Digimarc Corp. (DMRC)
NASDAQ:DMRC
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Digimarc
(NASDAQ:DMRC)
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Rating:50Neutral
Price Target:
$9.50
▲(32.68% Upside)
Action:ReiteratedDate:05/06/26
The score is held back primarily by weak financial performance (ongoing losses and historically negative free cash flow) despite solid revenue/gross margin characteristics and low leverage. Technicals are supportive with price above key moving averages, but overbought signals temper the setup. The latest earnings call adds cautious optimism from cost reductions, improving profitability metrics, and early commercialization wins, offset by the sharp ARR decline and execution/timing dependencies. Valuation remains challenged due to losses and no dividend support.
Positive Factors
High subscription gross margins
Sustained 90% subscription gross margins indicate strong platform economics and low incremental cost to serve. High margins support scalable recurring revenue, improve long-term operating leverage potential, and give management flexibility to invest in commercialization while protecting core profitability as ARR grows.
Negative Factors
Persistent negative free cash flow
Multi-year negative operating and free cash flow forces reliance on external capital or equity dilution to fund operations and growth. Continued cash deficits erode financial flexibility, risk shareholder equity over time, and require sustained improvement in recurring revenue and margins to become self-funding.
Read all positive and negative factors
Positive Factors
Negative Factors
High subscription gross margins
Sustained 90% subscription gross margins indicate strong platform economics and low incremental cost to serve. High margins support scalable recurring revenue, improve long-term operating leverage potential, and give management flexibility to invest in commercialization while protecting core profitability as ARR grows.
Read all positive factors
Digimarc (DMRC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$206.79M
Dividend YieldN/A
Average Volume (3M)144.75K
Price to Earnings (P/E)―
Beta (1Y)2.26
Revenue Growth-11.73%
EPS Growth18.65%
CountryUS
Employees215
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)-1.50
Shares Outstanding22,093,287
10 Day Avg. Volume161,879
30 Day Avg. Volume144,755
Financial Highlights & Ratios
PEG Ratio0.24
Price to Book (P/B)3.53
Price to Sales (P/S)4.19
P/FCF Ratio-11.51
Enterprise Value/Market Cap0.98
Enterprise Value/Revenue5.96
Enterprise Value/Gross Profit11.10
Enterprise Value/Ebitda-7.74
Forecast
1Y Price Target
$8.00Price Target Upside11.73% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)-1.21
Revenue Forecast (FY)$29.50M
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 obje...
How the Company Makes Money
Digimarc primarily makes money by licensing its proprietary digital watermarking and identification technology and providing related services under contractual arrangements with commercial and public-sector customers. Key revenue streams include: ...
Digimarc Earnings Call Summary
Earnings Call Date:Mar 11, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Neutral
The call presented a mix of meaningful operational and financial progress—positive cash flow, improved margins, major commercialization milestones (first secure gift card order, IP deals, retail rollout plans), and reduced operating expenses—offset by a notable decline in ARR (~31.5%) driven by the loss of two large contracts and ongoing churn and timing risks tied to third-party dependencies. Management emphasized a strong path to ARR growth in 2026 driven by the secure gift card opportunity and other upsells, but near-term execution and contract-duration factors create uncertainty.Positive Updates
First Secure Gift Card Commercial Order
Closed first secure gift card commercial order representing over $500,000 in ARR; initial cards to appear in early spring and ~600 stores of a major U.S. retailer in summer, with plans to expand for holiday 2026.
Negative Updates
Significant ARR Decline
Ending ARR for Q4 was $13.7 million versus $20.0 million in Q4 last year, a decline of approximately 31.5%; decline largely attributed to the loss of two large customer contracts totaling ~$6.6M in ARR (a $3.5M DRS contract and a $3.1M retailer contract).
Read all updates
Q4-2025 Updates
Positive
Negative
First Secure Gift Card Commercial Order
Closed first secure gift card commercial order representing over $500,000 in ARR; initial cards to appear in early spring and ~600 stores of a major U.S. retailer in summer, with plans to expand for holiday 2026.
Read all positive updates
Company Guidance
The company guided to “significant ARR growth” in 2026 led primarily by its secure gift card solution, noting it finished Q4 with $13.7M ARR (down from $20M a year ago; excluding two lapsed contracts ARR grew $0.4M YoY), closed its first gift‑card commercial order worth over $500k ARR (under 0.1% / 10 bps of the U.S. SAM of 3–5 billion cards; global SAM 7.5–17 billion), expects all Chinook locations to carry Digimarc‑secured cards this spring and ~600 stores of a major U.S. retailer this summer with broader holiday 2026 rollouts planned, and will report the percentage of ARR from gift‑card orders as adoption progresses; Q4 revenue was $8.9M (+3% YoY) with subscription revenue $5.3M (+6%), subscription gross margin 90% (up 5 pts), service gross margin 57% (down 2 pts), operating expenses $10.0M (down $4.4M or 31% YoY), non‑GAAP Opex $6.5M (down $5.4M or 45%), GAAP net loss per diluted share $0.19 vs $0.40 prior year, non‑GAAP net income per diluted share $0.05 vs a non‑GAAP loss of $0.22, cash & short‑term investments $12.9M with no debt, and positive free cash flow of $0.7M in Q4 (vs –$4.4M prior year); they expect Q1 FCF of –$1M to –$2M, which includes ~ $500k of annual compliance costs and ~ $1M of one‑time tax/legal costs for a new corporate structure.Digimarc Financial Statement Overview
Summary
Income Statement
22
Negative
Balance Sheet
55
Neutral
Cash Flow
28
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 33.91M | 38.42M | 34.85M | 30.20M | 26.52M |
| Gross Profit | 18.21M | 24.24M | 20.16M | 15.32M | 17.74M |
| EBITDA | -25.05M | -33.16M | -39.15M | -51.05M | -30.32M |
| Net Income | -32.31M | -39.01M | -45.96M | -59.80M | -34.76M |
Balance Sheet | |||||
| Total Assets | 52.96M | 75.77M | 80.55M | 113.78M | 64.88M |
| Cash, Cash Equivalents and Short-Term Investments | 12.87M | 28.73M | 27.18M | 52.54M | 33.33M |
| Total Debt | 5.21M | 5.99M | 5.99M | 5.98M | 1.03M |
| Total Liabilities | 12.73M | 14.41M | 18.63M | 16.19M | 9.50M |
| Stockholders Equity | 40.23M | 61.36M | 61.93M | 97.59M | 55.38M |
Cash Flow | |||||
| Free Cash Flow | -12.35M | -26.78M | -22.73M | -45.88M | -27.69M |
| Operating Cash Flow | -11.78M | -26.57M | -22.00M | -44.41M | -26.12M |
| Investing Cash Flow | 12.10M | -11.28M | 12.56M | 3.76M | 25.98M |
| Financing Cash Flow | -2.91M | 28.77M | -2.76M | 60.50M | -5.77M |
Digimarc Technical Analysis
Positive
7.16
Price Trends
5.37
Positive
6.27
Positive
8.16
Negative
Market Momentum
0.39
Negative
68.15
Neutral
94.56
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 7.16 is above the 20-day moving average (MA) of 5.62, above the 50-day MA of 5.37, and below the 200-day MA of 8.16, indicating a neutral trend. The MACD of 0.39 indicates Negative momentum. The RSI at 68.15 is Neutral, neither overbought nor oversold. The STOCH value of 94.56 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DMRC.
Digimarc Risk Analysis
Digimarc disclosed 32 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
59 Neutral | $351.12M | -10.17 | -31.77% | ― | 52.21% | 31.30% | |
52 Neutral | $92.36M | 77.50 | -1.02% | 0.95% | 5.47% | 92.26% | |
50 Neutral | $206.79M | -8.50 | -72.56% | ― | -11.73% | 18.65% | |
48 Neutral | $1.43B | -2.86 | -55.55% | ― | -16.22% | -41.59% | |
47 Neutral | $231.84M | -1.04 | 125.36% | ― | 0.15% | -359.97% |
* Technology Sector Average
DMRC
Digimarc
9.36
-4.13
-30.62%
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9.87
-14.33
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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.