Revenue Performance - Total revenue for the three-month period ended March 31, 2025, decreased by $0.6 million to $9.4 million compared to $9.9 million for the same period in 2024, reflecting a 6% decline [111]. - Subscription revenue decreased by $0.4 million, primarily due to the expiration of a commercial contract in June 2024, which accounted for $1.1 million, partially offset by higher revenue from new and existing contracts [111][118]. - Service revenue decreased by $0.1 million, mainly due to lower government service revenue from Central Banks, offset by higher commercial service revenue related to HolyGrail 2.0 recycling projects [111][120]. - Domestic revenue decreased by $0.7 million to $2.1 million, primarily due to lower subscription revenue from the expiration of a commercial contract [121][122]. - International revenue increased by $0.2 million to $7.2 million, driven by higher commercial service and subscription revenue from HolyGrail 2.0 projects and international customers [121][123]. - Total revenue for the three months ended March 31, 2025, was $9,368 million, a decrease of $570 million or 6% compared to $9,938 million in the same period of 2024 [124]. - Commercial revenue increased by $91 million or 2% to $5,810 million, driven by a $539 million increase in service revenue, while subscription revenue decreased by $448 million or 8% [124][125]. - Government revenue decreased by $661 million or 16% to $3,558 million, primarily due to a $661 million decline in service revenue attributed to a smaller approved budget for program work in 2025 [124][126]. - Annual Recurring Revenue (ARR) decreased by $3,932 million or 16% to $19,973 million, reflecting a $5,800 million decrease from the expiration of a commercial contract [127]. Operating Expenses - Total operating expenses increased by $1.1 million to $18.2 million for the three-month period ended March 31, 2025, primarily due to $3.2 million in higher cash severance costs from a reorganization [114]. - Sales and marketing expenses decreased by $458 million or 8% to $5,078 million, representing 54% of total revenue [134]. - Research, development, and engineering expenses increased by $893 million or 13% to $7,634 million, accounting for 81% of total revenue [134]. - General and administrative expenses increased by $661 million or 15% to $5,181 million, representing 55% of total revenue [137]. - Non-GAAP operating expenses increased by $2.7 million to $16.467 million for the three months ended March 31, 2025, primarily due to higher severance and professional services costs [154]. Profitability Metrics - The gross profit margin improved to 65% in Q1 2025 from 63% in Q1 2024, despite a decrease in total revenue [110]. - Gross profit for the three months ended March 31, 2025, was $6,085 million, a decrease of $127 million or 2% compared to $6,212 million in 2024 [129][130]. - Subscription gross profit margin decreased to 86% from 87%, while service gross profit margin increased to 65% from 56% [129][131][132]. - Non-GAAP gross profit for the three months ended March 31, 2025, decreased by $0.3 million to $7.488 million compared to $7.743 million for the same period in 2024 [152]. - Non-GAAP gross profit margin increased to 80% for the three months ended March 31, 2025, compared to 78% for the same period in 2024 [153]. Cash Flow and Financial Position - Cash, cash equivalents, and short-term marketable securities decreased by $7.2 million to $21.567 million as of March 31, 2025, from $28.730 million as of December 31, 2024 [155]. - Net cash used in operating activities decreased by $2.9 million to $5.486 million for the three months ended March 31, 2025, compared to $8.422 million for the same period in 2024 [159]. - The company raised $32.5 million in gross cash proceeds from a registered direct stock offering in February 2024 [166]. - As of March 31, 2025, $67.5 million remained available under the new shelf registration statement filed on June 23, 2023 [167]. - Future cash expectations indicate that current balances will satisfy projected working capital and capital expenditure requirements for at least the next 12 months [163]. Future Outlook - The company expects subscription revenue in fiscal 2025 to be negatively impacted by the termination of a contract that contributed $3.3 million in 2024, with an expected contribution of $1.1 million in 2025 [112][113]. - The company anticipates government service revenue in fiscal 2025 to be $1.7 million to $2.0 million lower than in fiscal 2024 due to a smaller approved budget [113]. - Projected annualized cash expense reductions of approximately $16.5 million due to a recent reorganization [165]. - The company anticipates expense reductions resulting from a recent reorganization [170]. - The company expects to see impacts from accounting pronouncements that have been issued but not yet adopted [170]. Strategic Initiatives - The company has identified approximately $5.5 million in annualized cash cost savings as part of its reorganization efforts [115]. - The company believes it has one of the world's most extensive patent portfolios in digital watermarking and related fields [170].

Financial Data and Key Metrics Changes - Ending Annual Recurring Revenue (ARR) for Q1 was $20 million compared to $23.9 million for Q1 last year, representing a year-on-year decline [16] - Total revenue was $9.4 million, a decrease of $600,000 or 6% from $9.9 million in Q1 last year [18] - Subscription revenue accounted for 57% of total revenue for the quarter, decreasing 8% from $5.8 million to $5.3 million [18] - Free cash flow usage decreased from $8.6 million in Q1 last year to $5.6 million in Q1 this year [22] Business Line Data and Key Metrics Changes - Subscription revenue would have increased by $600,000 or 13% excluding the impact of an expired commercial contract [18] - Service revenue decreased 3% from $4.2 million to $4.1 million, reflecting lower government service revenue [18] - Subscription gross profit margin was 86% for the quarter, down one percentage point from Q1 last year [20] Market Data and Key Metrics Changes - The company expects the first gift cards protected with their solution to appear on shelves within the next month, indicating a significant market opportunity [9] - The company is beginning to work with partners to explore opportunities in multiple large geographies beyond the US market for their gift card solution [10] Company Strategy and Development Direction - The company has narrowed its focus to three specific opportunity sets: retail loss prevention, physical authentication, and digital authentication [5] - The company aims to achieve sustainable free cash flow generation for the first time in over twelve years and expects significant top-line growth in 2026 and beyond [8] - The company is strategically price aggressive on renewals outside its current focus areas to maintain market presence [16][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for revenue growth from the gift card opportunities, emphasizing the importance of catalyzing adoption this year [31] - The company anticipates higher cash flow usage in Q2 due to increased legal and public relations costs but expects normalized cash flow usage to decrease thereafter [23] - Management highlighted the importance of executing well in Belgium to prove the value of their technology and drive adoption [43] Other Important Information - The company has formed a partnership with a supplier to enhance its loyalty and reward offerings [12] - The company was selected by Unilever as their digital link vendor of choice, indicating a strong market position [14] Q&A Session Summary Question: What is the potential for revenue and ARR from the gift card opportunities? - Management expects gift cards to be a significant driver of 2025 ARR growth and is focused on catalyzing adoption this year [31][32] Question: Are price-sensitive renewals impacting ARR growth? - Management indicated that while there is some impact from price-sensitive renewals, it is not material enough to break down ARR in detail [35][36] Question: Can you provide initial proof points regarding the deal in Belgium? - Management noted that it has only been a couple of months since the signing, but there is potential upside as the initiative progresses [39] Question: How should investors think about ARR trajectory by year-end? - Management reiterated the goal of achieving non-GAAP profitability by Q4 and highlighted the gift card initiative as a significant driver for ARR [48][49]

Financial Data and Key Metrics Changes - Ending Annual Recurring Revenue (ARR) for Q1 was $20 million compared to $23.9 million for Q1 last year, representing a year-on-year decline of 16% [15] - Total revenue was $9.4 million, a decrease of $600,000 or 6% from $9.9 million in Q1 last year [16] - Subscription revenue accounted for 57% of total revenue for the quarter, decreasing 8% from $5.8 million to $5.3 million [16] - Free cash flow usage decreased from $8.6 million in Q1 last year to $5.6 million in Q1 this year [20] Business Line Data and Key Metrics Changes - Subscription revenue would have increased by $600,000 or 13% if excluding the impact of an expired commercial contract [16] - Service revenue decreased 3% from $4.2 million to $4.1 million, reflecting lower government service revenue [16] - Subscription gross profit margin was 86% for the quarter, down one percentage point from Q1 last year [18] Market Data and Key Metrics Changes - The company expects to see higher cash flow usage in Q2 due to increased legal and public relations costs [21] - Government service revenue was down 17%, reflecting a lower annual program budget [17] Company Strategy and Development Direction - The company has narrowed its focus to three specific opportunity sets: retail loss prevention, physical authentication, and digital authentication [4] - The company aims to achieve sustainable free cash flow generation for the first time in over twelve years and expects significant top-line growth in 2026 and beyond [7] - The company is positioned to benefit from historical work outside its current focus areas while tightening its go-to-market strategy [7] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for revenue growth from gift card solutions, expecting it to be a significant driver of 2025 ARR [28] - The company is focused on optimizing long-term decisions rather than short-term gains, particularly in digital authentication [12] - Management highlighted the importance of executing well in Belgium to prove the value of their technology and drive adoption [40] Other Important Information - The company has formed partnerships with major clients, including Unilever, to enhance its digital link offerings [13] - The company anticipates that subscription gross margins may be lower in the next couple of quarters due to ongoing consolidation of legacy platforms [18] Q&A Session Summary Question: What is the potential for revenue and ARR from gift card opportunities in 2025? - Management expects gift cards to be a significant driver of 2025 ARR growth and is focused on catalyzing adoption this year [28] Question: Are price-sensitive renewals impacting ARR growth in Q1 and Q2? - Management indicated that while there is some impact from price-sensitive renewals, it is not material enough to call out specifically [32] Question: Can you provide initial proof points regarding the deal in Belgium? - Management noted that the initiative is still in early stages, but there is potential upside as it moves forward [36] Question: How should investors think about ARR trajectory by year-end? - Management reiterated the goal of achieving non-GAAP profitability by Q4 and highlighted gift cards as a significant driver for ARR [45] Question: What is the total addressable market (TAM) for gift cards? - Management estimates the U.S. market for gift cards to be between $900 million and $1.5 billion, with growth vectors including pricing strategies and new features [47]

Exhibit 99.1 Digimarc Reports First Quarter 2025 Financial Results Beaverton, Ore. – May 5, 2025 – Digimarc Corporation (NASDAQ: DMRC) reported financial results for the first quarter ended March 31, 2025. "Q1 results came in above our internal plan," said Digimarc CEO Riley McCormack. "While early, we are demonstrating that we can drive results in our much tighter focus areas while still positioning ourselves to benefit from our historical work outside these specific areas. We are excited to continue to ex ...

Core Viewpoint - Ocho Investments LLC, which holds 5.2% of Digimarc Corporation's stock, is urging shareholders to vote "WITHHOLD" on CEO Riley McCormack and Chair Kathleen Kool, and to "VOTE NO" on the company's say-on-pay proposal at the upcoming Annual Meeting on May 7, 2025 [1][2]. Group 1: Reasons for Voting Recommendations - Ocho believes shareholders deserve an experienced CEO who can deliver tangible results and communicate transparently [2]. - The company should implement fair compensation practices that align management performance with shareholder value [2]. - A strong and capable Chair is necessary to effectively oversee the Board, which is currently lacking [2]. Group 2: Performance Critique - McCormack's four-year tenure has seen a 60% decline in stock price, no growth in revenue per share, and declining net Annual Recurring Revenue (ARR) [6]. - The company has faced continued operating losses and has had to reduce investments in employees and the business [6]. - There has been a loss of credibility with investors due to a lack of transparent communication from management [6]. Group 3: Say-on-Pay Concerns - Ocho criticizes the incentive plan for misaligning management interests with those of shareholders, particularly due to a change in compensation metrics shortly before the loss of a major commercial contract [6]. - This change allowed executives to receive nearly four times the payout under the new plan compared to the previous one, despite poor company performance [6]. Group 4: Chair's Performance - Kathleen Kool, as Chair of the Compensation Committee, is criticized for not addressing the significant loss in shareholder value and the CEO's poor performance [6]. - Kool has not been willing to meet with large shareholders unless they communicate publicly, which raises concerns about her commitment to shareholder interests [6]. - She opted to receive her annual retainer in cash rather than stock, indicating a lack of confidence in the company's future [6].

Digimarc Corporation (NASDAQ:DMRC) Class Period: November 7, 2024 - March 2, 2025 The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that significant non-performing loans in its CRE portfolio were not likely to be collectible; (2) that Ready Cap ...

Calls for Hiring a New CEO and Offers Various Forms of Possible Support AUSTIN, Texas, April 15, 2025 /PRNewswire/ -- Ocho Investments LLC ("Ocho"), which owns 5.2% of the stock of Digimarc Corporation (Nasdaq: DMRC) ("Digimarc" or the "Company"), today published its recent presentation to the independent Directors of the Board of the Company. Ocho is a family office that invests in public and private companies across a wide variety of industries. Our level of involvement varies from passive investments to ...

Core Points - A class action lawsuit has been filed against Digimarc Corporation for failing to disclose significant information regarding a large commercial contract during the Class Period from May 2, 2024, to February 26, 2025 [1][4] - Digimarc reported a 10% decrease in quarterly subscription revenue to $5.0 million and a decline in annual recurring revenue to $20.0 million, primarily due to the expiration of a commercial contract [3] - Following the financial results announcement, Digimarc's share price dropped by approximately 43%, from $27.04 to $15.39 [3] Financial Performance - The fourth quarter and full year 2024 results showed a quarterly subscription revenue decrease of 10% to $5.0 million compared to $5.6 million the previous year [3] - Annual recurring revenue fell to $20.0 million from $22.23 million in the previous year, attributed to a $5.8 million decrease due to a contract expiration [3] Legal Proceedings - Investors have until May 9, 2025, to apply to be appointed as lead plaintiff in the class action lawsuit [1] - The lawsuit alleges that Digimarc did not disclose the non-renewal of a significant contract and the subsequent impact on subscription and annual recurring revenue [4]

NEW YORK, March 25, 2025 (GLOBE NEWSWIRE) -- The law firm of Kirby McInerney LLP reminds investors that a class action lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of those who acquired Digimarc Corporation (“Digimarc” or the “Company”) (NASDAQ:DMRC) securities during the period from May 2, 2024, through February 26, 2025 (“the Class Period”). Investors have until May 9, 2025, to apply to the Court to be appointed as lead plaintiff in the lawsuit. [LEARN ...

NEW YORK, March 21, 2025 /PRNewswire/ -- Levi & Korsinsky, LLP notifies investors in Digimarc Corporation ("Digimarc" or the "Company") (NASDAQ: DMRC) of a class action securities lawsuit.CLASS DEFINITION: The lawsuit seeks to recover losses on behalf of Digimarc investors who were adversely affected by alleged securities fraud between May 2, 2024 and February 26, 2025. Follow the link below to get more information and be contacted by a member of our team:https://zlk.com/pslra-1/digimarc-corporation-lawsuit ...