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Press Contact: Lara Burhenn

lara.burhenn@digimarc.com | 503-469-4704

| Apr 26, 2012

Digimarc Reports Record Profits; Declares Cash Dividend

by Apr 26, 2012

Beaverton, Ore. — April 26, 2012 — Digimarc Corporation (NASDAQ: DMRC) reported financial results for the first quarter ended March 31, 2012.

First Quarter 2012 Results

Revenues for the first quarter 2012 increased 88% to $17.0 million from $9.1 million in the same quarter a year ago. The 2012 quarter reflected an $8.0 million increase in revenues primarily due to royalties paid by Verance to Digimarc in conjunction with resolution of a license dispute.

Operating income for the quarter was $9.2 million, compared to $1.4 million in the first quarter of 2011. The improvement was largely due to the payment from Verance, and a related decrease in legal fees from the associated litigation, which was resolved in January; offset by increased headcount and an additional layer of stock-based awards.

Net income for the quarter was $5.0 million or $0.70 per diluted share, which included Digimarc's share of the net loss of $1.1 million from its joint ventures with Nielsen. This compares to a net income of $0.9 million or $0.12 per diluted share in the first quarter of 2011, which also included Digimarc's share of the net loss of $0.5 million from the company's joint ventures with Nielsen. The increase in the net loss from the joint ventures was primarily due to accrued expenses in connection with suspending operations of the joint ventures.

During the quarter, Digimarc and The Nielsen Company mutually agreed to reduce the investment in their joint ventures to a nominal level for the foreseeable future. Based on its assessment of the market and competition, Digimarc concluded that licensing its patents and technology is a better path to maximum profit than continuing to invest in an operating business to compete in the space.

At March 31, 2012, cash and cash equivalents and marketable securities totaled $44.0 million, up from $33.4 million at December 31, 2011. The increase was from improved operating results, driven primarily by increased revenues from Verance.

Given its strong operating performance and healthy cash balances, Digimarc declared a quarterly dividend of $0.11 per share on the outstanding common shares, payable on May 25, 2012, to shareholders of record at the close of business on May 11, 2012. The aggregate amount of the quarterly dividend payment is expected to be approximately $781,000. The dividend is an elaboration of the company's capital allocation strategy that is intended to provide income to current shareholders and broaden investor interest in Digimarc.

Conference Call

Digimarc will hold a conference call later today (Thursday, April 26, 2012) to discuss first quarter 2012 results. Chairman and CEO Bruce Davis and CFO Mike McConnell 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 presentation.

The call will be broadcast live via webcast at www.digimarc.com/investors and www.earnings.com, and will be available for replay until May 10, 2012. Thereafter, the webcast will be archived and available on Digimarc's website at www.digimarc.com/investors/investor-events-and-webcasts.

For those who wish to listen to the call via telephone, please dial the listen-only telephone number below at least 5-10 minutes prior to the scheduled start time:

  • Listen-Only Number: +1 866 562 9934
  • Conference ID#: 72969651

If you have any difficulty connecting with the conference call, please contact Liolios Group at +1 949 574 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 digital 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, please visit www.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 providing inferences about future financial performance and amounts of future dividend payments, any related inferences regarding increases in license and subscription revenues, 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 will be set forth in the company's Form 10-K for the year ended December 31, 2011 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.

Company Contacts

Michael McConnell
Chief Financial Officer
+1 503 469 4652
mmcconnell@digimarc.com

Scott Liolios or Matt Glover
Liolios Group, Inc.
Investor Relations for Digimarc
+1 949 574 3860
info@liolios.com

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