Digimarc Q2 2026 Earnings Report

Digimarc EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.33
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Digimarc Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $7.10 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Digimarc Announcement Details

• Quarter: Q2 2026
• Date: 8/13/2026
• Time: After Market Closes
• Conference Call Date: Thursday, August 13, 2026
• Conference Call Time: 5:00PM ET

Digimarc (NASDAQ:DMRC) is a technology company specializing in digital identification and authentication solutions. Its core offering centers on embedding imperceptible digital watermarks into images, audio, video and packaging materials. These watermarks carry unique identifiers that enable secure tracking, brand protection and content provenance across print and digital channels.

The company’s product suite includes software development kits and cloud-based services that allow enterprises to integrate digital watermarking into their existing workflows. In the consumer goods and retail sectors, Digimarc Barcode enhances supply‐chain visibility and eCommerce readiness by replacing traditional barcodes with machine-readable, resilient identifiers. In media and publishing, its tools help rights holders monitor and manage content distribution, while law enforcement and anti‐counterfeiting teams leverage the technology to authenticate documents and products.

Founded in the mid‐1990s and headquartered in Beaverton, Oregon, Digimarc serves a global client base spanning North America, Europe and Asia Pacific. The company has forged partnerships with packaging manufacturers, major retailers and software platforms to extend the reach of its watermarking and traceability solutions. Under its executive leadership, Digimarc continues to invest in research and development, aiming to expand applications of its digital identification technology in emerging markets such as connected packaging and augmented reality.

Digimarc Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Secure Gift Card momentum is expanding: Two additional retailers committed to deployments, while more than 31 retailers are in discovery, pilot, or rollout stages. However, most meaningful revenue contribution is now expected toward late Q4 2026 and into 2027.
• Positive Sentiment: Digimarc is narrowing its go-to-market focus to retail and CPG, where management sees the strongest differentiation and market demand. New commercial leadership, dedicated sales teams, and partner infrastructure are intended to improve pipeline and forecast reliability.
• Negative Sentiment: Ending ARR fell to $11.6 million from $15.9 million year over year, following a contract expiration and a $2.6 million government-related reduction. Management no longer expects to achieve its original target for significant ARR growth by year-end 2026, with restoration of the lost business uncertain.
• Negative Sentiment: Q2 revenue declined to $7.4 million from $8.0 million, and GAAP operating expenses increased due partly to stock-based compensation and CEO-transition severance. The company ended the quarter with $8.8 million in cash and investments, used $1.0 million in cash during the quarter, and is considering capital raising to fund its go-to-market build-out.
• Neutral Sentiment: Management highlighted a live CPG deployment covering 45,000 SKUs and cited GS1 Sunrise 2027 and EU Digital Product Passport requirements as potential demand drivers. It also identified content provenance, C2PA compliance, and AI-agent authentication as longer-term opportunities, but is not prioritizing them as dedicated verticals today.

Presentation

[Operator]

Greetings. Welcome to the Digimarc Q2 2026 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Charles Beck, Chief Financial Officer. Thank you, Charles. You may begin.

[Charles Beck, CFO at Digimarc]

Thank you, Max. Welcome everyone to our Q2 earnings call. I'm Charles Beck, Digimarc's CFO, and I'm joined today by Paul Carreiro, Digimarc's CEO. On the call today, Paul will share his plans for the next 90 days, and I will provide a business update and discuss our Q2 2026 financial results. This will be followed by a question and answer forum. Before we begin, let me remind everyone that today's discussion contains forward-looking statements that have risks and uncertainties. Please refer to our press release for more information on specific risk factors that could cause actual results to differ materially. Paul, I'll turn the call over to you now.

[Paul Carreiro, CEO at Digimarc]

Great. Thank you, Charles. Hello, everyone. Before I walk through the plan, I want to spend a moment on why I took this role. It's just the lens through which everything else I say today should be understood. When I looked at Digimarc, I saw a company trading well below the value of what it had actually been built on, proprietary technology, a genuinely differentiated platform, and real provable customer outcomes already in production, held back by a commercial execution gap that is entirely fixable. That is rare and, frankly, an exciting setup. The hardest part, building durable technological differentiation, has already been done. What was missing was leadership focus, structure, and accountability to convert that differentiation into revenue at the pace it deserves.

[Paul Carreiro, CEO at Digimarc]

I built my career around finding exactly this kind of situation, and I'm genuinely energized by how much upside sits on the other side of straightforward execution discipline. That conviction is the foundation for everything you'll hear from me on this call. 30 days into this seat, my conclusion is not that Digimarc lacks a differentiated technology position. The platform, the IP underlying our digital and physical watermarking capability, and the depth of our Illuminate stack should not be in question. What has been in question is commercial execution. Whether the organization could reliably convert genuine technological differentiation into a forecastable and repeatable revenue motion. That is the constraint we will address, and it is the lens through which I would ask you to evaluate everything else in this plan. The first concrete evidence of that shift are two early leadership hires.

[Paul Carreiro, CEO at Digimarc]

We have brought in a chief revenue officer who now holds quota, pipeline, and forecast accountability across every vertical. A single point of ownership that simply did not exist before, and that alone is one of the highest leverage changes we can make. Diffuse commercial accountability is one of the more common and, importantly, one of the more correctable causes of underperformance in businesses our size, and we've now closed that gap. Alongside that, we've hired a VP of retail solutions who I know well to give our largest and fastest-moving vertical dedicated leadership rather than shared part-time attention it received historically. Both hires matter to this narrative for the same underlying reason. They provide focus and dedicated ownership and accountability, and that is what produces forecast results and reliability.

[Paul Carreiro, CEO at Digimarc]

We are standing up a real go-to-market engine and leadership team, which I have built successfully a number of times over my career. External messaging discipline, a functioning revenue operations capability, a pre-sales value engineering capacity in support of our new leadership model rather than layered into the old structure. We are tightening forecast and pipeline rigor to the standard this market should expect, and I'm confident we'll get there quickly because the underlying demand signals and proof points I'll walk you through shortly are already strong. We are redesigning our organization in order to achieve discipline, focus, and accelerated growth. We have a plan already in motion, and that is the difference between a company with a problem and a company executing an accelerated transformation. The plan itself rests on four priorities.

[Paul Carreiro, CEO at Digimarc]

I want to walk you through not just what they are, but why they are sequenced the way they are. Because the sequencing is itself a statement about capital and operating discipline. The first priority is narrowing our industry focus and our messaging while rebuilding our commercial engine focused on our two highest vertical industries, retail, anchored by our Secure Gift Card solution, and CPG. We're evolving our messaging around three questions in cascading order. Which industries we serve, which problems do we solve in those industries, and what value do we create in doing so? All enabled by our common platform. The second priority is evolving our organizational design to support and accelerate that focus.

[Paul Carreiro, CEO at Digimarc]

We are building out the CRO, head of marketing, CPO, revenue operations, value engineering, and a dedicated partner and ecosystem leadership function, and using that foundational structure to stand up two purpose-built sales teams, one for retail, one for CPG, rather than a single generalized sales organization asked to cover five industries with random attention. The third priority is reorienting how we engage with all of our customer and prospect relationships. We are implementing a formal 360-degree customer engagement model turning account management into a repeatable discipline applied to every relationship. These actions will not only accelerate our upsell, cross-sell opportunity, but also increase retention. The fourth priority is organizing a roadshow to take our exciting go-forward story directly to the market. The recent new hires announced as a strong indication of how purposeful I'm being to drive the changes needed.

[Paul Carreiro, CEO at Digimarc]

Now, let me briefly walk you through each of these priorities. Priority 1 is where I would ask analysts to focus first, because it is the one area of our plan where we already have measurable proof rather than a forward promise. In retail, our Secure Gift Card solution program is live today, anchored by our Schnucks chain-wide deployment across 115 stores, clearly demonstrating that the solution can be successful in driving value in a live retail environment. A little more on that later. Gift card fraud is not a hypothetical problem we are posing to solve. It is real dollarized leakage that retailers already measure and already budget against. CPG is another exciting industry for Digimarc. A great example is a global CPG manufacturer and distributor using our Digimarc Digital Link platform.

[Paul Carreiro, CEO at Digimarc]

It is a live global rollout spanning 45,000 SKUs across their multiple global brands available in every household, and is positioned directly ahead of two external forcing functions, the GS1 Sunrise 2027 Global Initiative and the EU Digital Product Passport Mandate. This is not a discretionary purchase that a CPG customer can defer. It is a compliance requirement already fixed on the calendar. To support these industries and to scale quickly, we will have dedicated go-to-market ownership across the full customer life cycle. This is what is needed in order to provide a repeatable, forecastable revenue model, which this business does not reliably have. Let me also provide you with a further update on our retail Secure Gift Card solution program rollout.

[Paul Carreiro, CEO at Digimarc]

As you have heard from us previously, our Secure Gift Card solution program has rapidly moved from proof of concept to a live in-production deployment, anchored by Schnucks, as I noted previously, anchored this program's success. We will now build out our global partner ecosystem needed to scale quickly rather than reinvent the deal by deal. We are partnered with Blackhawk Network and InComm on card issuance and program distribution, Zebra Technologies, Datalogic, and Honeywell on point-of-sale and scanning infrastructure, Graph-Tech USA, SDL Labels on secure card production and serialization, and WestRock on packaging integration. A supply chain that is truly integrated end-to-end. That alignment is precisely why we are confident in an accelerated rollout from here. The technology is proven and the partnerships are in place. The remaining work is pipeline build-out and execution, not partnership building or infrastructure development.

[Paul Carreiro, CEO at Digimarc]

At the start of this year, we were only working with a single retailer. Today, our pipeline has grown over 30 times, and we have more than 31 large and mid-sized retailers at various stages of engagement, ranging from early discovery through active pilots and production rollouts, and rapidly growing. Priority 2 is organizational. Structure determines the speed and consistency with which strategy converts into real results. The structure that brought Digimarc to this point was not designed for our next stage of growth, so we are not tuning it incrementally. We are redesigning it around where the business is going rather than where it has been. Our Chief Revenue Officer, recently hired, will unify global sales, partnerships, customer success under a single owner, closing the accountability gaps I described earlier. Our Chief Operating Officer owns cross-functional execution, people, global marketing, and operating strategy.

[Paul Carreiro, CEO at Digimarc]

Our Chief Product Officer will build and define our value-based roadmap strategy and will function as the interpreter, defining the business problems our platform solves across our entire registered platform. Additionally, we'll be hiring a VP of partner and ecosystem, which will build and manage our global partner community. Of course, we'll maintain and enhance our CTO and CFO functions as we progress and evolve. We are not asking the market to underwrite a series of reorganizations. We are asking it to underwrite one durable structural decision. The third and fourth priorities are where strategy becomes visible to the two audiences who ultimately have to believe it for any of this to matter, our customers and our shareholders. On the customer side, our 360-degree customer engagement model will ensure our go-to-market teams will personally engage with every account in person.

[Paul Carreiro, CEO at Digimarc]

This approach will ensure we engage with all accounts well ahead of contract decision point to significantly increase retention and maximize upsell, cross-sell opportunities with existing customers. On the shareholder side, we will continue to take this narrative directly to the market in a roadshow targeted for existing and new investors in the coming weeks, led jointly by myself and our CFO, Charles. Our goal is to continue to provide the investment community with enough confidence that it is really going to be different this time. We'll be leading with proof, not promise. I'm going to close on market trends. This slide will answer a question I would expect every analyst on this call to be asking directly. If you are narrowing commercial focus to two industries, what happens to the others, and are you leaving revenue and TAM on the table by doing so?

[Paul Carreiro, CEO at Digimarc]

The answer is that we are not exiting the other industries we serve today. We are changing how we reach them. Retail and CPG, as mentioned, will receive dedicated focus as that is where our platform's value proposition is greatest and most defensible today. Each of the solutions you see noted helps solve specific definable business challenges with a quantifiable cost of inaction, which is exactly the kind of proof point this plan was built around. Pharma, life sciences, media and technology, and government solutions, with the exception of our expanding work with the Central Bank Counterfeit Deterrence Group, will transition to be reached horizontally. Still leveraging our roadmap and product portfolio, but mainly through our partner ecosystem rather than through dedicated vertical sales capacity. This is not a retreat from total addressable market. It's a capital and operationally efficient sequencing and prioritization decision.

[Paul Carreiro, CEO at Digimarc]

I would flag one item inside that horizontal category because I believe it's more consequential than the current classification suggests. Our media and technology exposure with content provenance, C2PA compliance, and AI agent authentication is one of the more underappreciated, potentially category-defining opportunities we are watching closely. As the AI Act enforcement matures in Europe and globally, and as agent-to-agent authentication becomes a genuine infrastructure requirement and critical risk, we believe Digimarc's role could become a much larger part of the story. We are not resourcing it as a primary vertical today, and I want to be disciplined about that. But I would not want this call to end without analysts understanding that we see it and that our platform and roadmap already positions us for it without requiring separate investment to own that category as the market quickly evolves.

[Paul Carreiro, CEO at Digimarc]

Thank you for giving me this time to speak with you, and I look forward to updating you all as our exciting story continues to progress. I will now hand it over to Charles to go through our financial results.

[Charles Beck, CFO at Digimarc]

Thank you, Paul. Earlier, Paul highlighted several important developments related to our Secure Gift Card solution, and I would like to provide some additional detail before I cover Q2 financial results. We are pleased to see continued momentum among retailers. Two additional retailers have committed to deploying our Secure Gift Card solution across their stores, with one rolling out beginning later this month and the other scheduled for October. We have also made progress with the large retailer that postponed its pilot earlier in the year due to software availability constraints. The retailer is now planning to launch a pilot in September at a smaller scale than originally contemplated, with the objective of supporting a broader deployment beginning in the first quarter of 2027. Additionally, several other retailers are actively planning to start rolling out our solution in the first half of 2027.

[Charles Beck, CFO at Digimarc]

We are also continuing to see increasing interest from major brands that are exploring opportunities to enable their gift card programs with our solution. As these deployments expand, we look forward to demonstrating the effectiveness and scalability of our solution across a broader set of retail environments. These initial implementations are an important step toward broader industry adoption, and over time, position us to participate in what we believe is a significant market opportunity. Ending ARR was $11.6 million at the end of Q2, compared to $15.9 million a year ago. The change primarily reflects two previously disclosed events, the expiration of a $3.1 million contract in October 2025, and a $2.6 million contract reduction in June 2026, partially offset by net ARR growth of $1.5 million. As a reminder, the contract reduction related to two projects that were canceled following changes in requirements imposed by the government end customer.

[Charles Beck, CFO at Digimarc]

We are working with our direct customer to restructure the agreement and pursue the recertification of three legacy projects and the certification of two new projects. If successful, these efforts could, at a minimum, restore a meaningful portion of the lost ARR and potentially grow ARR much higher. However, the timing and outcome of these efforts remain uncertain. Based on the magnitude of the contract reduction, the absence of a committed upsell from this customer at this time, and the limited time remaining in 2026, we no longer expect to achieve our original target for significant ARR growth by year-end. That said, our confidence in the underlying opportunities remain unchanged. The anticipated ARR growth from gift cards has largely been deferred due to timing related to the alignment with our go-to-market partners, a process that has now been completed.

[Charles Beck, CFO at Digimarc]

As a result, while the timing has shifted a few quarters, we continue to expect meaningful ARR growth as this initiative moves forward. Total revenue for Q2 was $7.4 million compared to $8 million in Q2 last year. Subscription revenue, which accounted for 51% of total revenue for the quarter, decreased $900,000 from $4.6 million to $3.7 million. The customer contract that expired in October 2025 accounted for substantially all the change. Service revenue increased $300,000 from $3.4 million to $3.6 million, with both commercial and government parts of our business contributing to the increase. Subscription gross profit margin was 89% for the quarter, up 4 percentage points from Q2 last year. The improvement primarily reflects lower subscription platform costs, which decreased by $300,000 year-over-year. Service gross profit margin was 60% for the quarter, up 1 percentage point from Q2 last year.

[Charles Beck, CFO at Digimarc]

The improvement was primarily due to a favorable mix of service revenue. Operating expenses were $16.7 million for the quarter, compared to $13.1 million in Q2 last year. Operating expenses for the quarter included $5.4 million of stock-based compensation expense and $700,000 of severance costs related to our former CEO. Excluding these one-time costs, operating expenses were $10.6 million for the quarter, down $2.5 million or 19% from Q2 last year. The decrease reflects lower other stock-based compensation expenses of $1.4 million and lower cash compensation costs of $1 million. Non-GAAP operating expenses, which exclude non-cash and non-recurring items, were $8.1 million for the quarter, down $800,000 or 9% from $8.9 million in Q2 last year. The decrease primarily reflects lower cash compensation costs and other operating costs, partially offset by severance costs associated with the CEO transition.

[Charles Beck, CFO at Digimarc]

Net loss per diluted share was $0.54 for the quarter, compared to $0.38 in Q2 last year. Non-GAAP net loss per diluted share was $0.08 for the quarter, compared to $0.11 in Q2 last year. Turning to cash flow. We ended the quarter with $8.8 million in cash and short-term investments and no debt. During the quarter, we used $1.03 million cash flow and $600,000 to repurchase shares associated with our employee equity programs. We also raised $300,000 of cash proceeds on our ATM program at an average price of $12.59 per share. For additional information regarding our financial results and recent prospects for our business, please refer to our 10-K, which will be filed shortly with the SEC. Max, please open the call up for questions. Thank you.

[Operator]

Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question is from Joshua Reilly with Needham & Company. Please proceed with your question.

[Joshua Reilly, Analyst at Needham & Company]

Great. Thanks for taking my questions. In terms of the go-to-market rebuild here, can you just discuss in more detail why retail and CPG are the right industries to be focusing on for sales going forward? In terms of the org redesign, what are you thinking in terms of the timeline to get all of these senior positions in place and working to execute the strategy as one team?

[Paul Carreiro, CEO at Digimarc]

Yeah. Thanks for the question, Joshua. If we take a look at why those two industries, not only is it because those are the two industries that are very well-developed already today, and in terms of solutions that we already provide to those two industries, as well as we believe that is where we have the greatest differentiation in our current product portfolio today, and I tried to provide a little bit of the solution overview in the deck that I provided earlier that you saw. If not, you will have it shortly. So that is kind of just a quick summary where we believe we can build the greatest moat as well, particularly with our retail gift card program, as you are already starting to see the beginnings of that.

[Paul Carreiro, CEO at Digimarc]

In terms of the go-to-market team build-out, as you have already seen and have heard, we are moving pretty quickly with that. We have hired a VP of our retail solutions business. We have hired a CRO. I would expect a couple more hires by the time, at least one or two more hires by the time we get out of August, September. I would expect that full team build-out, at least at the senior level, to be complete by the time we get out of Q3, and then adding capacity at the account executive level as we progress through Q3 and Q4.

[Joshua Reilly, Analyst at Needham & Company]

Got it. As you think about the restructuring of the business model here to some degree, how are you thinking about the pricing and packaging model and contract structure for customers? Does that need to evolve as well along with the go-to-market strategy, or how are you thinking about that?

[Paul Carreiro, CEO at Digimarc]

It does need to evolve. However, for our retail gift card program, the pricing structure that we have in place for that as well as the solution packaging is already very well-defined. I am pleased with what I have seen, and I think that is a program, in fact, I am confident that is a program that we can accelerate very quickly with the pricing and packaging structure we have today. The other areas are going to take a little bit of work, and I am comfortable that we can get through that very, very quickly. In fact, as I noted in my narrative, one of the areas that we are reforming the go-to-market teams against is clearly defining the two industries that we are going to market in, as I noted, being CPG and retail.

[Paul Carreiro, CEO at Digimarc]

Clearly defining the solutions that we solve in those two industries and the value that we create in solving those particular problems in those industries. That is where we are going to get the most amount of stickiness, and so we are going to be matching the solutions that we have today to those problem statements, and that is a very rapid exercise that we are going through now. So that is where the repackaging, if you will be occurring here in the short term.

[Joshua Reilly, Analyst at Needham & Company]

Got it. The commentary implies a greater ramp for gift cards in 2027, if I am understanding that correctly. How do we think about what is the opportunity through the holiday season here in 2026, in terms of revenue that could be coming through in Q3 and Q4 there? Is there any possibility for a bit of upside to the 2026 holiday season on gift cards?

[Paul Carreiro, CEO at Digimarc]

I would not anticipate that there would be additional that I can commit to at this point for the gift card program through the balance of 2026. While the build-out and the partnership structuring has already been completed, as you heard me go through from the InComm and the Blackhawk Network on the aggregator side, the Datalogic and the Zebra on the scanner side, and WestRock on the packaging side. That is a tremendous amount of heavy lifting. At the same time, we are building a pretty significant moat that is becoming impenetrable. So that is where a lot of the legroom has been happening. Now, together with those aggregators, the InComm, the Blackhawk Network, as well as directly to those large retail partners and customers that we are working with.

[Paul Carreiro, CEO at Digimarc]

A lot of that significant demand will be built up through the balance of the second half, and that is why I am saying we expect the build-out to really happen and the demand start to happen towards the end of Q4, beginning of Q1 2027.

[Joshua Reilly, Analyst at Needham & Company]

Got it. That is really helpful. Then just one financial question. As we look at the exit rate of ARR here for Q2, is there any considerations in terms of customer churn that we should be anticipating for the second half of the year? How do you feel about your current visibility on this base of ARR and potential churn? Thanks, guys.

[Charles Beck, CFO at Digimarc]

Yeah, Josh. I think it is important to remember that most of the churn that we have seen over the last two years really has come from two customers, and were a result of factors outside of our control. Obviously, every business has some voluntary and involuntary churn. Those two are kind of special cases. If you look at those two customers combined, now they represent less than 10% of ending ARR. Why I share that is just our customer concentration in general is significantly less than it was before. Our focus really is how do we maintain and grow these customer relationships and minimize churn where we can? If you really are looking at trends, it is really those two customers that account for the majority of the churn that you have seen.

[Joshua Reilly, Analyst at Needham & Company]

Got it. Super helpful. Thank you, guys.

[Charles Beck, CFO at Digimarc]

Thank you, Josh.

[Paul Carreiro, CEO at Digimarc]

Thank you.

[Operator]

Our next question is from Jeff Van Rhee with Craig-Hallum Capital Group. Please proceed with your question.

[Vijay Homan, Analyst at Craig-Hallum Capital Group]

Hey, guys, this is Vijay on for Jeff. First question from me. In the last year or so, there's been a little bit of a pivot from capital returns to now a little bit of capital raising. I'm just wondering, how are you guys going to approach capital allocation going forward? Is it going to be trying to get to breakeven as soon as possible? Is it going to be growth at any cost? What's the thought process there?

[Paul Carreiro, CEO at Digimarc]

All of the above. Certainly, as you heard, I give you an indication of the go-to-market build-out that we are embarking on. Part of that is to do that in as much of a cost-neutral way as we can. That is where a big part of the capital raise planning that we are looking at right now is going to go into. This is a build-out of our go-to-market program and teams that we have in place. That is, I would say, where 90%+ of the investment is going to be going into.

[Vijay Homan, Analyst at Craig-Hallum Capital Group]

Okay. Yeah. That makes sense. The two other retailers that are going to be rolling out here in, I think it was August and October, is there any kind of quantification you can do around size or revenue potential for this?

[Paul Carreiro, CEO at Digimarc]

Not at this time, but I would say that a couple of the retailers that we are working with, that we are talking about, are a couple of the largest global retailers in the world. They can be very significant in size. The roll-outs are starting small, but they can ramp very quickly, and with very significant scale.

[Vijay Homan, Analyst at Craig-Hallum Capital Group]

Okay. Got it. Just last one from me. How do you think about unit economics for the gift card solutions? How scalable are these things, and how do the economics change as you get to these fully deployed across hundreds or potentially even thousands of stores?

[Paul Carreiro, CEO at Digimarc]

Yeah. It would be the hundreds of thousands, actually. We already have quite a good framework in place in terms of unit economics that are really based on volume, number of stores that are already in place with our aggregators, being the InComms and the Blackhawk Networks, as well as with our retail customers. Of course, there are individual negotiations as we really start to ramp up with some of these large global players. But the framework is already in place, and we believe we can scale that across the board.

[Vijay Homan, Analyst at Craig-Hallum Capital Group]

Got it. Thank you guys so much for taking the questions.

[Paul Carreiro, CEO at Digimarc]

Thank you.

[Operator]

Once again, if you would like to ask a question, please press star one on your telephone keypad. Our next question is from Jeff Bernstein with Silverberg Bernstein Capital Management. Please proceed with your question.

[Jeff Bernstein, Analyst at Silverberg Bernstein Capital Management]

Yeah. I just wanted to hear a little bit more behind the emphasis on the GS1 Digital Link opportunity. We have had a fair amount of one-and-done contracts in various opportunity sets. Why is this one the one where you see pressure for additional customers to adopt in a timely kind of fashion?

[Paul Carreiro, CEO at Digimarc]

Well, that is one of the many. I used that as an example of what I call external forcing factors as well as sunrise initiative. The wonderful thing when you are in the go-to-market business, there is nothing better than having regulatory external forcing factors to drive the justification for the need. That is just one of the elements that will drive the demand. Of course, a big part of the demand beyond just our Digimarc Digital Link solution, and as I noted from the slide deck enclosed, we have a number of other solutions within CPG, that just being one of them that we have already rolled out successfully, that 45,000 SKUs for an extremely large CPG manufacturing distributor. That is one that is known as proven. We have got a reference on it. We believe we can duplicate.

[Paul Carreiro, CEO at Digimarc]

That is just one of the solution areas across our CPG platform that we believe we can roll out.

[Jeff Bernstein, Analyst at Silverberg Bernstein Capital Management]

Okay. Thank you.

[Paul Carreiro, CEO at Digimarc]

Thanks, Jeff.

[Operator]

We have reached the end of the question and answer session. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Charles Beck, CFO
• Paul Carreiro, CEO

Analysts

• Joshua Reilly, Analyst at Needham & Company
• Vijay Homan, Analyst at Craig-Hallum Capital Group
• Jeff Bernstein, Analyst at Silverberg Bernstein Capital Management