Company: DMRC
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001437749-25-005471
Chunk: 55

Company: Digimarc CORP
Filing Date: 2025-02-27
Form: 10-K
Item: Item 1
Chunk 55
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, we lack the history and insight that benefited us in fields conventionally using digital watermarking. Although we have extensive experience in the commercial application of digital watermarking, we are investing in but may not be as well-positioned for these other opportunities. Accordingly, it may be difficult for us to achieve success in other technologies we might pursue.

(6) A small number of customers account for a substantial portion of our revenue, and the loss of any large contract could materially disrupt our business.

Historically, we have derived a significant portion of our revenue from a limited number of customers. Five customers represented approximately 76% of our revenue for the year ended December 31, 2024.

Nearly half of our revenue came from our contract with the Central Banks in 2024 and 2023. That contract expires at the end of 2029. The customer contracts we enter into may contain termination for convenience provisions or may not include automatic renewal provisions. If we were to lose any such contract for any reason, or if our relationship with these customers or the Central Banks were materially modified, our financial results would be adversely affected. For example, we expect our government service revenue in 2025 to be 12% to 14% lower than 2024 due to a smaller approved budget for program work in 2025.

We expect to continue to depend upon a small number of customers for a significant portion of our revenue for the foreseeable future. The loss of, or decline in, orders or backlog from one or more major customers could reduce our revenue and have a material adverse effect on our financial results. For example, we expect that our subscription revenue in 2025 will be negatively impacted by the termination of a commercial contract that contributed $3.3 million of subscription revenue in 2024. This contract is expected to end in April 2025 and contribute $1.1 million of subscription revenue in 2025. Additionally, our subscription revenue in 2025 may also be impacted negatively by the expiration of a commercial contract in June 2024 that may or may not be extended. This contract contributed $2.1 million of subscription revenue in 2024.

(7) The market for our products is highly competitive, and alternative technologies or larger companies that compete with us may be more successful than us in gaining market share, which would decrease our revenue and profits.

The markets in which we compete for business are intensely competitive and rapidly evolving. We expect competition to continue from both existing competitors and