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[February 21, 2013] Digimarc Reports Fourth Quarter and Full Year 2012 Financial Results BEAVERTON, Ore. --(Business Wire)-- Digimarc Corporation (NASDAQ:DMRC) reported financial results for the fourth quarter and fiscal year ended December 31, 2012. Fourth Quarter 2012 Results Revenues for the fourth quarter 2012 increased 4% to $9.3 million from $8.9 million in the same quarter a year ago. The increase was primarily attributable to higher licensing revenues from Verance and Intellectual Ventures ("IV") as well as initial revenues for one month from Attributor Corporation, partially offset by the elimination of revenues from the suspension of operations of the Nielsen joint ventures in Q1 2012. Operating income for the fourth quarter 2012 increased 60% to $1.9 million from $1.2 million in the same year-ago quarter. The increase reflects higher revenues and lower operating expenses. Net income for the fourth quarter 2012 was $1.1 million or $0.14 per diluted share compared to $0.5 million or $0.06 per diluted share in the fourth quarter of 2011. The improvement in net income reflects increased revenues. Full Year 2012 Results Revenues in 2012 increased 23% to a record $44.4 million from $36.0 million in 2011. The improvement was driven primarily by the $8 million past due royalties payment from Verance received in Q1 2012 and from increased license payments from IV and Verance, partially offset by lower revenues from the suspension of the company's joint ventures with Nielsen. Operating income in 2012 increased 128% to $14.6 million from $6.4 million in 2011. The improvement reflects increased revenues, partially offset by slightly higher operating expenses as a result of the company's recent acquisition of Attributor Corporation in December 2012. Net income in 2012 increased 46% to $8.3 million or $1.12 per diluted share from $5.7 million or $0.76 per diluted share in 2011. The improvement primarily reflects increased revenues. Net income for 2011 includes losses from the suspended joint ventures as well as the reversal of the valuation allowance against deferred tax assets. At December 31, 2012, cash, cash equivalents and marketable securities totaled $39.1 million, up from $33.4 million at December 31, 2011. This increase is net of the $5.4 million paid in connection with the Attributor acquisition. On February 20, 2013, Digimarc declared a quarterly dividend of�$0.11 per share on the outstanding common shares, payable on March 11, 2013 to shareholders of record at the close of business on March 4, 2013.�The aggregate amount of the quarterly dividend payment is expected to be approximately $800,000. An updated investor presentation is available on Digimarc's website at: http://www.digimarc.com/investors/presentations. Conference Call Digimarc will hold a conference call later today (Thursday, February 21, 2013) to discuss these results. The company's 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 March 7, 2013. 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: 866-562-9934

Conference ID#: 10340926

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� � � � � � � � � � � � � � � Digimarc Corporation Income Statement Information (in thousands, except per share amounts) (Unaudited) � Three-Month Information Twelve-Month Information December 31, December 31, December 31, December 31, � 2012 � � 2011 � � 2012 � � 2011 � Revenue: Service $ 2,519 $ 3,053 $ 10,792 $ 12,395 License & subscription � 6,795 � � 5,872 � � 33,583 � � 23,644 � Total revenue 9,314 8,925 44,375 36,039 � Cost of revenue: Service 1,373 1,775 5,917 6,638 License & subscription � 275 � � 81 � � 591 � � 299 � Total cost of revenue 1,648 1,856 6,508 6,937 � Gross profit: Service 1,146 1,278 4,875 5,757 License & subscription � 6,520 � � 5,791 � � 32,992 � � 23,345 � Total gross profit 7,666 7,069 37,867 29,102 � Gross margin: Service 45 % 42 % 45 % 46 % License & subscription 96 % 99 % 98 % 99 % Total revenue 82 % 79 % 85 % 81 % � Operating expenses: Sales and marketing 913 1,051 3,827 4,336 Research, development and engineering 2,277 1,710 8,741 7,327 General and administrative 2,226 2,839 9,457 9,956 Intellectual property � 329 � � 268 � � 1,248 � � 1,094 � Total operating expenses 5,745 5,868 23,273 22,713 � Operating income 1,921 1,201 14,594 6,389 � Net loss from joint ventures - (784 ) (1,107 ) (2,714 ) Interest income, net � 40 � � 46 � � 179 � � 195 � � Income before income taxes 1,961 463 13,666 3,870 � (Provision) benefit for income taxes � (907 ) � (10 ) � (5,394 ) � 1,786 � Net income $ 1,054 � $ 453 � $ 8,272 � $ 5,656 � � Earnings per common share: Net income per common share - basic $ 0.15 $ 0.07 $ 1.16 $ 0.84 Net income per common share - diluted $ 0.14 $ 0.06 $ 1.12 $ 0.76 Weighted average common shares outstanding - basic 6,791 6,699 6,757 6,741 Weighted average common shares outstanding - diluted 6,966 7,279 6,989 7,430 � Cash dividends declared per common share: $ 0.11 $ - $ 0.33 $ - �

� � � � Digimarc Corporation Balance Sheet Information (in thousands) (Unaudited) � � December 31, December 31, 2012 2011 Assets Current assets: Cash and cash equivalents ⁽¹⁾ $ 6,866 $ 3,419 Marketable securities ⁽¹⁾ 25,403 22,244 Trade accounts receivable, net 4,216 3,502 Other current assets � 1,016 � 1,306 Total current assets 37,501 30,471 Marketable securities ⁽¹⁾ 6,787 7,715 Property and equipment, net 1,453 1,395 Intangible assets, net 6,721 2,808 Goodwill 1,114 - Investments in joint ventures - 415 Deferred tax assets, net 3,589 2,634 Other assets � 166 � 355 Total assets $ 57,331 $ 45,793 � Liabilities and Shareholders' Equity Current liabilities: Accounts payable and other accrued liabilities $ 1,143 $ 952 Deferred revenue � 2,512 � 2,660 Total current liabilities 3,655 3,612 Deferred rent and other long-term liabilities � 673 � 464 Total liabilities 4,328 4,076 � Commitments and contingencies � Shareholders' equity: Preferred stock 50 50 Common stock 7 7 Additional paid-in capital 39,869 34,511 Retained earnings � 13,077 � 7,149 Total shareholders' equity 53,003 41,717 � � Total liabilities and shareholders' equity $ 57,331 $ 45,793 � �

(1) Aggregate cash, cash equivalents, short- and long-term marketable securities was $39,056 and $33,378 at December 31, 2012 and 2011, respectively.

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Digimarc Corporation Cash Flow Information (in thousands) (Unaudited) � � � � � � � � Three-Month Information Twelve-Month Information December 31, December 31, December 31, December 31, � 2012 � � 2011 � � 2012 � � 2011 � Cash flows from operating activities: Net income $ 1,054 $ 453 $ 8,272 $ 5,656 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of property and equipment 156 139 600 613 Amortization and write-off of intangibles 172 38 385 143 Stock-based compensation 1,054 1,178 5,256 4,216 Net loss from joint ventures - 784 1,107 2,714 Deferred income taxes (207 ) (202 ) (284 ) (3,640 ) Tax benefit from stock-based awards 1,303 274 3,688 1,871 Excess tax benefit from stock-based awards (1,243 ) (274 ) (3,044 ) (1,066 ) Changes in operating assets and liabilities: Trade accounts receivable, net (59 ) (82 ) (187 ) (21 ) Other current assets 264 109 219 240 Other assets 34 73 201 107 Accounts payable and other liabilities (934 ) (741 ) (228 ) (668 ) Deferred revenue � 128 � � 729 � � (384 ) � 88 � Net cash provided by operating activities 1,722 2,478 15,601 10,253 � Cash flows from investing activities: Purchase of property and equipment (194 ) (66 ) (570 ) (678 ) Capitalized patent costs and purchased intellectual property (272 ) (168 ) (1,170 ) (712 ) Investments in joint ventures, net - - (692 ) (2,100 ) Business acquisitions, net of cash acquired (5,092 ) - (5,092 ) - Sale or maturity of marketable securities 26,534 14,385 144,214 74,689 Purchase of marketable securities � (24,312 ) � (15,247 ) � (146,444 ) � (65,044 ) Net cash provided by (used in) investing activities (3,336 ) (1,096 ) (9,754 ) 6,155 � Cash flows from financing activities: Issuance of common stock 212 96 1,660 1,651 Purchase of common stock (861 ) (452 ) (4,760 ) (22,046 ) Cash dividends paid (783 ) - (2,344 ) - Excess tax benefit from stock-based awards � 1,243 � � 274 � � 3,044 � � 1,066 � Net cash used in financing activities (189 ) (82 ) (2,400 ) (19,329 ) � � � � Net increase (decrease) in cash and cash equivalents ⁽²⁾ $ (1,803 ) $ 1,300 � $ 3,447 � $ (2,921 ) � � Cash equivalents and marketable securities at beginning of period 43,080 31,216 33,378 45,944 Cash equivalents and marketable securities at end of period � 39,056 � � 33,378 � � 39,056 � � 33,378 � (2) Net increase (decrease) in cash, cash equivalents and marketable securities $ (4,024 ) $ 2,162 � $ 5,678 � $ (12,566 )