Digimarc Corporation (NASDAQ: DMRC) reported financial results for the second quarter ended June 30, 2026.

“We are already starting to see early signs that our re-modeled execution focus and discipline are paying off, and the results are showing up in our pipeline across both Retail and CPG,” said Paul Carreiro, Digimarc CEO. “This is a company with world leading technology that the global Central Bank Counterfeit Deterrence Group (CBCDG) has trusted for over 25 years and with global brands as customers, and now the leadership and structure forming to scale — I’m confident this is just the beginning.”

Second Quarter 2026 Financial Results

Total revenue for the second quarter of 2026 was $7.4 million compared to $8.0 million for the second quarter of 2025.

Subscription revenue for the second quarter of 2026 was $3.7 million compared to $4.6 million for the second quarter of 2025. The decrease reflects $0.8 million of lower commercial subscription revenue from the expiration of a commercial contract in October 2025.

Service revenue for the second quarter of 2026 was $3.6 million compared to $3.4 million for the second quarter of 2025. The increase primarily reflects higher service revenue from existing commercial and government customers.

Ending ARR(1) as of June 30, 2026 was $11.6 million compared to $15.9 million as of June 30, 2025. The decrease primarily reflects the expiration of a commercial contract in October 2025 that accounted for $3.1 million of ARR and the step-down in another commercial contract in June 2026 that accounted for $2.6 million of ARR, partially offset by $1.5 million of net increases to ARR from new and existing commercial contracts.

Gross profit margin for the second quarter of 2026 was 58% compared to 59% for the second quarter of 2025. Subscription gross profit margin(2) increased to 89% from 85% and service gross profit margin(2) increased to 60% from 59% for the second quarter of 2026 compared to the second quarter of 2025.

Non-GAAP gross profit margin for the second quarter of 2026 was 83% compared to 80% for the second quarter of 2025.

Operating expenses for the second quarter of 2026 were $16.7 million compared to $13.1 million for the second quarter of 2025. The increase primarily reflects increases of stock-based compensation expense of $4.0 million and professional services costs of $0.4 million, partially offset by decreases in cash compensation of $0.3 million, software and hardware costs of $0.2 million, and other costs of $0.4 million. The $4.0 million increase in stock-based compensation expense includes $5.4 million of one-time expense related to the acceleration of unvested equity awards held by our former CEO, partially offset by $1.4 million of lower stock-based compensation expense largely due to a lower number of employee stock grants. The $0.4 million increase in professional services costs includes $0.4 million of one-time costs associated with the recent corporate reorganization. The $0.3 million decrease in cash compensation costs includes $1.0 million of lower costs largely due to lower headcount, partially offset by one-time cash severance costs of $0.7 million paid to our former CEO.

Non-GAAP operating expenses for the second quarter of 2026 were $8.1 million compared to $8.9 million for the second quarter of 2025.

Net loss for the second quarter of 2026 was $12.1 million or ($0.54) per diluted share compared to $8.2 million or ($0.38) per diluted share for the second quarter of 2025.

Non-GAAP net loss for the second quarter of 2026 was $1.7 million or ($0.08) per diluted share compared to $2.3 million or ($0.11) per diluted share for the second quarter of 2025.

At June 30, 2026, cash, cash equivalents and marketable securities totaled $8.8 million compared to $12.9 million at December 31, 2025. Free cash flow usage for the second quarter of 2026 was $1.0 million compared to $5.0 million for the second quarter of 2025.

____________________

(1)

Annual Recurring Revenue (ARR) is a company performance metric calculated as the aggregation of annualized subscription fees from all of our commercial contracts as of the measurement date.

(2)

Cost of revenue, Gross profit and Gross profit margin for Subscription and Service excludes amortization expense on acquired intangible assets.

Conference Call

Digimarc will hold a conference call today (Thursday, August 13, 2026) to discuss strategic priorities, quarterly highlights, and these financial results. CEO Paul Carreiro and CFO Charles Beck 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’s prepared remarks.

The conference call and investor presentation will be broadcast live and available for replay here and in the investor section of the company’s website. The investor presentation will also be posted to the company’s 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: 13754823

About Digimarc

Digimarc Corporation (NASDAQ: DMRC) is building the trust layer for the modern world. As AI accelerates how we produce, share, and interact with the world, the risks of fraud, counterfeiting, and misinformation are growing exponentially. Our innovative, highly scalable, and ultra-secure solutions make it possible for consumers, businesses, and intelligent systems to instantly verify what’s real, protect what matters, and transact with confidence. Digimarc’s solutions for loss prevention, authentication, and digital are built to counter the speed and sophistication of today’s AI-enabled threats. Trusted by the world’s central banks to deter the counterfeiting of global currency, we exist to protect truth in every interaction, spanning both the physical and digital worlds. Learn more at Digimarc.com.

Forward-Looking Statements

Except for historical information contained in this release, the matters described in this release contain various “forward-looking statements.” These forward-looking statements include statements identified by terminology such as “will,” “should,” “may,” “expects,” “estimates,” “predicts” and “continue” or other derivations of these or other comparable terms. These forward-looking statements are statements of management’s 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’s Form 10-K for the year ended December 31, 2025, 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’s 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 net loss per diluted share, 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’s 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.

 

Digimarc Corporation

Consolidated Statements of Operations

(in thousands, except per share amounts)

(Unaudited)

 

 

 

 

Three Months Ended

June 30,

Six Months Ended

June 30,

 

2026

2025

2026

2025

Revenue:

 

 

 

 

 

 

 

 

Subscription

$

3,742

 

$

4,624

 

$

8,110

 

$

9,938

 

Service

 

3,646

 

 

3,386

 

 

6,856

 

 

7,440

 

Total revenue

 

7,388

 

 

8,010

 

 

14,966

 

 

17,378

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription (2)

 

417

 

 

715

 

 

872

 

 

1,459

 

Service (2)

 

1,470

 

 

1,383

 

 

2,848

 

 

2,790

 

Amortization expense on acquired intangible assets

 

1,201

 

 

1,205

 

 

2,409

 

 

2,337

 

Total cost of revenue

 

3,088

 

 

3,303

 

 

6,129

 

 

6,586

 

Gross profit:

 

 

 

 

 

 

 

 

Subscription (2)

 

3,325

 

 

3,909

 

 

7,238

 

 

8,479

 

Service (2)

 

2,176

 

 

2,003

 

 

4,008

 

 

4,650

 

Amortization expense on acquired intangible assets

 

(1,201

)

 

(1,205

)

 

(2,409

)

 

(2,337

)

Total gross profit

 

4,300

 

 

4,707

 

 

8,837

 

 

10,792

 

Gross profit margin:

 

 

 

 

 

 

 

 

Subscription (2)

 

89

%

 

85

%

 

89

%

 

85

%

Service (2)

 

60

%

 

59

%

 

58

%

 

63

%

Total

 

58

%

 

59

%

 

59

%

 

62

%

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

2,414

 

 

3,231

 

 

4,496

 

 

8,309

 

Research, development and engineering

 

3,652

 

 

4,536

 

 

7,399

 

 

12,170

 

General and administrative

 

10,311

 

 

5,078

 

 

15,866

 

 

10,259

 

Amortization expense on acquired intangible assets

 

287

 

 

288

 

 

576

 

 

559

 

Total operating expenses

 

16,664

 

 

13,133

 

 

28,337

 

 

31,297

 

 

 

 

 

 

 

 

 

 

Operating loss

 

(12,364

)

 

(8,426

)

 

(19,500

)

 

(20,505

)

Other income, net

 

229

 

 

210

 

 

400

 

 

579

 

Loss before income taxes

 

(12,135

)

 

(8,216

)

 

(19,100

)

 

(19,926

)

Benefit (provision) for income taxes

 

4

 

 

(4

)

 

3

 

 

(24

)

Net loss

 

(12,131

)

 

(8,220

)

 

(19,097

)

 

(19,950

)

Net loss attributable to non-controlling interest

 

(17

)

 

–

 

 

(17

)

 

–

 

Net loss attributable to Digimarc Corporation

$

(12,114

)

$

(8,220

)

$

(19,080

)

$

(19,950

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Net loss per share attributable to Digimarc Corporation common shareholders — basic

$

(0.54

)

$

(0.38

)

$

(0.86

)

$

(0.93

)

Net loss per share attributable to Digimarc Corporation common shareholders — diluted

$

(0.54

)

$

(0.38

)

$

(0.86

)

$

(0.93

)

Weighted average shares outstanding — basic

 

22,268

 

 

21,608

 

 

22,139

 

 

21,565

 

Weighted average shares outstanding — diluted

 

22,268

 

 

21,608

 

 

22,139

 

 

21,565
 

Digimarc Corporation

Reconciliation of GAAP to Non-GAAP Financial Measures

(in thousands, except per share amounts)

(Unaudited)

 

 

 

 

 

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2026

 

2025

 

2026

 

2025

GAAP gross profit

 

$

4,300

 

 

$

4,707

 

 

$

8,837

 

 

$

10,792

 

Amortization of acquired intangible assets

 

 

1,201

 

 

 

1,205

 

 

 

2,409

 

 

 

2,337

 

Amortization and write-off of other intangible assets

 

 

206

 

 

 

219

 

 

 

414

 

 

 

438

 

Stock-based compensation

 

 

401

 

 

 

253

 

 

 

747

 

 

 

390

 

Non-GAAP gross profit

 

$

6,108

 

 

$

6,384

 

 

$

12,407

 

 

$

13,957

 

Non-GAAP gross profit margin

 

 

83

%

 

 

80

%

 

 

83

%

 

 

80

%

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating expenses

 

$

16,664

 

 

$

13,133

 

 

$

28,337

 

 

$

31,297

 

Depreciation and write-off of property and equipment

 

 

(146

)

 

 

(138

)

 

 

(300

)

 

 

(284

)

Amortization of acquired intangible assets

 

 

(287

)

 

 

(288

)

 

 

(576

)

 

 

(559

)

Amortization and write-off of other intangible assets

 

 

(99

)

 

 

(227

)

 

 

(221

)

 

 

(201

)

Amortization of lease right of use assets under operating leases

 

 

(122

)

 

 

(103

)

 

 

(240

)

 

 

(201

)

Stock-based compensation

 

 

(7,524

)

 

 

(3,518

)

 

 

(9,187

)

 

 

(4,641

)

Corporate reorganization expenses

 

 

(433

)

 

 

—

 

 

 

(1,656

)

 

 

—

 

Non-GAAP operating expenses

 

$

8,053

 

 

$

8,859

 

 

$

16,157

 

 

$

25,411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss

 

$

(12,131

)

 

$

(8,220

)

 

$

(19,097

)

 

$

(19,950

)

Total adjustments to gross profit

 

 

1,808

 

 

 

1,677

 

 

 

3,570

 

 

 

3,165

 

Total adjustments to operating expenses

 

 

8,611

 

 

 

4,274

 

 

 

12,180

 

 

 

5,886

 

Non-GAAP net loss

 

 

(1,712

)

 

 

(2,269

)

 

 

(3,347

)

 

 

(10,899

)

Non-GAAP net loss attributable to non-controlling interest

 

 

(2

)

 

 

–

 

 

 

(2

)

 

 

–

 

Non-GAAP net loss attributable to Digimarc Corporation

 

$

(1,710

)

 

$

(2,269

)

 

$

(3,345

)

 

$

(10,899

)

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net loss per diluted share

 

$

(0.54

)

 

$

(0.38

)

 

$

(0.86

)

 

$

(0.93

)

Non-GAAP net loss attributable to Digimarc Corporation

 

$

(1,710

)

 

$

(2,269

)

 

$

(3,345

)

 

$

(10,899

)

Non-GAAP net loss per diluted share attributable to Digimarc Corporation common shareholders

 

$

(0.08

)

 

$

(0.11

)

 

$

(0.15

)

 

$

(0.51

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

$

(790

)

 

$

(4,688

)

 

$

(2,637

)

 

$

(10,174

)

Purchase of property and equipment

 

 

(51

)

 

 

(198

)

 

 

(95

)

 

 

(253

)

Capitalized patent costs

 

 

(113

)

 

 

(120

)

 

 

(190

)

 

 

(208

)

Free cash flow

 

$

(954

)

 

$

(5,006

)

 

$

(2,922

)

 

$

(10,635

)
 

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)

 

 

 

 

 

 

 

June 30,

 

December 31,

 

 

2026

 

2025

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

6,932

 

 

$

9,820

 

Marketable securities

 

 

1,823

 

 

 

3,046

 

Trade accounts receivable, net

 

 

6,462

 

 

 

6,513

 

Other current assets

 

 

2,624

 

 

 

1,961

 

Total current assets

 

 

17,841

 

 

 

21,340

 

Property and equipment, net

 

 

872

 

 

 

1,104

 

Intangibles, net

 

 

13,766

 

 

 

17,045

 

Goodwill

 

 

8,937

 

 

 

9,056

 

Lease right of use assets

 

 

2,998

 

 

 

3,238

 

Other assets

 

 

1,429

 

 

 

1,175

 

Total assets

 

$

45,843

 

 

$

52,958

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and other accrued liabilities

 

$

7,850

 

 

$

4,359

 

Deferred revenue

 

 

4,613

 

 

 

3,993

 

Total current liabilities

 

 

12,463

 

 

 

8,352

 

Long-term lease liabilities

 

 

3,816

 

 

 

4,314

 

Other long-term liabilities

 

 

125

 

 

 

63

 

Total liabilities

 

 

16,404

 

 

 

12,729

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

Preferred stock

 

 

50

 

 

 

50

 

Common stock

 

 

23

 

 

 

22

 

Additional paid-in capital

 

 

433,215

 

 

 

424,665

 

Accumulated deficit

 

 

(402,167

)

 

 

(383,087

)

Accumulated other comprehensive loss

 

 

(1,809

)

 

 

(1,421

)

Total shareholders’ equity – Digimarc Corporation

 

 

29,312

 

 

 

40,229

 

Non-controlling interest

 

 

127

 

 

 

—

 

Total equity

 

 

29,439

 

 

 

40,229

 

Total liabilities and equity

 

$

45,843

 

 

$

52,958

 
 

Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)

 

 

 

 

 

Six Months Ended June 30,

 

 

2026

 

2025

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(19,097

)

 

$

(19,950

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and write-off of property and equipment

 

 

300

 

 

 

284

 

Amortization of acquired intangible assets

 

 

2,985

 

 

 

2,896

 

Amortization and write-off of other intangible assets

 

 

635

 

 

 

639

 

Amortization of lease right of use assets under operating leases

 

 

240

 

 

 

201

 

Stock-based compensation

 

 

9,934

 

 

 

5,031

 

Increase (decrease) in allowance for doubtful accounts

 

 

15

 

 

 

311

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Trade accounts receivable

 

 

84

 

 

 

(442

)

Other current assets

 

 

(857

)

 

 

1,447

 

Other assets

 

 

(456

)

 

 

(201

)

Accounts payable and other accrued liabilities

 

 

3,300

 

 

 

79

 

Deferred revenue

 

 

616

 

 

 

(71

)

Lease liability and other long-term liabilities

 

 

(336

)

 

 

(398

)

Net cash provided by (used in) operating activities

 

 

(2,637

)

 

 

(10,174

)

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of property and equipment

 

 

(95

)

 

 

(253

)

Capitalized patent costs

 

 

(190

)

 

 

(208

)

Proceeds from maturities of marketable securities

 

 

2,351

 

 

 

13,741

 

Purchases of marketable securities

 

 

(1,127

)

 

 

(3,355

)

Net cash provided by (used in) investing activities

 

 

939

 

 

 

9,925

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Issuance of common stock, net of issuance costs

 

 

262

 

 

 

—

 

Non-controlling interest capital contributions

 

 

56

 

 

 

—

 

Purchase of common stock

 

 

(1,462

)

 

 

(2,048

)

Repayment of loans

 

 

(17

)

 

 

(18

)

Net cash provided by (used in) financing activities

 

 

(1,161

)

 

 

(2,066

)

Effect of exchange rate on cash

 

 

(29

)

 

 

59

 

Net increase (decrease) in cash and cash equivalents

 

$

(2,888

)

 

$

(2,256

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash, cash equivalents and marketable securities at beginning of period

 

$

12,866

 

 

$

28,730

 

Cash, cash equivalents and marketable securities at end of period

 

 

8,755

 

 

 

16,088

 

Net increase (decrease) in cash, cash equivalents and marketable securities

 

$

(4,111

)

 

$

(12,642

)

 

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