Digimarc (DMRC) AI Stock Analysis

• Market Cap: $204.46M
• Dividend Yield: N/A
• Average Volume (3M): 182.75K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.86
• Revenue Growth: -8.07%
• EPS Growth: 7.66%
• Country: US
• Employees: 215
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): -0.38
• Shares Outstanding: 21,681,377
• 10 Day Avg. Volume: 165,919
• 30 Day Avg. Volume: 182,754
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.35
• Enterprise Value/Revenue: 7.75
• Enterprise Value/Gross Profit: 12.53
• Enterprise Value/Ebitda: -8.41
• 1Y Price Target: $20.00
• Price Target Upside: 105.13% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

• Rating: 47 Neutral
• Price Target: $10.00 ▲(2.56% Upside)

Digimarc's overall stock score is primarily impacted by its challenging financial performance, characterized by declining revenues and persistent losses. Technical analysis provides a neutral outlook, while valuation metrics highlight significant concerns due to negative profitability. The earnings call offered some strategic positives, but these were outweighed by financial declines and potential revenue losses.

Positive Factors

Strategic Partnerships

The new contract with a European packaging company enhances Digimarc's market reach and revenue stability, providing a steady ARR stream and reinforcing its position in the packaging sector.

Cost Management

Effective cost management through reorganization improves financial health, aiming for positive cash flow, which is crucial for long-term sustainability and investment in growth initiatives.

Product Development

The launch of the gift card solution represents a strategic product development, enhancing Digimarc's offering and opening new revenue channels, potentially increasing market penetration.

Negative Factors

Revenue Decline

A significant decline in revenue, particularly in subscription services, indicates challenges in maintaining customer base and market demand, impacting long-term financial performance.

Decreasing ARR

The decline in ARR reflects potential customer attrition and contract losses, posing risks to predictable revenue streams and financial stability over the medium term.

Contract Renegotiation Risks

Potential revenue loss from contract renegotiations with a major retailer could weaken revenue forecasts and market confidence, affecting strategic planning and resource allocation.

Digimarc Business Overview & Revenue Model

Company Description

Digimarc Corporation (DMRC) is a technology company specializing in digital identification and data management solutions. It operates primarily in the sectors of digital media, consumer goods, and supply chain management. Digimarc's core products include its digital watermarking technology, which enables the embedding of information in various media formats, and its Digimarc Barcode, which enhances product packaging by facilitating improved tracking and consumer engagement, ultimately aimed at enhancing brand protection and improving analytics.

How the Company Makes Money

Digimarc generates revenue through a subscription-based model and licensing fees associated with its digital watermarking technologies and services. The company partners with retailers, manufacturers, and brands to integrate its solutions into their operations, allowing them to enhance product visibility and consumer interaction. Key revenue streams include annual subscriptions for its software and services, one-time licensing fees for its technology, and revenue from collaborative projects with major corporations in the consumer goods and retail sectors. Additionally, partnerships with industry leaders help expand its market reach and create new opportunities for monetization.

Digimarc Financial Statement Overview

Summary

Digimarc faces significant financial challenges with persistent losses and negative cash flows, despite modest revenue growth. The company maintains low leverage, which is a positive aspect, but the overall trajectory suggests a need for strategic financial restructuring to improve profitability and cash generation capabilities.

Income Statement

Digimarc's income statement reveals significant challenges with persistent negative net income and declining EBIT and EBITDA margins, indicating operational inefficiency. Despite modest revenue growth over recent years, the inability to turn a profit and improve margins significantly impacts the overall financial health.

Balance Sheet

The balance sheet shows relatively low total debt levels compared to equity, suggesting conservative leverage. However, the declining equity and total assets reflect a weakened financial position. The company's equity ratio remains strong, but continuous losses could erode this stability over time.

Cash Flow

Cash flow analysis highlights negative operating cash flow and free cash flow, indicating liquidity issues. While capital expenditures are low, the inability to generate positive cash flow from operations is a major concern and could hinder future investments and growth prospects.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	35.48M	38.42M	34.85M	30.20M	26.52M	23.99M
Gross Profit	21.96M	24.24M	18.53M	15.32M	17.74M	16.06M
EBITDA	-32.70M	-33.16M	-39.83M	-52.31M	-39.87M	-30.04M
Net Income	-39.35M	-39.01M	-45.96M	-59.80M	-34.76M	-32.54M
Balance Sheet
Total Assets	60.75M	75.77M	80.55M	113.78M	64.88M	97.03M
Cash, Cash Equivalents and Short-Term Investments	16.09M	28.73M	27.18M	52.54M	33.33M	77.73M
Total Debt	5.62M	5.21M	5.99M	5.98M	1.03M	6.84M
Total Liabilities	14.26M	14.41M	18.63M	16.19M	9.50M	13.19M
Stockholders Equity	46.48M	61.36M	61.93M	97.59M	55.38M	83.84M
Cash Flow
Free Cash Flow	-22.07M	-26.78M	-22.73M	-45.88M	-27.69M	-21.57M
Operating Cash Flow	-21.49M	-26.57M	-22.00M	-44.41M	-26.12M	-20.35M
Investing Cash Flow	4.10M	-11.28M	12.56M	3.76M	25.98M	-33.86M
Financing Cash Flow	-3.17M	28.77M	-2.76M	60.50M	-5.77M	62.69M

Digimarc Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 9.75
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DMRC, the sentiment is Positive. The current price of 9.75 is above the 20-day moving average (MA) of 9.35, above the 50-day MA of 9.24, and below the 200-day MA of 16.12, indicating a neutral trend. The MACD of -0.09 indicates Negative momentum. The RSI at 53.43 is Neutral, neither overbought nor oversold. The STOCH value of 83.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DMRC.

Digimarc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
WYY	58 Neutral	$61.94M	-28.51	-15.98%	―	16.25%	41.38%
TLS	54 Neutral	$502.38M	―	-41.49%	―	-13.76%	-75.18%
CNDT	53 Neutral	$407.57M	84.09	2.21%	―	-14.36%	-73.74%
CSPI	52 Neutral	$115.48M	-72.18	-3.33%	0.95%	-0.37%	-161.02%
DMRC	47 Neutral	$204.46M	-5.33	-63.65%	―	-8.07%	7.66%
UIS	41 Neutral	$269.49M	-3.16	―	―	-1.53%	78.84%

Digimarc Corporate Events

Digimarc’s Earnings Call: Innovation Amid Financial Challenges

The recent earnings call for Digimarc presented a mixed outlook, reflecting both promising advancements and concerning financial declines. On the positive side, the company celebrated significant product developments and strategic partnerships, such as the launch of a new gift card solution and recognition in Gartner’s Hype Cycle. However, these achievements were tempered by declines in Annual Recurring Revenue (ARR) and total revenue, alongside potential revenue losses from a major retailer contract renegotiation.

Activist Shareholders: A Looming Threat to Digimarc’s Stability and Growth

The potential actions of activist shareholders pose a significant risk to Digimarc, as they could lead to costly and time-consuming disruptions that divert management’s focus and resources. These actions may include public proposals, board nominations, or strategic transaction requests, necessitating the engagement of additional professional services, which have already impacted the company’s financial results. Furthermore, the uncertainty surrounding these initiatives could deter business opportunities and affect investor confidence, potentially leading to stock price volatility and securities litigation. Such litigation could further strain the company’s resources and management attention, exacerbating the adverse effects on its business operations.

Digimarc’s Q2 2025 Financial Performance Overview

Digimarc Corporation, a leader in digital watermarking technologies, plays a crucial role in the identification and authentication of both physical and digital items, with notable partnerships including a consortium of central banks to combat currency counterfeiting. In its second quarter of 2025 financial results, Digimarc reported a decrease in total revenue to $8.0 million from $10.4 million in the same quarter of 2024, largely due to the expiration of two significant commercial contracts. Despite this, the company continues to focus on its mission to enhance trust and authenticity in the digital age, as emphasized by CEO Riley McCormack.

Digimarc Appoints Rishi Bajaj to Board of Directors

On July 28, 2025, Digimarc Corporation entered into a Cooperation Agreement with Rishi Bajaj and Altai Capital Management, which includes the appointment of Bajaj to the Board of Directors. This agreement, effective until the 2026 annual meeting of shareholders, involves Bajaj and Altai voting in line with the Board’s recommendations on shareholder proposals, with some exceptions. Bajaj’s appointment is expected to bring financial and strategic expertise to Digimarc, enhancing its strategic direction as it continues to build the trust layer for the modern world.

The most recent analyst rating on (DMRC) stock is a Buy with a $40.00 price target. To see the full list of analyst forecasts on Digimarc stock, see the DMRC Stock Forecast page.