Digimarc Corp. (DMRC)
NASDAQ:DMRC
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Digimarc
(NASDAQ:DMRC)
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Rating:50Neutral
Price Target:
$16.50
▲(130.45% Upside)
Action:Reiterated
Date:05/22/26
The score is held down primarily by weak financial performance (ongoing losses, negative cash flow, and revenue/ARR declines). Technicals are a partial offset with a strong uptrend, but overbought readings and high beta add near-term risk. Earnings-call commentary is constructive on cost cuts, margins, and sequential ARR momentum, but timing delays and continued cash use limit confidence. Valuation is constrained by a negative P/E and no dividend yield data.
Positive Factors
High subscription gross margin
A 90% subscription gross margin indicates a highly scalable, software-like revenue stream with low incremental costs. Sustained high margins improve operating leverage as ARR grows, enabling faster path to profitability and greater reinvestment capacity for sales and product development.
Negative Factors
ARR and revenue decline
A 25% YoY ARR decline and material revenue contraction erode the recurring revenue base and weaken predictability. Sustained top-line deterioration reduces scale benefits, handicaps margin recovery, and forces greater reliance on new product launches and partner rollouts to restore growth.
Read all positive and negative factors
Positive Factors
Negative Factors
High subscription gross margin
A 90% subscription gross margin indicates a highly scalable, software-like revenue stream with low incremental costs. Sustained high margins improve operating leverage as ARR grows, enabling faster path to profitability and greater reinvestment capacity for sales and product development.
Read all positive factors
Digimarc (DMRC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$321.62M
Dividend YieldN/A
Average Volume (3M)144.75K
Price to Earnings (P/E)―
Beta (1Y)2.31
Revenue Growth-15.12%
EPS Growth32.79%
CountryUS
Employees215
SectorTechnology
Sector Strength88
IndustryInformation Technology Services
Share Statistics
EPS (TTM)-1.27
Shares Outstanding22,241,976
10 Day Avg. Volume161,879
30 Day Avg. Volume144,755
Financial Highlights & Ratios
PEG Ratio0.24
Price to Book (P/B)3.53
Price to Sales (P/S)4.19
P/FCF Ratio-11.51
Enterprise Value/Market Cap1.00
Enterprise Value/Revenue10.03
Enterprise Value/Gross Profit16.91
Enterprise Value/Ebitda-15.45
Forecast
1Y Price Target
$11.50Price Target Upside60.61% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
EPS Forecast (FY)-1.16
Revenue Forecast (FY)$29.13M
Digimarc Business Overview & Revenue Model
Company Description
Digimarc Corporation provides automatic identification solutions to commercial and government customers in the United States and internationally. The company offers Digimarc watermarks, a data carrier that provides a digital identity to media obje...
How the Company Makes Money
Digimarc primarily makes money by licensing its proprietary digital watermarking and identification technology and providing related services under contractual arrangements with commercial and public-sector customers. Key revenue streams include: ...
Digimarc Earnings Call Summary
Earnings Call Date:May 12, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 05, 2026
Earnings Call Sentiment Neutral
The call presented a mixed but constructive picture: material year-over-year declines in ARR and revenue (driven by two lost contracts and lumpy service work) are offset by strong sequential ARR growth, substantial margin expansion, meaningful operating cost reductions, early commercial traction for Secure Gift Cards (first commercial order and rollout plans with major retailers), multiple upsells across product lines, and strategic progress in Digital Trust & Integrity. Near-term timing risks (scanner firmware delays) and continued cash use temper the outlook, but execution metrics and improved non-GAAP profitability indicate momentum toward scaled commercial adoption.Positive Updates
Sequential ARR Growth
Ending ARR grew 9% sequentially to $15.0M, driven by new upsells and initial Secure Gift Card ARR despite prior-year contract losses.
Negative Updates
Year-over-Year ARR Decline
Ending ARR was $15.0M vs $20.0M a year ago (a decline of $5.0M or 25%), primarily due to the previously disclosed loss of two customer contracts in 2025 that accounted for $6.8M of ARR.
Read all updates
Q1-2026 Updates
Positive
Negative
Sequential ARR Growth
Ending ARR grew 9% sequentially to $15.0M, driven by new upsells and initial Secure Gift Card ARR despite prior-year contract losses.
Read all positive updates
Company Guidance
The company reiterated it still expects to deliver "significant" ARR growth in 2026 but said the composition has changed due to scanner firmware delays that mean Secure Gift Cards will no longer be the largest contributor to near‑term growth; Q1 metrics cited include ending ARR of $15.0M (vs. $20.0M a year ago, but excluding two lost contracts ARR grew $1.8M YoY and included $500k from gift cards), sequential ARR growth of 9%, a first commercial gift‑card order of >$500k ARR, total revenue of $7.6M (subscription $4.4M, 58% of revenue; services $3.2M), subscription gross margin 90% (+400 bps YoY), service margin 57%, platform costs down $300k YoY, operating expenses $11.7M (‑36% YoY), non‑GAAP opex $8.1M (‑51% YoY), net loss per diluted share $0.32 (non‑GAAP net loss per diluted share $0.07), non‑GAAP net loss of $1.6M (improved $6.9M, 81% YoY), cash & short‑term investments $10M with no debt, free cash flow used just under $2M (free cash flow usage up $3.7M YoY) and a $900k stock buyback (169k shares); management also expects to implement a new corporate structure (CUSIP change) around mid‑May and is advancing rollout plans with 15 North American retailers, including 8 of the top 20 by sales (up from 8 retailers and 4 top‑20 two months ago), while one near‑600‑store launch was pushed to January 2027.Digimarc Financial Statement Overview
Summary
Income Statement
18
Very Negative
Balance Sheet
62
Positive
Cash Flow
22
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 32.12M | 33.91M | 38.42M | 34.85M | 30.20M | 26.52M |
| Gross Profit | 19.06M | 18.21M | 24.24M | 20.16M | 15.32M | 17.74M |
| EBITDA | -20.85M | -25.05M | -33.16M | -39.15M | -51.05M | -30.32M |
| Net Income | -27.55M | -32.31M | -39.01M | -45.96M | -59.80M | -34.76M |
Balance Sheet | ||||||
| Total Assets | 48.51M | 52.96M | 75.77M | 80.55M | 113.78M | 64.88M |
| Cash, Cash Equivalents and Short-Term Investments | 9.96M | 12.87M | 28.73M | 27.18M | 52.54M | 33.33M |
| Total Debt | 4.07M | 5.21M | 5.99M | 5.99M | 5.98M | 1.03M |
| Total Liabilities | 14.44M | 12.73M | 14.41M | 18.63M | 16.19M | 9.50M |
| Stockholders Equity | 34.07M | 40.23M | 61.36M | 61.93M | 97.59M | 55.38M |
Cash Flow | ||||||
| Free Cash Flow | -8.82M | -12.35M | -26.78M | -22.73M | -45.88M | -27.69M |
| Operating Cash Flow | -8.14M | -11.78M | -26.57M | -22.00M | -44.41M | -26.12M |
| Investing Cash Flow | 10.32M | 12.10M | -11.28M | 12.56M | 3.76M | 25.98M |
| Financing Cash Flow | -2.24M | -2.91M | 28.77M | -2.76M | 60.50M | -5.77M |
Digimarc Technical Analysis
Positive
7.16
Price Trends
8.73
Positive
7.12
Positive
7.85
Positive
Market Momentum
1.95
Negative
65.34
Neutral
53.19
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DMRC, the sentiment is Positive. The current price of 7.16 is below the 20-day moving average (MA) of 12.04, below the 50-day MA of 8.73, and below the 200-day MA of 7.85, indicating a bullish trend. The MACD of 1.95 indicates Negative momentum. The RSI at 65.34 is Neutral, neither overbought nor oversold. The STOCH value of 53.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DMRC.
Digimarc Risk Analysis
Digimarc disclosed 32 risk factors in its most recent earnings report. Digimarc reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Digimarc Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
64 Neutral | $326.96M | -12.73 | -24.08% | ― | 66.50% | 52.19% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
52 Neutral | $92.41M | -879.87 | -0.22% | 0.95% | 5.47% | 92.26% | |
50 Neutral | $321.62M | -11.53 | -67.94% | ― | -15.12% | 32.79% | |
50 Neutral | $1.62B | ― | -55.55% | ― | -35.67% | -49.96% | |
48 Neutral | $307.66M | -0.90 | 125.36% | ― | 0.15% | -359.97% |
* Technology Sector Average
DMRC
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Digimarc Corporate Events
Business Operations and StrategyDelistings and Listing ChangesRegulatory Filings and Compliance
Digimarc Completes Holding Company Reorganization and Restructuring
Neutral
May 18, 2026
On May 15, 2026, Digimarc Corporation completed a corporate reorganization in which newly created Digimarc Parent, Inc. became the publicly traded holding company, with the original Digimarc converted into a wholly owned LLC subsidiary. All existi...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.