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Investing.com - Needham maintained its Buy rating and $30.00 price target on Digimarc (NASDAQ:DMRC) following the company’s second-quarter results. The stock, currently trading at $11.03, sits near its 52-week low of $10.44, suggesting potential upside based on InvestingPro’s Fair Value analysis.
Digimarc reported results in line with expectations for the second quarter, but faces revenue challenges due to contract losses. The company lost a Digital Rights Service contract worth $3.5 million annually and expects to lose approximately $3 million per year from another contract negotiation in the second half of the year. Despite these challenges, the company maintains impressive gross profit margins of 75.8%.
Despite these setbacks, Needham noted that Digimarc continues to win new deals while shifting its product strategy to focus on a smaller subset of products within its large total addressable market.
Needham believes this product prioritization is necessary and expects that ramping newer products can return Digimarc to annual recurring revenue growth by the end of the year.
The research firm also highlighted that Digimarc’s lower cash burn rate provides the company more time to prove its business model and continue winning new vertical opportunities.
In other recent news, Digimarc Corporation reported its second-quarter earnings for 2025, showcasing a significant earnings per share (EPS) beat. The company achieved an EPS of -$0.11, surpassing analyst expectations of -$0.32, representing a 65.63% positive surprise. However, the company’s revenue did not meet forecasts, coming in at $8 million compared to the anticipated $8.2 million, reflecting a 23% decrease from the previous year. These financial results highlight a mixed performance for Digimarc, with strong EPS figures but weaker revenue outcomes. Despite the earnings beat, the revenue shortfall may be a point of concern for investors. The stock experienced a decline during regular and after-hours trading, reflecting market reactions to the mixed results. These developments are part of Digimarc’s recent financial updates, providing insights into the company’s current fiscal health.
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