The Barcode of Everything

Safe Harbor Statement

This presentation includes forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended, which reflect managements current view with respect to future events and performance,
including statements regarding: projected gains in operational efficiency, reduction of labor costs and increased customer satisfaction our customers
could realize from implementing Digimarc Barcode; the size of the total addressable market for Digimarc Barcode and anticipated revenue we could
realize from serving that market; potential applications for and performance of our products and services, and related sources of revenue. Although
these statements are based upon expectations and beliefs concerning future events we believe to be reasonable, they are subject to risks and
uncertainties which are difficult to predict and, in many instances, are beyond our control. These risks and uncertainties include, but are not limited
to: the size and growth of our markets; protection, development, enforcement and monetization of our intellectual property portfolio; adoption or
endorsement of our technology by leading companies in the retail and consumer products industries or standard-setting bodies or institutions; our
future profitability; competition from larger companies or alternative technologies; acceptance in our markets of our revenue models and pricing
structures; and the risks detailed in our filings with the U.S. Securities and Exchange Commission from time to time, including the risk factors set
forth in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015. We believe that the risk factors specified above
and the risk factors identified in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 and our other filings with
the U.S. Securities and Exchange Commission, among others, could affect our future performance and the liquidity and value of our securities and
cause our actual results to differ materially from those expressed or implied by forward-looking statements made by us or on our behalf. All forwardlooking statements made by us or by persons acting on our behalf apply only as of the date of this presentation. We expressly disclaim any obligation
to update or revise any forward-looking statements to reflect future events, information or circumstances that arise after the date of this
presentation or a change in our views or expectations, or otherwise.

Delivering Shareholder Value From Innovation for 20 Years

Investment in Long Term Assets Nearing Inflection
Sold $100mm division in 2008
Patent license revenues declined as company transitioned to software and
services; license revenues have stabilized
TTM Revenues: $21mm / R&D: $13mm / EBITDAS: ($13mm)
Core plus growth opportunity
Clearly articulated market development strategy
Cash consumption $4-6mm per quarter; revenues not yet material
Working capital: $70mm cash and investments / no debt

History of Delivering Shareholder Value

Focus on long term assets has created significant shareholder value
$310mm in cash to shareholders from 2008 spin-off
$42mm in share buybacks at an average price of $26/share
$7mm in dividends from 2012 to 2014
3

30% CAGR in EV appreciation since 2008 sale ($34.34/share on 9/20/16)

Transformational Tech Targeting Enormous Market

Transformational Technology for Global Supply Chain
Consolidated 20 years of R&D into licensable software and services platform
Digimarc Barcode of Everything leapfrogs conventional UPC barcode
Launched for retailers and CPG brands in January 2014 rollout
underway
Projected to save retailers billions of dollars in labor costs
Many other applications anticipated

Enormous Addressable Market

Invisible and inaudible barcode that outperforms conventional barcodes
TAM: 100s of millions of barcodes in global supply chain
Comprehensive mobile discovery software platform
Targeting worlds largest retailers and brands

Sustainable Competitive Advantage

20 year history in high security; proven proprietary algorithms
4

1,100 patents issued and pending

Evolution of Digimarc Barcode Application Development

Government
Security
Central Banks: Banknote counterfeit
deterrence
Morpho Trust, Mitek: Driver license
authentication

TV and Radio
Nielsen: Audience measurement;
expansion thru Digimarc JV
SourceAudio: Production music
monitoring

Movies
Civolution: Digital cinema copyright
protection
Verance: BluRay copyright protection

Consumer
Mobile
Shazam: Visual Shazaming
Endeavour Media: Consumer
engagement

eBooks
and Digital Images
Guardian: Anti-piracy and
copyright protection services

Retailers
and Brands
Datalogic, Honeywell, NCR, Zebra:
Retail POS scanning
SGS, Schawk, Diadeis, Perrigo:
Brand deployment

Verimatrix: OTT copyright protection

HP Inc.: Printing

Irdeto: OTT copyright protection

Wegmans, New Seasons: Retailers

Digimarcs Intuitive Computing Platform

IDENTIFY

DISCOVER

ENGAGE

PROPRIETARY
DIGIMARC BARCODE

MULTI-MODAL SDK

APPLICATIONS

Digimarc Barcode

Digimarc Discover

Better than conventional

barcode

From Search to Discovery

Digimarc-branded
and Third Party

$50 annual fee/Barcode;

or enterprise license
TAM: 600M GTINs; billions of
other items and media objects
Opportunity: billions of dollars
of annual license revenue
6

Consumer mobile devices:

$.02 per download

Broad range of applications

Industrial scanners: software

integration and maintenance
fees; revenue shares

Subscriptions

Professional services
Royalties; rev shares
Pass-through of Digimarc
Barcode fees

Digimarc and Evolution of Auto ID

LOOKS LIKE THIS

Traditional UPC Barcode (1974)

PERFORMS LIKE THIS

Digimarc Barcode (2014)

The Barcode of Everything

Transformative technology
100s of millions of barcodes used today

Invisible and inaudible

Does everything UPC barcode does, better
Can be applied to audio as well as images
Reliable, efficient, economical, and scalable

Digimarc Barcode for Packaging

Looks like this

8

Performs like this

Multiple Barcodes: Six or Two Hundred?

4
1

3
6

2
9

Massive Improvement in Scanning at Checkout

https://vimeo.com/176492746

Faster Checkout at Retail:

Improving Operational Efficiency and Customer Satisfaction

$Billions in Labor
Cost Savings
$500 million in labor savings for top 120
retailers from just one Item Per Minute (IPM)
scan speed improvement

Source: Digimarc Barcode: A Quantitative Model of Labor Cost Savings for Retailers

11

1
IPM

No hunting for the barcode

means faster checkout!

First Retailer to Implement Digimarc Barcode for Packaging

$2 million in projected savings per IPM; $200k annual license fee

Digimarc Discover:

Worlds Best
Discovery Engine for Consumers

Digimarc Discover
with ICP optimization

Digimarc Discover
and Barcode

ACCURACY OF SEARCH

Mobile Auto ID
SKU
QR Code
ScanLife
RedLaser
Shazam
Blippar
Vuforia
Firefly
Layar
Kooaba
A9Flow

Keywords/Online Shopping

Traditional Media/
Physical Retail

Google
Amazon

Digimarc
The Barcode of Everything
1973

UPC (barcode)

1992

Digimarc

1994

Denso QR Code
Amazon

1998

Google
MediaBridge

2005

ScanLife

2007

Apple iPhone

2008

Digimarc ICP
Kooaba
RedLaser
Shazam

2009

Layar
Amazon Flow

2010

Digimarc Discover
for Publishing

2011

Blippar
Vuforia

2013

Google

2014

Fire Phone
FireFly

2015

Metaio
Digimarc Discover
for Retail and Brands

13

EASE OF SEARCH

Digimarc Barcode of
Everything

DIGIMARC IS TRANSFORMING
MOBILE APPS INTO POWERFUL
ENGAGEMENT TOOLS
Brands are adapting to leverage
packaging, print and audio as a
personal, digital marketing channel.

14

Packaging Real Estate is Exhausted

All food packaging required to be redesigned by July 2018. Each new product transparency
initiative would require package redesign and additional visible symbologies or text

15

Food Nutrition Label

Deadline July 26, 2018

Safe and Accurate

Food Labeling Act

Billions of Mobile Sensors Seeking Discovery

Consumer
Packaged
Goods
Lifecycle

Manufacturing

Warehouse

Efficiencies in on-line production

Reduced inventory shrinkage
Improved quality control
Tracking of design revision control
Lot and manufacturing date codes
for food safety

Retail
Distribution Center

Efficiencies in order fulfillment

Enhanced inventory control
Traceability of returns &
reclamations
Speed of pick & pack

Speed of order fulfillment

Enhanced inventory control
Traceability of returns &
reclamations
Speed of pick & pack

Home

Access to product availability

Increased product information
Immediate placement of product reviews
Immediate access to online product reviews
Product lifestyle and usage information

Point of Sale

Retail Store

Improved consumer information

Access to SmartLabel
Digitally-enabled POS signage
Evaluation of OSA (On Shelf Availability)

In store consumer engagement

Evaluation of planogram compliance
Faster and more efficient retail
servicing

Restocking & direct store

distribution opportunities
Improved loss prevention-barcode
swapping
Better checkout experience both
attended and self check out
Delivery of couponing
& loyalty programs
Reduced inventory shrinkage

Evolution of the Ecosystem: Partners and Licensees

GS1 US INDUSTRY ASSOCIATION

DISCOVER

APPLICATIONS

PROPRIETARY
DIGIMARC BARCODE

MULTI-MODAL SDK

ENGAGE

Design Tools
Adobe

Scanner OEMs
Datalogic, Honeywell, Zebra, NCR

Brand Deployment
SGS, SGK/Schawk, Diadeis, Perrigo

Variable Weight OEMs Bizerba

Smart phone Apps

HP, Shazam, Wegmans, Rovio,
Portland Trail Blazers, ScanLife

IDENTIFY

Music, Movies, TV
Proprietary solutions

Digital Images Digimarc Guardian

Government IDs Digimarc Idmarc
Currency Proprietary solutions
18

Music, Movies, TV
Proprietary solutions

Movies Civolution, Verance

Digital Images Digimarc Guardian

TV Nielsen, Kantar, Verimatrix

Government IDs Morpho

Digital Images Digimarc Guardian

Currency Proprietary solutions

Government IDs Morpho

Music SourceAudio

Currency Proprietary solutions

Who is GS1?

GS1 is a global industry association created to

assist industry in adoption of the barcode over 40
years ago
Systems now responsible for over 5 billion
transactions per day
GS1 System of Standards serves more than
2 million businesses across 25 industries
In the United States alone, there are 300,000
member companies
19

1974: First Scan of UPC Barcode

Summary
Validated Mission Critical Proprietary Technology

High-security digital watermarking pioneer provider of counterfeit deterrence platform for Central Banks
Vote of confidence from global industry standards body for barcodes (GS1)
Strong partner and customer momentum
Protected by over 1,100 patents and proprietary trade secret algorithms

Compelling Retail Value Proposition

Enables retailers to save billions while simultaneously improving the customer experience
Early adoption by Wegmans, New Seasons; other larger retailers in confidential pilots
Potential for rapid brand adoption (enterprise licenses) when big retail adopts

Enabling New Generation Of Mobile Discovery For Consumers

Powerful consumer engagement tool for brands with no packaging real estate impact
Point and shoot search leveraging the ubiquity of smartphones and appealing to the Snapchat generation
Shoppers Journey enablement - generates highly valuable consumer insights for retailers and brands

Enormous TAM and Attractive Business Model

20

Competitive advantages clear and documented

Licensing model indicates enormous potential scale with strong margins and recurring revenues
Highly-qualified and experienced management team with decades of industry experience
Good stewards of capital with the proven ability to return value to shareholders

The Barcode of Everything

2016 Digimarc Corporation