Digimarc (DMRC) AI Stock Analysis

• Market Cap: $133.37M
• Dividend Yield: N/A
• Average Volume (3M): 144.75K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.99
• Revenue Growth: -13.78%
• EPS Growth: 12.76%
• Country: US
• Employees: 215
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): -0.38
• Shares Outstanding: 21,756,987
• 10 Day Avg. Volume: 161,879
• 30 Day Avg. Volume: 144,755
• PEG Ratio: 1.07
• Price to Book (P/B): 12.98
• Price to Sales (P/S): 20.73
• P/FCF Ratio: -29.73
• Enterprise Value/Market Cap: 0.86
• Enterprise Value/Revenue: 3.43
• Enterprise Value/Gross Profit: 5.62
• Enterprise Value/Ebitda: -3.75
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 41 Neutral
• Price Target: $6.00 ▼(-2.12% Downside)

The overall stock score is primarily influenced by Digimarc's financial performance challenges, including consistent losses and negative cash flow. Technical analysis also indicates a bearish trend, further impacting the score. Valuation concerns, such as a negative P/E ratio, contribute to the low score. Despite some strategic progress noted in the earnings call, significant financial and operational improvements are needed.

Positive Factors

Conservative Leverage

A low debt-to-equity ratio provides financial flexibility, letting Digimarc fund operations or product investments without heavy interest burdens. This conservatism supports resilience through revenue volatility and reduces refinancing risk while management pursues growth initiatives.

Improved Operational Efficiency

A 26% cut in operating expenses and a 58% reduction in free cash flow usage indicate durable cost discipline. Lower fixed costs improve the path to positive free cash flow and non-GAAP profitability, increasing runway and allowing targeted reinvestment as revenues stabilize.

Enterprise Customer Traction

Adoption by large retailers validates product-market fit and creates sticky, enterprise-level relationships. These integrations increase ARR potential, build channel credibility, and enable upsell and cross-sell opportunities that can sustainably scale subscription revenue over time.

Negative Factors

Declining ARR

A material ARR decline from contract lapses and renegotiations weakens subscription predictability and recurring revenue momentum. Persistent ARR erosion raises churn risk, lengthens payback periods for customer acquisition, and makes profitable scaling of the business harder.

Negative Operating Cash Flow

Ongoing negative operating cash flow reflects structural cash burn that limits internal funding for R&D, sales, and inventory. Until FCF turns sustainably positive, the company may need external financing, which can dilute shareholders or constrain strategic flexibility.

Chronic Profitability Issues

Sustained net losses and negative margins indicate systemic profitability problems. This restricts the firm's ability to reinvest, reduces returns on equity, and means management must balance growth initiatives against urgent margin recovery to achieve durable, self-sustaining profitability.

Digimarc Business Overview & Revenue Model

Company Description

Digimarc Corporation provides automatic identification solutions to commercial and government customers in the United States and internationally. The company offers Digimarc watermarks, a data carrier that provides a digital identity to media objects; Digimarc Discover, a software for computing devices and network interfaces that recognize and decode indicia of the identity of media; and Digimarc Verify, a suite of software tools used to inspect and verify that the identification and discovery of media. Its solutions are used in various application solutions, such as product authentication of physical products; sorting of consumer-packaged goods in recycling streams; track and trace of products within the supply chain; quality control in manufacturing processes; inventory management and planogram compliance; retail point of sale transaction processing; piracy deterrence of digital media objects; content identification and media management; and enhanced services in support of mobile commerce. The company offers its solutions through its sales personnel and business partners. Digimarc Corporation was incorporated in 2008 and is based in Beaverton, Oregon.

How the Company Makes Money

Digimarc generates revenue primarily through licensing its technology and software solutions to various industries, including retail, consumer goods, and pharmaceuticals. The company offers subscription-based services that provide access to its digital identification platforms, which help clients improve traceability and product safety. Key revenue streams include direct sales of its software solutions, ongoing subscription fees for its services, and revenue from partnerships with large enterprises that integrate Digimarc's technology into their operations. Additionally, collaborations with major retailers and brands enhance its market presence and contribute to its earnings through increased adoption of its digital watermarking solutions.

Digimarc Financial Statement Overview

Summary

Digimarc faces significant financial challenges, with consistent losses impacting profitability and cash flow. The company's low leverage is a positive aspect, but it must focus on improving revenue growth and operational efficiency to enhance financial performance.

Income Statement

Digimarc's income statement reveals significant challenges with profitability. The company has consistently reported negative net income, resulting in negative net profit margins. The TTM (Trailing-Twelve-Months) data shows a decline in revenue, with a negative revenue growth rate of -5.12%. Despite a relatively stable gross profit margin, the EBIT and EBITDA margins remain negative, indicating operational inefficiencies. The company needs to address its cost structure and revenue generation strategies to improve its financial health.

Balance Sheet

The balance sheet shows a low debt-to-equity ratio, suggesting a conservative approach to leveraging. However, the return on equity is negative, reflecting ongoing losses. The equity ratio is not explicitly calculated, but the company's equity position appears relatively stable compared to its assets. While the low leverage is a positive aspect, the inability to generate returns on equity remains a concern.

Cash Flow

Cash flow analysis indicates persistent negative operating cash flow, which is concerning for liquidity. The free cash flow growth rate is negative, and the operating cash flow to net income ratio is also negative, highlighting cash flow challenges. Although the free cash flow to net income ratio is slightly above 1, indicating some alignment between cash flow and reported earnings, the overall cash flow position is weak and requires improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	33.66M	38.42M	34.85M	30.20M	26.52M	23.99M
Gross Profit	20.50M	24.24M	20.16M	15.32M	17.74M	16.06M
EBITDA	-30.75M	-33.16M	-39.15M	-51.05M	-30.32M	-30.04M
Net Income	-36.75M	-39.01M	-45.96M	-59.80M	-34.76M	-32.54M
Balance Sheet
Total Assets	55.44M	75.77M	80.55M	113.78M	64.88M	97.03M
Cash, Cash Equivalents and Short-Term Investments	12.56M	28.73M	27.18M	52.54M	33.33M	77.73M
Total Debt	4.55M	5.99M	5.99M	5.98M	1.03M	6.84M
Total Liabilities	14.05M	14.41M	18.63M	16.19M	9.50M	13.19M
Stockholders Equity	41.39M	61.36M	61.93M	97.59M	55.38M	83.84M
Cash Flow
Free Cash Flow	-17.73M	-26.78M	-22.73M	-45.88M	-27.69M	-21.57M
Operating Cash Flow	-17.00M	-26.57M	-22.00M	-44.41M	-26.12M	-19.94M
Investing Cash Flow	3.59M	-11.28M	12.56M	3.76M	25.98M	-34.26M
Financing Cash Flow	-3.03M	28.77M	-2.76M	60.50M	-5.77M	62.69M

Digimarc Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 6.13
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 6.13 is below the 20-day moving average (MA) of 6.38, below the 50-day MA of 7.22, and below the 200-day MA of 10.15, indicating a bearish trend. The MACD of -0.34 indicates Negative momentum. The RSI at 39.91 is Neutral, neither overbought nor oversold. The STOCH value of 45.53 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DMRC.

Digimarc Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MGIC	73 Outperform	$1.26B	31.63	14.36%	2.92%	12.65%	14.80%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
CSPI	57 Neutral	$113.11M	-797.26	-0.27%	0.95%	6.36%	73.88%
TLS	53 Neutral	$402.70M	-13.61	-23.73%	―	17.44%	41.97%
AI	47 Neutral	$1.55B	-3.86	-46.77%	―	1.84%	-27.74%
UIS	45 Neutral	$187.54M	-0.58	―	―	-4.93%	18.65%
DMRC	41 Neutral	$133.37M	-3.52	-65.89%	―	-13.78%	12.76%