Tue, May 6, 8:27 PM (12 days ago)
### Digimarc Corporation (DMRC) Q1 2025 Financial Summary **Financial Health and Performance:** - **Revenue:** Total revenue for Q1 2025 was $9.4 million, a decrease of $0.6 million from Q1 2024. Subscription revenue decreased by $0.4 million, while service revenue decreased by $0.1 million. - **Profit Margins:** Gross profit margin was 65%, slightly down from 63% in Q1 2024. Operating expenses increased by $1.1 million to $18.2 million, primarily due to $3.2 million in cash severance costs from a reorganization and higher professional services costs. - **Cash Flow:** Net cash used in operating activities was $5.5 million, an improvement from $8.4 million in Q1 2024. Cash flows from investing activities improved by $10.6 million, mainly due to lower purchases of marketable securities and higher proceeds from maturities. - **Earnings:** Net loss was $11.7 million, compared to $10.3 million in Q1 2024. Loss per share was $0.55, slightly higher than $0.50 in Q1 2024. **Key Performance Metrics:** - **Annual Recurring Revenue (ARR):** ARR decreased by $3.9 million to $19.97 million, reflecting the expiration of a commercial contract in June 2024. - **Operating Expenses:** Increased by $1.1 million due to reorganization costs and higher professional services costs, partially offset by lower stock compensation and cash compensation costs. - **Cash and Marketable Securities:** Decreased by $7.2 million to $21.57 million, primarily due to cash used in operations and purchases of property and equipment. **Trends and Uncertainties:** - **Revenue Impact:** Subscription revenue is expected to be negatively impacted by the termination of a commercial contract and the expiration of another contract. - **Cost Savings:** The reorganization is expected to reduce cash expenses by approximately $16.5 million annually, with additional cost savings identified. - **Future Operations:** The company expects to meet its working capital and capital expenditure requirements for at least the next 12 months. **Future Outlook:** - **Revenue Expectations:** Subscription revenue may be negatively impacted by contract terminations and expirations. Government service revenue is expected to be lower due to a smaller approved budget. - **Cost Management:** The company aims to reduce expenses significantly due to the reorganization and identified cost savings. - **Liquidity:** Current cash, cash equivalents, and marketable securities are expected to satisfy projected working capital and capital expenditure requirements for the next 12 months. **Ticker:** DMRC