Core Insights - Digimarc is advancing its Secure Gift Card initiative, expecting rollouts in spring and summer 2024, with plans for further expansion by holiday 2026 [1][6][18] - The company reported positive financial results, including non-GAAP profitability and positive free cash flow, despite a decline in annual recurring revenue (ARR) due to lost contracts [3][5][17] Rollout Expectations - All Schnucks locations are expected to carry Digimarc-secured gift cards in spring 2024, with approximately 600 stores of a major U.S. retailer to follow in summer 2024 [1][6] - Digimarc is in planning stages with six additional retailers, including three of the largest in North America [1] Fraud Prevention and Market Opportunity - Retailers are increasingly seeking solutions to combat gift card fraud, which is seen as a significant threat to the industry [2] - The Secure Gift Card solution has shown strong fraud reduction and improved checkout experiences, positioning it as a key opportunity for retail loss prevention [2] Financial Performance - Q4 results showed ARR fell to $13.7 million from $20.0 million due to two lost contracts, but excluding these, ARR increased by $0.4 million [5][13] - Total revenue for the quarter was $8.9 million, with a 60% subscription mix and a 90% subscription gross margin [5][14] Product Authentication and Digital Trust - Digimarc continues to grow in product authentication, with ARR from anti-counterfeiting solutions increasing due to upsells and new applications [4][8] - The company is also focusing on digital trust and integrity solutions, exceeding its 2025 ARR assumptions and expecting further traction in 2026 [10] Cash Flow and Expenses - The company ended the quarter with $12.9 million in cash and short-term investments, reporting positive free cash flow of $0.7 million [17] - Operating expenses decreased significantly, contributing to improved margins, with subscription gross margin rising to 90% [15][16] Future Outlook - Management anticipates significant ARR growth in 2026, primarily driven by the Secure Gift Card initiative [18] - The company aims for meaningful adoption of its solutions among targeted retailers and brands by holiday 2026 [18][19]

Investor Presentation Fourth Quarter 2025 March 11, 2026 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 difficult ...