Digimarc CORP - Interim / Quarterly Report 2025

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34108

DIGIMARC CORPORATION

(Exact name of registrant as specified in its charter)

Oregon	26-2828185
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

8500 SW Creekside Place , Beaverton , Oregon 97008

(Address of principal executive offices) (Zip Code)

( 503 ) 469-4800

(Registrant’ s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered
Common Stock, $0.001 Par Value Per Share	DMRC	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 8, 2025, there we re 21,681,378 s h ares of the registrant’s common stock, par value $0.001 per share, outstanding.

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PART I. FINANCIAL INFORMATION — Item 1.	Financial Statements (Unaudited):	3
	Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	3
	Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2025 and 2024	4
	Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2025 and 2024	5
	Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and 2024	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
SIGNATURES		34

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

DIGIMARC CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(UNAUDITED)

	June 30, — 2025	2024
ASSETS
Current assets:
Cash and cash equivalents	$ 10,109	$	12,365
Marketable securities	5,979		16,365
Trade accounts receivable, net	6,358		6,412
Other current assets	2,664		4,189
Total current assets	25,110		39,331
Property and equipment, net	1,042		1,040
Intangibles, net	20,595		22,191
Goodwill	9,207		8,532
Lease right of use assets	3,458		3,659
Other assets	1,334		1,013
Total assets	$ 60,746	$	75,766
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued liabilities	$ 5,474	$	5,118
Deferred revenue	3,951		4,020
Total current liabilities	9,425		9,138
Long-term lease liabilities	4,779		5,213
Other long-term liabilities	59		56
Total liabilities	14,263		14,407
Commitments and contingencies (Note 17)
Shareholders’ equity:
Preferred stock (par value $ 0.001 per share, 2,500 authorized, 10 shares issued and outstanding at June 30, 2025 and December 31, 2024)	50		50
Common stock (par value $ 0.001 per share, 50,000 authorized, 21,657 and 21,495 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively)	22		21
Additional paid-in capital	418,085		415,049
Accumulated deficit	( 370,728	)	( 350,778	)
Accumulated other comprehensive loss	( 946	)	( 2,983	)
Total shareholders’ equity	46,483		61,359
Total liabilities and shareholders’ equity	$ 60,746	$	75,766

The accompanying notes are an integral part of these consolidated financial statements.

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DIGIMARC CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except per share data)

(UNAUDITED)

	Three Months Ended June 30, — 2025		2024		Six Months Ended June 30, — 2025		2024
Revenue:
Subscription	$ 4,624		$ 6,380		$ 9,938		$ 12,142
Service	3,386		3,999		7,440		8,175
Total revenue	8,010		10,379		17,378		20,317
Cost of revenue:
Subscription (1)	715		723		1,459		1,470
Service (1)	1,383		1,661		2,790		3,500
Amortization expense on acquired intangible assets	1,205		1,132		2,337		2,272
Total cost of revenue	3,303		3,516		6,586		7,242
Gross profit	4,707		6,863		10,792		13,075
Operating expenses:
Sales and marketing	3,231		5,616		8,309		11,152
Research, development and engineering	4,536		6,644		12,170		13,385
General and administrative	5,078		4,314		10,259		8,834
Amortization expense on acquired intangible assets	288		271		559		543
Total operating expenses	13,133		16,845		31,297		33,914
Operating loss	( 8,426	)	( 9,982	)	( 20,505	)	( 20,839	)
Other income, net	210		723		579		1,251
Loss before income taxes	( 8,216	)	( 9,259	)	( 19,926	)	( 19,588	)
Provision for income taxes	( 4	)	( 11	)	( 24	)	( 20	)
Net loss	$ ( 8,220	)	$ ( 9,270	)	$ ( 19,950	)	$ ( 19,608	)
Loss per share:
Loss per share — basic	$ ( 0.38	)	$ ( 0.43	)	$ ( 0.93	)	$ ( 0.93	)
Loss per share — diluted	$ ( 0.38	)	$ ( 0.43	)	$ ( 0.93	)	$ ( 0.93	)
Weighted average shares outstanding — basic	21,608		21,392		21,565		21,061
Weighted average shares outstanding — diluted	21,608		21,392		21,565		21,061
Comprehensive loss:
Unrealized gain (loss) on marketable securities, net of tax of $ 0	$ 14		$ 14		$ 3		$ ( 17	)
Foreign currency translation adjustment, net of tax of $ 0	1,355		95		2,034		( 277	)
Other comprehensive income (loss)	$ 1,369		$ 109		$ 2,037		$ ( 294	)
Net loss	( 8,220	)	( 9,270	)	( 19,950	)	( 19,608	)
Comprehensive loss	$ ( 6,851	)	$ ( 9,161	)	$ ( 17,913	)	$ ( 19,902	)

(1) Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.

The accompanying notes are an integral part of these consolidated financial statements.

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DIGIMARC CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS ’ EQUITY

(In thousands)

(UNAUDITED)

										Accumulated
						Additional				Other		Total
Preferred Stock			Common Stock			Paid-in	Accumulated			Comprehensive		Shareholders’
Shares		Amount	Shares	Amount		Capital	Deficit			Loss		Equity
Three Months Ended June 30, 2025
Balance at March 31, 2025	10	$ 50	21,548	$	22	$ 414,768	$	( 362,508	)	$ ( 2,315	)	$ 50,017
Issuance of restricted common stock	—	—	47		—	—		—		—		—
Vesting of restricted stock units	—	—	98		—	—		—		—		—
Purchase of common stock	—	—	( 36	)	—	( 503	)	—		—		( 503	)
Stock-based compensation	—	—	—		—	3,820		—		—		3,820
Unrealized gain (loss) on marketable securities	—	—	—		—	—		—		14		14
Foreign currency translation adjustments	—	—	—		—	—		—		1,355		1,355
Net loss	—	—	—		—	—		( 8,220	)	—		( 8,220	)
Balance at June 30, 2025	10	$ 50	21,657	$	22	$ 418,085	$	( 370,728	)	$ ( 946	)	$ 46,483
Three Months Ended June 30, 2024
Balance at March 31, 2024	10	$ 50	21,372	$	21	$ 409,473	$	( 322,106	)	$ ( 2,967	)	$ 84,471
Issuance of restricted common stock	—	—	18		—	—		—		—		—
Vesting of restricted stock units	—	—	52		—	—		—		—		—
Purchase of common stock	—	—	( 22	)	—	( 551	)	—		—		( 551	)
Stock-based compensation	—	—	—		—	2,409		—		—		2,409
Unrealized gain (loss) on marketable securities	—	—	—		—	—		—		14		14
Foreign currency translation adjustments	—	—	—		—	—		—		95		95
Net loss	—	—	—		—	—		( 9,270	)	—		( 9,270	)
Balance at June 30, 2024	10	$ 50	21,420	$	21	$ 411,331	$	( 331,376	)	$ ( 2,858	)	$ 77,168
										Accumulated
						Additional				Other		Total
Preferred Stock			Common Stock			Paid-in	Accumulated			Comprehensive		Shareholders’
Shares		Amount	Shares	Amount		Capital	Deficit			Loss		Equity
Six Months Ended June 30, 2025
Balance at December 31, 2024	10	$ 50	21,495	$	21	$ 415,049	$	( 350,778	)	$ ( 2,983	)	$ 61,359
Issuance of restricted common stock	—	—	47		—	—		—		—		—
Vesting of restricted stock units	—	—	147		—	—		—		—		—
Vesting of performance restricted stock units	—	—	49		—	—		—		—		—
Purchase of common stock	—	—	( 81	)	1	( 2,049	)	—		—		( 2,048	)
Stock-based compensation	—	—	—		—	5,085		—		—		5,085
Unrealized gain (loss) on marketable securities	—	—	—		—	—		—		3		3
Foreign currency translation adjustments	—	—	—		—	—		—		2,034		2,034
Net loss	—	—	—		—	—		( 19,950	)	—		( 19,950	)
Balance at June 30, 2025	10	$ 50	21,657	$	22	$ 418,085	$	( 370,728	)	$ ( 946	)	$ 46,483
Six Months Ended June 30, 2024
Balance at December 31, 2023	10	$ 50	20,379	$	20	$ 376,189	$	( 311,768	)	$ ( 2,564	)	$ 61,927
Issuance of common stock	—	—	929		1	32,217		—		—		32,218
Issuance of restricted common stock	—	—	24		—	—		—		—		—
Vesting of restricted stock units	—	—	96		—	—		—		—		—
Vesting of performance restricted stock units	—	—	60		—	—		—		—		—
Forfeiture of restricted common stock	—	—	( 1	)	—	—		—		—		—
Purchase of common stock	—	—	( 67	)	—	( 2,332	)	—		—		( 2,332	)
Stock-based compensation	—	—	—		—	5,257		—		—		5,257
Unrealized gain (loss) on marketable securities	—	—	—		—	—		—		( 17	)	( 17	)
Foreign currency translation adjustments	—	—	—		—	—		—		( 277	)	( 277	)
Net loss	—	—	—		—	—		( 19,608	)	—		( 19,608	)
Balance at June 30, 2024	10	$ 50	21,420	$	21	$ 411,331	$	( 331,376	)	$ ( 2,858	)	$ 77,168

The accompanying notes are an integral part of these consolidated financial statements.

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DIGIMARC CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(UNAUDITED)

	Six Months Ended June 30, — 2025		2024
Cash flows from operating activities:
Net loss	$ ( 19,950	)	$ ( 19,608	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and write-off of property and equipment	284		391
Amortization of acquired intangible assets	2,896		2,815
Amortization and write-off of other intangible assets	639		438
Amortization of lease right of use assets under operating leases	201		173
Stock-based compensation	5,031		5,237
Increase (decrease) in allowance for doubtful accounts	311		( 17	)
Changes in operating assets and liabilities:
Trade accounts receivable	( 442	)	( 2,236	)
Other current assets	1,447		426
Other assets	( 201	)	( 456	)
Accounts payable and other accrued liabilities	79		( 992	)
Deferred revenue	( 71	)	( 1,037	)
Lease liability and other long-term liabilities	( 398	)	( 386	)
Net cash provided by (used in) operating activities	( 10,174	)	( 15,252	)
Cash flows from investing activities:
Purchase of property and equipment	( 253	)	( 132	)
Capitalized patent costs	( 208	)	( 196	)
Proceeds from maturities of marketable securities	13,741		9,623
Purchases of marketable securities	( 3,355	)	( 14,753	)
Net cash provided by (used in) investing activities	9,925		( 5,458	)
Cash flows from financing activities:
Issuance of common stock, net of issuance costs	—		32,218
Purchase of common stock	( 2,048	)	( 2,332	)
Repayment of loans	( 18	)	( 18	)
Net cash provided by (used in) financing activities	( 2,066	)	29,868
Effect of exchange rate on cash	59		( 16	)
Net increase (decrease) in cash and cash equivalents	( 2,256	)	9,142
Cash and cash equivalents at beginning of period	12,365		21,456
Cash and cash equivalents at end of period	$ 10,109		$ 30,598
Supplemental disclosure of cash flow information:
Cash received (paid) for income taxes, net	$ ( 28	)	$ ( 46	)
Supplemental schedule of non-cash activities:
Property and equipment and patent costs in accounts payable	$ 178		$ 60
Stock-based compensation capitalized to software and patent costs	$ 54		$ 20

The accompanying notes are an integral part of these consolidated financial statements.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

(UNAUDITED)

1. Description of Business and Significant Accounting Policies

Description of Business

Digimarc, an Oregon corporation, is a pioneer and global leader in digital watermarking technologies. For nearly 30 years, Digimarc innovations and intellectual property in digital watermarking have been deployed in solutions built upon one or both of the following two things: the identification and the authentication of physical and digital items, often at massive scale, and often where other methods of identification or authentication don’t work well or don’t work at all.

The Digimarc Illuminate platform is a distinctive software as a service (“SaaS”) cloud-based platform for digital connectivity that provides the tools for the application of advanced digital watermarks and dynamic Quick Response (“QR”) codes, software (digital twins) that enables various systems and devices to interact with those data carriers, and a centralized platform for capturing insights about digital interactions and automating activities based on that information.

The Digimarc product suite is built on top of the Digimarc Illuminate platform to power a trusted and scalable ecosystem that can address specific business needs in areas like automation, authenticity, sustainability, and customer trust and connectivity. All of the Company’s products are complementary to each other, providing exponential benefits when combined. By enabling customers to create and connect digital twins to physical and digital items, Digimarc’s products provide many benefits including:

• Digimarc Automate improves product inspection by embedding imperceptible digital watermarks into products, labels, and packaging, which are detectable by standard vision systems. This significantly reduces mixing errors and mislabeling, ensuring higher accuracy and efficiency in production, fulfillment, and distribution facilities without additional costs for special inks or hardware. By enabling real-time data analysis and minimizing human error, Digimarc Automate enhances quality assurance, reduces waste, and lowers the risk of product recalls, giving brands a competitive edge.

• Digimarc Engage activates products and multimedia to create and leverage an interactive, fully owned communications channel directly with consumers. Digimarc delivers dynamic, GS1 Digital Link-compliant QR codes and hyperlinks that provide contextual redirection capabilities for multiple consumer experiences (including personalized and automated loyalty and rewards programs) based on a variety of factors such as time and location or previous behavior. Connecting engagements across the physical and digital worlds in a singular view results in powerful new capabilities and insights for brands.

• Digimarc Recycle increases the quality and quantity of recycled materials by digitizing products and packaging with digital watermarking technology. Coupled with consumer engagement capabilities, brands can leverage a direct, digital communications channel. Plus, Digimarc Recycle creates a cloud-based record of never-before-seen post-consumption data to provide new insights that benefit stakeholders across the value chain, including brands, facility operators, and Producer Responsibility Organizations (“PROs”).

• Digimarc Retail Experience delivers smarter, connected packaging that supports next-generation retail checkout systems, including checkout efficiency (faster scanning) and checkout effectiveness (reduced shrinkage, including gift card and price look-up fraud prevention), optimized operational processes, advanced consumer engagement experiences, compliance with upcoming industry standards, and the collection of powerful first -party data and consumer insights.

• Digimarc Validate supports authentication in the physical and digital worlds to help ensure online interactions can be trusted and that real products and digital assets are genuine and in the right place. Digimarc’s technology protects digital images, audio, product packaging, gift cards, and other physical items by delivering exclusive, covert digital watermarks and/or dynamic QR codes and a cloud-based record of product authentication information. In addition, consumer engagement capabilities provide a direct, digital communications channel.

Interim Consolidated Financial Statements

Our significant accounting policies are detailed in “Note 1: Description of Business and Summary of Significant Accounting Policies” of our Annual Report on Form 10 -K for the year ended December 31, 2024 , which was filed with the U.S. Securities and Exchange Commission (“SEC”) on February 27, 2025 (the “ 2024 Annual Report”).

The accompanying interim consolidated financial statements have been prepared from the Company’s records without audit and, in management’s opinion, include all adjustments (consisting of only normal recurring adjustments) necessary to fairly reflect the financial condition and the results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles in the United States (“GAAP”) have been condensed or omitted in accordance with the rules and regulations of the SEC.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the 2024 Annual Report. The results of operations for the interim periods presented in these consolidated financial statements are not necessarily indicative of the results for the full year.

Principles of Consolidation

The consolidated financial statements include the accounts of Digimarc and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

Accounting Pronouncements Issued But Not Yet Adopted

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023 - 09 “ Income Taxes (Topic 740 ) - Improvements to Income Tax Disclosures ”. The ASU requires greater disaggregation of income tax disclosures primarily on the income tax rate reconciliation and income taxes paid. This ASU will be effective for the Company for the fiscal year ending December 31, 2025, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company’s disclosures, but it is not expected to have a material impact.

In November 2024, the FASB issued ASU No. 2024 - 03 “ Income Statement (Subtopic 220 - 40 ) - Reporting Comprehensive Income - Expense Disaggregation Disclosures ”. The ASU requires disaggregated disclosure of income statement expenses, primarily the disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This ASU will be effective for the Company starting in the fiscal year ending December 31, 2027 for annual periods and in the first quarter of the fiscal year ending December 31, 2028 for interim periods, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company’s disclosures, but it is not expected to have a material impact.

2. Fair Value of Financial Instruments

The estimated fair values of the Company’s financial instruments, which include cash equivalents, accounts receivable, accounts payable and other accrued liabilities, approximate their carrying values due to the short-term nature of these instruments. The Company’s marketable securities are classified as available-for-sale and are reported at fair value. Unrealized holding gains and losses are excluded from earnings and are reported net of tax in “accumulated other comprehensive loss” in the Consolidated Balance Sheets until realized. Realized gains and losses are included in “other income, net” in the Consolidated Statements of Operations and Comprehensive Loss and are derived using the specific identification method for determining the cost of marketable securities sold.

In accordance with Accounting Standards Codification (“ASC”) No. 820 “ Fair Value Measurements and Disclosures ”, the Company defines its’s fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, in the following:

• Level 1 Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date.

• Level 2 Pricing inputs are quoted for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level 2 includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to these investments.

• Level 3 Pricing inputs are unobservable for the investment; that is, the inputs reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability.

The Company’s fair value hierarchy for its cash equivalents and marketable securities was as follows:

June 30, 2025	Level 1	Level 2	Level 3	Total
Money market securities	$ 2,217	$ —	$ —	$ 2,217
U.S. treasuries	—	5,968	—	5,968
Commercial paper	—	4,683	—	4,683
Federal agency notes	—	1,499	—	1,499
Total	$ 2,217	$ 12,150	$ —	$ 14,367

December 31, 2024	Level 1	Level 2	Level 3	Total
Money market securities	$ 112	$ —	$ —	$ 112
Commercial paper	—	10,633	—	10,633
U.S. treasuries	—	9,192	—	9,192
Federal agency notes	—	5,317	—	5,317
Total	$ 112	$ 25,142	$ —	$ 25,254

The fair value maturities of the Company’s cash equivalents and marketable securities as of June 30, 2025 , were as follows:

	Maturities by Period	Less than	1 - 5	5 - 10	More than
	Total	1 year	years	years	10 years
Cash equivalents and marketable securities	$ 14,367	$ 14,367	$ —	$ —	$ —

The Company considers all highly liquid marketable securities with original maturities of 90 days or less at the date of acquisition to be cash equivalents. Cash equivalents include commercial paper, U.S. treasuries, and money market securities t otaling $ 8,388 and $ 8,889 at June 30, 2025 and December 31, 2024 , respectively. Cash equivalents are carried at either cost or fair value, depending on the type of security.

3. Revenue Recognition

The Company derives its revenue primarily from software subscriptions and software development services. Applicable revenue recognition criteria are considered separately for each performance obligation as follows:

• Subscription revenue consists primarily of revenue earned from subscription fees for access to the Company’s SaaS platform and products and, to a lesser extent, licensing fees for software products. The majority of subscription contracts are recurring, paid in advance and recognized over the term of the subscription, which is typically one to three years.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

• Service revenue consists primarily of revenue earned from the performance of software development services and, to a lesser extent, professional services. The majority of software development contracts are structured as time and materials agreements. Revenue for services is generally recognized as the services are performed. Billing for services rendered generally occurs within one month after the services are provided.

Customer arrangements may contain multiple deliverables such as software platform subscriptions, software product subscriptions, and professional services. Subscriptions and services offered are usually distinct performance obligations. When they are not capable of being distinct, they are combined with other subscriptions or services until a distinct performance obligation is identified. To determine the transaction price, management considers the terms of the contract and the Company’s customary business practices. Some contracts may contain variable consideration. In those cases, management estimates the amount of variable consideration based on the sum of probability-weighted amounts in a range of possible consideration amounts. As part of this assessment, management evaluates whether any of the variable consideration is constrained and if it is, it is not included in the transaction price. The consideration is allocated between distinct performance obligations based on their stand-alone selling prices. When the standalone selling prices are not directly observable, management makes estimates based on reasonably available information, including market conditions, specific factors affecting the Company, and information about the customer. The Company recognizes the revenue associated with each performance obligation as the obligation is fulfilled, which for subscriptions is typically recognized ratably over time and for services is typically recognized when they are performed.

All revenue recognized in the Consolidated Statements of Operations and Comprehensive Loss is considered to be revenue from contracts with customers.

The following table provides information about disaggregated revenue by major target market in the Company’s single reporting segment:

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Commercial:
Subscription	$ 4,324	$ 6,080	$ 9,338	$ 11,542
Service	39	177	835	434
Total Commercial	$ 4,363	$ 6,257	$ 10,173	$ 11,976
Government:
Subscription	$ 300	$ 300	$ 600	$ 600
Service	3,347	3,822	6,605	7,741
Total Government	3,647	4,122	7,205	8,341
Total	$ 8,010	$ 10,379	$ 17,378	$ 20,317

The Company has contract assets from contracts with customers that are classified as “trade accounts receivable” in the Consolidated Balance Sheets. See Note 8 for more information about trade accounts receivable.

The Company has contract assets from capitalized contract acquisition costs that are classified as “other current assets” and “other assets” in the Consolidated Balance Sheets. These contract acquisition costs are recognized in proportion to the revenue recognized from the contract they are associated with.

The following table provides information about contract assets:

	June 30,	December 31,
	2025	2024
Contract acquisition costs, current	$ 104	$ 38
Contract acquisition costs, long-term	225	—
Total	$ 329	$ 38

The Company has contract liabilities from contracts with customers that are classified as “deferred revenue” in the Consolidated Balance Sheets. Deferred revenue consists of billings in advance for subscriptions and services for which the performance obligation has not been satisfied.

The following table provides information about contract liabilities:

	June 30,	December 31,
	2025	2024
Deferred revenue, current	$ 3,951	$ 4,020
Deferred revenue, long-term	—	2
Total	$ 3,951	$ 4,022

The Company recognized $ 3,716 of revenue during the six months ended June 30, 2025 , that was included in the contract liability balance as of December 31, 2024 .

The aggregate amount of the transaction prices from contractual obligations that are unsatisfied or partially unsatisfied was $ 25,125 and $ 25,215 as of June 30, 2025 , and December 31, 2024 , respectively. As of June 30, 2025 , the Company expect s $ 21,303 of the $ 25,125 t o be recognized as revenue during the next twelve months.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

4. Segment Information

Significant Segment Expenses

The Company derives its revenue from a single reporting segment: product digitization solutions. Revenue is generated in this segment primarily through software subscriptions and software development services. The Company manages its business activities on a consolidated basis. In addition, the Chief Executive Officer of the Company, as the chief operating decision-maker (“CODM”), reviews the Company’s operating results and makes decisions to allocate resources based on consolidated financial information. As such, the Company has one single reportable segment. The CODM uses consolidated net income (loss) as a performance measure and total consolidated assets as an asset measure, to assess performance of the Company, to allocate working capital, and to monitor budget versus actual results.

The following table illustrates reported segment revenue, segment profit and loss, and significant segment expenses.

	Three Months Ended June 30, — 2025		2024		Six Months Ended June 30, — 2025		2024
Revenue:
Subscription	$ 4,624		$ 6,380		$ 9,938		$ 12,142
Service	3,386		3,999		7,440		8,175
Total revenue	8,010		10,379		17,378		20,317
Cost of revenue:
Subscription (1)	715		723		1,459		1,470
Service (1)	1,383		1,661		2,790		3,500
Amortization expense on acquired intangible assets	1,205		1,132		2,337		2,272
Total cost of revenue	3,303		3,516		6,586		7,242
Operating expenses
Cash compensation	5,310		10,211		17,352		20,103
Stock-based compensation	3,573		2,249		4,695		4,828
Professional services and consultants	1,989		1,894		4,842		3,823
Software and hardware	685		926		1,538		1,888
Depreciation and amortization	568		500		1,043		1,100
Other segment items (2)	1,008		1,065		1,827		2,172
Total operating expenses	13,133		16,845		31,297		33,914
Operating loss	( 8,426	)	( 9,982	)	( 20,505	)	( 20,839	)
Other income, net	210		723		579		1,251
Provision for income taxes	( 4	)	( 11	)	( 24	)	( 20	)
Net loss	$ ( 8,220	)	$ ( 9,270	)	$ ( 19,950	)	$ ( 19,608	)

( 1 ) Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.

( 2 ) Other segment items include training and travel expenses, recruiting expenses, rent and facility expenses, bad debt expenses and other miscellaneous costs.

Geographic Information

The Company markets its products in the U.S. and in non-U.S. countries through its sales personnel and partners. Revenue by geographic area, based upon the “bill-to” location, was as follows:

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Domestic	$ 2,327	$ 3,471	$ 4,473	$ 6,345
International (1)	5,683	6,908	12,905	13,972
Total	$ 8,010	$ 10,379	$ 17,378	$ 20,317

( 1 ) Revenue from the Central Banks, consisting of a consortium of central banks around the world, is classified as international revenue. Reporting revenue by country for this customer is not practicable.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

Major Customers

The following customers accounted for 10% or more of revenue:

2025	2024	2025	2024
Customer A	45 %	39 %	41 %	41 %
Customer B	11 %	14 %	15 %	14 %
Customer C	10 %	18 %	*	18 %

Less than 10%

Long-Lived Assets by Geographical Area

Long-lived assets by geographic area were as follows:

	June 30,	December 31,
	2025	2024
United States	$ 1,035	$ 1,026
Europe	7	14
Total	$ 1,042	$ 1,040

5. Stock-Based Compensation

Stock-based compensation includes expense charges for all stock-based awards to employees and directors. These awards include restricted stock awards, restricted stock units, and performance restricted stock units.

Stock-based compensation expense related to internal labor is capitalized to software and patent costs based on direct labor hours charged to capitalized software and patent costs.

Determining Fair Value

Restricted Stock Awards

The fair value of restricted stock awards (“RSA”) that vest upon meeting a service condition is based on the fair market value of the Company’s common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally three to four years for employee grants and one to three years for director grants.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

Restricted Stock Units

The fair value of restricted stock unit (“RSU”) awards that vest upon meeting a service condition is based on the fair market value of the Company’s common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally three to four years for employee grants.

Performance Restricted Stock Units

The fair value of performance restricted stock unit (“PRSU”) awards that vest upon meeting a service condition and a performance condition, such as the Company exceeding a future annual recurring revenue target, is determined based on the fair market value of the Company’s common stock on the date of the grant (measurement date), adjusted for probability of achievement of the performance criteria as of each reporting date, and is recognized on a straight-line basis over the service period of the award, which is generally three years for employee grants. The probability of achievement is subject to judgment, and could change from period to period, impacting the amount of expense to be recognized.

The fair value of PRSU awards that vest upon meeting a service condition and a market condition, such as the Company exceeding shareholder returns as compared to an index of peer companies, is determined on the date of grant (measurement date) using the Monte Carlo valuation model. The Company recognizes the fair value of the award on a straight-line basis over the service period of the award, which is generally three years for employee grants.

The following inputs are used in the Monte Carlo valuation model to estimate the fair value:

Stock Price. The stock price represents the fair market value of the Company’s common stock on the date of the grant.

Expected Volatility. The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock based on historical prices over the most recent period commensurate with the term of the award.

Risk-Free Interest Rate. The Company determines the risk-free interest rate using current U.S. treasury yields for bonds with a maturity commensurate with the term of the award.

Monte Carlo valuation inputs:

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Stock price	$ 13.16	$ 25.39	$ 13.16	$ 36.64
Expected volatility	70.9 %	66.3 %	70.9 %	66.3 %
Risk-free interest rate	3.8 %	4.3 %	3.8 %	4.3 %

Stock-Based Compensation

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Stock-based compensation:
Cost of revenue	$ 253	$ 156	$ 390	$ 409
Sales and marketing	795	798	1,150	1,510
Research, development and engineering	1,221	645	1,628	1,263
General and administrative	1,502	807	1,863	2,055
Stock-based compensation expense	3,771	2,406	5,031	5,237
Capitalized to software and patent costs	49	3	54	20
Total stock-based compensation	$ 3,820	$ 2,409	$ 5,085	$ 5,257

The following table sets forth total unrecognized compensation costs related to non-vested stock-based awards granted under the Company’s stock incentive plan:

	June 30,	December 31,
	2025	2024
Total unrecognized compensation costs	$ 18,892	$ 16,226

Total unrecognized compensation costs will be adjusted based on updates to the estimated future achievement of performance conditions on PRSU awards as well as for any future forfeitures if and when they occur.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

The Company expects to recognize the total unrecognized compensation costs as of June 30, 2025 , for all non-vested stock-based awards over weighted average periods through June 30, 2029 , as follows:

Weighted average period (in years)	1.05	1.60	1.70

As of June 30, 2025 , under the Company’s stock incentive plan, an additional 2,345 shares remained available for future grants. The Company issues new shares upon the grants of RSAs and vesting of RSU and PRSU awards.

Restricted Stock Awards Activity

The following table presents the unvested RSA activity:

			Weighted
			Average
	Number of		Grant Date
Three Months Ended June 30, 2025:	Shares		Fair Value
Unvested balance at March 31, 2025	50		$ 27.85
Granted	47		$ 12.89
Vested	( 23	)	$ 28.91
Forfeited	—		$ —
Unvested balance at June 30, 2025	74		$ 18.15

			Weighted
			Average
	Number of		Grant Date
Six Months Ended June 30, 2025:	Shares		Fair Value
Unvested balance at December 31, 2024	59		$ 29.98
Granted	47		$ 12.89
Vested	( 32	)	$ 32.62
Forfeited	—		$ —
Unvested balance at June 30, 2025	74		$ 18.15

The fair value of RSAs vested is as follows:

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Fair value of RSAs vested	$ 295	$ 1,211	$ 596	$ 1,761

Restricted Stock Units Activity

The following table presents the unvested RSU award activity:

			Weighted
			Average
	Number of		Grant Date
Three Months Ended June 30, 2025:	Shares		Fair Value
Unvested balance at March 31, 2025	251		$ 25.76
Granted	565		$ 13.38
Vested	( 98	)	$ 17.36
Forfeited	( 39	)	$ 27.64
Unvested balance at June 30, 2025	679		$ 16.25

			Weighted
			Average
	Number of		Grant Date
Six Months Ended June 30, 2025:	Shares		Fair Value
Unvested balance at December 31, 2024	406		$ 28.27
Granted	575		$ 13.79
Vested	( 147	)	$ 20.75
Forfeited	( 155	)	$ 28.02
Unvested balance at June 30, 2025	679		$ 16.25

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

The fair value of RSU awards vested is as follows:

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Fair value of RSU awards vested	$ 1,311	$ 1,318	$ 3,037	$ 3,047

Performance Restricted Stock Units Activity

The following table presents the unvested PRSU award activity:

			Weighted
			Average
	Number of		Grant Date
Three Months Ended June 30, 2025:	Shares		Fair Value
Unvested balance at March 31, 2025	161		$ 28.60
Change in units based on performance expectations	—		$ —
Granted	417		$ 15.25
Vested	—		$ —
Forfeited	( 18	)	$ 33.12
Unvested balance at June 30, 2025	560		$ 18.49

			Weighted
			Average
	Number of		Grant Date
Six Months Ended June 30, 2025:	Shares		Fair Value
Unvested balance at December 31, 2024	215		$ 32.08
Change in units based on performance expectations	( 5	)	$ 42.43
Granted	417		$ 15.25
Vested	( 49	)	$ 42.43
Forfeited	( 18	)	$ 33.12
Unvested balance at June 30, 2025	560		$ 18.49

The fair value of PRSU awards vested is as follows:

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Fair value of PRSU awards vested	$ —	$ —	$ 1,707	$ 2,370

6. Shareholders’ Equity

Registered Direct Offering

On February 24, 2024, the Company entered into purchase agreements with certain investors providing for the issuance and sale by the Company of 929 shares of common stock in a registered direct stock offering. The common shares were offered at a price of $ 35.00 per share, and the gross cash proceeds to the Company were $ 32,500 . We incurred $ 282 of legal costs related to the offering. The closing of the registered direct offering occurred on February 27, 2024.

Employee Stock Purchase Plan

On February 25, 2025, the Company’s Board of Directors adopted the 2025 Employee Stock Purchase Plan (“ESPP”). The Company reserved a total o f 250 thousand s hares and as of June 30, 2025 , there were 250 thousand s hares authorized and available for future issuance under the ESPP. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 15 % of their salary for the purchase of the Company’s common stock at a discounted price per share. The Company’s current offering period began on June 16, 2025, with the first purchase period ending on December 15, 2025. The stock-based compensation expense and payroll withholding for the ESPP during the three and six months ended June 30, 2025 were not material.

Incentive Plan Amendment

On May 7, 2025, the Company’s shareholders approved an amendment to the Digimarc Corporation 2018 Stock Incentive Plan (as amended, the “2018 Plan”) to, among other things, increase the number of shares authorized for issuance by 950 thousand shares.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

7. Earnings Per Share

The Company calculates basic and diluted earnings per share in accordance with ASC No. 260, “ Earnings Per Share ,” using the treasury stock method.

Basic earnings per share excludes dilution and is calculated by dividing earnings by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing earnings by the weighted-average number of common shares, as adjusted for the potentially dilutive effect of unvested RSUs and PRSUs. The dilutive effect of unvested RSUs and PRSUs is determined using the treasury stock method. RSAs are included in shares outstanding on the date of grant.

The following table reconciles earnings (loss) per share:

	Three Months Ended June 30, — 2025		2024		Six Months Ended June 30, — 2025		2024
Basic Earnings (Loss) per Share:
Net loss — basic	$ ( 8,220	)	$ ( 9,270	)	$ ( 19,950	)	$ ( 19,608	)
Weighted average shares outstanding — basic	21,608		21,392		21,565		21,061
Basic loss per share	$ ( 0.38	)	$ ( 0.43	)	$ ( 0.93	)	$ ( 0.93	)
Diluted Earnings (Loss) per Share:
Net loss — diluted	$ ( 8,220	)	$ ( 9,270	)	$ ( 19,950	)	$ ( 19,608	)
Weighted average shares outstanding — diluted	21,608		21,392		21,565		21,061
Diluted loss per share	$ ( 0.38	)	$ ( 0.43	)	$ ( 0.93	)	$ ( 0.93	)

The following table indicates the stock equivalents related to unvested RSUs and PRSUs that were anti-dilutive and excluded from diluted earnings (loss) per share calculations:

2025	2024	2025	2024
Anti-dilutive shares due to net loss	2	—	61	206

8. Trade Accounts Receivable

Trade Accounts Receivable

Trade accounts receivables are recorded at the contractual or invoiced amount.

	June 30, — 2025	2024
Trade accounts receivable, current	$ 6,995	$	6,563
Trade accounts receivable, long-term	90		80
Allowance for doubtful accounts	( 637	)	( 151	)
Trade accounts receivable, net	$ 6,448	$	6,492
Unpaid deferred revenue included in trade accounts receivable	$ 1,812	$	2,590

Allowance for Doubtful Accounts

The Company’s accounts receivables are subject to concentrations of credit risk. The Company maintains an allowance for its doubtful accounts receivable to reflect any estimated credit losses. The allowance is established in accordance with the current expected credit loss model, which requires the estimation of expected credit losses over the contractual life of financial assets. The allowance is calculated using a forward-looking probability-weighted approach based on historical loss experience, current economic conditions, and reasonable and supportable forecasts. The Company records the allowance in “general and administrative” expense in the Consolidated Statements of Operations and Comprehensive Loss, up to the amount of revenue recognized to date for each account. Any incremental allowance is recorded as an offset to “deferred revenue” in the Consolidated Balance Sheets. Account receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success.

Unpaid Deferred Revenue

The unpaid deferred revenue that is included in trade accounts receivable is billed in accordance with the provisions of the contracts with the Company’s customers.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

Major Customers

The following customers accounted for 10% or more of trade accounts receivable, net:

2025	2024
Company A	34 %	47 %
Company B	12 %	12 %

9. Property and Equipment

Property and equipment are stated at cost. Repairs and maintenance are charged to expense when incurred.

Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, generally two to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the lease term.

	June 30, — 2025	2024
Office furniture and fixtures	$ 63	$	63
Software	5,705		5,476
Equipment	2,604		2,566
Leasehold improvements	227		203
Gross property and equipment	8,599		8,308
Less accumulated depreciation	( 7,557	)	( 7,268	)
Property and equipment, net	$ 1,042	$	1,040

10. Goodwill

The Company performs its annual goodwill impairment test during the second quarter of each fiscal year or whenever events or changes in circumstances indicate that the carrying value may exceed the fair value. If the carrying value exceeds the estimated fair value, an impairment is recorded. The Company operates as a single reporting unit. The Company estimates the fair value of its single reporting unit using a market approach, which takes into account the Company’s market capitalization plus an estimated control premium.

In connection with the Company’s annual impairment test of goodwill as of June 30, 2025 and 2024 , management concluded that there was no impairment to goodwill as the estimated fair value of the Company’s reporting unit substantially exceeded the carrying value.

Balance at December 31, 2024	$
Currency translation adjustments	675
Balance at June 30, 2025	$ 9,207

11. Intangibles

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. No impairment charges were recorded for the three and six months ended June 30, 2025 and 2024 .

Patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, but generally approximates seventeen years.

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

Amortization of intangible assets acquired is calculated using the straight-line method over the estimated useful lives of the assets.

(years)		June 30, — 2025	2024
Capitalized patent costs	~17	$ 9,232	$	9,174
Intangible assets acquired:
Purchased intellectual property	10	250		250
Developed technology	5	24,554		22,504
Customer relationships	10	11,734		10,754
Gross intangible assets		45,770		42,682
Accumulated amortization		( 25,175	)	( 20,491	)
Intangibles, net		$ 20,595	$	22,191

The amortization of capitalized patent costs, purchased intellectual property, and developed technology is recorded in “cost of revenue” and the amortization of customer relationships is recorded in “operating expenses” in the Consolidated Statements of Operations and Comprehensive Loss.

Amortization expense on intangible assets was as follows:

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Amortization expense	$ 1,625	$ 1,539	$ 3,162	$ 3,089

For intangible assets recorded at June 30, 2025 , the estimated future aggregate amortization expense for the years ending December 31, 2025 through December 31, 2029 is as follows:

	Amortization
As of June 30, 2025	Expense
Remaining in 2025	$ 3,296
2026	6,577
2027	1,633
2028	1,625
2029	1,596

12. Leases

The Company accounts for leases in accordance with ASC No. 842, “ Leases. ”

The Company entered into a sublease agreement and lease extension agreement for office space in Beaverton, Oregon in February 2022 to move the Company’s corporate headquarters. The term of the sublease and lease extension runs through September 2030, with remaining rent payments as of June 30, 2025 , totaling $ 7,146 plu s operating expenses, payable in monthly installments. The first 26 months of rent payments and operating expenses were abated to cover the remaining lease term on the Company’s former corporate headquarters.

All of the Company’s leases are operating leases. The following table provides additional details of leases presented in the Consolidated Balance Sheets:

	June 30,	December 31,
	2025	2024
Lease right of use assets	$ 3,458	$ 3,659
Lease liabilities, current	$ 838	$ 781
Lease liabilities, long-term	$ 4,779	$ 5,213
Weighted-average remaining life (in years)	5.2	5.7
Weighted-average discount rate	9 %	9 %

The current lease liabilities are included in “accounts payable and other accrued liabilities” in the Consolidated Balance Sheets.

The carrying value of the lease right of use assets is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. No impairment charges were recorded for the three and six months ended June 30, 2025 and 2024 .

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DIGIMARC CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(In thousands, except per share data)

(UNAUDITED)

Operating lease expense is included in “operating expenses” in the Consolidated Statements of Operations and Comprehensive Loss and in “cash flows from operating activities” in the Consolidated Statements of Cash Flows. The operating leases include variable lease payments, which are included in operating lease expense. Additional details of the Company’s operating leases are presented in the following table:

	Three Months Ended June 30, — 2025	2024	Six Months Ended June 30, — 2025	2024
Operating lease expense	$ 373	$ 318	$ 742	$ 747
Cash paid for operating leases	$ 466	$ 496	$ 918	$ 764

The table below reconciles the aggregate cash payment obligations for the next five years and total of the remaining years for the operating lease liability recorded in the Consolidated Balance Sheets as of June 30, 2025 :

	Cash
	Payment
As of June 30, 2025	Obligations
Remaining in 2025	$ 663
2026	1,356
2027	1,397
2028	1,296
2029	1,389
Thereafter	1,066
Total lease payments	7,167
Imputed interest	( 1,550	)
Total minimum lease payments	$ 5,617

13. Accounts Payable and Accrued liabilities

The components of accounts payable and accrued liabilities are summarized below:

	June 30,	December 31,
	2025	2024
Accounts payable	$ 2,986	$ 2,378
Accrued liabilities	1,650	1,959
Short term lease obligation	838	781
Total accounts payable and other accrued liabilities	$ 5,474	$ 5,118

14. Reorganization

On February 26, 2025, the Company announced a reduction of its global workforce to streamline the Company’s team structure to better align with its long-term growth initiatives and profitability objectives. All associated costs with the reorganization are recorded as “operating expenses” in the Consolidated Statements of Operations and Comprehensive Loss. Corresponding liabilities are recorded as “accrued liabilities” in the Consolidated Balance Sheets. During the six months ended June 30, 2025 , the Company incurred cash severance costs totaling $ 3,217 , reported as “cash compensation” in Note 4 Segment Information, including $ 1,631 related to research, development and engineering, $ 958 related to sales and marketing, $ 628 related to general and administration.

The following table provides the details of costs and liabilities associated with the reorganization announced on February 26, 2025:

Balance at December 31, 2024	$
Costs incurred	3,217
Cash paid	( 3,008	)
Balance at June 30, 2025	$ 209

15. Other Income

The following table provides activity in other income, net:

	Three Months Ended June 30, — 2025	2024	2025		2024
Interest income	$ 178	$ 611	$	432	$ 985
Refundable tax credit	—	125		87	250
Foreign currency gains (losses)	32	( 13	)	60	16
Total other income, net	$ 210	$ 723	$	579	$ 1,251

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16. Income Taxes

The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the six months ended June 30, 2025 and 2024 was 0 %.

The valuation allowance against net deferred tax assets as of June 30, 2025 , was $ 111,023 , an increase of $ 6,662 from $ 104,361 as of December 31, 2024 . The Company continues to provide for a valuation allowance to offset its net deferred tax assets until such time it is more likely than not the tax assets or portions thereof will be realized.

Excess tax deficiencies of $ 748 and $ 218 were recognized in the provision for income taxes for the three months ended June 30, 2025 and 2024 , respectively, which were offset by $ 748 and $ 218 of valuation allowance, respectively.

An excess tax deficiency of $ 879 and an excess tax benefit of $ 1,512 were recognized in the provision for income taxes for the six months ended June 30, 2025 and 2024 , respectively, which were offset by $ 879 and $ 1,512 of valuation allowance, respectively.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States. The Company is currently evaluating the impact the new tax law will have on its financial condition and results of operations, but does not expect the OBBBA to have a material impact on its effective tax rate in 2025.

17. Commitments and Contingencies

Certain of the Company’s product and services agreements include an indemnification provision for claims from third parties relating to the Company’s intellectual property. Such indemnification provisions are accounted for in accordance with ASC No. 450 “ Contingencies .” To date, there have been no claims made under such indemnification provisions.

The Company is subject from time to time to other legal proceedings and claims arising in the ordinary course of business. At this time, the Company does not believe that the resolution of any such matters will have a material adverse effect on its financial position, results of operations or cash flows.

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Item 2. Management’ s Discussion and Analysis of Financial Condition and Results of Operations

The following Management ’ s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements relating to future events or the future financial performance of Digimarc that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. See the discussion regarding forward-looking statements included in this Quarterly Report on Form 10-Q under the caption “ Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995. ”

The following discussion should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Readers are also urged to carefully review and consider the disclosures made in Part II, Item 1A ( “ Risk Factors ” ) of this Quarterly Report on Form 10-Q and in the audited consolidated financial statements and related notes included in our 2024 Annual Report, and other reports and filings we have made with the SEC.

Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “ Company, ” “ Digimarc, ” “ we, ” “ our, ” and “ us ” refer to Digimarc Corporation.

All dollar amounts within the tables below are in thousands. The percentages within the tables may not sum to 100% due to rounding.

Digimarc, Digimarc Barcode, The Barcode of Everything, Barcode of Everything, and the circle-d logo are registered trademarks of Digimarc Corporation. EVRYTHNG and EVRYTHNG PRODUCT CLOUD are registered trademarks of EVRYTHNG Limited ( “ EVRYTHNG ” ), a wholly owned subsidiary of Digimarc.

Overview

Digimarc, an Oregon corporation, is a pioneer and global leader in digital watermarking technologies. For nearly 30 years, Digimarc innovations and intellectual property in digital watermarking have been deployed in solutions built upon one or both of the following two things: the identification and the authentication of physical and digital items, often at massive scale, and often where other methods of identification or authentication don’t work well or don’t work at all.

Digimarc has maintained a relationship with a consortium of central banks for nearly 30 years, providing trusted technology to help deter digital counterfeiting of currency. The relationship was the first commercially successful large-scale use of our technologies and protects billions of banknotes in circulation globally.

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Our intellectual property contains many innovations in digital watermarking, content and object recognition, product authentication, and related fields. To protect our inventions, we have implemented an extensive intellectual property protection program that relies on a combination of patent, copyright, trademark and trade secret laws, and nondisclosure agreements and other contracts. As a result, we believe we have one of the world’s most extensive patent portfolios in digital watermarking and related fields, with approximately 734 U.S. and foreign patents granted and applications pending as of June 30, 2025. The patents in our portfolio each have a life of approximately 20 years from the patent’s effective filing date.

Critical Accounting Policies and Estimates

Detailed information about our critical accounting policies and estimates is set forth in Part III, Item 15 of our 2024 Annual Report (“Exhibits and Financial Statement Schedules”), in “Note 1: Description of Business and Summary of Significant Accounting Policies,” which is incorporated by reference into this Quarterly Report on Form 10-Q.

Results of Operations

The following table presents Consolidated Statements of Operations data for the periods indicated as a percentage of total revenue. Unless stated otherwise, all references in this Management’s Discussion and Analysis of Financial Condition and Results of Operations relate to the three and six months ended June 30, 2025, and all changes discussed with respect to such period reflect changes compared to the three and six months ended June 30, 2024.

2025		2024		2025		2024
Percentages are percent of total revenue
Revenue:
Subscription	58	%	61	%	57	%	60	%
Service	42	%	39	%	43	%	40	%
Total revenue	100	%	100	%	100	%	100	%
Cost of revenue:
Subscription (1)	9	%	7	%	8	%	7	%
Service (1)	17	%	16	%	16	%	17	%
Amortization expense on acquired intangible assets	15	%	11	%	13	%	11	%
Total cost of revenue	41	%	34	%	38	%	36	%
Gross profit	59	%	66	%	62	%	64	%
Operating expenses:
Sales and marketing	40	%	54	%	48	%	55	%
Research, development and engineering	57	%	64	%	70	%	66	%
General and administrative	63	%	42	%	59	%	43	%
Amortization expense on acquired intangible assets	4	%	3	%	3	%	3	%
Total operating expenses	164	%	162	%	180	%	167	%
Operating loss	(105	)%	(96	)%	(118	)%	(103	)%
Other income, net	3	%	7	%	3	%	6	%
Loss before income taxes	(103	)%	(89	)%	(115	)%	(96	)%
Provision for income taxes	(—	)%	(—	)%	(—	)%	(—	)%
Net loss	(103	)%	(89	)%	(115	)%	(97	)%

(1) Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.

Summary

Our commercial subscription revenue in fiscal 2025 will be negatively impacted by the termination of a commercial contract that ended in April 2025 with an international customer. The contract contributed $0.8 million and $1.6 million of subscription revenue during the three and six months ended June 30, 2024 compared to $0.2 million and $1.1 million of subscription revenue during the three and six months ended June 30, 2025. Our commercial subscription revenue in fiscal 2025 will also be negatively impacted by the expiration of a commercial contract that ended in June 2024 with a domestic customer. The contract contributed $1.1 million and $2.1 million of subscription revenue during the three and six months ended June 30, 2024. Our commercial subscription revenue in fiscal 2025 may also be negatively impacted by the renegotiation currently underway of a $3.1 million contract, which will most likely result in a reduction of up to $3.0 million in annual revenue. Our government service revenue in fiscal 2025 will be negatively impacted by a smaller approved budget by the Central Banks for program work in 2025. We expect government service revenue in fiscal 2025 to be $1.7 million to $1.9 million lower than in fiscal 2024.

Total revenue for the three months ended June 30, 2025 , decreased $2.4 million, to $8.0 million, compared to $10.4 million for the corresponding three months ended June 30, 2024 . Subscription revenue decreased $1.8 million, primarily reflecting the expiration of the two commercial contracts referenced above. Service revenue decreased $0.6 million, primarily reflecting lower government service revenue from the Central Banks.

Total revenue for the six months ended June 30, 2025 , decreased $2.9 million, to $17.4 million, compared to $20.3 million for the corresponding six months ended June 30, 2024 . Subscription revenue decreased $2.2 million, primarily reflecting the expiration of the two commercial contracts referenced above, partially offset by higher commercial subscription revenue from new and existing commercial contracts. Service revenue decreased $0.7 million, reflecting lower government service revenue from the Central Banks, partially offset by higher commercial service revenue from HolyGrail 2.0 recycling projects.

We expect our expenses in fiscal 2025 to be significantly lower than fiscal 2024 due to the reorganization we announced on February 26, 2025, which is expected to reduce our cash expenses by approximately $16.5 million on an annualized basis. We have also identified a total of approximately $5.5 million of other annualized cash cost savings that have been implemented or are being implemented later this year.

Total operating expenses for the three months ended June 30, 2025 , decreased $3.7 million, to $13.1 million, compared to $16.8 million for the corresponding three months ended June 30, 2024 . The decrease in operating expenses primarily reflects $4.9 million of lower cash compensation costs due to lower headcount, partially offset by $1.3 million of higher stock compensation costs .

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Total operating expenses for the six months ended June 30, 2025 , decreased $2.6 million, to $31.3 million, compared to $33.9 million for the corresponding six months ended June 30, 2024 . The decrease in operating expenses primarily reflects $2.8 million of lower cash compensation costs, $0.3 million of lower software and hardware costs and $0.3 million of lower other expenses, partially offset by higher professional service costs of $1.0 million. The $2.8 million of lower cash compensation costs primarily reflects $6.4 million of lower compensation costs due to lower headcount, partially offset by $3.2 million of higher cash severance costs incurred as a result of the reorganization.

Revenue

	Three Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)			Six Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)
Revenue:
Subscription	$ 4,624	$ 6,380	$ (1,756	)	(28	)%	$ 9,938	$ 12,142	$ (2,204	)	(18	)%
Service	3,386	3,999	(613	)	(15	)%	7,440	8,175	(735	)	(9	)%
Total	$ 8,010	$ 10,379	$ (2,369	)	(23	)%	$ 17,378	$ 20,317	$ (2,939	)	(14	)%
Revenue (as % of total revenue):
Subscription	58 %	61 %					57 %	60 %
Service	42 %	39 %					43 %	40 %
Total	100 %	100 %					100 %	100 %

Subscription

Subscription revenue consists primarily of revenue earned from subscription fees for access to our SaaS platform and products and, to a lesser extent, licensing fees for our software products. The majority of subscription contracts are recurring, paid in advance and recognized over the term of the subscription, which is typically one to three years.

The $1.8 million decrease in subscription revenue for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024 , primarily reflects the expiration of two commercial contracts.

The $2.2 million decrease in subscription revenue for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024 , primarily reflects the expiration of two commercial contracts, partially offset by higher commercial subscription revenue from new and existing commercial contracts.

Service

Service revenue consists primarily of revenue earned from the performance of software development services and, to a lesser extent, professional services. The majority of software development contracts are structured as time and materials agreements. Revenue for services is generally recognized as the services are performed. Billing for services rendered generally occurs within one month after the services are provided. Service contracts can range from days to several years in length. Our contract with the Central Banks, which accounts for the majority of our service revenue, has a contract term through December 31, 2029. The contract is subject to work plans that are reviewed and agreed upon quarterly. The contract provides for predetermined billing rates, which are adjusted annually to account for cost of living variables, and provides for the reimbursement of third party costs incurred to support the work plans.

The $0.6 million decrease in service revenue for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024 , primarily reflects $0.5 million of lower government service revenue from the Central Banks.

The $0.7 million decrease in service revenue for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024 , primarily reflects $1.1 million of lower government service revenue from the Central Banks, partially offset by $0.4 million of higher commercial service revenue from HolyGrail 2.0 recycling projects.

Revenue by geography

	Three Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)			Six Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)
Revenue by geography:
Domestic	$ 2,327	$ 3,471	$ (1,144	)	(33	)%	$ 4,473	$ 6,345	$ (1,872	)	(30	)%
International	5,683	6,908	(1,225	)	(18	)%	12,905	13,972	(1,067	)	(8	)%
Total	$ 8,010	$ 10,379	$ (2,369	)	(23	)%	$ 17,378	$ 20,317	$ (2,939	)	(14	)%
Revenue (as % of total revenue):
Domestic	29 %	33 %					26 %	31 %
International	71 %	67 %					74 %	69 %
Total	100 %	100 %					100 %	100 %

Domestic

The $1.1 million decrease in domestic revenue for the three months ended June 30, 2025 , compared to the corresponding three month s e nded June 30, 2024 , primarily reflects the expiration of a commercial contract in June 2024 with a domestic customer.

The $1.9 million decrease in domestic revenue for the six months ended June 30, 2025 , compared to the corresponding six month s e nded June 30, 2024 , primarily reflects the expiration of a commercial contract in June 2024 with a domestic customer, partially offset by higher subscription revenue from new and existing commercial contracts with domestic customers.

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International

The $1.2 million decrease in international revenue for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024 , primarily reflects the expiration of a commercial contract in April 2025 with an international customer, and $0.5 million of lower government service revenue from the Central Banks.

The $1.1 million decrease in international revenue for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024 , primarily reflects $1.1 million of lower government service revenue from the Central Banks and the expiration of a commercial contract in April 2025 with an international customer, partially offset by $0.4 million of higher commercial service revenue from HolyGrail 2.0 recycling projects .

Revenue by market

	Three Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)			Six Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)
Commercial:
Subscription	$ 4,324	$ 6,080	$ (1,756	)	(29	)%	$ 9,338	$ 11,542	$ (2,204	)	(19	)%
Service	39	177	(138	)	(78	)%	835	434	401		92	%
Total Commercial	$ 4,363	$ 6,257	$ (1,894	)	(30	)%	$ 10,173	$ 11,976	$ (1,803	)	(15	)%
Government:
Subscription	$ 300	$ 300	$ —		—	%	$ 600	$ 600	$ —		—	%
Service	3,347	3,822	(475	)	(12	)%	6,605	7,741	(1,136	)	(15	)%
Total Government	$ 3,647	$ 4,122	$ (475	)	(12	)%	$ 7,205	$ 8,341	$ (1,136	)	(14	)%
Total	$ 8,010	$ 10,379	$ (2,369	)	(23	)%	$ 17,378	$ 20,317	$ (2,939	)	(14	)%
Revenue (as % of total revenue):
Commercial	54 %	60 %					59 %	59 %
Government	46 %	40 %					41 %	41 %
Total	100 %	100 %					100 %	100 %

Commercial

The $1.9 million decrease in commercial revenue for the three months ended June 30, 2025 , compared to the corresponding t hree months ended June 30, 2024, primarily reflects the expiration of two commercial contracts.

The $1.8 million decrease in commercial revenue for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024, primarily reflects the expiration of two commercial contracts, partially offset by higher commercial subscription revenue from new and existing commercial contracts and $0.4 millio n of higher commercial service revenue from HolyGrail 2.0 recycling projects.

Government

The $0.5 million decrease in government revenue for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024 , primarily reflects $0.5 million of lower government service revenue from the Central Banks.

The $1.1 million decrease in government revenue for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024 , primarily reflects $1.1 million of lower government service revenue from the Central Banks.

Annual Recurring Revenue ( “ ARR ” )

	As of — June 30,	As of — June 30,	Dollar — Increase	Increase
	2025	2024	(Decrease)	(Decrease)
ARR	$ 15,881	$ 23,923	$ (8,042	)	(34	)%

ARR decreased $8.0 million from June 30, 2024 to June 30, 2025 , reflecting the expiration of two commercial contracts that accounted for a total of $9.3 million of ARR, partially offset by increases to ARR from new and existing commercial contracts.

We provide an ARR performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources has increased in recent years. ARR is calculated as the aggregation of annualized subscription fees from all of our commercial contracts as of the measurement date. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with, or to replace, either of those items. ARR is not a forecast and the contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

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Cost of revenue

Subscription . Cost of subscription revenue primarily includes:

• internet cloud hosting costs and image search data fees to support our subscription products; and

• amortization of capitalized patent costs and patent maintenance fees.

Service. Cost of service revenue primarily includes:

• compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our software developers, quality assurance personnel, professional services team and other personnel where we bill our customers for time and materials costs;

• payments to outside contractors that are billed to customers;

• charges for equipment and software directly used by customers;

• depreciation for equipment and software directly used by customers; and

• travel costs that are billed to customers.

Amortization expense on acquired intangible assets includes:

• amortization expense recognized on the developed technology intangible asset acquired in the EVRYTHNG acquisition.

Gross profit

	Three Months Ended June 30, — 2025	2024		Increase/(Decrease)		Increase/(Decrease)			Six Months Ended June 30, — 2025	2024		Increase/(Decrease)		Increase/(Decrease)
Gross Profit:
Subscription (1)	$ 3,909	$	5,657	$	(1,748	)	(31	)%	$ 8,479	$	10,672	$	(2,193	)	(21	)%
Service (1)	2,003		2,338		(335	)	(14	)%	4,650		4,675		(25	)	(1	)%
Amortization expense on acquired intangible assets	(1,205	)	(1,132	)	(73	)	(6	)%	(2,337	)	(2,272	)	(65	)	(3	)%
Total	$ 4,707	$	6,863	$	(2,156	)	(31	)%	$ 10,792	$	13,075	$	(2,283	)	(17	)%
Gross Profit Margin:
Subscription (1)	85	%	89	%					85	%	88	%
Service (1)	59	%	58	%					63	%	57	%
Total	59	%	66	%					62	%	64	%

(1) Gross Profit and Gross Profit Margin for Subscription and Service excludes amortization expense on acquired intangible assets.

The $2.2 million decrease in total gross profit for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024 , primarily reflects $2.4 million of lower revenue, partially offset by $0.3 million of lower cost of service revenue.

The $2.3 million decrease in total gross profit for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024 , primarily reflects $2.9 million of lower revenue, partially offset by $0.7 million of lower cost of service revenue.

The decrease in subscription gross profit margin, excluding amortization expense on acquired intangible assets, for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024 , primarily reflects lower subscription revenue.

The decrease in subscription gross profit margin, excluding amortization expense on acquired intangible assets, for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024 , primarily reflects lower subscription revenue.

The increase in service gross profit margin, excluding amortization expense on acquired intangible assets, for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024 , primarily reflects a more favorable mix of service revenue.

The increase in service gross profit margin, excluding amortization expense on acquired intangible assets, for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024 , primarily reflects a more favorable mix of service revenue.

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Operating expenses

Sales and marketing

	Three Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)			Six Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)
Sales and marketing	$ 3,231	$ 5,616	$ (2,385	)	(42	)%	$ 8,309	$ 11,152	$ (2,843	)	(25	)%
Sales and marketing (as % of total revenue)	40 %	54 %					48 %	55 %

Sales and marketing expenses consist primarily of:

• compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our sales, marketing, product, operations and customer support personnel;

• travel and market research costs, and costs associated with marketing programs, such as trade shows, public relations and new product launches;

• professional services and outside contractor costs for sales and marketing and product initiatives; and

• the allocation of facilities and information technology costs.

The $2.4 million decrease in sales and marketing expenses for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024, primarily reflects:

• lower cash compensation costs of $1.9 million due to lower headcount; and

• lower professional services costs of $0.2 million.

The $2.8 million decrease in sales and marketing expenses for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024, primarily reflects:

• lower cash compensation costs of $2.9 million due to lower headcount;

• l ower stock compensation costs of $0.4 million; and

• lower other costs of $0.3 million; partially offset by

• higher cash severance costs of $0.9 million incurred as a result of the reorganization.

Research, development and engineering

	Three Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)			Six Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)
Research, development and engineering	$ 4,536	$ 6,644	$ (2,108	)	(32	)%	$ 12,170	$ 13,385	$ (1,215	)	(9	)%
Research, development and engineering (as % of total revenue)	57 %	64 %					70 %	66 %

Research, development and engineering expenses consist primarily of:

• compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our software and hardware developers and quality assurance personnel;

• payments to outside contractors for software development services;

• the purchase of materials and services for platform and product development; and

• the allocation of facilities and information technology costs.

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The $2.1 million decrease in research, development and engineering expenses for the three months ended June 30, 2025 , compared to the corresponding three mo nths ended June 30, 2024, primarily reflects:

• lower cash compensation costs of $2.2 million due to lower headcount; and

• lower professional services costs of $0.2 million; partially offset by

• higher stock compensation costs of $0.6 million.

The $1.2 million decrease in research, development and engineering expenses for the six months ended June 30, 2025 , compared to the corresponding six mo nths ended June 30, 2024, primarily reflects:

• lower cash compensation costs of $2.8 million due to lower headcount; and

• lower professional service costs of $0.4 million; partially offset by

• higher cash severance costs of $1.6 million incurred as a result of the reorganization; and

• higher stock compensation costs of $0.4 million.

General and administrative

	Three Months Ended June 30,		Dollar	Percent	Six Months Ended June 30,		Dollar	Percent
	2025	2024	Increase/(Decrease)	Increase/(Decrease)	2025	2024	Increase/(Decrease)	Increase/(Decrease)
General and administrative	$ 5,078	$ 4,314	$ 764	18 %	$ 10,259	$ 8,834	$ 1,425	16 %
General and administrative (as % of total revenue)	63 %	42 %			59 %	43 %

We incur general and administrative costs in the functional areas of finance, legal, human resources, intellectual property, executive and board of directors. Costs for facilities and information technology are also managed as part of the general and administrative processes. These costs are allocated to sales and marketing, research, development and engineering, and general and administrative based on relative headcount.

General and administrative expenses consist primarily of:

• compensation, benefits and incentive compensation in the form of cash and stock-based compensation and related costs of our general and administrative personnel;

• third party and professional fees associated with legal, accounting and human resources functions;

• costs associated with being a public company;

• third party costs, including filing and governmental regulatory fees and outside legal fees and translation costs, related to the filing and maintenance of our intellectual property; and

• the allocation of facilities and information technology costs.

The $0.8 million increase in general and administrative expenses for the three months ended June 30, 2025 , compared to the corresponding three mo nths ended June 30, 2024, primarily reflects:

• higher stock compensation costs of $0.7 million; and

• higher professional service costs of $0.5 million primarily due to higher legal expenses; partially offset by

• lower cash compensation costs of $0.8 million due to lower headcount.

The $1.4 million increase in general and administrative expenses for the six months ended June 30, 2025 , compared to the corresponding six mo nths ended June 30, 2024, primarily reflects:

• higher professional services costs of $1.5 million primarily due to higher legal expenses; and

• higher cash severance costs of $0.7 million incurred as a result of the reorganization; partially offset by

• lower cash compensation costs of $0.7 million; and

• lower software and hardware costs of $0.2 million.

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Amortization expense on acquired intangible assets

	Three Months Ended June 30,		Dollar	Percent	Six Months Ended June 30,		Dollar	Percent
	2025	2024	Increase/(Decrease)	Increase/(Decrease)	2025	2024	Increase/(Decrease)	Increase/(Decrease)
Amortization expense on acquired intangible assets	$ 288	$ 271	$ 17	6 %	$ 559	$ 543	$ 16	3 %
Amortization expense on acquired intangible assets (as % of total revenue)	4 %	3 %			3 %	3 %

Amortization expense on acquired intangible assets relates to amortization expense recognized on the customer relationships intangible asset acquired in the EVRYTHNG acquisition.

The insignificant change in amortization expense on acquired intangible assets reflects the impact of changes in foreign currency exchange rates.

Stock-based compensation

	Three Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)		Six Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)
Cost of revenue	$ 253	$ 156	$ 97		62 %	$ 390	$ 409	$ (19	)	(5	)%
Sales and marketing	795	798	(3	)	— %	1,150	1,510	(360	)	(24	)%
Research, development and engineering	1,221	645	576		89 %	1,628	1,263	365		29	%
General and administrative	1,502	807	695		86 %	1,863	2,055	(192	)	(9	)%
Total	$ 3,771	$ 2,406	$ 1,365		57 %	$ 5,031	$ 5,237	$ (206	)	(4	)%

The $1.4 million increase in st ock-based compensation expense for the three months ended June 30, 2025, compared to the corresponding three months ended June 30, 2024 , primarily reflects a larger number of employee stock grants .

The $0.2 million decrease in st ock-based compensation expense for the six months ended June 30, 2025, compared to the corresponding six months ended June 30, 2024 , primarily reflects a lower estimate of the future achievement of performance conditions on performance restricted stock unit (“PRSU”) awards as well as the timing of new stock grants, partially offset by a larger number of employee stock grants .

We anticipate incurring an additional $18.9 million in stock-based compensation expense through June 30, 2029, for stock awards outstanding as of June 30, 2025.

Other income, net

	Three Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)			Six Months Ended June 30, — 2025	2024	Dollar — Increase/(Decrease)	Increase/(Decrease)
Other income, net	$ 210	$ 723	(513	)	(71	)%	$ 579	$ 1,251	(672	)	(54	)%
Other income, net (as % of total revenue)	3 %	7 %					3 %	6 %

The $0.5 million decrease in other income, net for the three months ended June 30, 2025 , compared to the corresponding three months ended June 30, 2024 , primarily reflects lower interest income due to lower marketable securities balances and interest rates.

The $0.7 million decrease in other income, net for the six months ended June 30, 2025 , compared to the corresponding six months ended June 30, 2024 , primarily reflects lower interest income due to lower marketable securities balances and interest rates.

Income Taxes

The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the six months ended June 30, 2025 and 2024 was 0%. Our effective tax rate is significantly lower than our statutory tax rate because we have a valuation allowance recorded against our deferred tax assets.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”), which includes a broad range of tax reform provisions, was signed into law in the United States. The Company is currently evaluating the impact the new tax law will have on its financial condition and results of operations, but does not expect the OBBBA to have a material impact on its effective tax rate in 2025.

The valuation allowance against deferred tax assets as of June 30, 2025, was $111.0 million, an increase of $6.7 million from $104.4 million as of December 31, 2024.

We continually assess the applicability of a valuation allowance against our deferred tax assets. Based upon the positive and negative evidence available as of June 30, 2025, and largely due to the cumulative loss incurred by us over the last several years, which is considered a significant piece of negative evidence when assessing the realizability of deferred tax assets, a valuation allowance is recorded against our deferred tax assets. We will not record tax benefits on any future losses until it is determined that those tax benefits will be realized. Future reversals of the valuation allowance would result in a tax benefit in the period recognized.

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Non-GAAP Financial Measures

The following discussion and analysis include both financial measures in accordance with U.S. GAAP (“GAAP”) as well as non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position or cash flows that excludes amounts that are not normally excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to, GAAP financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Our management uses and relies on Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP loss per share (diluted), which are all non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods.

Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.

We define Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP loss per share (diluted) excluding the adjustments in the table below. These non-GAAP financial measures are an important measure of our operating performance because they allow management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing non-cash and non-recurring activities that can affect comparability.

We have included a reconciliation of our financial measures calculated in accordance with GAAP to the most comparable non-GAAP financial measures. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between us and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definitions being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

The following table presents a reconciliation of Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP loss per share (diluted) for the three and six months ended June 30, 2025 and 2024:

	Three Months Ended June 30, — 2025		2024		Six Months Ended June 30, — 2025		2024
GAAP gross profit	$ 4,707		$ 6,863		$ 10,792		$ 13,075
Amortization of acquired intangible assets	1,205		1,132		2,337		2,272
Amortization and write-off of other intangible assets (1)	219		209		438		421
Stock-based compensation	253		156		390		409
Non-GAAP gross profit	$ 6,384		$ 8,360		$ 13,957		$ 16,177
Non-GAAP gross profit margin	80	%	81	%	80	%	80	%
GAAP operating expenses	$ 13,133		$ 16,845		$ 31,297		$ 33,914
Depreciation and write-off of property and equipment	(138	)	(198	)	(284	)	(391	)
Amortization of acquired intangible assets	(288	)	(271	)	(559	)	(543	)
Amortization and write-off of other intangible assets	(227	)	(31	)	(201	)	(164	)
Amortization of lease right of use assets under operating leases	(103	)	(86	)	(201	)	(173	)
Stock-based compensation	(3,518	)	(2,250	)	(4,641	)	(4,828	)
Non-GAAP operating expenses	$ 8,859		$ 14,009		$ 25,411		$ 27,815
GAAP net loss	$ (8,220	)	$ (9,270	)	$ (19,950	)	$ (19,608	)
Total adjustments to gross profit	1,677		1,497		3,165		3,102
Total adjustments to operating expenses	4,274		2,836		5,886		6,099
Non-GAAP net loss	$ (2,269	)	$ (4,937	)	$ (10,899	)	$ (10,407	)
GAAP loss per share (diluted)	$ (0.38	)	$ (0.43	)	$ (0.93	)	$ (0.93	)
Non-GAAP net loss	$ (2,269	)	$ (4,937	)	$ (10,899	)	$ (10,407	)
Non-GAAP loss per share (diluted)	$ (0.11	)	$ (0.23	)	$ (0.51	)	$ (0.49	)

(1) In the second quarter of fiscal 2025, management updated its definition of Non-GAAP gross profit to adjust for the amortization of patent maintenance costs. The related amortization expense for the three and six months ended June 30, 2025 and 2024 is now reflected in “amortization and write-off of other intangible assets” above to calculate Non-GAAP gross profit, Non-GAAP net loss and Non-GAAP loss per share (diluted).

Non-GAAP gross profit for the three months ended June 30, 2025 , decreased by $2.0 million compared to the three months ended June 30, 2024 . The decrease primarily reflects lower revenue, partially offset by lower cost of service revenue.

Non-GAAP gross profit for the six months ended June 30, 2025 , decreased by $2.2 million compared to the six months ended June 30, 2024 . The decrease primarily reflects lower revenue, partially offset by lower cost of service revenue.

Non-GAAP gross profit margin for the three months ended June 30, 2025 , decreased to 80% compared to 81% for the three months ended June 30, 2024 . The decrease primarily reflects lower subscription revenue.

Non-GAAP gross profit margin f or the six months ended June 30, 2025, remained flat compared to the six months ended June 30, 2024. The impact of lower subscription revenue was offset by a more favorable mix of service revenue.

Non-GAAP operating expenses for the three months ended June 30, 2025, decreased $5.2 million compared to the three months ended June 30, 2024. The decrease primarily reflects $4.9 million of lower cash compensation costs due to lower headcount .

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Non-GAAP operating expense s for the six months ended June 30, 2025, decreased $2.4 million compared to the six months ended June 30, 2024. The decrease primarily reflects $2.8 million of lower cash compensation costs, $0.3 million of lower software and hardware costs and $0.3 million of lower other expenses, partially offset by higher professional service costs of $1.0 million. The $2.8 million of lower cash compensation costs primarily reflects $6.4 million of lower compensation costs due to lower headcount, partially offset by $3.2 million of higher cash severance costs incurred as a result of the reorganization.

Liquidity and Capital Resources

	June 30,	December 31,
	2025	2024
Working capital	$ 15,685	$ 30,193
Current ratio (1)	2.7:1	4.3:1
Cash, cash equivalents and short-term marketable securities	$ 16,088	$ 28,730

(1) The current ratio is calculated by dividing total current assets by total current liabilities.

T he $12.6 million decrease in cash, cash equivalents and marketable securities at June 30, 2025, from December 31, 2024, resulted primarily from:

• cash used in operations;

• purchases of common stock related to tax withholding in connection with the vesting of restricted stock, restricted stock units, and performance restricted stock units; and

• purchases of property and equipment and capitalized patent costs.

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and trade accounts receivable. We place our cash and cash equivalents with major banks and financial institutions and at times deposits may exceed insured limits. Marketable securities include U.S. treasuries, federal agency notes, and commercial paper. Ou r investment policy requires our portfolio to be invested to ensure that the greater of $3.0 million or 7% of the invested funds will be available within 30 days’ notice.

Other than cash used for operating needs, which may include short-term marketable securities, our investment policy limits our credit exposure to any one financial institution or type of financial instrument by limiting the maximum of 5% of our cash and cash equivalents and marketable securities or $1.0 million, whichever is greater, to be invested in any one issuer except for the U.S. government, U.S. federal agencies and U.S.-backed securities, which have no limits, at the time of purchase. Our investment policy also limits our credit exposure by limiting to a maximum of 40% of our cash and cash equivalents and marketable securities, or $15.0 million, whichever is lesser, to be invested in any one industry category (e.g., financial, energy, etc.) at the time of purchase. As a result, we believe our credit risk associated with cash and investments to be minimal.

A decline in the market value of any security that is deemed to be other-than-temporary is charged to earnings. To determine whether an impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until a market price recovery and evidence indicating that the cost of the investment is recoverable outweighs evidence to the contrary. There have been no other-than-temporary impairments identified or recorded by us for the three and six months ended June 30, 2025 and 2024.

Cash flows from operating activities

The components of cash flows used in operating activities were:

	Six Months Ended June 30, — 2025		2024		Dollar — Increase/(Decrease)	Increase/(Decrease)
Net loss	$ (19,950	)	$ (19,608	)	$ 342		2	%
Non-cash items	9,362		9,037		(325	)	(4	)%
Changes in operating assets and liabilities	414		(4,681	)	(5,095	)	(109	)%
Net cash used in operating activities	$ (10,174	)	$ (15,252	)	$ (5,078	)	(33	)%

Cash flows used in operating activities for the six months ended June 30, 2025, decreased by $5.1 million, compared to the corresponding six months ended June 30, 2024 , primarily reflecting a $5.1 million improvement due to the favorable timing of changes in operating assets and liabilities. The favorable timing reflects the timing of customer receipts and vendor payments, lower incentive compensation paid in 2025 for fiscal 2024 than paid in 2024 for fiscal 2023, and the timing and amount of refundable tax credits.

We incurred cash severance costs of $3.2 million as a result of the reorganization we announced on February 26, 2025, of which $3.0 million was paid during the six months ended June 30, 2025. The remaining $0.2 million of severance costs are expected to be paid during the three months ending September 30, 2025.

Cash flows from investing activities

Cash flows from investing activities for the six months ended June 30, 2025, increased by $15.4 million, compared to the corresponding six months ended June 30, 2024 , primarily reflecting lower purchases of marketable securities and higher proceeds from maturities of marketable securities.

Cash flows from financing activities

Cash flows from financing activities for the six months ended June 30, 2025, decreased by $31.9 million, compared to the corresponding six months ended June 30, 2024 , primarily reflecting the $32.2 million of net cash proceeds raised from our registered direct stock offering in February 2024.

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Future Cash Expectations

We believe that our current cash, cash equivalents, and marketable securities balances will satisfy our projected working capital and capital expenditure requirements for at least the next 12 months.

Our subscription revenue in fiscal 2025 will be negatively impacted by the termination of a commercial contract that contributed $3.3 million of subscription revenue in fiscal 2024. This contract ended in April 2025 and contributed $1.1 million of subscription revenue in fiscal 2025. Our subscription revenue in fiscal 2025 will also be negatively impacted by the expiration of a commercial contract in June 2024. This contract contributed $2.1 million of subscription revenue in fiscal 2024. Our subscription revenue in fiscal 2025 may also be negatively impacted by the renegotiation currently underway of a $3.1 million commercial contract, which will most likely result in a reduction of up to $3.0 million in annual revenue.

We expect government service revenue in fiscal 2025 to be $1.7 million to $1.9 million lower than fiscal 2024 due to a smaller approved budget from the Central Banks for program work in 2025.

We expect our expenses in fiscal 2025 to be significantly lower than fiscal 2024 due to the reorganization we announced on February 26, 2025, which is expected to reduce our cash expenses by approximately $16.5 million on an annualized basis. We have also identified approximately $5.5 million of other annualized cash cost savings that have been implemented or are being implemented later this year.

Registered Direct Offering

On February 24, 2024, we entered into purchase agreements with certain investors providing for the issuance and sale by us of 929 thousand shares of our common stock in a registered direct stock offering. The common shares were offered at a price of $35.00 per share, and the gross cash proceeds to us were $32.5 million. We incurred $0.3 million of legal costs related to the offering. The closing of the registered direct offering occurred on February 27, 2024.

Employee Stock Purchase Plan

On February 25, 2025, the Company’s Board of Directors adopted the 2025 Employee Stock Purchase Plan (“ESPP”). The Company reserved a total o f 250 thousand s hares and as of June 30, 2025, there were 250 thousand s hares authorized and available for future issuance under the ESPP. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to 15% of their salary for the purchase of the Company’s common stock at a discounted price per share. The Company’s current offering period began on June 16, 2025, with the first purchase period ending on December 15, 2025. The stock-based compensation expense and payroll withholding for the ESPP during the three and six months ended June 30, 2025 were not material.

Incentive Plan Amendment

On May 7, 2025, the Company’s shareholders approved an amendment to the Digimarc Corporation 2018 Stock Incentive Plan (as amended, the “2018 Plan”) to, among other things, increase the number of shares authorized for issuance by 950 thousand shares.

Shelf Registration

On June 23, 2023, we filed a new shelf registration statement on Form S-3 that included $34.6 million of unsold securities from our prior shelf registration statement filed on June 5, 2020. The new shelf registration statement became effective on July 19, 2023, and expires on July 19, 2026. Under the new shelf registration statement, we may sell securities in one or more offerings up to $100.0 million. As of June 30, 2025, $67.5 million remained available under the new shelf registration statement.

We may sell shares under the shelf registration and/or use similar or other financing means to raise working capital in the future, if necessary, to support continued investment in our growth initiatives. We may also raise capital in the future to fund acquisitions and/or investments in complementary businesses, technologies or product lines. If it becomes necessary to obtain additional financing, we may not be able to do so, or if these funds are available, they may not be available on satisfactory terms. These factors may inhibit our near-term ability to obtain financing.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933. Words such as “may,” “might,” “plan,” “should,” “could,” “expect,” “anticipate,” “intend,” “believe,” “project,” “forecast,” “estimate,” “continue,” and variations of such terms or similar expressions are intended to identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements, and investors are cautioned not to place undue reliance on such statements. We believe that the following factors, among others (including those described in Item 1A. “Risk Factors” of our 2024 Annual Report), could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us. Forward-looking statements include but are not limited to statements relating to:

• trends and sources of future revenue;

• anticipated revenue to be generated from current contracts;

• anticipated expenses, costs, margins, provision for income taxes and investment activities;

• our expectations regarding expense reductions resulting from our recent reorganization and implementation of other annualized cash cost savings;

• our assumptions and expectations related to stock awards, including future stock-based compensation expense;

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• our expectations regarding the timing of payment of our remaining severance obligations related to our recent reorganization;

• our belief that we have one of the world’s most extensive patent portfolios in digital watermarking and related fields;

• our beliefs regarding our critical accounting policies;

• business opportunities that could require that we seek additional financing and our ability to do so;

• our expected short-term and long-term liquidity positions;

• our capital expenditure and working capital requirements and our ability to fund our capital expenditure and working capital needs through cash flow from operations or financing;

• our expectations regarding our ability to meet future financial obligations as they become due within the coming fiscal year;

• our use of cash, cash equivalents and marketable securities in upcoming quarters and the possibility that our deposits of cash and cash equivalents with major banks and financial institutions may exceed insured limits;

• protection, development and monetization of our intellectual property portfolio;

• our expectations regarding the impact of the OBBBA on our tax rate; and

• our beliefs related to legal proceedings and claims arising in the ordinary course of business.

We believe that the risk factors specified above and the risk factors contained in 2024 Part I, Item 1A. “Risk Factors” of our 2024 Annual Report, among others, could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf. Investors should understand that it is not possible to predict or identify all risk factors and that there may be other factors that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements made by us or by persons acting on our behalf apply only as of the date of this Quarterly Report on Form 10-Q. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of the filing of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act), under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective.

Changes in Controls

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION.

Item 1. Legal Proceedings.

On July 7, 2025, a putative class action complaint was filed against Digimarc, Riley McCormack and Charles Beck in the Portland Division of the District Court of Oregon (case 3:25-cv-00779) alleging certain violations of federal securities laws and seeking unspecified damages.

Item 1A. Risk Factors

Our business, financial condition, results of operations and cash flows may be affected by a number of factors. Detailed information about risk factors that may affect Digimarc’s actual results are set forth in Part I, Item 1A: “Risk Factors” of our 2024 Annual Report. The risks and uncertainties described in our 2024 Annual Report are those risks of which we are aware and that we consider to be material to our business. If any of those risks and uncertainties develop into actual events, our business, financial condition, results of operations or cash flows could be materially adversely affected. In that case, the trading price of our common stock could decline. As of June 30, 2025, except as set forth below, there have been no material changes to the risk factors previously disclosed in our 2024 Annual Report.

Actions of activist shareholders and securities litigation could be costly and time-consuming, divert management’s attention and resources, and have an adverse effect on our business.

While we value open dialogue and input from our shareholders, activist shareholders could take actions that could be costly and time-consuming for us, disrupt our operations, and divert the attention of our board of directors, management, and employees. These actions could include public proposals and requests for potential nominations of candidates for election to our board of directors, requests to pursue a strategic combination or other transaction, or other special requests. As a result, we have retained, and may in the future retain, additional services of various professionals to advise us in these matters, including legal, financial and communications advisers, the costs of which have negatively impacted our quarterly financial results, and may negatively impact our financial results in the future. In addition, perceived uncertainties as to our future direction, strategy, or leadership created as a consequence of activist shareholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new or retain existing investors, customers, directors, employees or other partners, and cause our stock price to experience periods of volatility or otherwise be adversely affected. Volatility in our stock price may in the future cause us to become the target of securities litigation, which could result in substantial costs and divert management’s attention and the attention and resources of our board of directors from our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) Purchases of Equity Securities by the Issuer and Affiliated Purchases

We repurchase shares of common stock in satisfaction of required withholding of income tax liability in connection with the vesting of restricted stock, restricted stock units and performance restricted stock units.

The following table sets forth information regarding purchases of our equity securities during the three months ended June 30, 2025:

			(c)	(d) — Approximate
			Total number	dollar value
			of shares	of shares that
	(a)	(b)	purchased as	may yet be
	Total number	Average price	part of publicly	purchased
	of shares	paid per	announced plans	under the plans
Period	purchased (1)	share (1)	or programs	or programs
Month 1
April 1, 2025 to April 30, 2025	52	$ 13.08	—	$ —
Month 2
May 1, 2025 to May 31, 2025	37,345	$ 13.45	—	$ —
Month 3
June 1, 2025 to June 30, 2025	—	$ —	—	$ —
Total	37,397	$ 13.45	—	$ —

(1) Shares of common stock withheld (purchased) by us in satisfaction of required withholding of income tax liability upon vesting of restricted stock, restricted stock units and performance restricted stock units.

Item 5. Other Information

None of our officers or directors adopted, modified, or terminated a “Rule 10b5 - 1 trading arrangement” or a “non-Rule 10b5 - 1 trading arrangement,” as defined in Item 408 of Regulation S-K, during the three months ended June 30, 2025 .

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Item 6. Exhibits.

Exhibit Number	Exhibit Description
10.1	Digimarc Corporation 2018 Incentive Plan, as amended
10.2	Digimarc Corporation Employee Stock Purchase Plan
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 14, 2025
By:	/s/ CHARLES BECK
	CHARLES BECK
	Chief Financial Officer
	(Duly Authorized Officer and Principal Financial and Accounting Officer)

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