Aware Reports Fourth Quarter Financial Results
- None.
- Net loss for the fourth quarter of 2023 was $4.2 million, impacted by a $2.7 million expense related to a write-down of an investment.
- Adjusted EBITDA loss for the fourth quarter of 2023 was $1.2 million, showing a decline compared to the same period in the previous year.
- Full year 2023 net loss totaled $7.3 million, reflecting a negative impact from a $2.7 million expense related to a write-down of an investment.
- Adjusted EBITDA loss for the year ended December 31, 2023, was $4.6 million, despite an improvement compared to the same period in the previous year.
Insights
Aware, Inc.'s financial report indicates a 14% growth in total revenue and a significant 23% increase in Annual Recurring Revenue (ARR), which are positive signals for investors. The growth in ARR is particularly noteworthy as it suggests a shift towards a more stable and predictable revenue stream. The company's strategic transformation from a 'book and ship' model to one focused on recurring revenue appears to be yielding results, as evidenced by the alignment of ARR with the total revenue reported at the beginning of the transformation in FY 2020.
The increase in cash reserves by $1.9 million also provides the company with a cushion for strategic initiatives or to weather economic downturns. However, the net loss of $7.3 million for the year, including a significant write-off from the investment in Omlis Limited, raises concerns about the company's investment strategies and risk management practices. The share repurchase program, while modest, suggests confidence by management in the company's valuation.
Looking forward, the company's financial foundation and increased visibility in its pipeline could be a harbinger for continued growth. However, investors should consider the potential risks associated with the company's investment decisions and the broader market implications of adopting biometric technology.
The biometric technology sector is rapidly evolving and Aware, Inc.'s focus on expanding its biometric identity platform could position it well within this growth market. The company's rank as a top performer in NIST Face Analysis Technology Evaluation and its recognition as a 'catalyst' in the biometric identity market report underscore its competitive positioning. These accolades, along with partnerships aimed at expanding market footprint, are likely to enhance the company's reputation and could lead to increased adoption of its solutions.
Furthermore, the company's efforts to optimize demographic parity in biometrics could address growing concerns around bias and fairness in AI technologies, potentially opening up opportunities in sectors that are sensitive to these issues. The launch of AwareID® on AWS Marketplace could also significantly broaden the company's reach, tapping into AWS's extensive customer base.
Investors should monitor the adoption rate of Aware's biometric solutions and the performance of new partnerships, as these could be critical drivers of future revenue growth. Awareness of global data privacy regulations and the public perception of biometric technology will also be essential in assessing the company's long-term growth trajectory.
The biometric platform space is becoming increasingly important as businesses seek secure and efficient identity verification solutions. Aware, Inc.'s introduction of new functionalities for AwareID® and the development of a developer hub are strategic moves to accelerate the adoption of biometric technology. By simplifying integration processes, Aware is likely enhancing its appeal to technology providers and developers, which could lead to increased market penetration.
The company's partnerships with entities like Serban Group, PeopleCert, Anyline, Uqoud and SoftwareONE not only diversify its revenue streams but also allow it to tap into new markets and sectors. The focus on product-market fit and targeted use cases suggests a strategic approach to product development and sales, which is key in a technology market where needs can be highly specific and varied.
Investors should consider the pace of technological advancements in biometrics and the potential for new entrants to disrupt the market. Aware's ability to maintain its position as a leader in preventing bias in biometric algorithms will be crucial as the industry faces increased scrutiny over ethical concerns.
Full Year Total Revenue Grew
Annual Recurring Revenue (ARR) increased
BURLINGTON, Mass., March 12, 2024 (GLOBE NEWSWIRE) -- Aware, Inc. (NASDAQ: AWRE), a global biometric platform company that uses data science, machine learning, and artificial intelligence to tackle everyday business and identity challenges through biometrics, today reported financial results for the fourth quarter and fiscal year ended December 31, 2023.
Full Year 2023 Financial Highlights
- Total revenue increased
14% to$18.2 million from$16.0 million in 2022, representing the highest level of total revenue since 2016. - Annual Recurring Revenue (ARR) increased
23% to an all-time high of$12.0 million , compared to$9.7 million in 2022 and$5.5 million in 2019. - Recurring revenue (a non-GAAP metric reconciled below) increased to a record
$11.0 million , compared to$9.7 million in 2022. Recurring revenue has grown over200% since 2019. - Cash, cash equivalents and marketable securities increased by
$1.9 million to$30.9 million as of December 31, 2023, compared to$29.0 million as of December 31, 2022. The increase was impacted by the receipt of our IRS carryback claim of$1.5 million , along with the successful conclusion of a long-term project that resulted in the collection of$1.0 million of previously unbilled revenue. - Net income negatively impacted by
$2.7 million write-off related to March 2022 investment in Omlis Limited. - Repurchased 299,780 shares at a cost of
$0.5 million during the year. - Net income negatively impacted by
$2.7 million write-off related to March 2022 investment in Omlis Limited. - Repurchased 299,780 shares at a cost of
$0.5 million during the year.
Fourth Quarter 2023 Financial Highlights
- Total revenue increased
8% year-over-year to$4.4 million , compared to$4.1 million in the fourth quarter of 2022. - Recurring revenue increased
40% year-over-year to$3.7 million , highlighting the growth and continued transformation of Aware’s revenue model. - Increased cash, cash equivalents and marketable securities by
$3.4 million during the quarter, bringing the total balance to$30.9 million at year end. - Operating cash flow of
$3.1 million in the fourth quarter of 2023, driven by the collection of sales that occurred in the third quarter of 2023
Fourth Quarter 2023 and Full Year 2023 Recent Operational Highlights
- Premiered powerful new AwareID® functionality; introduced developer hub to further simplify and quicken businesses’ adoption of biometric technology; and launched partner program, to empower large and midmarket technology providers to leverage biometrics for enhanced revenue streams
- Named a Biometric Identity Platform “catalyst” and role model in new biometrics digital identity market report by Acuity Market Research and FindBiometrics, highlighting our shift from component provider to a scalable, solution-focused leader in the biometric identity market.
- Ranked top performer in NIST Face Analysis Technology Evaluation benchmarking test while optimizing demographic parity, affirming Aware’s leadership position in preventing bias in biometric algorithms
- Partnered with Serban Group, PeopleCert, Anyline and Uqoud to expand Aware’s footprint and address biometric needs in growing markets around the world; and with SoftwareONE to prepare AwareID® for availability on AWS Marketplace.
Management Commentary
“Our strong performance in Q4 marked the culmination of a breakthrough year. Despite having to write-off our Investment in Omlis Limited, we are excited that we surpassed our financial guidance for ARR in 2023, demonstrating the impact of our business model transformation and positioning us for even greater success in the upcoming years,” said CEO and President Robert Eckel. “We’re entering the new year with
"Our focus and growth in 2024 will continue to be centered on expanding through both our partnerships and customer relationships and advancing Aware’s product-market fit. With our increasing base of
Fourth Quarter 2023 Financial Results
Revenue for the fourth quarter of 2023 was
Recurring revenue for the fourth quarter of 2023 totaled
Net loss for the fourth quarter of 2023 totaled
Adjusted EBITDA loss (a non-GAAP metric reconciled below) for the fourth quarter of 2023 totaled
Cash, cash equivalents and marketable securities totaled
Full Year 2023 Financial Results
Revenue for the year ended December 31, 2023 was
Recurring revenue for the year ended December 31, 2023 totaled
Net loss for the year ended December 31, 2023, totaled
Adjusted EBITDA loss for the year ended December 31, 2023 was
Webcast
Aware management will host a webcast today, March 12, 2024, at 5:00 p.m. Eastern time to discuss these results and provide an update on business conditions. A question-and-answer session will follow management’s prepared remarks.
Date: Tuesday, March 12, 2024
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Webcast: Register Here
The presentation will be made available for replay in the investor relations section of the Company’s website. The audio recording will be available for approximately 90 days following the live event.
About Aware
Aware is a global biometric platform company that uses data science, machine learning, and artificial intelligence to tackle everyday business and identity challenges through biometrics. For over 30 years we’ve been a trusted name in the field. Aware’s offerings address the growing challenges that government and commercial enterprises face in knowing, authenticating and securing individuals through frictionless and highly secure user experiences. Our algorithms are based on diverse operational data sets from around the world, and we prioritize making biometric technology in an ethical and responsible manner. Aware is a publicly held company (NASDAQ: AWRE) based in Burlington, Massachusetts. To learn more, visit our website or follow us on LinkedIn and X.
Safe Harbor Warning
Portions of this release contain forward-looking statements regarding future events and are subject to risks and uncertainties, such as estimates or projections of future revenue, earnings and non-recurring charges, and the growth of the biometrics markets. Aware wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements.
Risk factors related to our business include, but are not limited to: i) our operating results may fluctuate significantly and are difficult to predict; ii) we derive a significant portion of our revenue from government customers, and our business may be adversely affected by changes in the contracting or fiscal policies of those governmental entities; iii) a significant commercial market for biometrics technology may not develop, and if it does, we may not be successful in that market; iv) we derive a significant portion of our revenue from third party channel partners; v) the biometrics market may not experience significant growth or our products may not achieve broad acceptance; vi) we face intense competition from other biometrics solution providers; vii) our business is subject to rapid technological change; viii) our software products may have errors, defects or bugs which could harm our business; ix) our business may be adversely affected by our use of open source software; x) we rely on third party software to develop and provide our solutions and significant defects in third party software could harm our business; xi) part of our future business is dependent on market demand for, and acceptance of, the cloud-based model for the use of software: xii) our operational systems and networks and products may be subject to an increasing risk of continually evolving cybersecurity or other technological risks which could result in the disclosure of company or customer confidential information, damage to our reputation, additional costs, regulatory penalties and financial losses; xiii) our intellectual property is subject to limited protection; xiv) we may be sued by third parties for alleged infringement of their proprietary rights; xv) we must attract and retain key personnel; xvi) our business may be affected by government regulations and adverse economic conditions; xvii) we may make acquisitions that could adversely affect our results, xviii) we may have additional tax liabilities; and xix) we believe the effects caused by the COVID-19 pandemic will likely have an adverse impact on our revenue over the next several quarters.
We refer you to the documents Aware files from time to time with the Securities and Exchange Commission, specifically the section titled Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2022 and other reports and filings made with the Securities and Exchange Commission.
| AWARE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (unaudited) | ||||||||||||||||
| For the Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| Software licenses | $ | 1,994 | $ | 1,926 | $ | 9,529 | $ | 7,386 | ||||||||
| Software maintenance | 2,183 | 1,844 | 7,674 | 7,111 | ||||||||||||
| Services and other | 197 | 293 | 1,041 | 1,511 | ||||||||||||
| Total revenue | 4,374 | 4,063 | 18,244 | 16,008 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of services and other | 239 | 340 | 1,273 | 1,260 | ||||||||||||
| Research and development | 2,215 | 2,302 | 9,124 | 9,234 | ||||||||||||
| Selling and marketing | 1,837 | 1,895 | 7,955 | 6,962 | ||||||||||||
| General and administrative | 1,870 | 1,546 | 6,549 | 6,548 | ||||||||||||
| Loss on write-off of note receivable | 2,695 | — | 2,695 | — | ||||||||||||
| Fair value adjustment to contingent acquisition payment | — | — | (812 | ) | (107 | ) | ||||||||||
| Gain on sale of fixed assets | — | — | — | (5,672 | ) | |||||||||||
| Total costs and expenses | 8,856 | 6,083 | 26,784 | 18,225 | ||||||||||||
| Operating loss | (4,482 | ) | (2,020 | ) | (8,540 | ) | (2,217 | ) | ||||||||
| Interest and other income | 303 | 311 | 1,285 | 540 | ||||||||||||
| Loss before provision for (benefit from) income taxes | (4,179 | ) | (1,709 | ) | (7,255 | ) | (1,677 | ) | ||||||||
| Provision for (benefit from) income taxes | 59 | 49 | 59 | 49 | ||||||||||||
| Net loss | $ | (4,238 | ) | $ | (1,758 | ) | $ | (7,314 | ) | $ | (1,726 | ) | ||||
| Net loss per share – basic | $ | (0.20 | ) | $ | (0.08 | ) | $ | (0.35 | ) | $ | (0.08 | ) | ||||
| Net loss per share – diluted | $ | (0.20 | ) | $ | (0.08 | ) | $ | (0.35 | ) | $ | (0.08 | ) | ||||
| Weighted-average shares - basic | 21,001 | 21,394 | 21,013 | 21,604 | ||||||||||||
| Weighted-average shares - diluted | 21,001 | 21,394 | 21,013 | 21,604 | ||||||||||||
| AWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (unaudited) | ||||||||
| December 31, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 10,002 | $ | 11,749 | ||||
| Marketable securities | 20,913 | 17,229 | ||||||
| Accounts and unbilled receivables, net | 3,855 | 6,246 | ||||||
| Tax receivable | — | 1,362 | ||||||
| Property and equipment, net | 579 | 726 | ||||||
| Goodwill and intangible assets, net | 5,511 | 5,926 | ||||||
| Note receivable | — | 2,601 | ||||||
| Right of use asset | 4,260 | 4,538 | ||||||
| All other assets, net | 1,176 | 815 | ||||||
| Total assets | $ | 46,296 | $ | 51,192 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued expense | $ | 1,986 | $ | 1,921 | ||||
| Deferred revenue | 5,537 | 3,733 | ||||||
| Operating lease liability | 4,475 | 4,517 | ||||||
| Contingent acquisition payment | — | 812 | ||||||
| Total stockholders’ equity | 34,298 | 40,209 | ||||||
| Total liabilities and stockholders’ equity | $ | 46,296 | $ | 51,192 | ||||
Non-GAAP Measures
We define adjusted EBITDA as U.S. GAAP net loss plus depreciation of fixed assets and amortization of intangible assets, stock-based compensation expenses, other (expense) income, net, and income tax provision. We discuss adjusted EBITDA in our quarterly earnings releases and certain other communications, as we believe adjusted EBITDA is an important measure. We use adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors, and evaluating short-term and long-term operating trends in our operations. We believe that the adjusted EBITDA financial measure assists in providing an enhanced understanding of our underlying operational measures to manage the business, to evaluate performance compared to prior periods and the marketplace, and to establish operational goals. We believe that the adjusted EBITDA adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making.
We define recurring revenue as the portion of Aware revenue that is based on a term arrangement and is likely to continue in the future, such as annual maintenance or subscription contracts. We use recurring revenue as a metric to communicate the portion of our revenue that has greater stability and predictability. We believe that recurring revenue assists in providing an enhanced understanding of effectiveness of our efforts to transition to a subscription-based business model.
We define ARR as the amount of annualized recurring revenue that is likely to continue in the future, such as annual maintenance and subscription contracts. We use ARR as a metric to assess the trajectory of our recurring revenue and we believe that ARR assists in providing an enhanced understanding of effectiveness of our efforts to transition to a subscription-based business model.
Adjusted EBITDA and recurring revenue are non-GAAP financial measures and should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies. We expect to continue to incur expenses similar to the financial adjustments described above in arriving at adjusted EBITDA and investors should not infer from our presentation of this non-GAAP financial measure that these costs are unusual, infrequent or non-recurring. The following table includes the reconciliations of our U.S. GAAP net loss, the most directly comparable U.S. GAAP financial measure, to our adjusted EBITDA for the three months and year ended December 31, 2023 and 2022 and for the three months ended September 30, 2023 and our U.S. GAAP revenue, the most directly comparable U.S. GAAP financial measure, to our recurring revenue for the three months and year ended December 31, 2023 and 2022.
| AWARE, INC. Reconciliation of GAAP Net loss to Adjusted EBITDA (In thousands) (unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net loss | $ | (4,238 | ) | $ | (1,758 | ) | $ | (7,314 | ) | $ | (1,726 | ) | ||||
| Depreciation and Amortization | 141 | 172 | 578 | 760 | ||||||||||||
| Stock based compensation | 428 | 351 | 1,525 | 1,707 | ||||||||||||
| Loss on write-off of note receivable | 2,695 | — | 2,695 | — | ||||||||||||
| Fair value adjustment to contingent acquisition payment | — | — | (812 | ) | — | |||||||||||
| Gain on sale of fixed assets | — | — | — | (5,672 | ) | |||||||||||
| Interest income | (303 | ) | (311 | ) | (1,285 | ) | (540 | ) | ||||||||
| Provision for (benefit from) income taxes | 59 | 49 | 59 | 49 | ||||||||||||
| Adjusted EBITDA | $ | (1,218 | ) | $ | (1,497 | ) | $ | (4,554 | ) | $ | (5,422 | ) | ||||
| Three Months Ended | ||||||||
| December 31, | September 30, | |||||||
| 2023 | 2023 | |||||||
| Net income (loss) | $ | (4,238 | ) | $ | 1,144 | |||
| Depreciation and amortization | 141 | 140 | ||||||
| Stock based compensation | 428 | 360 | ||||||
| Loss on write-off of note receivable | 2,695 | — | ||||||
| Fair value adjustment to contingent acquisition payment | — | (812 | ) | |||||
| Interest income | (303 | ) | (397 | ) | ||||
| Provision for (benefit from) income taxes | 59 | — | ||||||
| Adjusted EBITDA | $ | (1,218 | ) | $ | 435 | |||
| AWARE, INC. Revenue Breakout (In thousands) (unaudited) | ||||||||||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Recurring revenue: | ||||||||||||||||
| Software subscriptions | 1,492 | 782 | 3,316 | 2,631 | ||||||||||||
| Software maintenance | 2,183 | 1,844 | 7,674 | 7,111 | ||||||||||||
| Total recurring revenue | 3,675 | 2,626 | 10,990 | 9,742 | ||||||||||||
| Non-recurring revenue: | ||||||||||||||||
| Software licenses | 502 | 1,144 | 6,213 | 4,755 | ||||||||||||
| Services and other | 197 | 293 | 1,041 | 1,511 | ||||||||||||
| Total non-recurring revenue | 699 | 1,437 | 7,254 | 6,266 | ||||||||||||
| Total revenue | $ | 4,374 | $ | 4,063 | $ | 18,244 | $ | 16,008 | ||||||||
Aware is a registered trademark of Aware, Inc.
Flutter and the related logo are trademarks of Google LLC. Aware is not endorsed by or affiliated with Google LLC.
| Company Contact Gina Rodrigues Aware, Inc. 781-276-4000 grodrigues@aware.com | Investor Contact Matt Glover Gateway Group, Inc. 949-574-3860 AWRE@gatewayir.com |
FAQ
What was the total revenue growth percentage for Aware, Inc. (AWRE) in 2023?
What was the Annual Recurring Revenue (ARR) for Aware, Inc. (AWRE) in 2023?
What was the impact on net income for Aware, Inc. (AWRE) in the fourth quarter of 2023?
What was the Adjusted EBITDA loss for Aware, Inc. (AWRE) in the fourth quarter of 2023?
