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Digimarc Gift Card Security Gains Momentum as More Than Two Dozen Retailers and Brands Pilot and Deploy the Solution Digimarc Corporation (NASDAQ: DMRC), a leading provider of digital identity and authentication technologies, today announced growing adoption of its next generation gift card security solution. More than two dozen major retailers and brands are now exploring, piloting, or deploying the solution, which automatically identifies card tampering and stops compromised cards from activating at the register. Protected cards on shelves today carry top brands across several categories, including open loop bank cards, luxury department stores, and home improvement.

“The industry has spent years hardening packaging, and fraud has still exploded,” said Paul Carreiro, President & Chief Executive Officer at Digimarc. “We focused on the activation step instead. If a compromised card cannot be activated, the card draining fraud chain breaks down.”

Digimarc’s solution applies its digital identification and authentication technologies at checkout to detect tampered cards and block their activation. It works with existing point of sale scanners and requires no changes to the customer experience or to checkout, store, or supply chain processes.

Schnuck Markets, Inc., a grocer based in St. Louis, recently completed a storewide deployment across its 112 stores, with more than 90,000 Digimarc-protected cards either on shelves or sold to customers. In 2025 and 2026, Schnucks sold thousands of protected cards worth hundreds of thousands of dollars, with zero fraud reported on cards sold and 100% of cards activating successfully. The rollout included security updates to Zebra MP7000 flatbed scanners, Zebra DS8178 handheld scanners, and Honeywell Xenon XP 1952g handheld scanners.

“We are thrilled that Digimarc’s gift card security solution is helping us significantly mitigate the persistent gift card fraud within the retail sector,” said Dianna Kaiser, Store Auditor and Compliance Officer at Schnucks. “The Digimarc team worked closely with us to ensure a smooth rollout across all 112 store locations, which involved security updates for our Zebra and Honeywell scanner hardware.”

“We have been focused on modernizing the underlying activation architecture and making it intelligent and automated,” said Kaiser. “The result is gift card security that is three times more secure than package-level security.”

Retailers and brands can learn more about Digimarc gift card security by visiting the Digimarc website.

About Digimarc

Digimarc (NASDAQ: DMRC) provides persistent digital identity that makes products, packaging and content identifiable and verifiable across the physical and digital worlds. Our technology can make identity intrinsic to the things themselves, creating durable proof that people, systems and machines can recognize. For more than three decades, Digimarc technology has helped protect global currency. Today, organizations use Digimarc to authenticate products, combat fraud, identify and trace content, and enable trusted interactions across increasingly connected physical and digital environments. Visit www.digimarc.com to learn more.

View source version on businesswire.com: https://www.businesswire.com/news/home/20261007629570/en/

Disclosures I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.

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Digimarc NASDAQ: DMRC outlined a commercial restructuring centered on retail and consumer packaged goods, while reporting lower second-quarter revenue and annual recurring revenue following previously disclosed customer contract changes.

Chief Executive Officer Paul Carreiro, who said he was 30 days into the role, described the company’s primary challenge as commercial execution rather than technology differentiation. He said the company is building a more focused go-to-market organization designed to convert its digital and physical watermarking technology into more repeatable and forecastable revenue.

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Retail and CPG become primary commercial focus
Carreiro said Digimarc will concentrate dedicated sales resources on retail and CPG, which he characterized as the company’s most developed verticals and the areas where its current product portfolio has the greatest differentiation.

In retail, the company is emphasizing its Secure Gift Card solution, which is deployed chainwide at Schnucks across 115 stores. Carreiro said gift card fraud represents measurable financial leakage for retailers and that Digimarc has built partnerships across the card issuance, point-of-sale, scanning, card production, serialization and packaging supply chain.

The company’s partners include Blackhawk Network and InComm for card issuance and distribution; Zebra Technologies, Datalogic and Honeywell for point-of-sale and scanning infrastructure; Graph-Tech USA and SDL Labels for card production and serialization; and WestRock for packaging integration.

Carreiro said Digimarc’s retail pipeline has grown more than 30 times since the start of the year, when it was working with one retailer. The company now has more than 31 large and mid-sized retailers in stages ranging from initial discussions to pilots and production rollouts.

Chief Financial Officer Charles Beck said two additional retailers have committed to deploy the Secure Gift Card solution across their stores. One is expected to begin rolling out later in August, while another is scheduled to begin in October. A large retailer that had postponed a pilot because of software availability constraints is now planning a smaller pilot in September, with the objective of supporting a broader deployment beginning in the first quarter of 2027, Beck said.

Several other retailers are planning rollouts during the first half of 2027. Carreiro said he did not anticipate additional gift-card-program revenue that he could commit to for the balance of 2026, as the company and its partners build demand through the second half of the year.

Within CPG, Carreiro highlighted a global rollout of the company’s Digimarc Digital Link platform covering 45,000 SKUs for a global manufacturer and distributor. He said the company sees external demand drivers from the GS1 Sunrise 2027 initiative and the European Union’s Digital Product Passport mandate.

New leadership structure and customer engagement model
Digimarc has hired a chief revenue officer with responsibility for quota, pipeline and forecasting across verticals, as well as a vice president of retail solutions. Carreiro said the company expects to add one or two senior hires by the end of August or September and complete its senior leadership buildout by the end of the third quarter. The company plans to add account executive capacity through the third and fourth quarters.

The planned structure includes dedicated retail and CPG sales teams, revenue operations, value engineering, marketing, product leadership and partner ecosystem management. Carreiro said the company will move pharma, life sciences, media and technology, and most government opportunities to a more partner-led, horizontal approach rather than maintaining dedicated vertical sales capacity.

He also said Digimarc will implement a “360-degree customer engagement model,” with go-to-market teams engaging accounts ahead of contract decision points to support retention, upselling and cross-selling. The company plans to conduct an investor roadshow in coming weeks led by Carreiro and Beck.

Second-quarter results and ARR decline
Digimarc reported second-quarter revenue of $7.4 million, down from $8 million in the same period last year. Subscription revenue declined to $3.7 million from $4.6 million, primarily due to a customer contract that expired in October 2025. Service revenue increased to $3.6 million from $3.4 million, with contributions from commercial and government business.

Ending ARR was $11.6 million, compared with $15.9 million a year earlier.
Subscription gross margin increased to 89% from 85%.
Service gross margin increased to 60% from 59%.
Operating expenses were $16.7 million, compared with $13.1 million a year earlier.
GAAP net loss per diluted share was $0.54, compared with a loss of $0.38 per share a year earlier.
Non-GAAP net loss per diluted share improved to $0.08 from $0.11.

Beck said the ARR decline reflected the expiration of a $3.1 million contract in October 2025 and a $2.6 million contract reduction in June 2026, partly offset by $1.5 million in net ARR growth. The reduction stemmed from two projects canceled after the government end customer changed requirements.

Digimarc is working with its direct customer to restructure that agreement, pursue recertification of three legacy projects and seek certification for two new projects. Beck said those efforts could restore a meaningful portion of lost ARR and potentially increase ARR, but the timing and outcome remain uncertain.

Given the contract reduction, no committed upsell from that customer and limited time left in the year, Beck said Digimarc no longer expects to achieve its original target for significant ARR growth by year-end. The company still expects meaningful ARR growth from gift cards as deployments progress, though that opportunity has shifted by several quarters.

Cash position and capital allocation
Digimarc ended the quarter with $8.8 million in cash and short-term investments and no debt. The company used $1.03 million of cash flow during the quarter, spent $600,000 repurchasing shares associated with employee equity programs, and raised $300,000 through its at-the-market program at an average share price of $12.59.

Carreiro said more than 90% of planned investment from its capital-raising efforts is expected to support the go-to-market buildout, while the company seeks to execute the expansion in as cost-neutral a manner as possible.

About Digimarc (NASDAQ:DMRC)Digimarc Corporation 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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].

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