Company: DMRC
Filing Date: 2025-02-27
Form Type: 10-K
Source: 0001437749-25-005471
Chunk: 80

Company: Digimarc CORP
Filing Date: 2025-02-27
Form: 10-K
Item: Item 1
Chunk 80
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      Dollar 

      Percent 

      December 31, 

      December 31, 

      Increase 

      Increase 

      2024 

      2023 

      (Decrease) 

      (Decrease) 

      ARR 
      
     $
     19,964

     $
     22,251

     $
     (2,287
     )

     (10
     )%

ARR decreased $2.3 million, or 10%, from December 31, 2023 to December 31, 2024, primarily reflecting a $5.8 million decrease in ARR due to the expiration of a commercial contract in June 2024, partially offset by an increase in ARR from new and existing commercial contracts. 

We provide an ARR performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources has increased in recent years. ARR is calculated as the aggregation of annualized subscription fees from all of our commercial contracts as of the measurement date. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with, or to replace, either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers.

Cost of revenue

Subscription. Cost of subscription revenue primarily includes:

      • 
      internet cloud hosting costs and image search data fees to support our software subscriptions; and 

      • 
      amortization of capitalized patent costs and patent maintenance fees. 

Service. Cost of service revenue primarily includes:

      • 
      compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our software developers, quality assurance personnel, professional services team and other personnel where we bill our customers for time and materials costs; 

      • 
      payments to outside contractors that are billed to customers; 

      • 
      charges for equipment and software directly used by customers;  

      • 
      depreciation for equipment and software directly used by customers; and 

      • 
      travel costs that are billed to customers. 

      19

Amortization expense on acquired intangible assets. Amortization expense includes:

      • 
      amortization expense recognized on the developed technology intangible asset acquired in the EVRYTHNG