instructions]. : :

Ladies and gentlemen, we have reached the end of today's question-and-answer session. I would like to turn this call back over to Mr. Riley McCormack for closing remarks.

Thanks, Laura, and thank you everybody for attending today's call. I hope you have a great rest of your day.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation. Enjoy the rest of your day.