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Management frames the rapid pace of AI as a ‘trust gap’ which serves as the bottom line for their digital watermarking and integrity solutions.
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The company achieved positive non-GAAP net income and positive free cash flow for the first time in twelve years, driven by aggressive corporate streamlining and a 31% reduction in operating expenses.
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Activity in the retail loss prevention sector is accelerating, with the first commercial order for secure gift cards exceeding $500,000 in ARR.
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The strategic focus has shifted to three core areas: retail loss prevention, product authentication, and digital trust and integrity, leading to a focus on non-core legacy contracts.
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The anti-counterfeiting business is expanding through higher sales, including new applications for tax stamps and future printing trials for cigarette-tipping paper.
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IP licensing remains a recurring strategic pillar, confirmed by recent agreements with two major technology leaders as pioneers in the AI era.
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Significant ARR growth is expected in 2026, with secure gift card solutions identified as the single largest driver of this growth.
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Management anticipates a major technical milestone in the next few weeks as major scanner vendors release firmware enabling Digimark software at retail locations.
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A wide range of roles are planned for the 2026 holidays, with initial recruitment at Shanks and major US retailers starting in the spring and summer.
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The company expects to accelerate the pace in digital trust and maturity through 2026, before surpassing the conservative assumptions of 2025 in this green field.
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Recycling initiatives in Belgium and Germany are expected to reach critical mass in sorting centers by mid-year and Q3 2026, respectively.
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A new corporate structure and CUSIP number will be implemented to facilitate an alternative long-term employee equity incentive program designed to reduce layoffs.
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Q1 2026 free cash flow is expected to take a hit of $1 million to $2 million due to $1.5 million in one-time compliance, tax and legal costs.
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Reported ARR decreased year-over-year to $13.7 million following the termination of two large non-core contracts totaling $6.6 million.
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Gift card contracts may initially offer shorter than normal annual terms, which management notes may temporarily reduce the actual operating rate.
