Company: DMRC
Filing Date: 2025-11-13
Form Type: 10-Q
Source: 0001437749-25-034816
Chunk: 15

Company: Digimarc CORP
Filing Date: 2025-11-13
Form: 10-Q
Item: Part I, Item 8
Chunk 15
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 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 September 30,    Nine Months Ended September 30,  
   2025    2024    2025    2024  
 Stock price  $—  $—  $13.16  $36.64 
 Expected volatility   —   —   70.9%  66.3%
 Risk-free interest rate   —   —   3.8%  4.3%

   Stock-Based Compensation

       Three Months Ended September 30,    Nine Months Ended September 30