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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on DMRC

Digimarc Corporation faces a challenging environment, marked by a class action lawsuit filed against the company and certain of its officers, alleging violations of federal securities laws. The lawsuit, filed on behalf of investors who purchased shares between May 3, 2024, and February 26, 2025, seeks to recover damages. This development has likely contributed to investor uncertainty. Additionally, the company's recent earnings release has not provided sufficient information to alleviate concerns. With a July 8, 2025, lead plaintiff deadline approaching, investors are advised to secure counsel. (Source: Rosen Law Firm)

1.c. Company Highlights

2. Digimarc's Q3 2025 Earnings: A Mixed Bag

Digimarc Corporation reported total revenue of $7.6 million for Q3 2025, a decrease of 19% from $9.4 million in the same quarter last year. The decline was largely attributed to the lapsed DRS contract, which had a significant impact on the company's service revenue. Subscription revenue decreased 13% to $4.6 million, while service revenue dropped 27% to $3.1 million. The company's net loss per share was $0.38, and non-GAAP net loss per share was $0.10, missing analyst estimates of $-0.015. The actual EPS came out at '-0.1'.

Publication Date: Nov -20

📋 Highlights
  • Ending ARR Decline: Ended Q3 with $15.8M ARR, down $2.9M YoY due to lapsed DRS contract, but grew $600K YoY excluding this headwind.
  • Total Revenue Drop: Revenue fell 19% to $7.6M, driven by 13% drop in subscription revenue ($4.6M) and 27% decline in service revenue ($3.1M).
  • Operating Expense Reduction: Operating expenses decreased 26% to $12.8M, with non-GAAP expenses down 39% to $8.6M, reflecting cost discipline.
  • Free Cash Flow Improvement: Free cash flow usage reduced to $3.1M (vs $7.3M in Q3 2024), despite investing in growth areas like retail loss prevention.

Operational Efficiency and Expenses

The company reported operating expenses of $12.8 million, down 26% from Q3 last year, and non-GAAP expenses of $8.6 million, down 39% from the same period last year. This reduction in expenses was a positive note, indicating the company's efforts to optimize its operations. The company's free cash flow usage was $3.1 million, a significant improvement from $7.3 million in Q3 last year.

Progress in Key Initiatives

Despite the revenue decline, Digimarc made significant progress in advancing its gift card solution, closing multiple upsell opportunities in product authentication, and launching a new digitized security label solution. The company is also progressing with pilots in Belgium and Germany for its HolyGrail recycling initiative. As noted by Riley McCormack, the company is focused on delivering a future where humans and intelligent systems can verify what's real, protect what matters, and move forward with confidence.

Valuation and Outlook

Digimarc's current valuation metrics indicate a mixed picture. The company's P/S Ratio is 4.44, and EV/EBITDA is -4.71, suggesting that the market is pricing in some level of growth. Analysts estimate next year's revenue growth at 7.6%. With a current P/E Ratio of -4.07 and ROE of -73.78%, the company's profitability is a concern. However, the company's efforts to reduce expenses and improve operational efficiency are positive steps.

Future Prospects

The company remains on track to deliver positive non-GAAP net income in Q4 2025 and positive free cash flow. With a strong cash position of $12.6 million and ongoing investments in retail loss prevention and digital authentication, Digimarc is poised for growth. The company's focus on expanding its gift card solution and digital authentication capabilities is expected to drive future revenue growth.

3. NewsRoom

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Digimarc and Zebra Technologies Team Up to Dramatically Reduce Gift Card Fraud and Improve the Shopping Experience

Dec -04

Source: businesswire.com

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Digimarc and Honeywell Partner to Combat Gift Card Fraud and Streamline the Checkout Experience

Nov -24

Source: businesswire.com

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BERO Brewing Delivers Omnichannel Customer Loyalty Experience with Digimarc's Connected Packaging

Nov -11

Source: businesswire.com

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Digimarc Corporation (DMRC) Q3 2025 Earnings Call Transcript

Oct -31

Source: seekingalpha.com

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Digimarc Sets Third Quarter 2025 Conference Call for Thursday, October 30th

Oct -16

Source: businesswire.com

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NASDAQ: DMRC Lawsuit Update: Investors Digimarc Corporation (NASDAQ: DMRC) shares should contact the Shareholders Foundation in connection with pending Lawsuit

Sep -23

Source: prnewswire.com

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Digimarc Unveils Digitized Security Labels to Help Brands Prevent Product Counterfeiting and Restore Consumer Trust

Sep -17

Source: businesswire.com

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Digimarc Corporation (DMRC) Q2 2025 Earnings Call Transcript

Aug -15

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.69%)

6. Segments

Subscription

Expected Growth: 11.7%

The 11.7% growth in subscription from Digimarc Corporation is driven by increasing adoption of digital watermarking technology, rising demand for brand protection and product authentication, and expansion into new markets such as retail and healthcare. Additionally, strategic partnerships and investments in AI-powered solutions have enhanced the company's offerings, contributing to the growth.

Service

Expected Growth: 9.48%

Digimarc's 9.48% growth driven by increasing adoption of digital watermarking in retail and consumer goods, rising demand for product authentication and traceability, and expansion into new markets such as food and beverage, and pharmaceuticals, fueled by strategic partnerships and innovative solutions.

7. Detailed Products

Digimarc Barcode

A proprietary barcode that can be read by smartphones, providing a seamless way to connect consumers with additional content, offers, and information.

Digimarc Discover

A mobile app that enables consumers to discover more about the products they buy, using their smartphone camera to scan Digimarc Barcodes.

Digimarc Guardian

A suite of software and services that helps brand owners and manufacturers to track and trace their products throughout the supply chain.

Digimarc Image Bridge

A platform that enables brands to connect with consumers through interactive images, providing a seamless way to access additional content and offers.

8. Digimarc Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Digimarc Corporation is medium due to the presence of alternative technologies and products in the market.

Bargaining Power Of Customers

The bargaining power of customers for Digimarc Corporation is low due to the company's strong brand reputation and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Digimarc Corporation is medium due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for Digimarc Corporation is high due to the low barriers to entry in the technology industry.

Intensity Of Rivalry

The intensity of rivalry for Digimarc Corporation is high due to the presence of strong competitors in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 9.60%
Debt Cost 3.95%
Equity Weight 90.40%
Equity Cost 9.81%
WACC 9.25%
Leverage 10.62%

11. Quality Control: Digimarc Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Cantaloupe

A-Score: 5.2/10

Value: 3.3

Growth: 8.7

Quality: 7.1

Yield: 0.0

Momentum: 7.0

Volatility: 5.0

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Innodata

A-Score: 4.7/10

Value: 0.0

Growth: 9.3

Quality: 8.1

Yield: 0.0

Momentum: 10.0

Volatility: 0.7

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NCR Voyix

A-Score: 4.3/10

Value: 8.1

Growth: 3.0

Quality: 6.4

Yield: 0.0

Momentum: 4.0

Volatility: 4.7

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Castellum

A-Score: 3.9/10

Value: 7.6

Growth: 6.0

Quality: 4.1

Yield: 0.0

Momentum: 5.0

Volatility: 0.7

1-Year Total Return ->

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FiscalNote Holdings

A-Score: 3.6/10

Value: 9.6

Growth: 6.8

Quality: 4.3

Yield: 0.0

Momentum: 0.0

Volatility: 0.7

1-Year Total Return ->

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Stock-Card
Digimarc

A-Score: 2.8/10

Value: 6.8

Growth: 3.8

Quality: 4.5

Yield: 0.0

Momentum: 0.0

Volatility: 1.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.91$

Current Price

8.91$

Potential

-0.00%

Expected Cash-Flows