# EDGAR Filing Document

**Accession Number:** 0001438231
**File Stem:** 0001437749-26-016725
**Filing Date:** 2026-5
**Character Count:** 127236
**Document Hash:** 6c124486ecdad07eb986e29a17e7a79f
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001437749-26-016725.hdr.sgml**: 20260513

**ACCESSION NUMBER**: 0001437749-26-016725

**CONFORMED SUBMISSION TYPE**: 10-Q

**PUBLIC DOCUMENT COUNT**: 96

**CONFORMED PERIOD OF REPORT**: 20260331

**FILED AS OF DATE**: 20260513

**DATE AS OF CHANGE**: 20260513

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** Digimarc CORP
- **CENTRAL INDEX KEY:** 0001438231
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 262828185
- **STATE OF INCORPORATION:** OR
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 10-Q
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-34108
- **FILM NUMBER:** 26973354

**BUSINESS ADDRESS:**
- **STREET 1:** 8500 SW CREEKSIDE PLACE
- **CITY:** BEAVERTON
- **STATE:** OR
- **ZIP:** 97008
- **BUSINESS PHONE:** 503-469-4800

**MAIL ADDRESS:**
- **STREET 1:** 8500 SW CREEKSIDE PLACE
- **CITY:** BEAVERTON
- **STATE:** OR
- **ZIP:** 97008

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DMRC CORP
- **DATE OF NAME CHANGE:** 20080620

?xml version='1.0' encoding='ASCII'? dmrc20260331c_10q.htm

[**Table of Contents**](#toc)

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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM 10-Q**

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**(Mark One)**

**☒&nbsp;&nbsp;&nbsp;&nbsp; QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the quarterly period ended March 31, 2026**

**OR**

**☐&nbsp;&nbsp;&nbsp;&nbsp; TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from to** 

**Commission File Number: 001-34108**

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## DIGIMARC CORPORATION
**(Exact name of registrant as specified in its charter)**

------

---

| | |
|:---|:---|
| **Oregon** | **26-2828185** |
| **(State or other jurisdiction of**<br> **incorporation or organization)** | **(I.R.S. Employer**<br> **Identification No.)** |

---

**8500 SW Creekside Place, Beaverton, Oregon 97008**

**(Address of principal executive offices) (Zip Code)**

**(503) 469-4800**

**(Registrant's telephone number, including area code)**

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**Securities registered pursuant to Section 12(b) of the Act:**

---

| | | |
|:---|:---|:---|
| **Title of Each Class** | **Trading Symbol** | **Name of Each Exchange on Which Registered** |
| **Common Stock, $0.001 Par Value Per Share** | **DMRC** | **The NASDAQ Stock Market LLC** |

---

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.&nbsp;&nbsp;&nbsp;&nbsp;Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).&nbsp;&nbsp;&nbsp;&nbsp;Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
| Emerging growth company | ☐ |  |  |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act).&nbsp;&nbsp;&nbsp;&nbsp;Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

As of May 6, 2026, there were 22,241,975 shares of the registrant's common stock, par value $0.001 per share, outstanding.

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[**Table of Contents**](#toc)

**Table of Contents**

---

| | | |
|:---|:---|:---|
| [**PART I. FINANCIAL INFORMATION**](#part1) | [**PART I. FINANCIAL INFORMATION**](#part1) | [**PART I. FINANCIAL INFORMATION**](#part1) |
| Item 1. | [Financial Statements (Unaudited):](#fs) | [3](#fs) |
|  | [Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025](#bs) | [3](#bs) |
|  | [Consolidated Statements of Operations and Comprehensive Loss for the <u>three months ended March 31, 2026 and 2025</u>](#income) | [4](#income) |
|  | [Consolidated Statements of Shareholders' Equity for the <u>three months ended March 31, 2026 and 2025</u>](#equity) | [5](#equity) |
|  | [Consolidated Statements of Cash Flows for the three <u>months ended March 31, 2026 and 2025</u>](#cashflow) | [6](#cashflow) |
|  | [Notes to Consolidated Financial Statements](#notes) | [7](#notes) |
| Item 2. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#mda) | [18](#mda) |
| Item 3.  | [Quantitative and Qualitative Disclosures About Market Risk](#Item3) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[27](#Item3) |
| Item 4. | [Controls and Procedures](#controls) | [27](#controls) |
| [**PART II. OTHER INFORMATION**](#partII) | [**PART II. OTHER INFORMATION**](#partII) |  |
| Item 1. | [Legal Proceedings](#legal) | [28](#legal) |
| Item 1A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  | [Risk Factors](#riskfactors) | [28](#riskfactors) |
| Item 2. | [Unregistered Sales of Equity Securities and Use of Proceeds](#unregistered) | [28](#unregistered) |
| Item 5. | [Other Information](#item5) | [28](#item5) |
| Item 6. | [Exhibits](#exhibits) | [29](#exhibits) |
| [SIGNATURES](#signatures) | [SIGNATURES](#signatures) | [30](#signatures) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2

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[**Table of Contents**](#toc)

**PART I. FINANCIAL INFORMATION**

**Item 1.**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Financial Statements.**

**DIGIMARC CORPORATION**

**CONSOLIDATED BALANCE SHEETS**

**(In thousands, except per share data)**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| **ASSETS** |  |  |
| Current assets: |  |  |
| Cash and cash equivalents | $8818 | $9820 |
| Marketable securities | 1145 | 3046 |
| Trade accounts receivable, net | 7092 | 6513 |
| Other current assets | 1988 | 1961 |
| Total current assets | 19043 | 21340 |
| Property and equipment, net | 989 | 1104 |
| Intangibles, net | 15244 | 17045 |
| Goodwill | 8923 | 9056 |
| Lease right of use assets | 3121 | 3238 |
| Other assets | 1190 | 1175 |
| Total assets | $48510 | $52958 |
| **LIABILITIES AND SHAREHOLDERS' EQUITY** |  |  |
| Current liabilities: |  |  |
| Accounts payable and other accrued liabilities | $6004 | $4359 |
| Deferred revenue | 4227 | 3993 |
| Total current liabilities | 10231 | 8352 |
| Long-term lease liabilities | 4073 | 4314 |
| Other long-term liabilities | 140 | 63 |
| Total liabilities | 14444 | 12729 |
| Commitments and contingencies (Note 15) |  |  |
| Shareholders' equity: |  |  |
| Preferred stock (par value $0.001 per share, 2,500 authorized, 10 shares issued and outstanding at March 31, 2026 and December 31, 2025) | 50 | 50 |
| Common stock (par value $0.001 per share, 50,000 authorized, 22,140 and 21,901 shares issued and outstanding at March 31, 2026 and December 31, 2025, respectively) | 22 | 22 |
| Additional paid-in capital | 425789 | 424665 |
| Accumulated deficit | (390053) | (383087) |
| Accumulated other comprehensive loss | (1742) | (1421) |
| Total shareholders' equity | 34066 | 40229 |
| Total liabilities and shareholders' equity | $48510 | $52958 |

---

The accompanying notes are an integral part of these consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 3

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[**Table of Contents**](#toc)

**DIGIMARC CORPORATION**

**CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS**

**(In thousands, except per share data)**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Revenue: |  |  |
| Subscription | $4369 | $5314 |
| Service | 3210 | 4054 |
| Total revenue | 7579 | 9368 |
| Cost of revenue: |  |  |
| Subscription <sup>(1)</sup> | 456 | 744 |
| Service <sup>(1)</sup> | 1378 | 1407 |
| Amortization expense on acquired intangible assets | 1208 | 1132 |
| Total cost of revenue | 3042 | 3283 |
| Gross profit | 4537 | 6085 |
| Operating expenses: |  |  |
| Sales and marketing | 2082 | 5078 |
| Research, development and engineering | 3747 | 7634 |
| General and administrative | 5555 | 5181 |
| Amortization expense on acquired intangible assets | 289 | 271 |
| Total operating expenses | 11673 | 18164 |
| Operating loss | (7136) | (12079) |
| Other income, net | 171 | 369 |
| Loss before income taxes | (6965) | (11710) |
| Provision for income taxes | (1) | (20) |
| Net loss | $(6966) | $(11730) |
| Net loss per share: |  |  |
| Net loss per share — basic | $(0.32) | $(0.55) |
| Net loss per share — diluted | $(0.32) | $(0.55) |
| Weighted average shares outstanding — basic | 22008 | 21521 |
| Weighted average shares outstanding — diluted | 22008 | 21521 |
| Comprehensive loss: |  |  |
| Unrealized gain (loss) on marketable securities, net of tax of $0 | $(21) | $(11) |
| Foreign currency translation adjustment, net of tax of $0 | (300) | 679 |
| Other comprehensive income (loss) | $(321) | $668 |
| Net loss | (6966) | (11730) |
| Comprehensive loss | $(7287) | $(11062) |

---

------

<sup>(1)</sup> Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.

The accompanying notes are an integral part of these consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 4

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[**Table of Contents**](#toc)

 **DIGIMARC CORPORATION**

**CONSOLIDATED STATEMENTS OF SHAREHOLDERS**' **EQUITY**

**(In thousands)**

**(UNAUDITED)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | ***Accumulated*** |  |
|  |  |  |  |  | ***Additional*** |  | ***Other*** | ***Total*** |
|  | ***Preferred Stock*** | ***Preferred Stock*** | ***Common Stock*** | ***Common Stock*** | ***Paid-in*** | ***Accumulated*** | ***Comprehensive*** | ***Shareholders'*** |
|  | ***Shares*** | ***Amount*** | ***Shares*** | ***Amount*** | ***Capital*** | ***Deficit*** | ***Loss*** | ***Equity*** |
| **Three Months Ended March 31, 2026** |  |  |  |  |  |  |  |  |
| Balance at December 31, 2025 | 10 | $50 | 21901 | $22 | $424665 | $(383087) | $(1421) | $40229 |
| &nbsp;&nbsp;&nbsp; Vesting of restricted stock units |  |  | 153 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Vesting of performance restricted stock units |  |  | 255 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Purchase of common stock |  |  | (169) |  | (885) |  |  | (885) |
| Stock-based compensation | *—* |  | *—* |  | 2009 |  |  | 2009 |
| Unrealized gain (loss) on marketable securities | *—* |  | *—* |  |  |  | (21) | (21) |
| Foreign currency translation adjustments | *—* |  | *—* |  |  |  | (300) | (300) |
| Net loss | *—* |  | *—* |  |  | (6966) |  | (6966) |
| Balance at March 31, 2026 | 10 | $50 | 22140 | $22 | $425789 | $(390053) | $(1742) | $34066 |
| **Three Months Ended March 31, 2025** |  |  |  |  |  |  |  |  |
| Balance at December 31, 2024 | 10 | $50 | 21495 | $21 | $415049 | $(350778) | $(2983) | $61359 |
| &nbsp;&nbsp;&nbsp; Vesting of restricted stock units |  |  | 49 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Vesting of performance restricted stock units |  |  | 49 |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp; Purchase of common stock |  |  | (45) | 1 | (1546) |  |  | (1545) |
| Stock-based compensation | *—* |  | *—* |  | 1265 |  |  | 1265 |
| Unrealized gain (loss) on marketable securities | *—* |  | *—* |  |  |  | (11) | (11) |
| Foreign currency translation adjustments | *—* |  | *—* |  |  |  | 679 | 679 |
| Net loss | *—* |  | *—* |  |  | (11730) |  | (11730) |
| Balance at March 31, 2025 | 10 | $50 | 21548 | $22 | $414768 | $(362508) | $(2315) | $50017 |

---

The accompanying notes are an integral part of these consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 5

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[**Table of Contents**](#toc)

**DIGIMARC CORPORATION**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(In thousands)**

**(UNAUDITED)**

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Cash flows from operating activities: |  |  |
| Net loss | $(6966) | $(11730) |
| Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| Depreciation and write-off of property and equipment | 154 | 146 |
| Amortization of acquired intangible assets | 1497 | 1403 |
| Amortization and write-off of other intangible assets | 328 | 193 |
| Amortization of lease right of use assets under operating leases | 117 | 98 |
| Stock-based compensation | 2009 | 1260 |
| Increase (decrease) in allowance for doubtful accounts | 21 |  |
| Changes in operating assets and liabilities: |  |  |
| Trade accounts receivable | (566) | (149) |
| Other current assets | (44) | 1331 |
| Other assets | (44) | (105) |
| Accounts payable and other accrued liabilities | 1624 | 1549 |
| Deferred revenue | 231 | 689 |
| Lease liability and other long-term liabilities | (208) | (171) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash provided by (used in) operating activities | (1847) | (5486) |
| Cash flows from investing activities: |  |  |
| Purchase of property and equipment | (44) | (55) |
| Capitalized patent costs | (77) | (88) |
| Proceeds from maturities of marketable securities | 2128 | 6564 |
| Purchases of marketable securities | (227) | (2864) |
| Net cash provided by (used in) investing activities | 1780 | 3557 |
| Cash flows from financing activities: |  |  |
| Purchase of common stock | (885) | (1545) |
| Repayment of loans | (3) | (15) |
| Net cash provided by (used in) financing activities | (888) | (1560) |
| Effect of exchange rate on cash | (47) | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net increase (decrease) in cash and cash equivalents | (1002) | (3463) |
| Cash and cash equivalents at beginning of period | 9820 | 12365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents at end of period | $8818 | $8902 |
| Supplemental disclosure of cash flow information: |  |  |
| Cash received (paid) for income taxes, net | $(4) | $(3) |
| Supplemental schedule of non-cash investing activities: |  |  |
| Property and equipment and patent costs in accounts payable | $19 | $28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based compensation capitalized to software and patent costs | $— | $5 |

---

The accompanying notes are an integral part of these consolidated financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 6

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[**Table of Contents**](#toc)

**DIGIMARC CORPORATION**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**(In thousands, except per share data)**

**(UNAUDITED)**

***1.* Description of Business and Significant Accounting Policies**

***Description of Business***

Digimarc, an Oregon corporation, is building the trust layer for the modern world. As artificial intelligence ("AI") accelerates how people produce, share, and interact with the world, the risks of fraud, counterfeiting, and misinformation are growing exponentially.

Digimarc's innovative, highly scalable, and ultra-secure solutions make it possible for consumers, businesses, and intelligent systems to instantly verify what's real, protect what matters, and transact with confidence. Digimarc's solutions for retail loss prevention, product authentication, and digital trust and integrity are built to counter the speed and sophistication of today's AI-enabled threats. Trusted by a consortium of the world's central banks (the "Central Banks") to deter the counterfeiting of global currency, Digimarc exists to protect the truth in every interaction, spanning both the physical and digital worlds.

---

| | |
|:---|:---|
| **Physical Digimarc Solutions** | **Digital Digimarc Solutions** |
| **Anti-Counterfeiting:** Restore trust with counterfeit resistant packaging and product verification. | **Internal Compliance:** Ensure policy compliance and prevent misuse of digital assets. |
| **Counterfeiting Deterrence:** Deter digital counterfeiting of global currencies. | **Leak Detection:** Identify leaked information and its source instantly. |
| **Product Swap Prevention:** Reduce weight-based shrink at grocery checkouts. | **Piracy Prevention:** Gain insight into - and control of - digital asset use. |
| **Recycling:** Boost product sustainability while revealing never-before-seen data. | **Provenance & Authenticity:** Restore trust and ensure fair use of digital assets. |
| **Secure Gift Cards:** Fight gift card fraud with automated tamper detection. | **Royalty Monitoring:** Ensure content creators and owners receive proper payment. |

---

***Interim Consolidated Financial Statements***

Our significant accounting policies are detailed in "Note *1:* Description of Business and Summary of Significant Accounting Policies" of our Annual Report on Form *10*-K for the year ended *December 31, 2025*, which was filed with the U.S. Securities and Exchange Commission ("SEC") on *March 11, 2026* (the "*2025* Annual Report").

The accompanying interim consolidated financial statements have been prepared from the Company's records without audit and, in management's opinion, include all adjustments (consisting of only normal recurring adjustments) necessary to fairly reflect the financial condition and the results of operations for the periods presented. Certain information and note disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles in the United States ("GAAP") have been condensed or omitted in accordance with the rules and regulations of the SEC.

These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the *2025* Annual Report. The results of operations for the interim periods presented in these consolidated financial statements are *not* necessarily indicative of the results for the full year.

***Principles of Consolidation***

The consolidated financial statements include the accounts of Digimarc and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.

***Accounting Pronouncements Issued But *Not* Yet Adopted***

In *November 2024,* the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") *No. 2024*-*03,* "*Income Statement (Subtopic *220*-*40*) - Reporting Comprehensive Income - Expense Disaggregation Disclosures*". The ASU requires disaggregated disclosure of income statement expenses, primarily on disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements. This authoritative guidance will be effective for the Company starting in the fiscal year ending *December 31, 2027* for annual periods and in the *first* quarter of the fiscal year ending *December 31, 2028* for interim periods, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company's disclosures.

In *September 2025,* the FASB issued ASU *No. 2025*-*06,* "*Intangibles - Goodwill and Other - Internal-Use Software (Subtopic *350*-*40*): Targeted Improvements to the Accounting for Internal-Use Software*", which includes amendments intended to modernize the accounting for software costs by removing references to software development stages and clarifying the capitalization threshold. The amendments are effective for annual periods beginning after *December 15, 2027,* and interim reporting periods within those annual reporting periods, with early adoption permitted. The amendments *may* be applied prospectively, retrospectively, or through a modified transition approach. The Company is currently evaluating the effect of adopting this ASU on the Company's consolidated financial statements and disclosures.

In *December 2025,* the FASB issued ASU *No. 2025-11,* "*Interim Reporting (Topic *270*): Narrow*-*Scope Improvements*", which provides amendments intended to clarify interim disclosure requirements and improve the usability and consistency of interim financial reporting. The amendments are effective for public business entities for interim reporting periods within annual reporting periods beginning after *December 15, 2027,* and for all other entities for interim reporting periods within annual reporting periods beginning after *December 15, 2028,* with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company's disclosures.

In *December 2025,* the FASB issued ASU *No. 2025-12,* "*Codification Improvements,*" which includes amendments designed to clarify, correct, or enhance various areas of the FASB Accounting Standards Codification. These amendments do *not* introduce new accounting requirements but are intended to improve the clarity and consistency of the existing guidance. The amendments are effective for annual reporting periods beginning after *December 15, 2026,* and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company's disclosures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *7*

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[**Table of Contents**](#toc)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

***2.* Fair Value of Financial Instruments**

The estimated fair values of the Company's financial instruments, which include cash equivalents, accounts receivable, accounts payable and other accrued liabilities, approximate their carrying values due to the short-term nature of these instruments. The Company's marketable securities are classified as available-for-sale and are reported at fair value. Unrealized holding gains and losses are excluded from earnings and are reported net of tax in "accumulated other comprehensive loss" in the Consolidated Balance Sheets until realized. Realized gains and losses are included in "other income, net" in the Consolidated Statements of Operations and Comprehensive Loss and are derived using the specific identification method for determining the cost of marketable securities sold.

In accordance with Accounting Standards Codification ("ASC") *No. 820* "*Fair Value Measurements and Disclosures*", the Company defines its fair value hierarchy based on *three* levels of inputs, of which the *first two* are considered observable and the last unobservable, that *may* be used to measure fair value, in the following:

• Level *1* Pricing inputs are quoted prices available in active markets for identical investments as of the reporting date.

• Level *2* Pricing inputs are quoted for similar investments, or inputs that are observable, either directly or indirectly, for substantially the full term through corroboration with observable market data. Level *2* includes investments valued at quoted prices adjusted for legal or contractual restrictions specific to these investments.

• Level *3* Pricing inputs are unobservable for the investment; that is, the inputs reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability.

The Company's fair value hierarchy for its cash equivalents and marketable securities was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **March 31, 2026** | ***Level 1*** | ***Level 2*** | ***Level 3*** | ***Total*** |
| Money market securities | $2042 | $— | $– $| 2042 |
| Commercial paper |  | 3157 | – | 3157 |
| Corporate notes |  | 1145 | – | 1145 |
| Pre-refunded municipals |  | 350 | – | 350 |
| Total | $2042 | $4652 | $– $| 6694 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| **December 31, 2025** | ***Level 1*** | ***Level 2*** | ***Level 3*** | ***Total*** |
| Money market securities | $1210 | $— | $– $| 1210 |
| Commercial paper |  | 7093 | – | 7093 |
| Federal agency notes |  | 2223 | – | 2223 |
| Corporate notes |  | 923 | – | 923 |
| Total | $1210 | $10239 | $– $| 11449 |

---

The fair value maturities of the Company's cash equivalents and marketable securities as of *March 31, 2026*, were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | ***Maturities by Period*** | ***Maturities by Period*** | ***Maturities by Period*** |
|  |  | ***Less than*** | ***More than*** |
|  | ***Total*** | ***1 year*** | ***10 years*** |
| Cash equivalents and marketable securities | $6694 | $6694 | $— |

---

The Company considers all highly liquid marketable securities with original maturities of *90* days or less at the date of acquisition to be cash equivalents. Cash equivalents include commercial paper, money market securities, federal agency notes, corporate notes, and pre-refunded municipals totaling $5,549 and $8,403 at *March 31, 2026* and *December 31, 2025*, respectively. Cash equivalents are carried at either cost or fair value, depending on the type of security.

***3.* Revenue Recognition**

The Company derives its revenue primarily from software subscriptions and software development services. Applicable revenue recognition criteria are considered separately for each performance obligation as follows:

• Subscription revenue consists primarily of revenue earned from subscription fees for access to the Company's SaaS platform and products and, to a lesser extent, licensing fees for software products and intellectual property. The majority of subscription contracts are recurring, paid in advance and recognized over the term of the subscription, which is typically one to three years.

• Service revenue consists primarily of revenue earned from the performance of software development services and, to a lesser extent, professional services. The majority of software development contracts are structured as time and materials agreements. Revenue for services is generally recognized as the services are performed. Billing for services rendered generally occurs within one month after the services are provided.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *8*

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[**Table of Contents**](#toc)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

Customer arrangements *may* contain multiple deliverables such as software platform subscriptions, software product subscriptions, and professional services. Subscriptions and services offered are usually distinct performance obligations. When they are *not* capable of being distinct, they are combined with other subscriptions or services until a distinct performance obligation is identified. To determine the transaction price, management considers the terms of the contract and the Company's customary business practices. Some contracts *may* contain variable consideration. In those cases, management estimates the amount of variable consideration based on the sum of probability-weighted amounts in a range of possible consideration amounts. As part of this assessment, management evaluates whether any of the variable consideration is constrained and if it is, it is *not* included in the transaction price. The consideration is allocated between distinct performance obligations based on their stand-alone selling prices. When the standalone selling prices are *not* directly observable, management makes estimates based on reasonably available information, including market conditions, specific factors affecting the Company, and information about the customer. The Company recognizes the revenue associated with each performance obligation as the obligation is fulfilled, which for subscriptions is typically recognized ratably over time, and for services is typically recognized when they are performed.

All revenue recognized in the Consolidated Statements of Operations and Comprehensive Loss is considered to be revenue from contracts with customers.

The following table provides information about disaggregated revenue by major target market in the Company's single reporting segment:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Commercial: |  |  |
| Subscription | $4069 | $5014 |
| Service | 59 | 796 |
| Total Commercial | 4128 | 5810 |
| Government: |  |  |
| Subscription | $300 | $300 |
| Service | 3151 | 3258 |
| Total Government | 3451 | 3558 |
| Total | $7579 | $9368 |

---

The Company has contract assets from contracts with customers that are classified as "trade accounts receivable" in the Consolidated Balance Sheets. See [Note *7*](#Trade_Accounts_Receivable) for more information about trade accounts receivable.

The Company has contract assets from capitalized contract acquisition costs that are classified as "other current assets" and "other assets" in the Consolidated Balance Sheets. These contract acquisition costs are recognized in proportion to the revenue recognized from the contract they are associated with.

The following table provides information about contract assets:

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| Contract acquisition costs, current | $162 | $193 |
| Contract acquisition costs, long-term | 150 | 176 |
| Total | $312 | $369 |

---

The Company has contract liabilities from contracts with customers that are classified as "deferred revenue" in the Consolidated Balance Sheets. Deferred revenue consists of billings in advance for subscriptions and services for which the performance obligation has *not* been satisfied.

The following table provides information about contract liabilities:

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| Deferred revenue, current | $4227 | $3993 |
| Deferred revenue, long-term | 14 | 17 |
| Total | $4241 | $4010 |

---

The Company recognized $1,785 of revenue during the *three* months ended *March 31, 2026*, that was included in the contract liability balance as of *December 31, 2025*.

The aggregate amount of the transaction prices from contractual obligations that are unsatisfied or partially unsatisfied was $26,712 and $27,989 as of *March 31, 2026*, and *December 31, 2025*, respectively. As of *March 31, 2026*, the Company expects $21,396 of the $26,712 to be recognized as revenue during the next twelve months.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 9

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[**Table of Contents**](#toc)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

***4.* Segment Information**

*Significant Segment Expenses*

The Company derives its revenue from a single reporting segment: product digitization solutions. Revenue is generated in this segment primarily through software subscriptions and software development services. The Company manages its business activities on a consolidated basis. In addition, the Chief Executive Officer of the Company, as the chief operating decision-maker ("CODM"), reviews the Company's operating results and makes decisions to allocate resources based on consolidated financial information. As such, the Company has one single reportable segment. The CODM uses consolidated net income (loss) as a performance measure and total consolidated assets as an asset measure, to assess performance of the Company, to allocate working capital, and to monitor budget versus actual results.

The following table illustrates reported segment revenue, segment profit and loss, and significant segment expenses.

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Revenue: |  |  |
| Subscription | $4369 | $5314 |
| Service | 3210 | 4054 |
| Total revenue | 7579 | 9368 |
| Cost of revenue: |  |  |
| Subscription <sup>(1)</sup> | 456 | 744 |
| Service <sup>(1)</sup> | 1378 | 1407 |
| Amortization expense on acquired intangible assets | 1208 | 1132 |
| Total cost of revenue | 3042 | 3283 |
| Operating expenses: |  |  |
| Cash compensation | 4650 | 12041 |
| Stock-based compensation | 1662 | 1123 |
| Professional services and consultants | 3480 | 2853 |
| Software and hardware | 513 | 853 |
| Depreciation and amortization | 563 | 476 |
| Other segment items <sup>(2)</sup> | 805 | 818 |
| Total operating expenses | 11673 | 18164 |
| Operating loss | (7136) | (12079) |
| Other income, net | 171 | 369 |
| Provision for income taxes | (1) | (20) |
| Net loss | $(6966) | $(11730) |

---

------

<sup>(*1*)</sup> Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.

<sup>(*2*)</sup> Other segment items include training and travel expenses, recruiting expenses, rent and facility expenses, bad debt expenses and other miscellaneous costs.

*Geographic Information*

The Company markets its products in the U.S. and in non-U.S. countries through its sales personnel and partners. Revenue by geographic area, based upon the "bill-to" location, was as follows:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Domestic | $1868 | $2146 |
| International <sup>(1)</sup> | 5711 | 7222 |
| Total | $7579 | $9368 |

---

------

<sup>(*1*)</sup> Revenue from the Central Banks, consisting of a consortium of central banks around the world, is classified as international revenue. Reporting revenue by country for this customer is *not* practicable.

*Major Customers*

The following customers accounted for 10% or more of revenue:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Customer A | 45% | 38% |
| Customer B | 12% | 19% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *10*

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[**Table of Contents**](#toc)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

***5.* Stock-Based Compensation**

Stock-based compensation includes expense charges for all stock-based awards to employees and directors. These awards include restricted stock awards ("RSA"), restricted stock units ("RSU"), performance restricted stock units ("PRSU"), and shares offered for purchase under the Company's Employee Stock Purchase Plan ("ESPP").

Stock-based compensation expense related to internal labor is capitalized to software and patent costs based on direct labor hours charged to capitalized software and patent costs.

***Determining Fair Value***

*Restricted Stock Awards*

The fair value of RSAs that vest upon meeting a service condition is based on the fair market value of the Company's common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally three to four years for employee grants and one to three years for director grants.

*Restricted Stock Units*

The fair value of RSU awards that vest upon meeting a service condition is based on the fair market value of the Company's common stock on the date of the grant (measurement date) and is recognized on a straight-line basis over the service period of the award, which is generally three to four years for employee grants.

*Performance Restricted Stock Units*

The fair value of 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 one to 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.

*Employee Stock Purchase Program*

The fair value of shares offered for purchase under the Company's ESPP is determined at the beginning of each offering period (measurement date) using the Black-Scholes 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 eighteen months.

***Stock-Based Compensation***

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Stock-based compensation: |  |  |
| Cost of revenue | $347 | $137 |
| Sales and marketing | 56 | 355 |
| Research, development and engineering | 619 | 407 |
| General and administrative | 987 | 361 |
| Stock-based compensation expense | 2009 | 1260 |
| Capitalized to software and patent costs |  | 5 |
| Total stock-based compensation | $2009 | $1265 |

---

The following table sets forth total unrecognized compensation costs related to non-vested stock-based awards granted under the Company's stock incentive plan:

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| Total unrecognized compensation costs | $9962 | $13110 |

---

Total unrecognized compensation costs will be adjusted based on updates to the estimated future achievement of performance conditions on PRSU awards as well as for any future forfeitures if and when they occur.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *11*

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[**Table of Contents**](#toc)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

The Company expects to recognize the total unrecognized compensation costs as of *March 31, 2026*, for all non-vested stock-based awards over weighted average periods through *March 31, 2030*, as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | ***RSAs*** | ***RSAs*** | ***RSUs*** | ***RSUs*** | ***PRSUs*** | ***PRSUs*** | ***ESPP*** | ***ESPP*** |
| Weighted average period (in years) |  | 0.63 |  | 1.60 |  | 1.95 |  | 0.75 |

---

As of *March 31, 2026*, under the Company's stock incentive plan, an additional 2,517 shares remained available for future grants, and under the Company's ESPP, an additional 189 shares remained available for future offering periods. The Company issues new shares upon the grants of RSAs, upon vesting of RSU and PRSU awards, and upon purchase of ESPP shares.

*Restricted Stock Awards Activity*

The following table presents the unvested RSA activity:

---

| | | |
|:---|:---|:---|
|  |  | ***Weighted*** |
|  |  | ***Average*** |
|  | ***Number of*** | ***Grant Date*** |
| **Three Months Ended March 31, 2026:** | ***Shares*** | ***Fair Value*** |
| Unvested balance at December 31, 2025 | $85 | $15.77 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted |  | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested | (2) | $35.82 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited |  | $— |
| Unvested balance at March 31, 2026 | $83 | $15.32 |

---

The fair value of RSAs vested is as follows:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Fair value of RSAs vested | $12 | $301 |

---

*Restricted Stock Units Activity*

The following table presents the unvested RSU award activity:

---

| | | |
|:---|:---|:---|
|  |  | ***Weighted*** |
|  |  | ***Average*** |
|  | ***Number of*** | ***Grant Date*** |
| **Three Months Ended March 31, 2026:** | ***Shares*** | ***Fair Value*** |
| Unvested balance at December 31, 2025 | $584 | $15.32 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Granted | 77 | $4.79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Vested | (153) | $11.62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Forfeited | (34) | $21.08 |
| Unvested balance at March 31, 2026 | $474 | $14.40 |

---

The fair value of RSU awards vested is as follows:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| Fair value of RSU awards vested | $761 | $1726 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *12*

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[**Table of Contents**](#toc)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

*Performance Restricted Stock Units Activity*

The following table presents the unvested PRSU award activity:

---

| | | |
|:---|:---|:---|
|  |  | ***Weighted*** |
|  |  | ***Average*** |
|  | ***Number of*** | ***Grant Date*** |
| **Three Months Ended March 31, 2026:** | ***Shares*** | ***Fair Value*** |
| Unvested balance at December 31, 2025 | $533 | $20.70 |
| Change in units based on performance expectations | (26) | $61.43 |
| Granted |  | $— |
| Vested | (255) | $12.86 |
| Forfeited | (29) | $30.55 |
| Unvested balance at March 31, 2026 | $223 | $23.53 |

---

The fair value of PRSU awards vested is as follows:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Fair value of PRSU awards vested | $1373 | $1707 |

---

***6.* Earnings Per Share**

The Company calculates basic and diluted earnings per share in accordance with ASC *No. 260,* "*Earnings Per Share*," using the treasury stock method.

Basic earnings per share excludes dilution and is calculated by dividing earnings by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing earnings by the weighted-average number of common shares, as adjusted for the potentially dilutive effect of unvested RSUs and PRSUs, and outstanding ESPP purchase rights. The dilutive effect of unvested RSUs and PRSUs and outstanding ESPP purchase rights is determined using the treasury stock method. RSAs are included in shares outstanding on the date of grant.

The following table reconciles earnings (loss) per share:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| **Basic Earnings (Loss) per Share:** |  |  |
| Net loss — basic | $(6966) | $(11730) |
| Weighted average shares outstanding — basic | 22008 | 21521 |
| Net loss per share — basic | $(0.32) | $(0.55) |
| **Diluted Earnings (Loss) per Share:** |  |  |
| Net loss — diluted | $(6966) | $(11730) |
| Weighted average shares outstanding — diluted | 22008 | 21521 |
| Net loss per share — diluted | $(0.32) | $(0.55) |

---

The following table indicates the stock equivalents related to unvested RSUs and PRSUs that were anti-dilutive and excluded from diluted earnings (loss) per share calculations:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| Anti-dilutive shares due to net loss |  | 119 |

---

***7.* Trade Accounts Receivable**

*Trade Accounts Receivable*

Trade accounts receivables are recorded at the contractual or invoiced amount.

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| Trade accounts receivable, current | $7871 | $7271 |
| Trade accounts receivable, long-term | 42 | 90 |
| Allowance for doubtful accounts | (779) | (758) |
| Trade accounts receivable, net | $7134 | $6603 |
| Unpaid deferred revenue included in trade accounts receivable | $1534 | $2597 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *13*

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[**Table of Contents**](#toc)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

*Allowance for Doubtful Accounts*

The Company's accounts receivables are subject to concentrations of credit risk. The Company maintains an allowance for its doubtful accounts receivable to reflect any estimated credit losses. The allowance is established in accordance with the current expected credit loss model, which requires the estimation of expected credit losses over the contractual life of financial assets. The allowance is calculated using a forward-looking probability-weighted approach based on historical loss experience, current economic conditions, and reasonable and supportable forecasts. The Company records the allowance in "general and administrative" expense in the Consolidated Statements of Operations and Comprehensive Loss, up to the amount of revenue recognized to date for each account. Any incremental allowance is recorded as an offset to "deferred revenue" in the Consolidated Balance Sheets. Account receivables are written off and charged against the recorded allowance when the Company has exhausted collection efforts without success.

*Unpaid Deferred Revenue*

The unpaid deferred revenue that is included in trade accounts receivable is billed in accordance with the provisions of the contracts with the Company's customers.

*Major Customers*

The following customers accounted for *10%* or more of trade accounts receivable, net:

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| Company A | 30% | 47% |
| Company B | 27% | 19% |

---

***8.* Property and Equipment**

Property and equipment are stated at cost. Repairs and maintenance are charged to expense when incurred.

Depreciation on property and equipment is calculated using the straight-line method over the estimated useful lives of the assets, generally two to ten years. Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the lease term.

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| Software | 6065 | 6061 |
| Equipment | 2628 | 2621 |
| Leasehold improvements | 192 | 227 |
| Office furniture and fixtures | 63 | 63 |
| Gross property and equipment | 8948 | 8972 |
| Accumulated depreciation | (7959) | (7868) |
| Property and equipment, net | $989 | $1104 |

---

***9.* Goodwill**

The Company performs its annual goodwill impairment test during the *second* quarter of each fiscal year or whenever events or changes in circumstances indicate that the carrying value *may* exceed the fair value. If the carrying value exceeds the estimated fair value, an impairment is recorded. The Company operates as a single reporting unit. The Company estimates the fair value of its single reporting unit using a market approach, which takes into account the Company's market capitalization plus an estimated control premium. No impairment charges were recorded for the *three* months ended *March 31, 2026* and *2025*.

---

| | |
|:---|:---|
| Balance at December 31, 2025 | $9056 |
| Currency translation adjustments | (133) |
| Balance at March 31, 2026 | $8923 |

---

***10.* Intangibles**

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset *may not* be recoverable. No impairment charges were recorded for the *three* months ended *March 31, 2026* and *2025*.

Patent costs associated with the application and award of patents in the U.S. and various other countries are capitalized and amortized on a straight-line basis over the term of the patents as determined at the award date, which varies depending on the pendency period of the application, but generally approximates *seventeen* years.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *14*

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[**Table of Contents**](#toc)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

Amortization of intangible assets acquired is calculated using the straight-line method over the estimated useful lives of the assets.

---

| | | | |
|:---|:---|:---|:---|
|  | ***Estimated Life*** | ***March 31,*** | ***December 31,*** |
|  | ***(years)*** | ***2026*** | ***2025*** |
| Capitalized patent costs | ~17 | $8550 | $8795 |
| Intangible assets acquired: |  |  |  |
| Developed technology | 5 | 23693 | 24095 |
| Customer relationships | 10 | 11322 | 11514 |
| Purchased intellectual property | 10 | 250 | 250 |
| Gross intangible assets |  | 43815 | 44654 |
| Accumulated amortization |  | (28571) | (27609) |
| Intangibles, net |  | $15244 | $17045 |

---

The amortization of capitalized patent costs, purchased intellectual property, and developed technology is recorded in "cost of revenue" and the amortization of customer relationships is recorded in "operating expenses" in the Consolidated Statements of Operations and Comprehensive Loss.

Amortization expense on intangible assets was as follows:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Amortization expense | $1608 | $1537 |

---

For intangible assets recorded at *March 31, 2026*, the estimated future aggregate amortization expense for the years ending *December 31, 2026* through *December 31, 2030* is as follows:

---

| | | |
|:---|:---|:---|
|  | ***Amortization*** | ***Amortization*** |
|  | ***Expense*** | ***Expense*** |
| Remainder of 2026 |  | 4728 |
| 2027 |  | 1555 |
| 2028 |  | 1546 |
| 2029 |  | 1521 |
| 2030 |  | 1487 |

---

***11.* Leases**

The Company accounts for leases in accordance with ASC *No. 842,* "*Leases.*"

In *February 2022,* the Company entered into a sublease agreement and lease extension agreement for office space in Beaverton, Oregon to move the Company's corporate headquarters. The term of the sublease and lease extension runs through *September 2030,* with remaining rent payments as of *March 31, 2026*, totaling $6,157 plus operating expenses, payable in monthly installments. The *first* 26 months of rent payments and operating expenses were abated to cover the remaining lease term on the Company's former corporate headquarters.

&nbsp;&nbsp;&nbsp;&nbsp;

All of the Company's leases are operating leases. The following table provides additional details of leases presented in the Consolidated Balance Sheets:

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| Lease right of use assets | $3121 | $3238 |
| Lease liabilities, current | $931 | $899 |
| Lease liabilities, long-term | $4073 | $4314 |
| Weighted-average remaining life (in years) | 4.5 | 4.7 |
| Weighted-average discount rate | 9% | 9% |

---

The current lease liabilities are included in "accounts payable and other accrued liabilities" in the Consolidated Balance Sheets.

The carrying value of the lease right of use assets is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset *may not* be recoverable. No impairment charges were recorded for the *three* months ended *March 31, 2026* and *2025*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *15*

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; DIGIMARC CORPORATION

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (In thousands, except per share data)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (UNAUDITED)

Operating lease expense is included in "operating expenses" in the Consolidated Statements of Operations and Comprehensive Loss and in "cash flows from operating activities" in the Consolidated Statements of Cash Flows. The operating leases include variable lease payments, which are included in operating lease expense. Additional details of the Company's operating leases are presented in the following table:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Operating lease expense | $349 | $369 |
| Cash paid for operating leases | $443 | $452 |

---

The table below reconciles the aggregate cash payment obligations for the next *five* years and total of the remaining years for the operating lease liability recorded in the Consolidated Balance Sheets as of *March 31, 2026*:

---

| | |
|:---|:---|
|  | ***Cash*** |
|  | ***Payment*** |
|  | ***Obligations*** |
| Remainder of 2026 | $1025 |
| 2027 | 1397 |
| 2028 | 1296 |
| 2029 | 1389 |
| 2030 | 1066 |
| Thereafter |  |
| Total lease payments | 6173 |
| Imputed interest | (1169) |
| Total minimum lease payments | $5004 |

---

In *December 2025,* the Company entered into a sub-sublease agreement for the Company's corporate headquarters in Beaverton, Oregon, whereby the Company agreed to sub-sublease 38 thousand of the 65 thousand square feet of the building to another tenant. The term of the sub-sublease began on *March 1, 2026* and runs through *September 2030.* The Company has recognized net sublease income of $48 for the *three* months ended *March 31, 2026* in the Consolidated Statements of Operations and Comprehensive Loss and in "cash flows from operating activities" in the Consolidated Statements of Cash Flows. The remaining rent payments owed to the Company under the sub-sublease are $2,818.

***12.* Accounts Payable and Accrued liabilities**

The components of accounts payable and accrued liabilities are summarized below:

---

| | | |
|:---|:---|:---|
|  | ***March 31,*** | ***December 31,*** |
|  | ***2026*** | ***2025*** |
| Accrued liabilities | $3998 | $2959 |
| Accounts payable | 1075 | 501 |
| Lease liabilities, current | 931 | 899 |
| Accounts payable and other accrued liabilities | $6004 | $4359 |

---

***13.* Other Income**

The following table provides activity in other income, net:

---

| | | |
|:---|:---|:---|
|  | ***Three Months Ended March 31,*** | ***Three Months Ended March 31,*** |
|  | ***2026*** | ***2025*** |
| Interest income | $101 | $254 |
| Refundable tax credit | 18 | 87 |
| Foreign currency gains (losses) | 4 | 28 |
| Other income (loss) | 48 |  |
| Other income, net | $171 | $369 |

---

***14.* Income Taxes**

The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the *three* months ended *March 31, 2026* and *2025* was 0%.

The valuation allowance against net deferred tax assets as of *March 31, 2026*, was $113,664, an increase of $918 from $112,746 as of *December 31, 2025*. The Company continues to provide for a valuation allowance to offset its net deferred tax assets until such time it is more likely than *not* the tax assets or portions thereof will be realized.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 16

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Excess tax deficiencies of $2,968 and $131 were recognized in the provision for income taxes for the *three* months ended *March 31, 2026* and *2025*, respectively, which were offset by $2,968 and $131 of valuation allowance, respectively.

***15.* Commitments and Contingencies**

Certain of the Company's product and services agreements include an indemnification provision for claims from *third* parties relating to the Company's intellectual property. Such indemnification provisions are accounted for in accordance with ASC *No. 450* "*Contingencies*." To date, there have been *no* claims made under such indemnification provisions.

The Company is subject to certain legal proceedings, including ongoing securities and derivative matters, as previously disclosed in the Company's Annual Report on Form *10*-K for the Year Ended *December 31, 2025*. On *February 9, 2026,* the Company and its Chief Executive Officer and Chief Financial Officer moved to dismiss the class action lawsuit captioned *Ullom v. Digimarc Corp., et al.*, *No. 3:25*-cv-*00779*-JR (the "*Ullom* Action"). On *February 11, 2026,* the two derivative lawsuits filed in the Circuit Court of the State of Oregon for the County of Multnomah, *Johnson v. McCormack et al.*, *No. 25*-cv-*56998* and *Sperry v. McCormack et al.*, *No. 26*-cv-*00621,* were consolidated and remain stayed pending resolution of the defendants' motion to dismiss in the *Ullom* Action.

These cases are at an early stage. The Company believes it has defenses to the claims and is responding accordingly.

***16.* Subsequent Events**

On *April 30, 2026,* the Company's shareholders approved a previously announced holding-company reorganization pursuant to which Digimarc Corporation would become a wholly owned subsidiary of Digimarc Parent, Inc. (formerly Deschutes Parent, Inc.), a newly formed Oregon corporation, and each outstanding share of the Company's common stock would be exchanged for *one* share of common stock of Digimarc Parent, Inc. on a one-for-one basis. The reorganization is intended, among other things, to support the Company's long-term equity incentive strategy and better align employee and executive compensation with long-term shareholder value creation.

The Company currently expects the reorganization to be completed following satisfaction of the remaining customary closing conditions. Additional information regarding the reorganization is included in the Company's previously filed proxy materials.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *17*

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**Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations**

*The following Management*'*s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements relating to future events or the future financial performance of Digimarc that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements. See the discussion regarding forward-looking statements included in this Quarterly Report on Form 10-Q under the caption* "*Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995.*"

*The following discussion should be read in conjunction with our consolidated financial statements and the related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. Readers are also urged to carefully review and consider the disclosures made in Part II, Item 1A (*"*Risk Factors*"*) of this Quarterly Report on Form 10-Q and in the audited consolidated financial statements and related notes included in our 2025 Annual Report, and other reports and filings we have made with the SEC.*

*Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to* "*Company,*" "*Digimarc,*" "*we,*" "*our,*" *and* "*us*" *refer to Digimarc Corporation.*

*All dollar amounts within the tables below are in thousands. The percentages within the tables may not sum to 100% due to rounding.*

*Digimarc, Illuminate, and the circle-d logo are registered trademarks of Digimarc Corporation. EVRYTHNG and EVRYTHNG PRODUCT CLOUD are registered trademarks of EVRYTHNG Limited (*"*EVRYTHNG*"*), a wholly owned subsidiary of Digimarc.* 

**Overview**

Digimarc, an Oregon corporation, is building the trust layer for the modern world. As artificial intelligence ("AI") accelerates how people produce, share, and interact with the world, the risks of fraud, counterfeiting, and misinformation are growing exponentially. The impacts of these threats are evidenced by:

• Consumers demanding more transparency into how, where, and by whom products are made. 

• Brands and creators facing rampant counterfeiting and intellectual property theft. 

• Retailers losing hundreds of billions of dollars annually to shrink and theft. 

• Enterprises experiencing an increase in information leaks and digital manipulation. 

• AI-generated content blurring reality, sowing confusion and mistrust. 

• Regulators increasing pressure on companies to prove product authenticity and data integrity. 

Our innovative, highly scalable, and ultra-secure solutions make it possible for consumers, businesses, and intelligent systems to instantly verify what's real, protect what matters, and transact with confidence. Our solutions for retail loss prevention, product authentication, and digital trust and integrity are built to counter the speed and sophistication of today's AI-enabled threats. Trusted by a consortium of the world's central banks (the "Central Banks") to deter the counterfeiting of global currency, we exist to protect the truth in every interaction, spanning both the physical and digital worlds.

---

| | |
|:---|:---|
| **Physical Digimarc Solutions** | **Digital Digimarc Solutions** |
| **Anti-Counterfeiting:** Restore trust with counterfeit resistant packaging and product verification. | **Internal Compliance:** Ensure policy compliance and prevent misuse of digital assets. |
| **Counterfeiting Deterrence:** Deter digital counterfeiting of global currencies. | **Leak Detection:** Identify leaked information and its source instantly. |
| **Product Swap Prevention:** Reduce weight-based shrink at grocery checkouts. | **Piracy Prevention:** Gain insight into - and control of - digital asset use. |
| **Recycling:** Boost product sustainability while revealing never-before-seen data. | **Provenance & Authenticity:** Restore trust and ensure fair use of digital assets. |
| **Secure Gift Cards:** Fight gift card fraud with automated tamper detection. | **Royalty Monitoring:** Ensure content creators and owners receive proper payment. |

---

Our commercial solutions run on the Illuminate® platform—a high-performance, hyper-scalable, and ultra-secure software as a service ("SaaS") cloud-based platform for digital connectivity. Tested and trusted by the most highly demanding and mission-critical ecosystems in the world, the Illuminate platform provides the tools for the application of advanced digital watermarks and dynamic Quick Response ("QR") codes, Application Programming Interfaces ("APIs") that allow for direct integration into other mission critical systems, AI-assisted authentication workflows, and a centralized repository for capturing insights about digital interactions as well as automating activities based on that information.

The foundational digital watermarking technology used in our commercial solutions is backed by decades of innovation and inventions. It is also the same technology we use to deter digital counterfeiting of global currencies as part of our almost 30-year relationship with the Central Banks. This relationship was the first commercially successful large-scale use of our technologies and today protects hundreds of billions of banknotes in circulation around the world.

Our intellectual property contains many innovations in digital watermarking, content and object recognition, product authentication, and related fields. To protect our inventions, we have implemented an extensive intellectual property protection program that relies on a combination of patent, copyright, trademark and trade secret laws, and nondisclosure agreements and other contracts. As a result, we believe we have one of the world's most extensive patent portfolios in digital watermarking and related fields, with approximately 675 U.S. and foreign patents granted and applications pending as of March 31, 2026. The patents in our portfolio each have a life of approximately 20 years from the patent's effective filing date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 18

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**Critical Accounting Policies and Estimates**

Detailed information about our critical accounting policies and estimates is set forth in Part III, Item 15 of our 2025 Annual Report ("Exhibits and Financial Statement Schedules"), in "Note 1: Description of Business and Summary of Significant Accounting Policies," which is incorporated by reference into this Quarterly Report on Form 10-Q.

&nbsp;&nbsp;&nbsp;&nbsp;

**Results of Operations**

The following table presents Consolidated Statements of Operations data for the periods indicated as a percentage of total revenue. Unless stated otherwise, all references in this Management's Discussion and Analysis of Financial Condition and Results of Operations relate to the three months ended March 31, 2026, and all changes discussed with respect to such period reflect changes compared to the three months ended March 31, 2025.

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| **Percentages are percent of total revenue** |  |  |
| Revenue: |  |  |
| Subscription | 58% | 57% |
| Service | 42% | 43% |
| Total revenue | 100% | 100% |
| Cost of revenue: |  |  |
| Subscription <sup>(1)</sup> | 6% | 8% |
| Service <sup>(1)</sup> | 18% | 15% |
| Amortization expense on acquired intangible assets | 16% | 12% |
| Total cost of revenue | 40% | 35% |
| Gross profit | 60% | 65% |
| Operating expenses: |  |  |
| Sales and marketing | 27% | 54% |
| Research, development and engineering | 49% | 81% |
| General and administrative | 73% | 55% |
| Amortization expense on acquired intangible assets | 4% | 3% |
| Total operating expenses | 154% | 194% |
| Operating loss | (94)% | (129)% |
| Other income, net | 2% | 4% |
| Loss before income taxes | (92)% | (125)% |
| Provision for income taxes | (—)% | (—)% |
| Net loss | (92)% | (125)% |

---

------

<sup>(1)</sup> Cost of revenue for Subscription and Service excludes amortization expense on acquired intangible assets.

***Summary***

Total revenue for the three months ended March 31, 2026, decreased $1.8 million, or 19%, to $7.6 million, compared to $9.4 million for the three months ended March 31, 2025. Subscription revenue decreased $0.9 million, primarily reflecting a decrease of $1.5 million from the expiration of two commercial contracts in 2025, partially offset by higher subscription revenue from new and existing commercial contracts. Service revenue decreased $0.8 million, primarily reflecting $0.5 million lower commercial service revenue from HolyGrail 2.0 recycling projects, as that work was previously completed.

Total operating expenses for the three months ended March 31, 2026, decreased $6.5 million, or 36%, to $11.7 million, compared to $18.2 million for the three months ended March 31, 2025. The decrease primarily reflects decreases in cash compensation costs of $7.4 million, consulting costs of $0.5 million and software and hardware costs of $0.3 million, partially offset by increases in legal costs of $1.0 million and stock compensation costs of $0.5 million. The $7.4 million decrease in cash compensation costs primarily reflects $4.2 million of lower costs largely due to lower headcount and $3.2 million of cash severance costs resulting from the reduction in force in the first quarter of 2025. The $1.0 million increase in legal costs primarily reflects costs associated with the corporate reorganization.

*Revenue*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Revenue: |  |  |  |  |
| Subscription | $4369 | $5314 | $(945) | (18)% |
| Service | 3210 | 4054 | (844) | (21)% |
| Total | $7579 | $9368 | $(1789) | (19)% |
| Revenue (as % of total revenue): |  |  |  |  |
| Subscription | 58% | 57% |  |  |
| Service | 42% | 43% |  |  |
| Total | 100% | 100% |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 19

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*Subscription*

Subscription revenue consists primarily of revenue earned from subscription fees for access to our SaaS platform and products and, to a lesser extent, licensing fees for our software products and intellectual property. The majority of subscription contracts are recurring, paid in advance and recognized over the term of the subscription, which is typically one to three years.

The $0.9 million decrease in subscription revenue for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects a decrease of $1.5 million from the expiration of two commercial contracts in 2025, partially offset by an increase from new and existing commercial contracts.

*Service*

Service revenue consists primarily of revenue earned from the performance of software development services and, to a lesser extent, professional services. The majority of software development contracts are structured as time and materials agreements. Revenue for services is generally recognized as the services are performed. Billing for services rendered generally occurs within one month after the services are provided. Service contracts can range from days to several years in length. Our contract with the Central Banks, which accounts for the majority of our service revenue, has a contract term through December 31, 2029. The contract is subject to work plans that are reviewed and agreed upon quarterly. The contract provides for predetermined billing rates, which are adjusted annually to account for cost of living variables, and provides for the reimbursement of third party costs incurred to support the work plans.

The $0.8 million decrease in service revenue for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects $0.5 million of lower commercial service revenue from HolyGrail 2.0 recycling projects.

*Revenue by geography*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Revenue by geography: |  |  |  |  |
| Domestic | $1868 | $2146 | $(278) | (13)% |
| International | 5711 | 7222 | (1511) | (21)% |
| Total | $7579 | $9368 | $(1789) | (19)% |
| Revenue (as % of total revenue): |  |  |  |  |
| Domestic | 25% | 23% |  |  |
| International | 75% | 77% |  |  |
| Total | 100% | 100% |  |  |

---

*Domestic*

The $0.3 million decrease in domestic revenue for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects a decrease of $0.8 million from the expiration of a commercial subscription contract with a domestic customer in October 2025, partially offset by higher commercial subscription revenue from new and existing contracts with domestic customers.

*International*

The $1.5 million decrease in international revenue for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects a decrease of $0.8 million from the expiration of a commercial subscription and service contract with an international customer in April 2025 and $0.5 million of lower commercial service revenue from HolyGrail 2.0 recycling projects.

*Revenue by market*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Commercial: |  |  |  |  |
| Subscription | $4069 | $5014 | $(945) | (19)% |
| Service | 59 | 796 | (737) | (93)% |
| Total Commercial | $4128 | $5810 | $(1682) | (29)% |
| Government: |  |  |  |  |
| Subscription | $300 | $300 | $— | —% |
| Service | 3151 | 3258 | (107) | (3)% |
| Total Government | $3451 | $3558 | $(107) | (3)% |
| Total | $7579 | $9368 | $(1789) | (19)% |
| Revenue (as % of total revenue): |  |  |  |  |
| Commercial | 54% | 62% |  |  |
| Government | 46% | 38% |  |  |
| Total | 100% | 100% |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 20

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*Commercial*

The $1.7 million decrease in commercial revenue for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects a decrease of $1.6 million from the expiration of two commercial contracts in 2025 and $0.5 million of lower commercial service revenue from HolyGrail 2.0 recycling projects, partially offset by higher commercial subscription revenue from new and existing customers.

*Government*

The $0.1 million decrease in government revenue for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, reflects $0.1 million of lower government service revenue from the Central Banks.

*Annual Recurring Revenue (*"*ARR*"*)*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **As of** | **As of** | **Dollar** | **Percent** |
|  | **March 31,** | **March 31,** | **Increase** | **Increase** |
|  | **2026** | **2025** | **(Decrease)** | **(Decrease)** |
| ARR | $15038 | $19973 | $(4935) | (25)% |

---

ARR decreased $4.9 million from $20.0 million as of March 31, 2025 to $15.0 million as of March 31, 2026, reflecting the expiration of two commercial contracts, one in April 2025 that accounted for $3.7 million of ARR and the other in October 2025 that accounted for $3.1 million of ARR, partially offset by $1.8 million of net increases to 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 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 subscription products; 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; and

• travel costs that are billed to customers.

*Amortization expense on acquired intangible assets* includes:

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

*Gross profit*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Gross Profit: |  |  |  |  |
| Subscription <sup>(1)</sup> | $3913 | $4570 | $(657) | (14)% |
| Service <sup>(1)</sup> | 1832 | 2647 | (815) | (31)% |
| Amortization expense on acquired intangible assets | (1208) | (1132) | (76) | (7)% |
| Total | $4537 | $6085 | $(1548) | (25)% |
| Gross Profit Margin: |  |  |  |  |
| Subscription <sup>(1)</sup> | 90% | 86% |  |  |
| Service <sup>(1)</sup> | 57% | 65% |  |  |
| Total | 60% | 65% |  |  |

---

------

<sup>(1)</sup> Gross Profit and Gross Profit Margin for Subscription and Service excludes amortization expense on acquired intangible assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 21

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The $1.5 million decrease in total gross profit for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects $1.8 million of lower revenue, partially offset by $0.3 million of lower cost of subscription revenue.

The increase in subscription gross profit margin, excluding amortization expense on acquired intangible assets, for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects $0.3 million of lower cost of subscription revenue.

The decrease in service gross profit margin, excluding amortization expense on acquired intangible assets, for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects a less favorable mix of service revenue.

*Operating expenses*

*Sales and marketing*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Sales and marketing | $2082 | $5078 | $(2996) | (59)% |
| Sales and marketing (as % of total revenue) | 27% | 54% |  |  |

---

Sales and marketing expenses consist primarily of:

• compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our sales, marketing, product, professional services and customer support personnel;

• travel and market research costs, and costs associated with marketing programs, such as trade shows, public relations and new product launches;

• consulting costs for sales and marketing and product initiatives; and

• the allocation of facilities and information technology costs.

The $3.0 million decrease in sales and marketing expenses for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects:

• lower cash compensation costs of $1.7 million largely due to lower headcount;

• lower cash severance costs of $0.9 million resulting from the reduction in force in 2025; and

• lower stock compensation costs of $0.3 million.

*Research, development and engineering*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Research, development and engineering | $3747 | $7634 | $(3887) | (51)% |
| Research, development and engineering (as % of total revenue) | 49% | 81% |  |  |

---

Research, development and engineering expenses consist primarily of:

• compensation, benefits, incentive compensation in the form of cash and stock-based compensation and related costs of our software and hardware developers and quality assurance personnel;

• payments to outside contractors for software development services;

• the purchase of materials and services for platform and product development; and

• the allocation of facilities and information technology costs.

The $3.9 million decrease in research, development and engineering expenses for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects:

• lower cash compensation costs of $1.9 million largely due to lower headcount;

• lower cash severance costs of $1.6 million resulting from the reduction in force in 2025; and

• lower software and hardware costs of $0.3 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 22

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*General and administrative*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| General and administrative | $5555 | $5181 | $374 | 7% |
| General and administrative (as % of total revenue) | 73% | 55% |  |  |

---

We incur general and administrative costs in the functional areas of finance, legal, human resources, intellectual property, executive and board of directors. Costs for facilities and information technology are also managed as part of the general and administrative processes. These costs are allocated to sales and marketing, research, development and engineering, and general and administrative based on relative headcount.

General and administrative expenses consist primarily of:

• compensation, benefits and incentive compensation in the form of cash and stock-based compensation and related costs of our general and administrative personnel;

• third party and professional fees associated with legal, accounting and human resources functions;

• costs associated with being a public company;

• third party costs, including filing and governmental regulatory fees and outside legal fees and translation costs, related to the filing and maintenance of our intellectual property; and

• the allocation of facilities and information technology costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The $0.4 million increase in general and administrative expenses for the three months ended March 31, 2026 , compared to the corresponding three months ended March 31, 2025, primarily reflects:

• higher legal costs of $1.0 million, largely related to the corporate reorganization;

• higher stock compensation costs of $0.6 million; and

• lower allocation out for facilities and information technology costs of $0.3 million primarily due to lower allocable costs; partially offset by

• lower cash severance costs of $0.7 million resulting from the reduction in force in 2025;

• lower cash compensation costs of $0.6 million largely due to lower headcount; and

• lower consulting costs of $0.5 million.

*Amortization expense on acquired intangible assets*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Amortization expense on acquired intangible assets | $289 | $271 | $18 | 7% |
| Amortization expense on acquired intangible assets (as % of total revenue) | 4% | 3% |  |  |

---

Amortization expense on acquired intangible assets relates to amortization expense recognized on the customer relationships intangible asset acquired in the EVRYTHNG acquisition.

The insignificant change in amortization expense on acquired intangible assets reflects the impact of changes in foreign currency exchange rates.

*Stock-based compensation*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Cost of revenue | $347 | $137 | $210 | 153% |
| Sales and marketing | 56 | 355 | (299) | (84)% |
| Research, development and engineering | 619 | 407 | 212 | 52% |
| General and administrative | 987 | 361 | 626 | 173% |
| Total | $2009 | $1260 | $749 | 59% |

---

The $0.7 million increase in stock-based compensation expense for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects a larger number of employee stock grants.

We anticipate incurring an additional $10.0 million in stock-based compensation expense through March 31, 2030, for stock awards outstanding as of March 31, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 23

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*Other income, net*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Other income, net | $171 | $369 | $(198) | (54)% |
| Other income, net (as % of total revenue) | 2% | 4% |  |  |

---

The $0.2 million decrease in other income, net for the three months ended March 31, 2026, compared to the corresponding three months ended March 31, 2025, primarily reflects lower interest income due to lower marketable securities balances and interest rates.

*Income Taxes* 

The provision for income taxes reflects current taxes and deferred taxes. The effective tax rate for each of the three months ended March 31, 2026 and 2025 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, 2026, was $113.7 million, an increase of $0.9 million from $112.7 million as of December 31, 2025.

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, 2026, 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 includes 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 should not be considered as alternatives to, GAAP financial measures. Non-GAAP financial measures may not be indicative of the historical operating results of the Company nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP. Our management uses and relies on Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP net loss per diluted share, which are all non-GAAP financial measures. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measures in planning, forecasting and analyzing future periods.

Our management uses these non-GAAP financial measures in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparisons. Our management recognizes that the non-GAAP financial measures have inherent limitations because of the described excluded items.

We define Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP net loss per diluted share excluding the adjustments in the table below. These non-GAAP financial measures are an important measure of our operating performance because they allow management, investors and analysts to evaluate and assess our core operating results from period-to-period after removing non-cash and non-recurring activities that can affect comparability.

We have included a reconciliation of our financial measures calculated in accordance with GAAP to the most comparable non-GAAP financial measures. We believe that providing the non-GAAP financial measures, together with the reconciliation to GAAP, helps investors make comparisons between us and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definitions being used and to the reconciliation between such measures and the corresponding GAAP measures provided by each company under applicable SEC rules.

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The following table presents a reconciliation of Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP operating expenses, Non-GAAP net loss, and Non-GAAP net loss per diluted share for the three months ended March 31, 2026 and 2025:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** |
|  | **2026** | **2025** |
| <u>GAAP gross profit</u> | $4537 | $6085 |
| Amortization of acquired intangible assets | 1208 | 1132 |
| Amortization and write-off of other intangible assets <sup>(1)</sup> | 207 | 220 |
| Stock-based compensation | 347 | 137 |
| Non-GAAP gross profit | $6299 | $7574 |
| Non-GAAP gross profit margin | 83% | 81% |
| <u>GAAP operating expenses</u> | $11673 | $18164 |
| Depreciation and write-off of property and equipment | (154) | (146) |
| Amortization of acquired intangible assets | (289) | (271) |
| Amortization and write-off of other intangible assets | (121) | (59) |
| Amortization of lease right of use assets under operating leases | (117) | (98) |
| Stock-based compensation | (1662) | (1123) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Corporate reorganization expenses | (1223) |  |
| Non-GAAP operating expenses | $8107 | $16467 |
| <u>GAAP net loss</u> | $(6966) | $(11730) |
| Total adjustments to gross profit | 1762 | 1489 |
| Total adjustments to operating expenses | 3566 | 1697 |
| Non-GAAP net loss | $(1638) | $(8544) |
| <u>GAAP net loss per diluted share</u> | $(0.32) | $(0.55) |
| Non-GAAP net loss | $(1638) | $(8544) |
| Non-GAAP net loss per diluted share | $(0.07) | $(0.40) |

---

------

(1) In the second quarter of fiscal 2025, management updated its definition of Non-GAAP gross profit to adjust for the amortization of patent maintenance costs. The related amortization expense for the three months ended March 31, 2026 and 2025 is now reflected in "amortization and write-off of other intangible assets" above to calculate Non-GAAP gross profit, Non-GAAP gross profit margin, Non-GAAP net loss and Non-GAAP net loss per diluted share.

Non-GAAP gross profit for the three months ended March 31, 2026, decreased by $1.3 million compared to the three months ended March 31, 2025. The decrease primarily reflects lower revenue, partially offset by lower cost of subscription revenue.

Non-GAAP gross profit margin for the three months ended March 31, 2026, increased to 83% compared to 81% for the three months ended March 31, 2025. The increase primarily reflects a lower cost of subscription revenue.

Non-GAAP operating expenses for the three months ended March 31, 2026, decreased by $8.4 million compared to the three months ended March 31, 2025. The decrease primarily reflects $4.2 million of lower cash compensation costs largely due to lower headcount, $3.2 million lower cash severance costs resulting from the reduction in force in the first quarter of 2025, $0.5 million lower consulting costs, and $0.3 million of lower software and hardware costs.

**Liquidity and Capital Resources**

---

| | | |
|:---|:---|:---|
|  | **March 31,** | **December 31,** |
|  | **2026** | **2025** |
| Working capital | $8812 | $12988 |
| Current ratio <sup>(1)</sup> | 1.9:1 | 2.6:1 |
| Cash, cash equivalents and short-term marketable securities | $9963 | $12866 |

---

------

<sup>(1)</sup> The current ratio is calculated by dividing total current assets by total current liabilities.

The $2.9 million decrease in cash, cash equivalents and marketable securities at March 31, 2026, from December 31, 2025, resulted primarily from:

• $1.8 million of cash used in operations; and

• $0.9 million of cash used for purchases of common stock related to tax withholding in connection with the vesting of restricted stock, restricted stock units, and performance restricted stock units.

Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, and trade accounts receivable. We place our cash and cash equivalents with major banks and financial institutions and at times deposits may exceed insured limits. Marketable securities include commercial paper and corporate notes. Our investment policy requires our portfolio to be invested to ensure that the greater of $3.0 million or 7% of the invested funds will be available within 30 days' notice.

Other than cash used for operating needs, which may include short-term marketable securities, our investment policy limits our credit exposure to any one financial institution or type of financial instrument by limiting the maximum of 5% of our cash and cash equivalents and marketable securities or $1.0 million, whichever is greater, to be invested in any one issuer except for the U.S. government, U.S. federal agencies and U.S.-backed securities, which have no limits, at the time of purchase. Our investment policy also limits our credit exposure by limiting to a maximum of 40% of our cash and cash equivalents and marketable securities, or $15.0 million, whichever is lesser, to be invested in any one industry category (e.g., financial, energy, etc.) at the time of purchase. As a result, we believe our credit risk associated with cash and investments to be minimal.

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A decline in the market value of any security that is deemed to be other-than-temporary is charged to earnings. To determine whether an impairment is other-than-temporary, we consider whether we have the ability and intent to hold the investment until a market price recovery and evidence indicating that the cost of the investment is recoverable outweighs evidence to the contrary. There have been no other-than-temporary impairments identified or recorded by us for the three months ended March 31, 2026 and 2025.

*Cash flows from operating activities*

The components of cash flows used in operating activities were:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Three Months Ended March 31,** | **Three Months Ended March 31,** | **Dollar** | **Percent** |
|  | **2026** | **2025** | **Increase/(Decrease)** | **Increase/(Decrease)** |
| Net loss | $(6966) | $(11730) | $(4764) | (41)% |
| Non-cash items included in net loss | 4126 | 3100 | (1026) | (33)% |
| Changes in operating assets and liabilities | 993 | 3144 | 2151 | 68% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Net cash used in operating activities | $(1847) | $(5486) | $(3639) | (66)% |

---

Cash used in operating activities for the three months ended March 31, 2026, decreased by $3.6 million, compared to the corresponding three months ended March 31, 2025, reflecting a $4.8 million lower net loss and $1.0 million of higher non-cash items included in net loss, partially offset by a $2.2 million change in operating assets and liabilities due to unfavorable timing. The increase in non-cash items included in net loss primarily reflects $0.7 million of higher stock compensation expense. The unfavorable timing of operating assets and liabilities primarily reflects the timing and amount of refundable tax credits, customer receipts, and vendor prepayments.

 *Cash flows from investing activities*

Cash flows from investing activities for the three months ended March 31, 2026, decreased by $1.8 million, compared to the corresponding three months ended March 31, 2025, primarily reflecting $4.4 million of lower proceeds from maturities of marketable securities, partially offset by $2.6 million of lower purchases of marketable securities.

*Cash flows from financing activities*

Cash flows from financing activities for the three months ended March 31, 2026, increased by $0.7 million, compared to the corresponding three months ended March 31, 2025, primarily reflecting $0.7 million of lower purchases of common stock.

***Future Cash Expectations***

We believe that our current cash, cash equivalents, and marketable securities balances will satisfy our projected working capital and capital expenditure requirements for at least the next 12 months.

Our commercial subscription revenue in fiscal 2026 has been negatively impacted by the expiration of two commercial contracts that ended in 2025. The two expired commercial contracts contributed $1.5 million of subscription revenue during the three months ended March 31, 2025 compared to $0 during the three months ended March 31, 2026.

*Shelf Registration*

On June 23, 2023, we filed a new shelf registration statement on Form S-3 that included $34.6 million of unsold securities from our prior shelf registration statement filed on June 5, 2020. The new shelf registration statement became effective on July 19, 2023, and expires on July 19, 2026. Under the new shelf registration statement, we may sell securities in one or more offerings up to $100.0 million. As of March 31, 2026, $67.5 million remained available under the new shelf registration statement.

We may sell shares under the shelf registration and/or use similar or other financing means to raise working capital in the future, if necessary, to support continued investment in our growth initiatives. We may also raise capital in the future to fund acquisitions and/or investments in complementary businesses, technologies or product lines. If it becomes necessary to obtain additional financing, we may not be able to do so, or if these funds are available, they may not be available on satisfactory terms. These factors may inhibit our near-term ability to obtain financing.

**Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995**

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 27A of the Securities Act of 1933, as amended. Words such as "may," "might," "plan," "should," "could," "expect," "anticipate," "intend," "believe," "project," "forecast," "estimate," "continue," and variations of such terms or similar expressions are intended to identify such forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements, or other statements made by us, are made based on our expectations and beliefs concerning future events impacting us, and are subject to uncertainties and factors (including those specified below), which are difficult to predict and, in many instances, are beyond our control. As a result, our actual results could differ materially from those expressed in or implied by any such forward-looking statements, and investors are cautioned not to place undue reliance on such statements. We believe that the following factors, among others (including those described in Item 1A. "Risk Factors" of our 2025 Annual Report), could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us. Forward-looking statements include but are not limited to statements relating to:

• trends and sources of future revenue;

• anticipated revenue to be generated from current contracts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 26

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• anticipated expenses, costs, margins, provision for income taxes and investment activities;

• our assumptions and expectations related to stock awards, including future stock-based compensation expense;

• our belief that we have one of the world's most extensive patent portfolios in digital watermarking and related fields;

• our beliefs regarding our critical accounting policies;

• business opportunities that could require that we seek additional financing and our ability to do so;

• our expected short-term and long-term liquidity positions;

• our capital expenditure and working capital requirements and our ability to fund our capital expenditure and working capital needs through cash flow from operations or financing;

• our expectations regarding our ability to meet future financial obligations as they become due within the coming fiscal year;

• our use of cash, cash equivalents and marketable securities in upcoming quarters and the possibility that our deposits of cash and cash equivalents with major banks and financial institutions may exceed insured limits;

• protection, development and monetization of our intellectual property portfolio; and

• our beliefs related to legal proceedings and claims arising in the ordinary course of business.

We believe that the risk factors specified above and the risk factors contained in Part I, Item 1A. "Risk Factors" of our 2025 Annual Report, among others, could affect our future performance and the liquidity and value of our securities and cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf. Investors should understand that it is not possible to predict or identify all risk factors and that there may be other factors that may cause our actual results to differ materially from the forward-looking statements. All forward-looking statements made by us or by persons acting on our behalf apply only as of the date of this Quarterly Report on Form 10-Q. We do not undertake any obligation to publicly update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of the filing of this Quarterly Report on Form 10-Q.

**Item 3. Quantitative and Qualitative Disclosures About Market Risk**

Not applicable.

**Item 4.**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Controls and Procedures.**

**Evaluation of Disclosure Controls and Procedures**

We conducted an evaluation (pursuant to Rule 13a-15(b) of the Exchange Act), under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q. These disclosure controls and procedures are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Our disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures, as of the end of the period covered by this Quarterly Report on Form 10-Q, were effective.

**Changes in Controls**

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred during the three months ended March 31, 2026, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 27

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**PART II. OTHER INFORMATION.**

**Item 1.**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Legal Proceedings.**

On May 8, 2025, a class action lawsuit captioned *Ullom v. Digimarc Corp., et al.*, No. 3:25-cv-00779-JR (the "*Ullom* Action") was filed against the Company in the United States District Court for the District of Oregon. An amended complaint was filed on November 26, 2025. The amended complaint purports to assert claims against the Company and its Chief Executive Officer and Chief Financial Officer pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 10b-5 promulgated thereunder, on behalf of a putative class of investors who purchased or otherwise acquired the Company's shares between August 14, 2024 and February 26, 2025 (the "class period"). The *Ullom* Action seeks to recover damages allegedly caused by purported misstatements and omissions regarding the renewal status of a commercial contract, claiming that these alleged misstatements and omissions artificially inflated the price paid for our common stock during the class period.

Subsequently, five derivative lawsuits were filed nominally on the Company's behalf, including three in the United States District Court for the District of Oregon: (i) *Franchi v. McCormack et al.*, No. 3:25-cv-01543-AN, filed August 29, 2025 (as amended September 2, 2025) (the "*Franchi* Action"); (ii) *Chadwick v. McCormack et al.*, No. 3:25-cv-01838-JR, filed October 7, 2025 (the "C*hadwick* action"); and (iii) *Jensen v. McCormack et al.*, No. 3:25-cv-01891-SB, filed October 14, 2025 (the "*Jensen* action"); and two in the Circuit Court of the State of Oregon for the County of Multnomah: (i) *Johnson v. McCormack et al.*, No. 25-cv-56998, filed October 23, 2025 (the "*Johnson* action"); and (ii) *Sperry v. McCormack et al.*, No. 26-cv-00621*,* filed January 6, 2026. These derivative actions are based on the same alleged facts and circumstances as the *Ullom* Action and are against the Company's Chief Executive Officer, Chief Financial Officer and directors. The derivative actions collectively assert claims pursuant to Sections 10(b), 14(a), and 20(a) of the Exchange Act, as well as for breaches of fiduciary duties, aiding and abetting breaches of fiduciary duties, unjust enrichment, and waste of corporate assets. Each of the five derivative lawsuits seeks to recover damages on the Company's behalf and alleges that a legally required pre-suit demand on the Board of Directors would be futile and should be excused.

On November 4, 2025, the *Chadwick, Jensen and Franchi* Actions were consolidated and stayed pending resolution of the Company's anticipated motion to dismiss in the *Ullom* Action. On January 5, 2026, the *Johnson* Action was stayed pending the same event. On February 9, 2026, the Company and its Chief Executive Officer and Chief Financial Officer moved to dismiss the *Ullom* Action. On February 11, 2026, the *Johnson* and the *Sperry* Actions were consolidated and remain stayed pending resolution of the defendants' motion to dismiss in the *Ullom* Action. These cases are at an early stage, and the Company believes it has defenses against the claims and is responding accordingly.

**Item 1A.**&nbsp;&nbsp;&nbsp;&nbsp; **Risk Factors**

Our business, financial condition, results of operations and cash flows may be affected by a number of factors. Detailed information about risk factors that may affect Digimarc's actual results are set forth in Part I, Item 1A: "Risk Factors" of our 2025 Annual Report. The risks and uncertainties described in our 2025 Annual Report are those risks of which we are aware and that we consider to be material to our business, and such risk factors have not changed materially. If any of those risks and uncertainties develop into actual events, our business, financial condition, results of operations or cash flows could be materially adversely affected. In that case, the trading price of our common stock could decline.

**Item 2.**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; **Unregistered Sales of Equity Securities and Use of Proceeds.**

**(c) Purchases of Equity Securities by the Issuer and Affiliated Purchasers**

We repurchase shares of common stock in satisfaction of required withholding of income tax liability in connection with the vesting of restricted stock, restricted stock units and performance restricted stock units.

The following table sets forth information regarding purchases of our equity securities during the three months ended March 31, 2026:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  |  | **(d)** |
|  |  |  | **(c)** | **Approximate** |
|  |  |  | **Total number** | **dollar value** |
|  |  |  | **of shares** | **of shares that** |
|  | **(a)** | **(b)** | **purchased as** | **may yet be** |
|  | **Total number** | **Average price** | **part of publicly** | **purchased** |
|  | **of shares** | **paid per** | **announced plans** | **under the plans** |
| **Period** | **purchased <sup>(1)</sup>** | **share <sup>(1)</sup>** | **or programs** | **or programs** |
| Month 1 |  |  |  |  |
| January 1, 2026 to January 31, 2026 |  | $— |  | $— |
| Month 2 |  |  |  |  |
| February 1, 2026 to February 28, 2026 | 131335 | $4.86 |  | $— |
| Month 3 |  |  |  |  |
| March 1, 2026 to March 31, 2026 | 37900 | $6.53 |  | $— |
| Total | 169235 | $5.23 |  | $— |

---

------

<sup>(1)</sup> Shares of common stock withheld (purchased) by us in satisfaction of required withholding of income tax liability upon vesting of restricted stock, restricted stock units and performance restricted stock units.

**Item *5.* Other Information**

None of our officers or directors adopted, modified, or terminated a "Rule *10b5*-*1* trading arrangement" or a "non-Rule *10b5*-*1* trading arrangement," as defined in Item *408* of Regulation S-K, during the *three* months ended *March 31, 2026*.

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**Item 6. Exhibits.**

---

| | |
|:---|:---|
| **Exhibit**<br> **<u>Number</u>**  | **<u>Exhibit Description</u>** |
| 2.1 | [Agreement and Plan of Reorganization by and among Digimarc Corporation, Digimarc Parent, Inc. (formerly Deschutes Parent, Inc.) and Deschutes Merger Sub, Inc., dated as of March 12, 2026 (incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K, filed with the Commission on March 12, 2026 (File No. 001-34108))](http://www.sec.gov/Archives/edgar/data/1438231/000143774926008020/ex_931548.htm) |
| 2.2 | [Agreement and Plan of Merger by and among Digimarc Corporation, Digimarc Parent, Inc. (formerly Deschutes Parent, Inc.) and Deschutes Merger Sub, Inc., dated as of March 12, 2026 (incorporated by reference to exhibit 2.2 to the Company's Current Report on Form 8-K, filed with the Commission on March 12, 2026 (File No. 001-341086))](http://www.sec.gov/Archives/edgar/data/1438231/000143774926008020/ex_931549.htm) |
| 31.1 | [Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer](ex_940683.htm) |
| 31.2 | [Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer](ex_940684.htm) |
| 32.1 | [Section 1350 Certification of Chief Executive Officer](ex_940685.htm) |
| 32.2 | [Section 1350 Certification of Chief Financial Officer](ex_940686.htm) |
| 101.INS | Inline XBRL Instance Document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| &nbsp;&nbsp;&nbsp;&nbsp;104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |

---

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**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

---

| | | |
|:---|:---|:---|
| Date: May 13, 2026 | DIGIMARC CORPORATION | DIGIMARC CORPORATION |
|  | By:  | /S/ Charles Beck |
|  |  | CHARLES BECK |
|  |  | *Chief Financial Officer* |
|  |  | *(Duly Authorized Officer and Principal Financial and Accounting Officer)* |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 30

## Exhibit 31.1

**Exhibit 31.1**

**DIGIMARC CORPORATION**

**CERTIFICATION**

I, Riley McCormack, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Digimarc Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 13, 2026

---

| | |
|:---|:---|
| By: | /S/ Riley McCormack |
|  | RILEY MCCORMACK<br> *Chief Executive Officer* |

---

## Exhibit 31.2

**Exhibit 31.2**

**DIGIMARC CORPORATION**

**CERTIFICATION**

I, Charles Beck, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Digimarc Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 13, 2026

---

| | |
|:---|:---|
| By: | /S/ Charles Beck |
|  | CHARLES BECK<br> *Chief Financial Officer* |

---

## Exhibit 32.1

**Exhibit 32.1**

**DIGIMARC CORPORATION**

**CERTIFICATION**

In connection with the periodic report of Digimarc Corporation (the "Company") on Form 10-Q for the period ended March 31, 2026 as filed with the Securities and Exchange Commission (the "Report"), I, Riley McCormack, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the U.S. Code, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission.

Date: May 13, 2026

---

| | |
|:---|:---|
| By: | /S/ Riley McCormack |
|  | RILEY MCCORMACK<br> *Chief Executive Officer* |

---

## Exhibit 32.2

**Exhibit 32.2**

**DIGIMARC CORPORATION**

**CERTIFICATION**

In connection with the periodic report of Digimarc Corporation (the "Company") on Form 10-Q for the period ended March 31, 2026 as filed with the Securities and Exchange Commission (the "Report"), I, Charles Beck, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the U.S. Code, that to the best of my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission.

Date: May 13, 2026

---

| | |
|:---|:---|
| By: | /S/ Charles Beck |
|  | CHARLES BECK<br> *Chief Financial Officer* |

---