Digimarc Corporation reported a total revenue of $9.4 million for the first quarter of 2025, a decrease of 6% from $9.9 million in the same period of 2024. The decline was primarily driven by an $0.4 million drop in subscription revenue, which fell to $5.3 million, and a $0.1 million decrease in service revenue, which totaled $4.1 million. The company attributed the subscription revenue decline to the expiration of a significant commercial contract in June 2024, which had previously contributed $1.1 million. The net loss for the quarter was $11.7 million, compared to a loss of $10.3 million in the prior year, resulting in a loss per share of $0.55, up from $0.50.
Operating expenses increased to $18.2 million, up from $17.1 million year-over-year, largely due to $3.2 million in severance costs associated with a recent workforce reduction aimed at streamlining operations. This increase was partially offset by lower stock-based compensation and cash compensation costs due to a reduced headcount. The company expects that the reorganization will lead to annualized cash expense reductions of approximately $16.5 million, along with an additional $5.5 million in other cost savings.
In terms of operational metrics, Digimarc's annual recurring revenue (ARR) decreased by 16% to $20.0 million as of March 31, 2025, down from $23.9 million a year earlier. This decline reflects the impact of the aforementioned contract expiration. The company reported a total of 21,548 shares of common stock outstanding as of the end of the quarter, with cash and cash equivalents totaling $8.9 million, down from $12.4 million at the end of 2024.
Geographically, revenue from domestic customers fell by 25% to $2.1 million, while international revenue increased by 2% to $7.2 million. The company continues to focus on expanding its international market presence, particularly through initiatives like the HolyGrail 2.0 recycling project, which has contributed to higher commercial service revenue. Looking ahead, Digimarc anticipates further challenges in subscription revenue due to the ongoing impact of contract expirations and a reduced budget for government services, projecting a decrease of $1.7 million to $2.0 million in government service revenue for the fiscal year 2025 compared to 2024.
About Digimarc CORP
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