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Digimarc Reports Second Quarter 2025 Financial Results

BEAVERTON, Ore.--(BUSINESS WIRE)-- Corporation (NASDAQ: DMRC) reported financial results for the second quarter ended June 30, 2025.

鈥淎s AI accelerates how we produce, share, and interact with the world around us, the risks of fraud, counterfeiting, theft, and misinformation are growing exponentially,鈥� said Digimarc CEO Riley McCormack. 鈥淚n the wake of the relentless acceleration of AI models and agents, a vacuum of trust and authenticity is being created. Digimarc is focused on filling that vacuum by delivering a future where humans and intelligent systems alike can verify what's real, protect what matters, and move forward with confidence. We are focused on making trust verifiable and authenticity scalable. We are focused on building the trust layer for the modern world. In Q2, we made significant progress towards doing just that.鈥�

Second Quarter 2025 Financial Results

Subscription revenue for the second quarter of 2025 decreased to $4.6 million compared to $6.4 million for the second quarter of 2024, primarily reflecting the expiration of two commercial contracts that contributed $1.9 million of subscription revenue during the three months ended June 30, 2024.

Service revenue for the second quarter of 2025 decreased to $3.4 million compared to $4.0 million for the second quarter of 2024, primarily reflecting $0.5 million of lower government service revenue from the Central Banks.

Total revenue for the second quarter of 2025 decreased to $8.0 million compared to $10.4 million for the second quarter of 2024.

Annual recurring revenue (ARR¹) as of June 30, 2025 was $15.9 million compared to $23.9 million as of June 30, 2024. The $8.0 million decrease primarily reflects the expiration of two commercial contracts that accounted for a total of $9.3 million of ARR, partially offset by increases to ARR from new and existing commercial contracts.

Gross profit margin for the second quarter of 2025 decreased to 59% compared to 66% for the second quarter of 2024. Excluding amortization expense on acquired intangible assets, subscription gross profit margin decreased to 85% from 89%, and service gross profit margin increased to 59% from 58% for the second quarter of 2025 compared to the second quarter of 2024, respectively.

Non-GAAP gross profit margin for the second quarter of 2025 decreased to 80% compared to 81% for the second quarter of 2024.

Operating expenses for the second quarter of 2025 decreased to $13.1 million compared to $16.8 million for the second quarter of 2024, primarily reflecting $4.9 million of lower cash compensation costs due to lower headcount, partially offset by $1.3 million of higher stock compensation costs.

Non-GAAP operating expenses for the second quarter of 2025 decreased to $8.9 million compared to $14.0 million for the second quarter of 2024.

Net loss for the second quarter of 2025 was $8.2 million or ($0.38) per share compared to $9.3 million or ($0.43) per share for the second quarter of 2024.

Non-GAAP net loss for the second quarter of 2025 was $2.3 million or ($0.11) per share compared to $4.9 million or ($0.23) per share for the second quarter of 2024.

At June 30, 2025, cash, cash equivalents and marketable securities totaled $16.1 million compared to $28.7 million at December 31, 2024. Free cash flow usage for the second quarter of 2025 decreased to $5.0 million compared to $6.9 million for the second quarter of 2024. Excluding the previously accrued severance costs of $0.9 million that were paid in the second quarter of 2025, free cash flow usage would have been $4.1 million.

Conference Call

Digimarc will hold a conference call today (Thursday, August 14, 2025) to discuss these financial results and to provide a business update. CEO Riley McCormack, CFO Charles Beck, and CLO George Karamanos will host the call starting at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). A question and answer session will follow management鈥檚 prepared remarks.

The conference call and investor presentation will be broadcast live and available for replay and in the investor section of the company鈥檚 . The conference call script and investor presentation will also be posted to the company鈥檚 website shortly before the call.

For those who wish to call in via telephone to ask a question, please dial the number below at least five minutes before the scheduled start time. We encourage you to also login to the live broadcast so you can follow along with the investor presentation.

Toll Free number: 877-407-0832

International number: 201-689-8433

Conference ID number: 13748471

About Digimarc

Digimarc Corporation (NASDAQ: DMRC) is the pioneer and global leader in digital watermarking technologies. For nearly 30 years, Digimarc innovations and intellectual property in digital watermarking have been deployed at massive scale for the identification and the authentication of physical and digital items. A notable example of this is our partnership with a consortium of the world鈥檚 central banks to deter counterfeiting of global currency. Digimarc is also instrumental in supporting global industry standards efforts spanning both the physical and digital worlds. In 2023, Digimarc was named to the Fortune 2023 Change the World list and honored as a 2023 Fast Company World Changing Ideas finalist. Learn more at Digimarc.com.

Forward-Looking Statements

Except for historical information contained in this release, the matters described in this release contain various 鈥渇orward-looking statements.鈥� These forward-looking statements include statements identified by terminology such as 鈥渨ill,鈥� 鈥渟hould,鈥� 鈥渆xpects,鈥� 鈥渆stimates,鈥� 鈥減redicts鈥� and 鈥渃ontinue鈥� or other derivations of these or other comparable terms. These forward-looking statements are statements of management鈥檚 opinion and are subject to various assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied from the statements in this release as a result of changes in economic, business and regulatory factors. More detailed information about risk factors that may affect actual results are outlined in the company鈥檚 Form 10-K for the year ended December 31, 2024, and in subsequent periodic reports filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management鈥檚 opinions only as of the date of this release. Except as required by law, Digimarc undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this release.

Non-GAAP Financial Measures

This release contains the following non-GAAP financial measures: Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, Non-GAAP loss per share (diluted), and free cash flow. See below for a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure. These non-GAAP financial measures are an important measure of our operating performance because they allow management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing non-cash and non-recurring activities that affect comparability. Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons.

Digimarc believes that providing these non-GAAP financial measures, together with the reconciliation to GAAP, helps management and investors make comparisons between us and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules. These non-GAAP financial measures are not measurements of financial performance or liquidity under GAAP. In order to facilitate a clear understanding of its consolidated historical operating results, investors should examine Digimarc鈥檚 non-GAAP financial measures in conjunction with its historical GAAP financial information, and investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, GAAP financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results.

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View source version on businesswire.com:

Company Contact:

Charles Beck

Chief Financial Officer

[email protected]

+1 503-469-4721

Source: Digimarc Corporation