Company: DMRC
Filing Date: 2025-05-06
Form Type: 10-Q
Source: 0001437749-25-014773
Chunk: 28

Company: Digimarc CORP
Filing Date: 2025-05-06
Form: 10-Q
Item: Part I, Item 8
Chunk 28
---
 under the Company’s stock incentive plan.

Other income, net

      Three Months Ended March 31, 

      Dollar 

      Percent 

      2025 

      2024 

      Increase/(Decrease) 

      Increase/(Decrease) 

      Other income, net 
      
     $
     369

     $
     528

     $
     (159
     )

     (30
     )%

      Other income, net (as % of total revenue) 
      
      4 
     %

     5
     %

The $0.2 million decrease in other income, net for the three month period ended March 31, 2025, compared to the corresponding three month period ended March 31, 2024, primarily reflects lower interest income due to lower interest rates.

Income Taxes 

The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the three month periods ended March 31, 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.

The valuation allowance against deferred tax assets as of March 31, 2025, was $107.7 million, an increase of $3.4 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 March 31, 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.

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