Digimarc (DMRC) Q4 2025 Prepared Remarks earnings summary

Executive summary

• Achieved positive non-GAAP net income of $1.0M and positive free cash flow of $0.7M in Q4'25, marking the first time in over 12 years both milestones were reached.

• Secured first Secure Gift Card commercial order, advancing rollout plans with 8 major North American retailers, including 4 of the largest.

• Signed IP licensing agreements with two leading global technology companies, validating the value of core inventions.

• Ended the year with $12.9M in cash and investments and no debt.

• ARR from Anti-counterfeiting and Digital Trust & Integrity solutions continues to grow, with new applications and customer wins.

Financial highlights

• Q4'25 total revenue was $8.9M, up 3% year-over-year; subscription revenue grew 6% to $5.3M, service revenue was $3.6M.

• Q4'25 ending ARR was $13.7M, down from $20.0M last year due to loss of two large contracts outside focus areas; excluding these, ARR grew $0.4M year-over-year.

• Subscription gross margin rose to 90% (up 5 points year-over-year); service gross margin was 57% (down 2 points year-over-year).

• Operating expenses dropped 31% to $10.0M; non-GAAP operating expenses down 45% to $6.5M.

• Q4'25 non-GAAP net income per diluted share was $0.05; GAAP net loss per diluted share was ($0.19).

Outlook and guidance

• Expects significant ARR growth in 2026, primarily driven by Secure Gift Card solution adoption.

• Targeting meaningful adoption of Secure Gift Card solution for holiday 2026, with orders expected in summer and early fall.

• Anticipates continued ramp for spring 2027 refresh cycle and beyond.

• Q1'26 free cash flow expected to be negative $1.0M to $2.0M due to growth investments and one-time costs.