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Digimarc (DMRC) investor relations material
Digimarc Q2 2025 earnings summary
Complete event summary combining all related documents: earnings call transcript, report, and slide presentation.
Executive summary
Q2 2025 revenue declined 23% year-over-year to $8.0M, mainly due to the expiration of major commercial contracts and lower government service revenue.
Annual recurring revenue dropped to $15.9M from $23.9M year-over-year, reflecting contract expirations and churn, partially offset by new and expanded commercial contracts.
Net loss narrowed to $8.2M ($0.38/share) from $9.3M ($0.43/share) year-over-year; non-GAAP net loss improved to $2.3M ($0.11/share) from $4.9M ($0.23/share).
Operating expenses fell 22% to $13.1M, driven by cost-saving initiatives and lower headcount.
Significant progress made in product innovation and commercial execution, including the launch of a gift card fraud prevention solution and new ARR from a European packaging customer.
Financial highlights
Q2 2025 revenue was $8.0M, down from $10.4M in Q2 2024; subscription revenue fell 28% to $4.6M, service revenue fell 15% to $3.4M.
Gross profit margin for Q2 2025 was 59% (down from 66%); subscription gross margin was 85%, service gross margin was 59%.
Free cash flow usage improved to $5.0M from $6.9M year-over-year; adjusted free cash flow was $3.8M, a 45% improvement.
Cash, cash equivalents, and marketable securities totaled $16.1M at June 30, 2025, down from $28.7M at year-end 2024.
Non-GAAP operating expenses reduced to $8.9M from $14.0M year-over-year.
Outlook and guidance
Positive non-GAAP net income and free cash flow targeted for Q4 2025, with ARR expected to trough in Q3 or Q4 2025 and reacceleration anticipated in 2026.
Cash flow usage expected to decrease further as cost savings from reorganization are realized; cash balance expected to rebuild via operating cash flow in 2026.
Up to $3.1M in annual revenue at risk from contract renegotiations in 2H 2025; government service revenue expected to be $1.7M–$1.9M lower than 2024.
Management believes current liquidity is sufficient for at least the next 12 months.
Next Digimarc earnings date

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