Article contentBEAVERTON, Ore. — Digimarc Corporation (NASDAQ: DMRC), a leading provider of digital identity and authentication technologies, and Honeywell (NASDAQ: HON) have teamed up to help retailers and brands fight gift card fraud. The global gift card market was valued at $1.24 trillion in 2024 and is expected to reach $2.31 trillion by 2030, making it a growing target for bad actors.1 Gift card fraud losses grew 364% from 2018 to 2021 and continue to increase year over year.2 With 23% of consumers in ...

Revenue Performance - Total revenue for the three months ended September 30, 2025, decreased by $1.8 million to $7.6 million, compared to $9.4 million for the same period in 2024, representing a 19% decline [124]. - Subscription revenue for the three months ended September 30, 2025, decreased by $0.7 million, primarily due to a $0.8 million decrease from the expiration of a commercial contract in April 2025 [131]. - Service revenue for the three months ended September 30, 2025, decreased by $1.1 million, reflecting $0.7 million lower government service revenue from Central Banks and $0.4 million lower commercial service revenue [124]. - Total revenue for the nine months ended September 30, 2025, decreased by $4.8 million to $25.0 million, compared to $29.8 million for the same period in 2024, a 16% decrease [125]. - Subscription revenue for the nine months ended September 30, 2025, decreased by $2.9 million, primarily due to a $3.5 million decrease from the expiration of commercial contracts [132]. - Total revenue decreased by $1.8 million (19%) for the three months ended September 30, 2025, with domestic revenue increasing by $0.3 million (15%) and international revenue decreasing by $2.1 million (28%) [136]. - Annual Recurring Revenue (ARR) decreased by $2.9 million (15%) from September 30, 2024, to September 30, 2025, reflecting the expiration of a commercial contract that accounted for $3.5 million of ARR [145]. - Commercial subscription revenue decreased by $0.7 million (14%) for the nine months ended September 30, 2025, compared to the same period in 2024 [141]. - Government service revenue decreased by $1.9 million (20%) for the three months ended September 30, 2025, primarily due to lower revenue from Central Banks [144]. Operating Expenses - Total operating expenses for the three months ended September 30, 2025, decreased by $4.5 million to $12.8 million, compared to $17.3 million for the same period in 2024 [127]. - Total operating expenses for the nine months ended September 30, 2025, decreased by $7.1 million to $44.1 million, compared to $51.2 million for the same period in 2024 [128]. - The company anticipates expenses in fiscal 2025 to be significantly lower than in fiscal 2024, with cash expenses reduced by approximately $16.5 million on an annualized basis due to a reorganization [126]. - Sales and marketing expenses decreased by $2.8 million (49%) for the three months ended September 30, 2025, compared to the same period in 2024, representing 37% of total revenue [156]. - Sales and marketing expenses decreased by $2.8 million for the three months ended September 30, 2025, and by $5.6 million for the nine months ended September 30, 2025, compared to the same periods in 2024 [157]. - Research, development, and engineering expenses decreased by $2.2 million (33%) for the three months and by $3.4 million (17%) for the nine months ended September 30, 2025, compared to the same periods in 2024 [161]. - General and administrative expenses increased by $0.5 million (10%) for the three months and by $1.9 million (14%) for the nine months ended September 30, 2025, compared to the same periods in 2024 [164]. - Stock-based compensation expense increased by $1.2 million (43%) for the three months and by $1.0 million (12%) for the nine months ended September 30, 2025, compared to the same periods in 2024 [166]. - Cash compensation costs decreased by $2.5 million for the three months and by $5.4 million for the nine months ended September 30, 2025, largely due to lower headcount [158]. Profitability Metrics - Gross profit decreased by $1.5 million (25%) for the three months ended September 30, 2025, primarily due to lower revenue, partially offset by lower cost of service revenue [150]. - Total gross profit margin decreased from 62% in 2024 to 58% in 2025 for the three months ended September 30 [149]. - Non-GAAP gross profit for Q3 2025 decreased by $1.2 million to $6.213 billion compared to Q3 2024, primarily due to lower revenue [182]. - Non-GAAP gross profit margin for Q3 2025 increased to 81% from 79% in Q3 2024, reflecting a more favorable mix of service revenue [183]. - Non-GAAP operating expenses for Q3 2025 decreased by $5.5 million to $8.611 billion compared to Q3 2024, mainly due to lower cash compensation costs [185]. - Non-GAAP net loss for Q3 2025 was $2.186 billion, a decrease from $6.040 billion in Q3 2024 [181]. Cash Flow and Financial Position - Cash used in operating activities for the nine months ended September 30, 2025, decreased by $9.6 million to $12.770 billion compared to the same period in 2024 [191]. - Working capital as of September 30, 2025, was $12.319 billion, down from $30.193 billion at December 31, 2024 [187]. - Cash, cash equivalents, and short-term marketable securities decreased by $16.2 million to $12.562 billion from December 31, 2024 [188]. Future Outlook and Financing - The company expects government service revenue in fiscal 2025 to be $1.7 million to $1.8 million lower than in fiscal 2024 due to a smaller approved budget by Central Banks [123]. - The reorganization announced on February 26, 2025, is expected to reduce cash expenses by approximately $16.5 million on an annualized basis [199]. - The company may seek additional financing to support growth initiatives and fund acquisitions, although future financing may not be available on satisfactory terms [204]. - Forward-looking statements indicate expectations regarding future revenue trends and anticipated expenses, which are subject to uncertainties [205]. - The company does not undertake any obligation to publicly update or revise forward-looking statements after the filing date of the Quarterly Report [207]. Stock and Securities - The company issued 929 thousand shares of common stock at $35.00 per share, resulting in gross cash proceeds of $32.5 million from the registered direct offering [200]. - The 2025 Employee Stock Purchase Plan allows eligible employees to contribute up to 15% of their salary for purchasing common stock at a discounted price, with 250 thousand shares reserved for this plan [201]. - An amendment to the 2018 Stock Incentive Plan was approved, increasing the number of shares authorized for issuance by 950 thousand shares [202]. - A new shelf registration statement was filed, allowing the company to sell securities up to $100.0 million, with $67.5 million remaining available as of September 30, 2025 [203].

Core Insights - BERO Brewing has partnered with Digimarc Corporation to launch a unique loyalty program aimed at enhancing customer engagement and retention [1] Company Overview - BERO Brewing is recognized as a leading premium non-alcoholic beer brand [1] - Digimarc Corporation specializes in digital identity and authentication solutions [1] Partnership Details - The collaboration focuses on creating a seamless and fraud-resistant rewards experience for consumers [1] - This initiative is expected to deepen brand-consumer connections and drive long-term growth for BERO Brewing [1]

Group 1 - The article does not provide any specific content related to a company or industry [1]

Financial Data and Key Metrics Changes - Ending ARR for Q3 was $15.8 million compared to $18.7 million for Q3 last year, reflecting a decrease due to the DRS contract lapse [20] - Total revenue was $7.6 million, a decrease of $1.8 million, or 19%, from $9.4 million in Q3 last year [21] - Subscription revenue accounted for 60% of total revenue for the quarter, decreasing 13% from $5.3 million to $4.6 million [21] - Operating expenses were $12.8 million for the quarter, down $4.5 million, or 26%, from $17.3 million in Q3 last year [22] - Free cash flow usage was down from $7.3 million in Q3 last year to $3.1 million in Q3 this year, a decrease of 58% [24] Business Line Data and Key Metrics Changes - Significant progress was made in advancing the gift card solution and product authentication space, including upsell opportunities and a paid pilot with a major pharmaceutical company [4][14] - The company launched a new digitized security label solution to replace low-value holograms, enhancing product authentication capabilities [5][16] - The focus areas include retail loss prevention, product authentication, and digital authentication, with expectations for growth in these segments [6][19] Market Data and Key Metrics Changes - The global gift card industry is estimated to represent approximately $1 trillion of stored value, with increasing fraud impacting growth [8] - The company is positioned to help the gift card industry re-accelerate its growth by reducing fraud and improving marketing and merchandising [9] Company Strategy and Development Direction - The company aims to deliver positive free cash flow and positive non-GAAP net income in Q4 2025 while investing in growth areas [5][24] - The strategic focus is on scalable and repeatable business models, particularly in retail loss prevention and digital authentication [19] - The company is building a trust layer for the modern world, addressing the growing need for authenticity in both physical and digital interactions [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to re-accelerate ARR growth in 2026, driven by increased penetration of the gift card solution and growth in digital authentication [20] - The company remains focused on optimizing long-term potential rather than short-term revenue, particularly in the digital authentication space [17][31] Other Important Information - The company expects to rebuild its cash balance via operating cash flow throughout 2026 [24] - The reorganization has led to a meaningful reduction in operating expenses and cash usage [5][23] Q&A Session Summary Question: Update on Holy Grail - The company is progressing with recycling opportunities in Belgium and Germany, with Belgium being a full-country pilot [27] Question: Impact of retailer contract renegotiation - The company still maintains a relationship with the retailer, but the prior contract has led to a significant downsell [28] Question: Thoughts on California AI-related law - The law did not include digital watermarking language, and the company believes it does not go far enough in addressing trust and authenticity [29][30] Question: Ramp-up of retailers using Digimarc protected cards - The ramp-up will involve winning more partners, adding retailers, and expanding geographies [33] Question: Changes in Sales organization - There have been no personnel changes in the sales organization, and the team continues to move forward with their roles [34]

Investor Presentation Third Quarter 2025 October 30, 2025 1 Safe Harbor Statement This presentation includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, which reflect management's current view regarding future events and performance. Although we believe these statements are based on reasonable expectations and beliefs, they are subject to risks and uncertainties that are difficul ...

Revenue Performance - Subscription revenue for Q3 2025 decreased to $4.6 million, down from $5.3 million in Q3 2024, primarily due to the expiration of a commercial contract contributing $0.8 million [3]. - Service revenue for Q3 2025 decreased to $3.1 million from $4.2 million in Q3 2024, reflecting a $0.7 million decline in government service revenue and a $0.4 million decrease in commercial service revenue [4]. - Total revenue for Q3 2025 was $7.6 million, a decrease from $9.4 million in Q3 2024 [4]. - Annual recurring revenue (ARR) as of September 30, 2025, was $15.8 million, down from $18.7 million as of September 30, 2024, primarily due to the expiration of a commercial contract worth $3.5 million [5]. Profitability Metrics - Gross profit margin for Q3 2025 decreased to 58% from 62% in Q3 2024, with subscription gross profit margin remaining flat at 86% [6]. - GAAP gross profit for Q3 2025 was $4,446 million, down from $5,897 million in Q3 2024, representing a decrease of 24.6% [20]. - Non-GAAP gross profit margin improved to 81% in Q3 2025 compared to 79% in Q3 2024 [20]. - Net loss for Q3 2025 was $8.2 million, or ($0.38) per share, compared to a net loss of $10.8 million, or ($0.50) per share, in Q3 2024 [8]. - GAAP net loss for the nine months ended September 30, 2025, was $28,102 million, a slight improvement from a loss of $30,362 million in the same period of 2024 [24]. - Non-GAAP net loss for the nine months ended September 30, 2025, was $13,085 million, compared to $16,524 million in the same period of 2024, indicating a reduction of 20.5% [20]. - The company reported a GAAP loss per share (diluted) of $(1.30) for the nine months ended September 30, 2025, compared to $(1.43) for the same period in 2024 [20]. Cash Flow and Expenses - Operating expenses for Q3 2025 decreased to $12.8 million from $17.3 million in Q3 2024, mainly due to a $5.4 million reduction in cash compensation costs [7]. - Free cash flow usage for Q3 2025 decreased to $3.1 million from $7.3 million in Q3 2024 [9]. - Free cash flow for the nine months ended September 30, 2025, was $(13,709) million, compared to $(22,849) million in the same period of 2024 [24]. Assets and Liabilities - Total current assets decreased to $21,756 million as of September 30, 2025, from $39,331 million at December 31, 2024 [22]. - Cash and cash equivalents, along with marketable securities, totaled $12,562 million at the end of Q3 2025, down from $33,686 million at the end of Q3 2024 [24]. - Total liabilities decreased slightly to $14,048 million as of September 30, 2025, from $14,407 million at December 31, 2024 [22]. - Stock-based compensation increased to $8,896 million for the nine months ended September 30, 2025, compared to $7,939 million in the same period of 2024 [24]. Strategic Initiatives - The company launched a new digitized security label solution aimed at replacing low-value holograms and signed a pilot with a major pharmaceutical company for product authentication [2]. - Digimarc is positioning itself to capitalize on the digital authentication market in 2026 and beyond, with a growing pipeline of opportunities [2].

Group 1 - Digimarc Corporation has launched digitally watermarked security labels aimed at combating product counterfeiting and restoring consumer trust [1][3] - The new labels utilize advanced encrypted, covert, and highly copy-resistant watermarks that are optimized for various label material substrates [2] - The security labels offer an affordable and scalable method of authentication, supporting both single and two-factor authentication options [3] Group 2 - The labels can be scanned with a mobile device, either through an app or without one, enhancing accessibility for consumers [2] - Digimarc Corporation operates in the digital watermarking solutions sector, both in the US and internationally [4] - While Digimarc shows potential as an investment, there are other AI stocks that may offer greater upside potential and less downside risk [4]

Core Points - A lawsuit is currently pending for investors in Digimarc Corporation (NASDAQ: DMRC) regarding alleged securities law violations [2][3] - The lawsuit claims that Digimarc failed to disclose that a major commercial partner would not renew a significant contract on the same terms, which would negatively impact the company's subscription and annual recurring revenue [2] - The court has appointed a lead plaintiff for the case as of September 2, 2025 [3] Summary by Sections Lawsuit Details - Investors who purchased shares of Digimarc prior to May 2024 and continue to hold those shares have options to pursue [1] - The plaintiff alleges that the company's positive statements about its business and prospects were materially misleading due to undisclosed contract renegotiations [2] Legal Representation - The Shareholders Foundation, Inc. is facilitating communication for affected investors and is not a law firm [3]

Core Insights - Digimarc Corporation has launched digitally watermarked security labels aimed at providing 100% verifiable product authentication [1] - These labels utilize advanced encrypted, covert, and highly copy-resistant watermarks optimized for various label material substrates [1] - The new labels can be integrated with QR codes to facilitate low-friction, two-step consumer interaction [1]