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Digimarc Corp. (DMRC)
NASDAQ:DMRC
US Market
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Digimarc (DMRC) AI Stock Analysis

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DMRC

Digimarc

(NASDAQ:DMRC)

Rating:44Neutral
Price Target:
$8.50
▲(1.92% Upside)
Digimarc's overall stock score reflects significant financial and technical challenges. The company's declining revenues, negative profitability, and bearish technical indicators weigh heavily on the score. While strategic initiatives and executive changes offer some optimism, they are overshadowed by current financial weaknesses and valuation concerns.
Positive Factors
Annual Recurring Revenue Growth
Ramping newer products can return the company to annual recurring revenue growth.
Cost Management
The company is moving the cost trajectory in the right direction with the cost-cutting strategy on schedule.
New Deals and Growth Opportunities
Digimarc continues to win new deals, indicating potential growth opportunities.
Negative Factors
Contract Losses
The loss of a $3.5mm/year DRS contract and the expected loss of ~$3mm/year from a contract negotiation likely weighs on the stock as near-term revenue continues to depress.

Digimarc (DMRC) vs. SPDR S&P 500 ETF (SPY)

Digimarc Business Overview & Revenue Model

Company DescriptionDigimarc 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 MoneyDigimarc 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 Earnings Call Summary

Earnings Call Date:Aug 14, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook. While Digimarc achieved significant product development and strategic partnerships, including the launch of a new gift card solution and recognition in Gartner’s Hype Cycle, these were offset by declines in ARR and total revenue, as well as potential revenue loss from a major retailer contract renegotiation.
Q2-2025 Updates
Positive Updates
Gift Card Solution Launch
Significant progress was made towards launching Digimarc's gift card solution. The first Digimarc-protected gift cards are set to appear on shelves next week, involving multiple brands, including some of the largest companies in the world.
New ARR from European Packaging Customer
A multiyear committed contract with a large European packaging company was signed, expected to generate near 7 figures of ARR starting next year.
Corporate Reorganization Benefits
The company's reorganization resulted in a meaningful reduction in operating expenses and cash usage, with plans to deliver positive free cash flow by Q4 2025.
Recognition in Gartner’s Hype Cycle
Digimarc was recognized as a key vendor in the emerging TrustOps category alongside Microsoft and Google.
Next-Generation Audio Digital Watermark
The company delivered a next-generation audio digital watermark, signing a deal with SourceAudio to embed audio watermarks into production music for rights monitoring.
Negative Updates
Decreasing ARR
Ending ARR for Q2 was $15.9 million, down from $23.9 million in the previous year. This is due to a $5.8 million retailer contract lapse and a $3.5 million DRS contract lapse.
Revenue Decline
Total revenue was $8 million, a decrease of 23% from $10.4 million in Q2 last year, with subscription revenue down 28%.
Contract Renegotiation with Large Retailer
Ongoing contract renegotiations with a large retailer customer may result in a reduction of up to $3 million in annual revenue.
Company Guidance
During the Digimarc Corporation Q2 2025 earnings call, the company provided several key financial metrics and strategic updates. Ending Annual Recurring Revenue (ARR) for Q2 was reported at $15.9 million, down from $23.9 million the previous year, primarily due to the expiration of two significant contracts. Despite these headwinds, excluding the expired contracts, ARR grew by $1.3 million year-over-year. Total revenue for the quarter was $8 million, marking a 23% decrease from the prior year. The company highlighted its focus on three core areas: retail loss prevention, product authentication, and digital authentication, with a particular emphasis on the commercialization of its gift card solution. Operating expenses were reduced by 22% to $13.1 million, contributing to a net loss per share of $0.38. Non-GAAP operating expenses fell by 37% to $8.9 million, reflecting cost-saving measures. Digimarc expects to achieve positive free cash flow by Q4 2025, even considering the anticipated impact of a renegotiated contract with a large retailer, which may reduce annual revenue by up to $3 million. The company remains confident in its strategic direction, focusing on building a scalable and repeatable business model.

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
35
Negative
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
45
Neutral
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
40
Negative
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue35.48M38.42M34.85M30.20M26.52M23.99M
Gross Profit21.96M24.24M18.53M15.32M17.74M16.06M
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 Assets60.75M75.77M80.55M113.78M64.88M97.03M
Cash, Cash Equivalents and Short-Term Investments16.09M28.73M27.18M52.54M33.33M77.73M
Total Debt5.62M5.21M5.99M5.98M1.03M6.84M
Total Liabilities14.26M14.41M18.63M16.19M9.50M13.19M
Stockholders Equity46.48M61.36M61.93M97.59M55.38M83.84M
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 Flow4.10M-11.28M12.56M3.76M25.98M-33.86M
Financing Cash Flow-3.17M28.77M-2.76M60.50M-5.77M62.69M

Digimarc Technical Analysis

Technical Analysis Sentiment
Negative
Last Price8.34
Price Trends
50DMA
11.25
Negative
100DMA
12.11
Negative
200DMA
20.58
Negative
Market Momentum
MACD
-0.95
Negative
RSI
35.98
Neutral
STOCH
29.20
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 8.34 is below the 20-day moving average (MA) of 9.15, below the 50-day MA of 11.25, and below the 200-day MA of 20.58, indicating a bearish trend. The MACD of -0.95 indicates Negative momentum. The RSI at 35.98 is Neutral, neither overbought nor oversold. The STOCH value of 29.20 is Neutral, 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 (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
61
Neutral
$35.52B8.84-11.06%1.87%8.55%-8.14%
58
Neutral
$477.66M-41.49%-13.76%-75.18%
55
Neutral
$272.34M192.24%-1.53%78.84%
55
Neutral
$48.79M-15.98%16.25%41.38%
54
Neutral
$440.75M91.882.21%-14.36%-73.74%
52
Neutral
$114.00M40,175.00-3.33%1.06%-0.37%-161.02%
44
Neutral
$175.40M-63.65%-8.07%7.66%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DMRC
Digimarc
8.34
-20.41
-70.99%
UIS
Unisys
3.88
-1.44
-27.07%
WYY
Widepoint
5.03
1.56
44.96%
CSPI
CSP
11.37
0.05
0.44%
CNDT
Conduent
2.83
-0.83
-22.68%
TLS
Telos
6.27
3.07
95.94%

Digimarc Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Digimarc Appoints Rishi Bajaj to Board of Directors
Positive
Jul 29, 2025

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.

Executive/Board ChangesBusiness Operations and Strategy
Digimarc Appoints Carle Quinn as New COO
Positive
Jun 5, 2025

On June 1, 2025, Digimarc Corporation announced the appointment of Carle Quinn as Chief Operating Officer, effective immediately. Quinn, who previously served as Executive Vice President and Chief People Officer at Digimarc, brings extensive experience in strategy execution and operational excellence from her roles at Workato, Citrix, and SAP SuccessFactors. Her promotion reflects Digimarc’s commitment to accelerating business transformation and building long-term shareholder value. As COO, Quinn’s role will be crucial in driving scalable, sustainable growth by aligning strategy with execution and optimizing talent.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 20, 2025