Digimarc (DMRC) 8-K Digimarc Reports Second Quarter 2014 Financial Results

Exhibit 99.1

Company Contacts:

Charles Beck

Chief Financial Officer

503-469-4721

Charles.Beck@digimarc.com

Scott Liolios or Matt Glover

Liolios Group, Inc.

Investor Relations for Digimarc

949-574-3860

dmrc@liolios.com

FOR IMMEDIATE RELEASE

Digimarc Reports Second Quarter 2014 Financial Results

Beaverton, Ore. — July 23, 2014 — Digimarc Corporation (NASDAQ: DMRC) reported financial results for the second quarter ended June 30, 2014.

Second Quarter 2014 Results

Revenue for the second quarter of 2014 totaled $5.7 million compared to $10.5 million in the second quarter of 2013. The decrease was primarily due to the end of the scheduled minimum quarterly license fee payments from Intellectual Ventures in the second quarter of 2013 and from The Nielsen Company in the first quarter of 2014. Excluding the impact of these quarterly license fee payments, revenue was down $0.4 million or 6% for the second quarter of 2014 compared to the second quarter of 2013, primarily due to the timing of program work with the Central Banks.

Operating loss for the second quarter of 2014 was $4.5 million compared to operating income of $1.4 million in the same quarter a year-ago. The operating loss was primarily due to lower revenue and increased investment in the company’s ongoing product development and sales growth initiatives, mainly focused around Digimarc Discover and Barcode.

Net loss for the second quarter of 2014 was $2.7 million or $(0.38) per diluted share compared to net income of $0.6 million or $0.08 per diluted share in the second quarter of 2013.

At June 30, 2014, cash, cash equivalents and marketable securities totaled $27.9 million compared to $32.3 million at March 31, 2014.

Conference Call

Digimarc will hold a conference call later today (Wednesday, July 23, 2014) to discuss these results. Management will also provide an update on market conditions and execution of strategy. Chairman and CEO Bruce Davis and CFO Charles Beck will host the call starting at 5:00 p.m. Eastern time (2:00 p.m. Pacific time). A question and answer session will follow management’s discussion.

The call will be broadcast live via webcast atwww.digimarc.com/investors and available for replay through July 30, 2014. The webcast will be archived and available on Digimarc’s website atwww.digimarc.com/investors/investor-events-and-webcasts.

For those who wish to listen to the call via telephone, please dial the telephone number below at least five minutes prior to the scheduled start time:

Number: 866 562-9934

Conference ID: 27179678

If you have any difficulty connecting with the conference call, please contact Liolios Group at 949-574-3860.

About Digimarc

Digimarc Corporation (NASDAQ: DMRC), based in Beaverton, Oregon, is a leading innovator and provider of enabling technologies that create digital identities for all forms of media and many everyday objects. The embedded Digimarc IDs are imperceptible to humans, but not to computers, networks and devices like mobile phones, which can now use cameras and microphones as sensory inputs to “see, hear and understand” the world around them within the context of their environment. Digimarc has built an extensive intellectual property portfolio with patents in digital watermarking, content identification and management, media and object discovery to enable ubiquitous computing, and related technologies. Digimarc develops solutions, licenses its intellectual property, and provides development services to business partners across a range of industries. For more information, visitwww.digimarc.com.

Forward-looking Statements

With the exception of historical information contained in this release, the matters described in this release contain various “forward-looking statements.” These forward-looking statements include statements and any related inferences regarding timing of program work with the Central Banks and increased investments in ongoing product development and sales growth initiatives, and other statements identified by terminology such as “will,” “should,” “expects,” “estimates,” “predicts” and “continue” or other derivations of these or other comparable terms. These forward-looking statements are statements of management’s opinion and are subject to various assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied from the statements in this release as a result of changes in economic, business and/or regulatory factors. More detailed information about risk factors that may affect actual results are set forth in the company’s Form 10-K for the year ended December 31, 2013 and in subsequent periodic reports filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date of this release. Except as required by law, Digimarc undertakes no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this release.

Digimarc Corporation

Consolidated Income Statement Information

(in thousands, except per share amounts)

(Unaudited)

	Three-Month Information						Six-Month Information
	June 30, 2014			June 30, 2013			June 30, 2014			June 30, 2013
Revenue:
Service	$	2,716		$	3,022		$	5,704		$	5,951
Subscription		1,496			1,433			2,908			2,817
License		1,451			6,015			4,256			11,945
Total revenue		5,663			10,470			12,868			20,713
Cost of revenue:
Service		1,169			1,432			2,583			2,835
Subscription		699			588			1,348			1,223
License		84			100			167			196
Total cost of revenue		1,952			2,120			4,098			4,254
Gross profit:
Service		1,547			1,590			3,121			3,116
Subscription		797			845			1,560			1,594
License		1,367			5,915			4,089			11,749
Total gross profit		3,711			8,350			8,770			16,459
Gross margin:
Service		57	%		53	%		55	%		52	%
Subscription		53	%		59	%		54	%		57	%
License		94	%		98	%		96	%		98	%
Percentage of gross profit to total revenue		66	%		80	%		68	%		79	%
Operating expenses:
Sales and marketing		2,052			1,563			3,931			2,840
Research, development and engineering		3,404			2,822			6,950			5,547
General and administrative		2,326			2,348			4,747			4,534
Intellectual property		387			261			921			538
Total operating expenses		8,169			6,994			16,549			13,459
Operating income (loss)		(4,458	)		1,356			(7,779	)		3,000
Other income, net		21			19			48			48
Income (loss) before income taxes		(4,437	)		1,375			(7,731	)		3,048
(Provision) benefit for income taxes		1,757			(773	)		3,065			(1,475	)
Net income (loss)	$	(2,680	)	$	602		$	(4,666	)	$	1,573
Earnings (loss) per common share:
Earnings (loss) per common share - basic	$	(0.38	)	$	0.08		$	(0.68	)	$	0.22
Earnings (loss) per common share - diluted	$	(0.38	)	$	0.08		$	(0.68	)	$	0.21
Weighted average common shares outstanding - basic		7,113			6,850			7,057			6,844
Weighted average common shares outstanding - diluted		7,113			7,090			7,057			7,078
Cash dividends declared per common share:	$	0.11		$	0.11		$	0.22		$	0.22

Digimarc Corporation

Consolidated Cash Flow Information

(in thousands)

(Unaudited)

	Six-Month Information
	June 30, 2014			June 30, 2013
Cash flows from operating activities:
Net income (loss)	$	(4,666	)	$	1,573
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment		459			320
Amortization and write-off of intangibles		606			602
Change in allowance for doubtful accounts		(17	)		—
Gain on reversal of contingent merger consideration		—			(190	)
Stock-based compensation		2,631			2,169
Deferred income taxes		(1,621	)		1,406
Changes in operating assets and liabilities:
Trade accounts receivable, net		2,164			(303	)
Other current assets		(1,412	)		(271	)
Other assets		84			(46	)
Accounts payable and other accrued liabilities		(124	)		228
Income taxes payable		(167	)		24
Deferred revenue		(1,984	)		637
Net cash provided by (used in) operating activities		(4,047	)		6,149
Cash flows from investing activities:
Purchase of property and equipment		(579	)		(275	)
Capitalized patent costs		(561	)		(506	)
Maturity of marketable securities		32,376			35,474
Purchase of marketable securities		(25,810	)		(37,060	)
Net cash provided by (used in) investing activities		5,426			(2,367	)
Cash flows from financing activities:
Issuance of common stock		1,176			—
Purchase of common stock		(1,440	)		(742	)
Cash dividends paid		(1,654	)		(1,601	)
Net cash used in financing activities		(1,918	)		(2,343	)
Net increase (decrease) in cash and cash equivalents(1)	$	(539	)	$	1,439
Cash, cash equivalents and marketable securities at beginning of period		34,964			39,056
Cash, cash equivalents and marketable securities at end of period		27,859			42,081
(1)    Net increase (decrease) in cash, cash equivalents and marketable securities	$	(7,105	)	$	3,025

Digimarc Corporation

Consolidated Balance Sheet Information

(in thousands)

(Unaudited)

	June 30, 2014		December 31, 2013
Assets
Current assets:
Cash and cash equivalents(2)	$	3,272	$	3,811
Marketable securities(2)		20,843		25,851
Trade accounts receivable, net		3,691		5,838
Other current assets		3,089		1,658
Total current assets		30,895		37,158
Marketable securities(2)		3,744		5,302
Property and equipment, net		2,658		2,395
Intangibles, net		6,750		6,709
Goodwill		1,114		1,114
Deferred tax assets, net		4,942		3,949
Other assets		486		570
Total assets	$	50,589	$	57,197
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable and other accrued liabilities	$	1,653	$	1,560
Deferred revenue		2,210		4,218
Total current liabilities		3,863		5,778
Deferred rent and other long-term liabilities		278		496
Total liabilities		4,141		6,274
Commitments and contingencies
Shareholders’ equity:
Preferred stock		50		50
Common stock		8		7
Additional paid-in capital		43,342		41,498
Retained earnings		3,048		9,368
Total shareholders’ equity		46,448		50,923
Total liabilities and shareholders’ equity	$	50,589	$	57,197

(2) Aggregate cash, cash equivalents, short- and long-term marketable securities was $27,859 and $34,964 at June 30, 2014 and December 31, 2013, respectively.

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