Shares of Digimarc (NASDAQ: DMRC) plummeted over 10% in pre-market trading on Friday as the company faced challenges that impacted its third-quarter performance and near-term outlook.
The primary reason for the stock's decline was the delayed renewal of a significant commercial contract, which resulted in no revenue being recognized from it during the quarter. This led to a decrease of $900,000 in the company's annual recurring revenue (ARR).
Additionally, Digimarc's operating expenses increased by 5% year-over-year, partly due to one-time severance costs and lower labor cost allocations. The company's free cash flow usage was $7.3 million for the quarter, significantly higher than the previous year due to the timing of cash receipts.
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