Aware Reports Second Quarter 2023 Financial Results
Company Reaffirms 2023 Guidance for Total Revenue and Annual Recurring Revenue (ARR) Growth of
BURLINGTON, Mass., Aug. 01, 2023 (GLOBE NEWSWIRE) -- Aware, Inc. (NASDAQ: AWRE), a leading authentication company applying proven and trusted adaptive authentication to solve everyday business challenges with biometrics, today reported financial results for the second quarter ended June 30, 2023.
Second Quarter 2023 and Recent Operational Highlights
- Generated
$3.2 million of revenue, compared to$4.3 million in the first quarter of 2023 and$4.2 million in the second quarter of 2022. - Reaffirmed expectation to grow total revenue and annual recurring revenue (ARR) by
15% in 2023 and to achieve neutral operating cash flow exiting 2023. - Contracted to expand an existing European government system by introducing facial recognition and securing a five-year,
$5 million contract plus options up to$8 million . - Expanded Aware’s Knomi footprint in the Middle East by introducing contract management use cases.
- Secured two additional AwareABIS contracts, including Aware’s first cloud ABIS award.
- Integrated AwareID’s identity verification technology into Canadian-based mobility app “A Safer Walk” enabling women to join the verified walk network rapidly and securely.
- Showcased Aware’s advanced authentication solutions for commercial organizations, law enforcement and government agencies globally at IACP Tech Conference, Identity Week Europe 2023, America Digital Mexico, Febraban Tech 2023 and Border Security Expo.
Management Commentary
“We continue to focus on driving annual growth and building our recurring revenue as we strive to reduce volatility between quarters,” said Robert Eckel, Aware’s Chief Executive Officer and President. "During the second quarter we focused on protecting, securing and expanding our customer base commitments along with rolling out several product improvements. Although not yet reflected in our revenue, we signed several significant contracts in Q2 that have established the foundation for future recurring revenue growth and more revenue from partnerships. Furthermore, our technical team reinforced the capabilities of AwareID's facial authentication, improved Knomi's liveness detection excellence, and upgraded our orchestration to address new identity verification use cases with document authentication."
“The fidelity of our pipeline continues to improve,” added Eckel. “In addition to opportunities we are generating directly, our partners are bringing us high-quality opportunities with new end customers that have the potential to expand our market share, giving us the confidence to reiterate our expectation to grow total revenue and ARR by
Second Quarter 2023 Financial Results
Revenue for the second quarter of 2023 was
Net loss for the second quarter of 2023 totaled
Adjusted EBITDA loss (a non-GAAP metric reconciled below) for the second quarter of 2023 totaled
Six Month 2023 Financial Results
Revenue for the six months ended June 30, 2023 was
Net loss for the six months ended June 30, 2023 totaled
Adjusted EBITDA loss (a non-GAAP metric reconciled below) for the six months ended June 30, 2023 was
Cash, cash equivalents and marketable securities totaled
Webcast
Aware management will host a webcast today, August 1, 2023, 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, August 1, 2023
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 authentication company that validates and secures identities using proven and trusted adaptive biometrics. Aware’s software and SaaS offerings address the growing challenges that government and commercial enterprises face in knowing, authenticating and securing individuals through frictionless and highly secure user experiences. Aware’s algorithms are based on diverse data sets from all over the world and can be tailored to the unique security and requirements of each customer. The company empowers users to have control over identities through clear, intuitive opt-in/opt-out features, helping them feel secure and improving their lives. Aware is a publicly held company (NASDAQ: AWRE) based in Burlington, Massachusetts. To learn more, visit www.aware.com or follow Aware on Twitter @AwareBiometrics.
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; xvii) our business may be affected by government regulations and adverse economic conditions; xviii) we may make acquisitions that could adversely affect our results, xix) we may have additional tax liabilities; and xx) 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) | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue: | ||||||||||||||||
| Software licenses | $ | 1,039 | $ | 2,018 | $ | 3,145 | $ | 4,646 | ||||||||
| Software maintenance | 1,767 | 1,819 | 3,602 | 3,481 | ||||||||||||
| Services and other | 378 | 401 | 743 | 803 | ||||||||||||
| Total revenue | 3,184 | 4,238 | 7,490 | 8,930 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of services and other revenue | 325 | 324 | 623 | 638 | ||||||||||||
| Research and development | 2,265 | 2,229 | 4,646 | 4,653 | ||||||||||||
| Selling and marketing | 1,956 | 1,412 | 3,947 | 3,193 | ||||||||||||
| General and administrative | 1,574 | 1,626 | 3,079 | 3,086 | ||||||||||||
| Total costs and expenses | 6,120 | 5,591 | 12,295 | 11,570 | ||||||||||||
| Operating loss | (2,936 | ) | (1,353 | ) | (4,805 | ) | (2,640 | ) | ||||||||
| Interest income | 284 | 64 | 585 | 73 | ||||||||||||
| Net loss | $ | (2,652 | ) | $ | (1,289 | ) | $ | (4,220 | ) | $ | (2,567 | ) | ||||
| Net loss per share – basic | $ | (0.13 | ) | $ | (0.06 | ) | $ | (0.20 | ) | $ | (0.12 | ) | ||||
| Net loss per share – diluted | $ | (0.13 | ) | $ | (0.06 | ) | $ | (0.20 | ) | $ | (0.12 | ) | ||||
| Weighted-average shares – basic | 20,968 | 21,655 | 21,001 | 21,649 | ||||||||||||
| Weighted-average shares – diluted | 20,968 | 21,655 | 21,001 | 21,649 | ||||||||||||
| AWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (unaudited) | ||||||||
| June 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 3,313 | $ | 11,749 | ||||
| Marketable securities | 21,748 | 17,229 | ||||||
| Accounts and unbilled receivables, net | 6,837 | 6,246 | ||||||
| Tax receivable | 1,498 | 1,362 | ||||||
| Property and equipment, net | 652 | 726 | ||||||
| Goodwill and intangible assets, net | 5,719 | 5,926 | ||||||
| Note receivable | 2,663 | 2,601 | ||||||
| Right of use assets | 4,402 | 4,538 | ||||||
| Othe assets, net | 840 | 815 | ||||||
| Total assets | $ | 47,672 | $ | 51,192 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued expense | $ | 1,483 | $ | 1,921 | ||||
| Deferred revenue | 4,359 | 3,733 | ||||||
| Operating lease liability | 4,576 | 4,517 | ||||||
| Contingent acquisition payment | 812 | 812 | ||||||
| Total stockholders’ equity | 36,442 | 40,209 | ||||||
| Total liabilities and stockholders’ equity | $ | 47,672 | $ | 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 an annual term or shorter 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.
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 measure 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 and six months ended June 30, 2023 and 2022 and for the three months ended March 31, 2023 and (ii) our U.S. GAAP revenue, the most directly comparable U.S. GAAP financial measure, to our recurring revenue for the three and six months ended June 30, 2023 and 2022.
| AWARE, INC. Reconciliation of GAAP Net loss to Adjusted EBITDA (In thousands) (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2023 | 2023 | 2022 | ||||||||||
| Net loss | $ | (2,652 | ) | $ | (1,568 | ) | $ | (1,289 | ) | |||
| Depreciation and Amortization | 148 | 149 | 221 | |||||||||
| Stock based compensation | 403 | 335 | 379 | |||||||||
| Interest Income | (284 | ) | (301 | ) | (64 | ) | ||||||
| Adjusted EBITDA | $ | (2,385 | ) | $ | (1,385 | ) | $ | (753 | ) | |||
| Six Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Net loss | $ | (4,220 | ) | $ | (2,567 | ) | ||
| Depreciation and Amortization | 298 | 446 | ||||||
| Stock based compensation | 737 | 808 | ||||||
| Interest Income | (585 | ) | (73 | ) | ||||
| Adjusted EBITDA | $ | (3,770 | ) | $ | (1,386 | ) | ||
| AWARE, INC. Revenue Breakout (In thousands) (unaudited) | ||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30, | March 31 | June 30, | June 30, | June 30, | ||||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Recurring revenue: | ||||||||||||||||||||
| Software subscriptions | $ | 304 | $ | 1,227 | $ | 258 | 1,532 | 1,545 | ||||||||||||
| Software maintenance | 1,767 | 1,835 | 1,820 | 3,602 | 3,481 | |||||||||||||||
| Total recurring revenue | 2,071 | 3,062 | 2,078 | 5,134 | 5,026 | |||||||||||||||
| Non-recurring revenue: | ||||||||||||||||||||
| Software licenses | 735 | 878 | 1,759 | 1,613 | 3,101 | |||||||||||||||
| Services and other | 378 | 365 | 401 | 743 | 803 | |||||||||||||||
| Total non-recurring revenue | 1,113 | 1,243 | 2,160 | 2,356 | 3,904 | |||||||||||||||
| Total revenue | $ | 3,184 | $ | 4,305 | $ | 4,238 | $ | 7,490 | $ | 8,930 | ||||||||||
Aware is a registered trademark of Aware, Inc.
| Company Contact | Investor Contact |
| Gina Rodrigues | Matt Glover |
| Aware, Inc. | Gateway Group, Inc. |
| 781-687-0300 | 949-574-3860 |
| grodrigues@aware.com | AWRE@gateway-grp.com |
