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]

Financial Data and Key Metrics Changes - The ending ARR for Q4 was $13.7 million, down from $20 million in Q4 last year, primarily due to the loss of two large customer contracts [26] - Total revenue for Q4 was $8.9 million, an increase of $200,000 or 3% from $8.7 million in Q4 last year [29] - Subscription revenue accounted for 60% of total revenue for the quarter, increasing 6% from $5 million to $5.3 million [29] - Non-GAAP net income per diluted share for the quarter was $0.05 compared to a non-GAAP net loss of $0.22 in Q4 last year [33] Business Line Data and Key Metrics Changes - ARR from the anti-counterfeiting solution continues to grow, driven by customer upsells and new customer wins [16] - The company secured an upsell with an existing customer to expand their use of the anti-counterfeiting solution to authenticate tax stamps [17] - The Secure Gift Card solution achieved its first commercial order representing over $500,000 in ARR [12] Market Data and Key Metrics Changes - The U.S. serviceable addressable market for the Secure Gift Card solution is estimated at 3 billion to 5 billion cards annually, with a global SAM of 7.5 billion to 17 billion cards [9] - The company expects significant adoption of the Secure Gift Card solution by holiday 2026, with initial rollouts planned with major retailers [10][12] Company Strategy and Development Direction - The company is focused on building a trust layer for the modern world, addressing the increasing need for trust and authenticity in the wake of AI advancements [7][38] - The strategic focus areas include retail loss prevention, product authentication, and digital trust and integrity, with a commitment to selectively engage in other opportunities that represent low distraction revenue [6][39] - The company aims to capitalize on the convergence of key trends driving demand for its solutions, positioning itself to benefit from the advancements in AI [39] Management's Comments on Operating Environment and Future Outlook - Management highlighted the creation of a trust vacuum due to the acceleration of AI models, emphasizing the importance of trust as a currency [7][38] - The company expects to generate significant ARR growth in 2026, with the Secure Gift Card solution being the largest driver [26][41] - Management expressed confidence in the company's ability to address large problems outside current focus areas when market conditions are favorable [40] Other Important Information - The company ended the year with just under $13 million in cash and investments and no debt [6] - Positive free cash flow of $700,000 was generated in Q4, an improvement of $5.1 million compared to negative free cash flow of $4.4 million in Q4 last year [34] Q&A Session Summary Question: Technical difficulties during the call - The company experienced technical issues with the conference call service, preventing a Q&A session from occurring [42][43]

Financial Data and Key Metrics Changes - The ending ARR for Q4 was $13.7 million, down from $20 million in Q4 last year, primarily due to the loss of two large customer contracts [26] - Total revenue for Q4 was $8.9 million, an increase of $200,000 or 3% from $8.7 million in Q4 last year [28] - Subscription revenue accounted for 60% of total revenue for the quarter, increasing 6% from $5 million to $5.3 million [29] - Non-GAAP net income per diluted share for the quarter was $0.05 compared to a non-GAAP net loss of $0.22 in Q4 last year [33] - The company ended the quarter with $12.9 million in cash and short-term investments and no debt, generating positive free cash flow of $700,000 [34] Business Line Data and Key Metrics Changes - ARR from the anti-counterfeiting solution continued to grow, driven by customer upsells and new customer wins [16] - The Secure Gift Card solution achieved its first commercial order, representing over $500,000 in ARR [12] - The company secured an upsell with an existing customer to expand their use of the anti-counterfeiting solution to authenticate tax stamps [17] Market Data and Key Metrics Changes - The U.S. serviceable addressable market for the Secure Gift Card solution is estimated at 3 billion to 5 billion cards annually, with a global SAM of 7.5 billion to 17 billion cards [9] - The company is advancing initial rollout plans with 8 North American retailers, including 4 of the largest [4] Company Strategy and Development Direction - The company is focused on building a trust layer for the modern world, addressing the increasing need for trust and authenticity in the wake of AI advancements [7][38] - The strategic focus areas include retail loss prevention, product authentication, and digital trust and integrity, with significant emphasis on the Secure Gift Card solution [6][39] - The company aims to maximize holiday orders for the Secure Gift Card solution and expects significant ARR growth in 2026 [27] Management's Comments on Operating Environment and Future Outlook - Management highlighted the increasing demand for solutions that provide verifiable trust and authenticity due to the rapid advancement of AI [7][39] - The company expects to generate significant ARR growth in 2026, driven primarily by the Secure Gift Card solution [26][41] - Management expressed confidence in the company's positioning to benefit from the ongoing trends in the market [38] Other Important Information - The company signed IP licensing agreements with two major technology companies, validating the relevance and value of its inventions [4][40] - Operating expenses were reduced by 31% year-over-year, reflecting lower headcount costs and ongoing corporate streamlining efforts [32] Q&A Session Summary Question: Technical difficulties during the call - The company experienced technical issues with the conference call service, preventing a Q&A session from occurring [41]

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 ...