{"success":true,"data":{"pressRelease":{"id":"32265","rtpr_id":"nBw2tSNFha","ticker":"DMRC","exchange":"NASDAQ","all_tickers":["DMRC"],"title":"Digimarc Reports First Quarter 2026 Financial Results","author":"Business Wire","published_at":"2026-05-12T20:05:00.773Z","article_body":"Digimarc Reports First Quarter 2026 Financial Results\n\nDigimarc Corporation (NASDAQ: DMRC) reported financial results for the first\nquarter ended March 31, 2026.\n\n“Digimarc is capitalizing on the convergence of key trends driving increased\ndemand for our solutions, positioning ourselves to benefit from the relentless\nadvance of AI,\" said Riley McCormack, Digimarc CEO. \"In Q1 2026, we made\nsignificant progress against our strategy of building the trust layer for the\nmodern world while delivering a 9% sequential increase in ending ARR((1) )and\nexpanding our subscription gross profit margin((2)) 400 basis points year-over\nyear.\"\n\nFirst Quarter 2026 Financial Results\n\nSubscription revenue for the first quarter of 2026 was $4.4 million compared\nto $5.3 million for the first quarter of 2025. The decrease reflects $1.5\nmillion lower subscription revenue from the expiration of two commercial\ncontracts in 2025, partially offset by an increase from new and existing\ncommercial contracts.\n\nService revenue for the first quarter of 2026 was $3.2 million compared to\n$4.1 million for the first quarter of 2025. The decrease primarily reflects\n$0.5 million of lower commercial service revenue from HolyGrail 2.0 recycling\nprojects, as that work was previously completed.\n\nTotal revenue for the first quarter of 2026 was $7.6 million compared to $9.4\nmillion for the first quarter of 2025.\n\nARR((1)) as of March 31, 2026 was $15.0 million compared to $20.0 million as\nof March 31, 2025. The decrease primarily reflects the expiration of two\ncommercial contracts, one in April 2025 that accounted for a total of $3.7\nmillion of ARR and the other in October 2025 that accounted for $3.1 million\nof ARR, partially offset by $1.8 million of net increases to ARR from new and\nexisting commercial contracts.\n\nGross profit margin for the first quarter of 2026 was 60% compared to 65% for\nthe first quarter of 2025. Subscription gross profit margin((2)) increased to\n90% from 86% and service gross profit margin((2)) decreased to 57% from 65%\nfor the first quarter of 2026 compared to the first quarter of 2025.\n\nNon-GAAP gross profit margin for the first quarter of 2026 was 83% compared to\n81% for the first quarter of 2025.\n\nOperating expenses for the first quarter of 2026 were $11.7 million compared\nto $18.2 million for the first quarter of 2025. The decrease primarily\nreflects $4.2 million of lower cash compensation costs largely due to lower\nheadcount and $3.2 million of lower cash severance costs resulting from the\nreduction in force in the first quarter of 2025, partially offset by $1.0\nmillion of legal costs associated with the corporate reorganization.\n\nNon-GAAP operating expenses for the first quarter of 2026 were $8.1 million\ncompared to $16.5 million for the first quarter of 2025.\n\nNet loss for the first quarter of 2026 was $7.0 million or ($0.32) per diluted\nshare compared to $11.7 million or ($0.55) per diluted share for the first\nquarter of 2025.\n\nNon-GAAP net loss for the first quarter of 2026 was $1.6 million or ($0.07)\nper diluted share compared to $8.5 million or ($0.40) per diluted share for\nthe first quarter of 2025.\n\nAt March 31, 2026, cash, cash equivalents and marketable securities totaled\n$10.0 million compared to $12.9 million at December 31, 2025. Free cash flow\nusage for the first quarter of 2026 was $2.0 million compared to $5.6 million\nfor the first quarter of 2025.\n ________ \n (1) Annual Recurring Revenue (ARR) is a company performance metric calculated as \n the aggregation of annualized subscription fees from all of our commercial \n contracts as of the measurement date. \n (2) Cost of revenue, Gross profit and Gross profit margin for Subscription and \n Service excludes amortization expense on acquired intangible assets. \n\n\nConference Call\n\nDigimarc will hold a conference call today (Tuesday, May 12, 2026) to discuss\nthese financial results and to provide a business update. CEO Riley McCormack\nand CFO Charles Beck will host the call starting at 5:00 p.m. Eastern time\n(2:00 p.m. Pacific time). A question and answer session will follow\nmanagement’s prepared remarks.\n\nThe conference call and investor presentation will be broadcast live and\navailable for replay here\n(https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Fedge.media-server.com%2Fmmc%2Fp%2Fgpffvgvb&esheet=54534032&newsitemid=20260512814692&lan=en-US&anchor=here&index=1&md5=b0b0b6e1114b6cdcc36396b51ffc23b8)\nand in the investor section of the company’s website\n(https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Fwww.digimarc.com%2Fcompany%2Finvestors&esheet=54534032&newsitemid=20260512814692&lan=en-US&anchor=website&index=2&md5=8bb4ee1c0a56aee0dd57778a70556f6d)\n. The conference call script and investor presentation will also be posted to\nthe company’s website shortly before the call.\n\nFor those who wish to call in via telephone to ask a question, please dial the\nnumber below at least five minutes before the scheduled start time. We\nencourage you to also login to the live broadcast so you can follow along with\nthe investor presentation.\n\nToll Free number: 877-407-0832\n\nInternational number: 201-689-8433\n\nConference ID number: 13754826\n\nAbout Digimarc\n\nDigimarc Corporation (NASDAQ: DMRC) is building the trust layer for the modern\nworld. As AI accelerates how we produce, share, and interact with the world,\nthe risks of fraud, counterfeiting, and misinformation are growing\nexponentially. Our innovative, highly scalable, and ultra-secure solutions\nmake it possible for consumers, businesses, and intelligent systems to\ninstantly verify what's real, protect what matters, and transact with\nconfidence. Digimarc's solutions for loss prevention, authentication, and\ndigital are built to counter the speed and sophistication of today's\nAI-enabled threats. Trusted by the world's central banks to deter the\ncounterfeiting of global currency, we exist to protect truth in every\ninteraction, spanning both the physical and digital worlds. Learn more at\nDigimarc.com.\n\nForward-Looking Statements\n\nExcept for historical information contained in this release, the matters\ndescribed in this release contain various “forward-looking statements.”\nThese forward-looking statements include statements identified by terminology\nsuch as “will,” “should,” \"may,\" “expects,” “estimates,”\n“predicts” and “continue” or other derivations of these or other\ncomparable terms. These forward-looking statements are statements of\nmanagement’s opinion and are subject to various assumptions, risks,\nuncertainties and changes in circumstances. Actual results may vary materially\nfrom those expressed or implied from the statements in this release as a\nresult of changes in economic, business and regulatory factors. More detailed\ninformation about risk factors that may affect actual results are outlined in\nthe company’s Form 10-K for the year ended December 31, 2025, and in\nsubsequent periodic reports filed with the SEC. Readers are cautioned not to\nplace undue reliance on these forward-looking statements, which reflect\nmanagement’s opinions only as of the date of this release. Except as\nrequired by law, Digimarc undertakes no obligation to publicly update or\nrevise any forward-looking statements to reflect events or circumstances that\nmay arise after the date of this release.\n\nNon-GAAP Financial Measures\n\nThis release contains the following non-GAAP financial measures: Non-GAAP\ngross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses,\nNon-GAAP net loss, Non-GAAP net loss per diluted share, and free cash flow.\nSee below for a reconciliation of each non-GAAP financial measure to the most\ndirectly comparable GAAP financial measure. These non-GAAP financial measures\nare an important measure of our operating performance because they allow\nmanagement, investors and analysts to evaluate and assess our core operating\nresults from period-to-period after removing non-cash and non-recurring\nactivities that affect comparability. Our management uses these non-GAAP\nfinancial measures in evaluating its financial and operational decision making\nand as a means to evaluate period-to-period comparisons.\n\nDigimarc believes that providing these non-GAAP financial measures, together\nwith the reconciliation to GAAP, helps management and investors make\ncomparisons between us and other companies. In making any comparisons to other\ncompanies, investors need to be aware that companies use different non-GAAP\nmeasures to evaluate their financial performance. Investors should pay close\nattention to the specific definition being used and to the reconciliation\nbetween such measures and the corresponding GAAP measures provided by each\ncompany under applicable SEC rules. These non-GAAP financial measures are not\nmeasurements of financial performance or liquidity under GAAP. In order to\nfacilitate a clear understanding of its consolidated historical operating\nresults, investors should examine Digimarc’s non-GAAP financial measures in\nconjunction with its historical GAAP financial information, and investors\nshould not consider non-GAAP financial measures in isolation or as substitutes\nfor performance measures calculated in accordance with GAAP. Non-GAAP\nfinancial measures should be viewed as supplemental to, and should not be\nconsidered as alternatives to, GAAP financial measures. Non-GAAP financial\nmeasures may not be indicative of the historical operating results of the\nCompany nor are they intended to be predictive of potential future results.\n Digimarc Corporation \n \n \n \nConsolidated Statements of Operations \n \n \n \n(in thousands, except per share amounts) \n \n \n \n(Unaudited) \n   \n     Three Months Ended \n     March 31, \n     2026   2025 \n Revenue:             \n Subscription   $ 4,369     $ 5,314   \n Service     3,210       4,054   \n Total revenue     7,579       9,368   \n Cost of revenue:             \n Subscription ((2))     456       744   \n Service ((2))     1,378       1,407   \n Amortization expense on acquired intangible assets     1,208       1,132   \n Total cost of revenue     3,042       3,283   \n Gross profit:             \n Subscription ((2))     3,913       4,570   \n Service ((2))     1,832       2,647   \n Amortization expense on acquired intangible assets     (1,208 )     (1,132 ) \n Total gross profit     4,537       6,085   \n Gross profit margin:             \n Subscription ((2))     90 %     86 % \n Service ((2))     57 %     65 % \n Total     60 %     65 % \n               \n Operating expenses:             \n Sales and marketing     2,082       5,078   \n Research, development and engineering     3,747       7,634   \n General and administrative     5,555       5,181   \n Amortization expense on acquired intangible assets     289       271   \n Total operating expenses     11,673       18,164   \n               \n Operating loss     (7,136 )     (12,079 ) \n Other income, net     171       369   \n Loss before income taxes     (6,965 )     (11,710 ) \n Provision for income taxes     (1 )     (20 ) \n Net loss   $ (6,966 )   $ (11,730 ) \n               \n Net loss per share:             \n Net loss per share — basic   $ (0.32 )   $ (0.55 ) \n Net loss per share — diluted   $ (0.32 )   $ (0.55 ) \n Weighted average shares outstanding — basic     22,008       21,521   \n Weighted average shares outstanding — diluted     22,008       21,521 \n\n Digimarc Corporation \n \n \n \nReconciliation of GAAP to Non-GAAP Financial Measures \n \n \n \n(in thousands, except per share amounts) \n \n \n \n(Unaudited) \n   \n     Three Months Ended \n     March 31, \n     2026   2025 \n GAAP gross profit   $ 4,537     $ 6,085   \n Amortization of acquired intangible assets     1,208       1,132   \n Amortization and write-off of other intangible assets ((3))     207       220   \n Stock-based compensation     347       137   \n Non-GAAP gross profit   $ 6,299     $ 7,574   \n Non-GAAP gross profit margin     83 %     81 % \n               \n GAAP operating expenses   $ 11,673     $ 18,164   \n Depreciation and write-off of property and equipment     (154 )     (146 ) \n Amortization of acquired intangible assets     (289 )     (271 ) \n Amortization and write-off of other intangible assets     (121 )     (59 ) \n Amortization of lease right of use assets under operating leases     (117 )     (98 ) \n Stock-based compensation     (1,662 )     (1,123 ) \n Corporate reorganization expenses     (1,223 )     —   \n Non-GAAP operating expenses   $ 8,107     $ 16,467   \n               \n GAAP net loss   $ (6,966 )   $ (11,730 ) \n Total adjustments to gross profit     1,762       1,489   \n Total adjustments to operating expenses     3,566       1,697   \n Non-GAAP net loss   $ (1,638 )   $ (8,544 ) \n               \n GAAP net loss per diluted share   $ (0.32 )   $ (0.55 ) \n Non-GAAP net loss   $ (1,638 )   $ (8,544 ) \n Non-GAAP net loss per diluted share   $ (0.07 )   $ (0.40 ) \n               \n Free cash flow             \n Cash flows from operating activities   $ (1,847 )   $ (5,486 ) \n Purchase of property and equipment     (44 )     (55 ) \n Capitalized patent costs     (77 )     (88 ) \n Free cash flow   $ (1,968 )   $ (5,629 ) \n\n ________ \n (3) In the second quarter of fiscal 2025, management updated its definition of \n Non-GAAP gross profit to adjust for the amortization of patent maintenance \n costs. The related amortization expense for the three months ended March 31, \n 2026 and 2025 is now reflected in “amortization and write-off of other \n intangible assets” above to calculate Non-GAAP gross profit, Non-GAAP net \n loss and Non-GAAP net loss per diluted share. \n\n Digimarc Corporation \n \n \n \nConsolidated Balance Sheet Information \n \n \n \n(in thousands) \n \n \n \n(Unaudited) \n   \n     March 31,   December 31, \n     2026   2025 \n ASSETS             \n Current assets:             \n Cash and cash equivalents   $ 8,818     $ 9,820   \n Marketable securities     1,145       3,046   \n Trade accounts receivable, net     7,092       6,513   \n Other current assets     1,988       1,961   \n Total current assets     19,043       21,340   \n Property and equipment, net     989       1,104   \n Intangibles, net     15,244       17,045   \n Goodwill     8,923       9,056   \n Lease right of use assets     3,121       3,238   \n Other assets     1,190       1,175   \n Total assets   $ 48,510     $ 52,958   \n               \n LIABILITIES AND SHAREHOLDERS’ EQUITY             \n Current liabilities:             \n Accounts payable and other accrued liabilities   $ 6,004     $ 4,359   \n Deferred revenue     4,227       3,993   \n Total current liabilities     10,231       8,352   \n Long-term lease liabilities     4,073       4,314   \n Other long-term liabilities     140       63   \n Total liabilities     14,444       12,729   \n               \n Shareholders’ equity:             \n Preferred stock     50       50   \n Common stock     22       22   \n Additional paid-in capital     425,789       424,665   \n Accumulated deficit     (390,053 )     (383,087 ) \n Accumulated other comprehensive loss     (1,742 )     (1,421 ) \n Total shareholders’ equity     34,066       40,229   \n Total liabilities and shareholders’ equity   $ 48,510     $ 52,958   \n\n Digimarc Corporation \n \n \n \nConsolidated Cash Flow Information \n \n \n \n(in thousands) \n \n \n \n(Unaudited) \n   \n     Three Months Ended \n     March 31, \n     2026   2025 \n Cash flows from operating activities:             \n Net loss   $ (6,966 )   $ (11,730 ) \n Adjustments to reconcile net loss to net cash used in operating activities:             \n Depreciation and write-off of property and equipment     154       146   \n Amortization of acquired intangible assets     1,497       1,403   \n Amortization and write-off of other intangible assets     328       193   \n Amortization of lease right of use assets under operating leases     117       98   \n Stock-based compensation     2,009       1,260   \n Increase (decrease) in allowance for doubtful accounts     21       —   \n Changes in operating assets and liabilities:             \n Trade accounts receivable     (566 )     (149 ) \n Other current assets     (44 )     1,331   \n Other assets     (44 )     (105 ) \n Accounts payable and other accrued liabilities     1,624       1,549   \n Deferred revenue     231       689   \n Lease liability and other long-term liabilities     (208 )     (171 ) \n Net cash provided by (used in) operating activities     (1,847 )     (5,486 ) \n               \n Cash flows from investing activities:             \n Purchase of property and equipment     (44 )     (55 ) \n Capitalized patent costs     (77 )     (88 ) \n Proceeds from maturities of marketable securities     2,128       6,564   \n Purchases of marketable securities     (227 )     (2,864 ) \n Net cash provided by (used in) investing activities     1,780       3,557   \n               \n Cash flows from financing activities:             \n Purchase of common stock     (885 )     (1,545 ) \n Repayment of loans     (3 )     (15 ) \n Net cash provided by (used in) financing activities     (888 )     (1,560 ) \n Effect of exchange rate on cash     (47 )     26   \n Net increase (decrease) in cash and cash equivalents   $ (1,002 )   $ (3,463 ) \n               \n               \n Cash, cash equivalents and marketable securities at beginning of period   $ 12,866     $ 28,730   \n Cash, cash equivalents and marketable securities at end of period     9,963       21,567   \n Net increase (decrease) in cash, cash equivalents and marketable securities   $ (2,903 )   $ (7,163 ) \n\n\n \n\n\n\nView source version on businesswire.com:\nhttps://www.businesswire.com/news/home/20260512814692/en/\n(https://www.businesswire.com/news/home/20260512814692/en/)\n\nCompany Contact:\n\nCharles Beck\n\nChief Financial Officer\n\nCharles.Beck@digimarc.com \n(mailto:Charles.Beck@digimarc.com) \n+1 503-469-4721\n\n\nCopyright Business Wire 2026","article_body_html":"","raw_payload":{"data":{"id":"nBw2tSNFha","title":"Digimarc Reports First Quarter 2026 Financial Results","author":"Business Wire","ticker":"DMRC","created":"2026-05-12T20:05:00.773Z","tickers":["DMRC"],"exchange":"NASDAQ","article_body":"Digimarc Reports First Quarter 2026 Financial Results\n\nDigimarc Corporation (NASDAQ: DMRC) reported financial results for the first\nquarter ended March 31, 2026.\n\n“Digimarc is capitalizing on the convergence of key trends driving increased\ndemand for our solutions, positioning ourselves to benefit from the relentless\nadvance of AI,\" said Riley McCormack, Digimarc CEO. \"In Q1 2026, we made\nsignificant progress against our strategy of building the trust layer for the\nmodern world while delivering a 9% sequential increase in ending ARR((1) )and\nexpanding our subscription gross profit margin((2)) 400 basis points year-over\nyear.\"\n\nFirst Quarter 2026 Financial Results\n\nSubscription revenue for the first quarter of 2026 was $4.4 million compared\nto $5.3 million for the first quarter of 2025. The decrease reflects $1.5\nmillion lower subscription revenue from the expiration of two commercial\ncontracts in 2025, partially offset by an increase from new and existing\ncommercial contracts.\n\nService revenue for the first quarter of 2026 was $3.2 million compared to\n$4.1 million for the first quarter of 2025. The decrease primarily reflects\n$0.5 million of lower commercial service revenue from HolyGrail 2.0 recycling\nprojects, as that work was previously completed.\n\nTotal revenue for the first quarter of 2026 was $7.6 million compared to $9.4\nmillion for the first quarter of 2025.\n\nARR((1)) as of March 31, 2026 was $15.0 million compared to $20.0 million as\nof March 31, 2025. The decrease primarily reflects the expiration of two\ncommercial contracts, one in April 2025 that accounted for a total of $3.7\nmillion of ARR and the other in October 2025 that accounted for $3.1 million\nof ARR, partially offset by $1.8 million of net increases to ARR from new and\nexisting commercial contracts.\n\nGross profit margin for the first quarter of 2026 was 60% compared to 65% for\nthe first quarter of 2025. Subscription gross profit margin((2)) increased to\n90% from 86% and service gross profit margin((2)) decreased to 57% from 65%\nfor the first quarter of 2026 compared to the first quarter of 2025.\n\nNon-GAAP gross profit margin for the first quarter of 2026 was 83% compared to\n81% for the first quarter of 2025.\n\nOperating expenses for the first quarter of 2026 were $11.7 million compared\nto $18.2 million for the first quarter of 2025. The decrease primarily\nreflects $4.2 million of lower cash compensation costs largely due to lower\nheadcount and $3.2 million of lower cash severance costs resulting from the\nreduction in force in the first quarter of 2025, partially offset by $1.0\nmillion of legal costs associated with the corporate reorganization.\n\nNon-GAAP operating expenses for the first quarter of 2026 were $8.1 million\ncompared to $16.5 million for the first quarter of 2025.\n\nNet loss for the first quarter of 2026 was $7.0 million or ($0.32) per diluted\nshare compared to $11.7 million or ($0.55) per diluted share for the first\nquarter of 2025.\n\nNon-GAAP net loss for the first quarter of 2026 was $1.6 million or ($0.07)\nper diluted share compared to $8.5 million or ($0.40) per diluted share for\nthe first quarter of 2025.\n\nAt March 31, 2026, cash, cash equivalents and marketable securities totaled\n$10.0 million compared to $12.9 million at December 31, 2025. Free cash flow\nusage for the first quarter of 2026 was $2.0 million compared to $5.6 million\nfor the first quarter of 2025.\n ________ \n (1) Annual Recurring Revenue (ARR) is a company performance metric calculated as \n the aggregation of annualized subscription fees from all of our commercial \n contracts as of the measurement date. \n (2) Cost of revenue, Gross profit and Gross profit margin for Subscription and \n Service excludes amortization expense on acquired intangible assets. \n\n\nConference Call\n\nDigimarc will hold a conference call today (Tuesday, May 12, 2026) to discuss\nthese financial results and to provide a business update. CEO Riley McCormack\nand CFO Charles Beck will host the call starting at 5:00 p.m. Eastern time\n(2:00 p.m. Pacific time). A question and answer session will follow\nmanagement’s prepared remarks.\n\nThe conference call and investor presentation will be broadcast live and\navailable for replay here\n(https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Fedge.media-server.com%2Fmmc%2Fp%2Fgpffvgvb&esheet=54534032&newsitemid=20260512814692&lan=en-US&anchor=here&index=1&md5=b0b0b6e1114b6cdcc36396b51ffc23b8)\nand in the investor section of the company’s website\n(https://cts.businesswire.com/ct/CT?id=smartlink&url=https%3A%2F%2Fwww.digimarc.com%2Fcompany%2Finvestors&esheet=54534032&newsitemid=20260512814692&lan=en-US&anchor=website&index=2&md5=8bb4ee1c0a56aee0dd57778a70556f6d)\n. The conference call script and investor presentation will also be posted to\nthe company’s website shortly before the call.\n\nFor those who wish to call in via telephone to ask a question, please dial the\nnumber below at least five minutes before the scheduled start time. We\nencourage you to also login to the live broadcast so you can follow along with\nthe investor presentation.\n\nToll Free number: 877-407-0832\n\nInternational number: 201-689-8433\n\nConference ID number: 13754826\n\nAbout Digimarc\n\nDigimarc Corporation (NASDAQ: DMRC) is building the trust layer for the modern\nworld. As AI accelerates how we produce, share, and interact with the world,\nthe risks of fraud, counterfeiting, and misinformation are growing\nexponentially. Our innovative, highly scalable, and ultra-secure solutions\nmake it possible for consumers, businesses, and intelligent systems to\ninstantly verify what's real, protect what matters, and transact with\nconfidence. Digimarc's solutions for loss prevention, authentication, and\ndigital are built to counter the speed and sophistication of today's\nAI-enabled threats. Trusted by the world's central banks to deter the\ncounterfeiting of global currency, we exist to protect truth in every\ninteraction, spanning both the physical and digital worlds. Learn more at\nDigimarc.com.\n\nForward-Looking Statements\n\nExcept for historical information contained in this release, the matters\ndescribed in this release contain various “forward-looking statements.”\nThese forward-looking statements include statements identified by terminology\nsuch as “will,” “should,” \"may,\" “expects,” “estimates,”\n“predicts” and “continue” or other derivations of these or other\ncomparable terms. These forward-looking statements are statements of\nmanagement’s opinion and are subject to various assumptions, risks,\nuncertainties and changes in circumstances. Actual results may vary materially\nfrom those expressed or implied from the statements in this release as a\nresult of changes in economic, business and regulatory factors. More detailed\ninformation about risk factors that may affect actual results are outlined in\nthe company’s Form 10-K for the year ended December 31, 2025, and in\nsubsequent periodic reports filed with the SEC. Readers are cautioned not to\nplace undue reliance on these forward-looking statements, which reflect\nmanagement’s opinions only as of the date of this release. Except as\nrequired by law, Digimarc undertakes no obligation to publicly update or\nrevise any forward-looking statements to reflect events or circumstances that\nmay arise after the date of this release.\n\nNon-GAAP Financial Measures\n\nThis release contains the following non-GAAP financial measures: Non-GAAP\ngross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses,\nNon-GAAP net loss, Non-GAAP net loss per diluted share, and free cash flow.\nSee below for a reconciliation of each non-GAAP financial measure to the most\ndirectly comparable GAAP financial measure. These non-GAAP financial measures\nare an important measure of our operating performance because they allow\nmanagement, investors and analysts to evaluate and assess our core operating\nresults from period-to-period after removing non-cash and non-recurring\nactivities that affect comparability. Our management uses these non-GAAP\nfinancial measures in evaluating its financial and operational decision making\nand as a means to evaluate period-to-period comparisons.\n\nDigimarc believes that providing these non-GAAP financial measures, together\nwith the reconciliation to GAAP, helps management and investors make\ncomparisons between us and other companies. In making any comparisons to other\ncompanies, investors need to be aware that companies use different non-GAAP\nmeasures to evaluate their financial performance. Investors should pay close\nattention to the specific definition being used and to the reconciliation\nbetween such measures and the corresponding GAAP measures provided by each\ncompany under applicable SEC rules. These non-GAAP financial measures are not\nmeasurements of financial performance or liquidity under GAAP. In order to\nfacilitate a clear understanding of its consolidated historical operating\nresults, investors should examine Digimarc’s non-GAAP financial measures in\nconjunction with its historical GAAP financial information, and investors\nshould not consider non-GAAP financial measures in isolation or as substitutes\nfor performance measures calculated in accordance with GAAP. Non-GAAP\nfinancial measures should be viewed as supplemental to, and should not be\nconsidered as alternatives to, GAAP financial measures. Non-GAAP financial\nmeasures may not be indicative of the historical operating results of the\nCompany nor are they intended to be predictive of potential future results.\n Digimarc Corporation \n \n \n \nConsolidated Statements of Operations \n \n \n \n(in thousands, except per share amounts) \n \n \n \n(Unaudited) \n   \n     Three Months Ended \n     March 31, \n     2026   2025 \n Revenue:             \n Subscription   $ 4,369     $ 5,314   \n Service     3,210       4,054   \n Total revenue     7,579       9,368   \n Cost of revenue:             \n Subscription ((2))     456       744   \n Service ((2))     1,378       1,407   \n Amortization expense on acquired intangible assets     1,208       1,132   \n Total cost of revenue     3,042       3,283   \n Gross profit:             \n Subscription ((2))     3,913       4,570   \n Service ((2))     1,832       2,647   \n Amortization expense on acquired intangible assets     (1,208 )     (1,132 ) \n Total gross profit     4,537       6,085   \n Gross profit margin:             \n Subscription ((2))     90 %     86 % \n Service ((2))     57 %     65 % \n Total     60 %     65 % \n               \n Operating expenses:             \n Sales and marketing     2,082       5,078   \n Research, development and engineering     3,747       7,634   \n General and administrative     5,555       5,181   \n Amortization expense on acquired intangible assets     289       271   \n Total operating expenses     11,673       18,164   \n               \n Operating loss     (7,136 )     (12,079 ) \n Other income, net     171       369   \n Loss before income taxes     (6,965 )     (11,710 ) \n Provision for income taxes     (1 )     (20 ) \n Net loss   $ (6,966 )   $ (11,730 ) \n               \n Net loss per share:             \n Net loss per share — basic   $ (0.32 )   $ (0.55 ) \n Net loss per share — diluted   $ (0.32 )   $ (0.55 ) \n Weighted average shares outstanding — basic     22,008       21,521   \n Weighted average shares outstanding — diluted     22,008       21,521 \n\n Digimarc Corporation \n \n \n \nReconciliation of GAAP to Non-GAAP Financial Measures \n \n \n \n(in thousands, except per share amounts) \n \n \n \n(Unaudited) \n   \n     Three Months Ended \n     March 31, \n     2026   2025 \n GAAP gross profit   $ 4,537     $ 6,085   \n Amortization of acquired intangible assets     1,208       1,132   \n Amortization and write-off of other intangible assets ((3))     207       220   \n Stock-based compensation     347       137   \n Non-GAAP gross profit   $ 6,299     $ 7,574   \n Non-GAAP gross profit margin     83 %     81 % \n               \n GAAP operating expenses   $ 11,673     $ 18,164   \n Depreciation and write-off of property and equipment     (154 )     (146 ) \n Amortization of acquired intangible assets     (289 )     (271 ) \n Amortization and write-off of other intangible assets     (121 )     (59 ) \n Amortization of lease right of use assets under operating leases     (117 )     (98 ) \n Stock-based compensation     (1,662 )     (1,123 ) \n Corporate reorganization expenses     (1,223 )     —   \n Non-GAAP operating expenses   $ 8,107     $ 16,467   \n               \n GAAP net loss   $ (6,966 )   $ (11,730 ) \n Total adjustments to gross profit     1,762       1,489   \n Total adjustments to operating expenses     3,566       1,697   \n Non-GAAP net loss   $ (1,638 )   $ (8,544 ) \n               \n GAAP net loss per diluted share   $ (0.32 )   $ (0.55 ) \n Non-GAAP net loss   $ (1,638 )   $ (8,544 ) \n Non-GAAP net loss per diluted share   $ (0.07 )   $ (0.40 ) \n               \n Free cash flow             \n Cash flows from operating activities   $ (1,847 )   $ (5,486 ) \n Purchase of property and equipment     (44 )     (55 ) \n Capitalized patent costs     (77 )     (88 ) \n Free cash flow   $ (1,968 )   $ (5,629 ) \n\n ________ \n (3) In the second quarter of fiscal 2025, management updated its definition of \n Non-GAAP gross profit to adjust for the amortization of patent maintenance \n costs. The related amortization expense for the three months ended March 31, \n 2026 and 2025 is now reflected in “amortization and write-off of other \n intangible assets” above to calculate Non-GAAP gross profit, Non-GAAP net \n loss and Non-GAAP net loss per diluted share. \n\n Digimarc Corporation \n \n \n \nConsolidated Balance Sheet Information \n \n \n \n(in thousands) \n \n \n \n(Unaudited) \n   \n     March 31,   December 31, \n     2026   2025 \n ASSETS             \n Current assets:             \n Cash and cash equivalents   $ 8,818     $ 9,820   \n Marketable securities     1,145       3,046   \n Trade accounts receivable, net     7,092       6,513   \n Other current assets     1,988       1,961   \n Total current assets     19,043       21,340   \n Property and equipment, net     989       1,104   \n Intangibles, net     15,244       17,045   \n Goodwill     8,923       9,056   \n Lease right of use assets     3,121       3,238   \n Other assets     1,190       1,175   \n Total assets   $ 48,510     $ 52,958   \n               \n LIABILITIES AND SHAREHOLDERS’ EQUITY             \n Current liabilities:             \n Accounts payable and other accrued liabilities   $ 6,004     $ 4,359   \n Deferred revenue     4,227       3,993   \n Total current liabilities     10,231       8,352   \n Long-term lease liabilities     4,073       4,314   \n Other long-term liabilities     140       63   \n Total liabilities     14,444       12,729   \n               \n Shareholders’ equity:             \n Preferred stock     50       50   \n Common stock     22       22   \n Additional paid-in capital     425,789       424,665   \n Accumulated deficit     (390,053 )     (383,087 ) \n Accumulated other comprehensive loss     (1,742 )     (1,421 ) \n Total shareholders’ equity     34,066       40,229   \n Total liabilities and shareholders’ equity   $ 48,510     $ 52,958   \n\n Digimarc Corporation \n \n \n \nConsolidated Cash Flow Information \n \n \n \n(in thousands) \n \n \n \n(Unaudited) \n   \n     Three Months Ended \n     March 31, \n     2026   2025 \n Cash flows from operating activities:             \n Net loss   $ (6,966 )   $ (11,730 ) \n Adjustments to reconcile net loss to net cash used in operating activities:             \n Depreciation and write-off of property and equipment     154       146   \n Amortization of acquired intangible assets     1,497       1,403   \n Amortization and write-off of other intangible assets     328       193   \n Amortization of lease right of use assets under operating leases     117       98   \n Stock-based compensation     2,009       1,260   \n Increase (decrease) in allowance for doubtful accounts     21       —   \n Changes in operating assets and liabilities:             \n Trade accounts receivable     (566 )     (149 ) \n Other current assets     (44 )     1,331   \n Other assets     (44 )     (105 ) \n Accounts payable and other accrued liabilities     1,624       1,549   \n Deferred revenue     231       689   \n Lease liability and other long-term liabilities     (208 )     (171 ) \n Net cash provided by (used in) operating activities     (1,847 )     (5,486 ) \n               \n Cash flows from investing activities:             \n Purchase of property and equipment     (44 )     (55 ) \n Capitalized patent costs     (77 )     (88 ) \n Proceeds from maturities of marketable securities     2,128       6,564   \n Purchases of marketable securities     (227 )     (2,864 ) \n Net cash provided by (used in) investing activities     1,780       3,557   \n               \n Cash flows from financing activities:             \n Purchase of common stock     (885 )     (1,545 ) \n Repayment of loans     (3 )     (15 ) \n Net cash provided by (used in) financing activities     (888 )     (1,560 ) \n Effect of exchange rate on cash     (47 )     26   \n Net increase (decrease) in cash and cash equivalents   $ (1,002 )   $ (3,463 ) \n               \n               \n Cash, cash equivalents and marketable securities at beginning of period   $ 12,866     $ 28,730   \n Cash, cash equivalents and marketable securities at end of period     9,963       21,567   \n Net increase (decrease) in cash, cash equivalents and marketable securities   $ (2,903 )   $ (7,163 ) \n\n\n \n\n\n\nView source version on businesswire.com:\nhttps://www.businesswire.com/news/home/20260512814692/en/\n(https://www.businesswire.com/news/home/20260512814692/en/)\n\nCompany Contact:\n\nCharles Beck\n\nChief Financial Officer\n\nCharles.Beck@digimarc.com \n(mailto:Charles.Beck@digimarc.com) \n+1 503-469-4721\n\n\nCopyright Business Wire 2026"},"type":"article","timestamp":"2026-05-12T20:05:00.912547204Z","server_sent_at_ms":1778616300912},"received_at":"2026-05-12T20:05:01.540Z","source_url":"https://www.businesswire.com/news/home/20260512814692/en/"},"analysis":null,"durationMs":null,"modelName":null}}