In This Article:
-
Ending ARR: $20 million, compared to $23.9 million in Q1 last year; adjusted growth of 11% excluding a lapsed $5.8 million contract.
-
Total Revenue: $9.4 million, a decrease of 6% from $9.9 million in Q1 last year.
-
Subscription Revenue: $5.3 million, down 8% from $5.8 million in Q1 last year; adjusted increase of 13% excluding expired contract impact.
-
Service Revenue: $4.1 million, a decrease of 3% from $4.2 million in Q1 last year.
-
Subscription Gross Profit Margin: 86%, down 1 percentage point from Q1 last year.
-
Service Gross Profit Margin: 65%, up 9 percentage points from Q1 last year.
-
Operating Expenses: $18.2 million, up 6% from $17.1 million in Q1 last year.
-
Non-GAAP Operating Expenses: $16.5 million, up 19% from $13.8 million in Q1 last year.
-
Net Loss Per Share: $0.55, compared to $0.50 in Q1 last year.
-
Non-GAAP Net Loss Per Share: $0.40, compared to $0.27 in Q1 last year.
-
Cash and Short-term Investments: $21.6 million at the end of the quarter.
-
Free Cash Flow Usage: $5.6 million, down from $8.6 million in Q1 last year; $3.5 million excluding onetime severance costs.
Release Date: May 05, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
-
Digimarc Corp (NASDAQ:DMRC) has narrowed its focus to three specific opportunity sets: retail loss prevention, physical authentication, and digital authentication, which has led to significant technological and market advancements.
-
The company has grown its annual recurring revenue (ARR) almost five times over the last four years by focusing on areas with deep product market fit.
-
Digimarc Corp (NASDAQ:DMRC) has tripled its commercial subscription revenue since Q2 2021, excluding the end-of-life piracy intelligence business.
-
The company expects to achieve sustainable free cash flow generation for the first time in over 12 years, with significant top-line growth anticipated in 2026 and beyond.
-
Digimarc Corp (NASDAQ:DMRC) has formed a partnership with a fellow supplier to enhance loyalty and reward programs, which has already introduced them to four new customers.
Negative Points
-
Ending ARR for Q1 was $20 million, down from $23.9 million in Q1 last year, reflecting a decrease due to a lapsed commercial contract.
-
Total revenue decreased by 6% from $9.9 million in Q1 last year to $9.4 million this year, with subscription revenue decreasing by 8%.
-
Operating expenses increased by 6% to $18.2 million, primarily due to $3.2 million in onetime cash severance costs and higher professional services costs.
-
Free cash flow usage was $5.6 million in Q1, including $2.1 million in onetime severance-related costs, with expectations of higher cash flow usage in Q2 due to increased legal and public relations costs.
-
The company anticipates lower subscription gross profit margins in the next couple of quarters due to platform consolidation, with a recovery expected post-migration.