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Digimarc Corp. (DMRC)
NASDAQ:DMRC
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Digimarc
(NASDAQ:DMRC)
45Neutral
Positive Factors
Operating Expenses
The company announced a 25% reduction in run-rate operating expenses.
Negative Factors
Earnings
Digimarc reported Q4 results that were modestly below expectations.
Revenue Estimates
Several discrete items lead to lower FY25 revenue estimates.
Digimarc (DMRC) vs. S&P 500 (SPY)
Market Cap
$313.75M
Dividend YieldN/A
Average Volume (3M)296.07K
Price to Earnings (P/E)―
Beta (1Y)1.49
Revenue Growth10.24%
EPS Growth19.28%
CountryUS
Employees248
SectorTechnology
Sector Strength45
IndustrySoftware
Share Statistics
EPS (TTM)-1.84
Shares Outstanding21,548,578
10 Day Avg. Volume552,957
30 Day Avg. Volume296,067
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)8.10
Price to Cash Flow (P/CF)-18.40
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$30.00Price Target Upside106.04% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Digimarc Business Overview & Revenue Model
Company DescriptionDigimarc Corporation (DMRC) is a technology company that specializes in digital identification and detection solutions. Operating primarily in the technology and software sectors, the company develops and provides advanced platform services that enable the creation, management, and detection of unique digital identities. Digimarc's core products include digital watermarking and barcode solutions, which are used across a range of industries, including retail, media, and government, to enhance product information, improve supply chain efficiency, and facilitate digital content management.
How the Company Makes MoneyDigimarc makes money through a combination of product sales, licensing fees, and subscription services. The company's revenue model is centered around licensing its proprietary digital watermarking technology to various industries, including consumer goods, packaging, and media. Digimarc charges fees for the use of its technology, which is embedded into products and packaging, enabling enhanced tracking, authentication, and engagement capabilities. Additionally, Digimarc generates revenue from subscription services for its platform, which provides ongoing digital identity management and analytics. Significant partnerships with major retail and consumer goods companies also contribute to its earnings by expanding the adoption of its technology solutions across different sectors.
Digimarc Financial Statement Overview
Summary
Digimarc shows consistent revenue growth but struggles with profitability and cash flow. The equity-based financial structure reduces debt risk, yet operational inefficiencies hinder financial performance. Improved cost management is crucial.Income Statement
Digimarc has shown consistent revenue growth over the years, with a notable increase from $22.99M in 2019 to $38.42M in 2024. However, the company has been struggling with profitability as evidenced by negative EBIT and net income margins, indicating operational challenges and cost management issues. The gross profit margin remains relatively stable, suggesting some control over production costs.40
Negative
Balance Sheet
The company's equity ratio is strong, reflecting a solid capital structure with most assets financed by equity rather than debt. However, the return on equity is negative due to persistent net losses, indicating inefficiencies in generating returns from shareholders' investments. The debt-to-equity ratio is low, suggesting low financial leverage and risk from debt.45
Neutral
Cash Flow
Digimarc's cash flow statement reveals significant challenges in generating positive cash flows from operations, with consistent negative operating cash flows over the years. Although the company has had episodes of positive financing cash flow, likely from equity raises, the free cash flow remains negative, indicating a need for improved cash management.35
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 38.42M | 34.85M | 30.20M | 26.52M | 23.99M | Gross Profit |
| 24.24M | 20.16M | 15.32M | 17.74M | 16.06M | EBIT |
| -40.21M | -48.21M | -59.63M | -39.87M | -32.81M | EBITDA |
| -40.21M | -39.83M | -52.31M | -39.87M | -29.98M | Net Income Common Stockholders |
| -39.01M | -45.96M | -59.80M | -34.76M | -32.54M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 28.73M | 27.18M | 52.54M | 33.33M | 77.73M | Total Assets |
| 75.77M | 80.55M | 113.78M | 64.88M | 97.03M | Total Debt |
| 5.21M | 5.99M | 5.98M | 1.78M | 7.36M | Net Debt |
| -7.15M | -15.46M | -27.62M | -12.01M | -12.34M | Total Liabilities |
| 14.41M | 18.63M | 16.19M | 9.50M | 13.19M | Stockholders Equity |
| 61.36M | 61.93M | 97.59M | 55.38M | 83.84M |
| Cash Flow | Free Cash Flow | |||
| -26.78M | -22.73M | -45.88M | -27.69M | -21.98M | Operating Cash Flow |
| -26.57M | -22.00M | -44.41M | -26.12M | -20.35M | Investing Cash Flow |
| -11.28M | 12.56M | 3.76M | 25.98M | -33.86M | Financing Cash Flow |
| 28.77M | -2.76M | 60.50M | -5.77M | 62.69M |
Digimarc Technical Analysis
Negative
14.56
Price Trends
33.40
Negative
33.27
Negative
31.11
Negative
Market Momentum
-5.76
Positive
19.57
Positive
6.24
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DMRC, the sentiment is Negative. The current price of 14.56 is below the 20-day moving average (MA) of 23.70, below the 50-day MA of 33.40, and below the 200-day MA of 31.11, indicating a bearish trend. The MACD of -5.76 indicates Positive momentum. The RSI at 19.57 is Positive, neither overbought nor oversold. The STOCH value of 6.24 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DMRC.
Digimarc Risk Analysis
Digimarc disclosed 29 risk factors in its most recent earnings report. Digimarc reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Digimarc Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $22.38B | 29.56 | -72.04% | ― | 4.31% | 1.07% | |
61 Neutral | $2.58B | ― | -6.10% | ― | -1.21% | -4.63% | |
58 Neutral | $21.35B | 9.96 | -19.72% | 2.38% | 5.03% | -22.83% | |
56 Neutral | $82.40M | ― | -25.33% | ― | -44.37% | -447.26% | |
45 Neutral | $313.75M | ― | -63.28% | ― | 10.24% | 19.28% | |
39 Underperform | $18.17M | ― | -336.97% | ― | 2.85% | 83.13% |
* Technology Sector Average
Performance Comparison
DMRC
Digimarc
14.84
-15.73
-51.46%
INVE
Identiv
3.29
-4.26
-56.42%
MRCY
Mercury Systems
42.10
12.25
41.04%
VRSN
Verisign
235.60
44.43
23.24%
INTZ
Intrusion
0.98
-3.09
-75.92%
Digimarc Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -46.15% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Neutral
While the company is experiencing challenges with revenue decline, contract lapses, and anticipated reductions in government service revenue, its strategic focus on authentication use cases and significant cost reductions are promising. The expectation of achieving positive free cash flow by Q4 2025 adds a positive outlook despite current setbacks.Highlights
Cost Reduction and Reorganization
The company announced a corporate reorganization that will reduce its cost base by approximately a quarter, translating to annualized cash savings of $16.5 million, plus an additional $5.5 million in other savings.
Focus on Authentication Use Cases
Digimarc is shifting its focus to authentication use cases, particularly in retail loss prevention and physical anti-counterfeit solutions, which are expected to drive significant ARR growth in 2025.
Gift Card Fraud Prevention Progress
Significant progress in securing gift cards with partnerships involving the two largest industry players, large retailers, and brands, with an immediate TAM of $900 million to $1.5 billion per year.
Positive Free Cash Flow Outlook
The company expects to achieve positive non-GAAP net income by no later than Q4 2025, with significant top-line growth anticipated in 2026.
Lowlights
Expired Commercial Contract Impacting ARR
A $5.8 million commercial contract lapsed, impacting ARR for the year, with total ending ARR at $20 million compared to $22.3 million the previous year.
Revenue Decline and Subscription Revenue Drop
Total revenue for Q4 was $8.7 million, a decrease of 7% compared to the previous year, with subscription revenue decreasing by 10%.
Government Service Revenue Expected Decline
Government service revenue is expected to be 12% to 14% lower in 2025 due to a smaller approved budget for program work.
Challenges in Large Commercial Deal Closure
The anticipated large commercial deal was not closed by the set deadline, leading the company to prioritize other opportunities, although discussions continue.
Company Guidance
During the Digimarc Corporation Fourth Quarter and Full Year 2024 Earnings Conference Call, the company outlined its strategic focus on authentication use cases, emphasizing potential revenue drivers and cost-saving measures. The company aims to achieve positive non-GAAP net income by Q4 2025, with annualized cash savings from reorganization estimated at $16.5 million and additional savings of $5.5 million. Ending ARR for Q4 was $20 million, with expectations for significant ARR growth driven by gift card security and physical anti-counterfeit solutions. The company also announced a corporate restructuring to reduce costs by approximately 25%, aligning with a focus on authentication to optimize shareholder value. Furthermore, Digimarc plans to explore strategic options with Goldman Sachs, including potentially going private, as it approaches free cash flow positivity.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.