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Aware Reports Third Quarter and Nine Month 2024 Financial Results

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Aware Inc. (NASDAQ: AWRE) reported Q3 2024 financial results with total revenue of $3.8 million, down 41% from $6.4 million in Q3 2023. However, recurring revenue grew 29% to $2.8 million. Operating expenses decreased to $5.3 million from $5.6 million year-over-year due to cost optimization initiatives. The company secured a $1 million booking with a European government and launched AwareID on WordPress Marketplace. Cash position stood at $27.4 million as of September 30, 2024. The company reaffirmed expectations for double-digit annual recurring revenue growth in 2024.

Aware Inc. (NASDAQ: AWRE) ha riportato i risultati finanziari del terzo trimestre 2024, con ricavi totali di 3,8 milioni di dollari, in calo del 41% rispetto ai 6,4 milioni di dollari del terzo trimestre 2023. Tuttavia, il fatturato ricorrente è cresciuto del 29%, raggiungendo i 2,8 milioni di dollari. Le spese operative sono diminuite a 5,3 milioni di dollari, rispetto ai 5,6 milioni dell'anno precedente, grazie a iniziative di ottimizzazione dei costi. L'azienda ha ottenuto un contratto di 1 milione di dollari con un governo europeo e ha lanciato AwareID su WordPress Marketplace. La posizione di cassa si attesta a 27,4 milioni di dollari al 30 settembre 2024. L'azienda ha ribadito le aspettative di una crescita a due cifre del fatturato ricorrente annuale nel 2024.

Aware Inc. (NASDAQ: AWRE) informó los resultados financieros del tercer trimestre de 2024, con ingresos totales de 3.8 millones de dólares, una disminución del 41% en comparación con los 6.4 millones de dólares del tercer trimestre de 2023. Sin embargo, los ingresos recurrentes crecieron un 29% alcanzando los 2.8 millones de dólares. Los gastos operativos se redujeron a 5.3 millones de dólares desde los 5.6 millones del año anterior, gracias a iniciativas de optimización de costos. La empresa aseguró un contrato de 1 millón de dólares con un gobierno europeo y lanzó AwareID en WordPress Marketplace. La posición de efectivo se situó en 27.4 millones de dólares al 30 de septiembre de 2024. La empresa reafirmó sus expectativas de crecimiento a dos dígitos en los ingresos recurrentes anuales para 2024.

Aware Inc. (NASDAQ: AWRE)는 2024년 3분기 재무 결과를 보고했으며, 총 수익은 380만 달러로 2023년 3분기의 640만 달러에서 41% 감소했습니다. 그러나 재 recurring revenue는 29% 증가하여 280만 달러에 이르렀습니다. 운영 비용은 연간 560만 달러에서 530만 달러로 감소하였으며, 이는 비용 최적화 이니셔티브 덕분입니다. 이 회사는 유럽 정부와 100만 달러의 계약을 체결하였고, WordPress Marketplace에서 AwareID를 출시했습니다. 현금 잔고는 2024년 9월 30일 기준으로 2,740만 달러였습니다. 이 회사는 2024년 연간 재 recurring revenue 성장률이 두 자릿수에 이를 것이라는 기대를 재확인했습니다.

Aware Inc. (NASDAQ: AWRE) a annoncé ses résultats financiers pour le troisième trimestre 2024, avec un chiffre d'affaires total de 3,8 millions de dollars, en baisse de 41 % par rapport à 6,4 millions de dollars au troisième trimestre 2023. Cependant, le chiffre d'affaires récurrent a augmenté de 29 % pour atteindre 2,8 millions de dollars. Les dépenses d'exploitation ont diminué à 5,3 millions de dollars contre 5,6 millions de dollars l'année précédente, grâce à des initiatives d'optimisation des coûts. L'entreprise a sécurisé une commande d'un million de dollars avec un gouvernement européen et a lancé AwareID sur WordPress Marketplace. La position de trésorerie était de 27,4 millions de dollars au 30 septembre 2024. L'entreprise a réaffirmé ses attentes de croissance à deux chiffres du chiffre d'affaires récurrent annuel pour 2024.

Aware Inc. (NASDAQ: AWRE) hat die finanziellen Ergebnisse für das 3. Quartal 2024 veröffentlicht, mit einem Gesamtumsatz von 3,8 Millionen Dollar, was einem Rückgang von 41% gegenüber 6,4 Millionen Dollar im 3. Quartal 2023 entspricht. Der wiederkehrende Umsatz hingegen stieg jedoch um 29% auf 2,8 Millionen Dollar. Die Betriebsausgaben verringerten sich auf 5,3 Millionen Dollar von 5,6 Millionen Dollar im Vorjahr, bedingt durch Kostensenkungsmaßnahmen. Das Unternehmen sicherte sich einen Auftrag über 1 Million Dollar mit einer europäischen Regierung und launched AwareID im WordPress Marketplace. Die liquiden Mittel beliefen sich zum 30. September 2024 auf 27,4 Millionen Dollar. Das Unternehmen bekräftigte die Erwartungen an ein zweistelliges jährliches Wachstum des wiederkehrenden Umsatzes für 2024.

Positive
  • Recurring revenue increased 29% YoY to $2.8 million in Q3 2024
  • Operating expenses reduced by $1.3 million in first nine months of 2024
  • Secured new $1 million European government contract
  • Strong cash position of $27.4 million
Negative
  • Total revenue decreased 41% YoY to $3.8 million in Q3 2024
  • Net loss of $1.1 million in Q3 2024 compared to net income of $1.1 million in Q3 2023
  • Adjusted EBITDA loss of $1.1 million in Q3 2024 versus positive $0.4 million in Q3 2023
  • Cash position declined from $30.9 million to $27.4 million since December 2023

Insights

The Q3 results present a mixed financial picture for Aware. Total revenue declined 41% YoY to $3.8 million, largely due to the absence of a one-time $2.9 million license sale from the previous year. However, the core business shows strength with recurring revenue growing 29% to $2.8 million.

The company's cost optimization efforts are yielding results, with operating expenses down $1.3 million in the first nine months. The balance sheet remains solid with $27.4 million in cash and equivalents, though this represents a $3.5 million decrease from year-end 2023. The recent $1 million European government booking provides near-term revenue visibility.

Key concerns include the continued net losses and cash burn, though the improving recurring revenue trajectory and cost controls could lead to sustainable positive cash flow.

Aware's strategic pivot towards recurring revenue and SaaS offerings shows promising momentum. The launch of AwareID on WordPress Marketplace represents a significant expansion into the commercial sector, targeting high-growth verticals like online gaming and e-commerce. The enhanced BioSP platform with offline capabilities demonstrates adaptability to market needs.

The company's partner ecosystem expansion and success in reducing fraud for clients (notably the 86% reduction for a Brazilian bank) validate their technology's effectiveness. The focus on product development and integration simplification positions them well in the competitive biometric authentication market, though the transition to a recurring revenue model may continue to impact near-term results.

Company Reaffirms Expectations for Double-Digit Annual Recurring Revenue (ARR) and Recurring Revenue Growth in 2024

Ongoing Cost Optimization Initiatives Reduced Operating Expenses by $1.3 million in the First Nine Months of 2024 Compared to Same Period Last Year

BURLINGTON, Mass., Oct. 30, 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 biometric solutions, today reported financial results for the third quarter and nine months ended September 30, 2024.

Third Quarter and Nine Month 2024 Financial Highlights

  • Total revenue for the three and nine months ended September 30, 2024, was $3.8 million and $12.6 million, respectively, compared to $6.4 million and $13.9 million in the three and nine months ended September 30, 2023, respectively, representing decreases of 41% and 9%, respectively, for the three and nine months ended September 30, 2024, compared to the corresponding periods in 2023. Revenue for the three  and nine months ended September 30, 2023, included a one-time license sale of $2.9 million.
  • Recurring revenue (a non-GAAP metric reconciled below) for the three and nine months ended September 30, 2024, was $2.8 million and $8.7 million, respectively, compared to $2.2 million and $7.3 million in the three and nine months ended September 30, 2023, respectively, representing increases of 29% and 19%, respectively for the three and nine months ended September 30, 2024, compared to the corresponding periods in 2023.
  • Ongoing cost optimization initiatives aimed at streamlining operations and improving efficiency resulted in lower operating expenses. For the third quarter of 2024, operating expenses were $5.3 million, a decrease from $5.6 million in the third quarter of 2023. For the nine months ended September 30, 2024, operating expenses were $16.7 million, a decrease from $17.9 million in the same period of 2023.
  • Maintained a robust financial position with cash, cash equivalents, and marketable securities totaling $27.4 million as of September 30, 2024.

Third Quarter and Recent Operational Highlights

  • European Expansion: In October 2024, secured a $1 million booking with a European government with planned delivery of licenses within the current year, a portion of which is expected to contribute to the company’s Annual Recurring Revenue (ARR).  This booking is the result of recent enhancements to Aware’s BioSP, which improved usability and offline biometric enrollment capabilities drawing on Voice of the customer inputs received from a broad range of clients, and highlights the leverage Aware is creating by responding to diverse customer requirements.
  • Product Launch: Launched AwareID on the WordPress Marketplace, enabling businesses, website owners, and eCommerce platforms across industries like online gaming, retail, and content management to easily implement cloud-based biometric and identity authentication. This no-code WordPress plug-in offers a turnkey solution for seamless authentication and security integration. See more information in the official release here.
  • Product Enhancement:Introduced a new core version of Aware's biometric orchestration and identity management system, BioSP, designed to enhance usability and key functionalities. This update enables Aware to expand customer utilization and better serve both new and existing needs, including offline biometric enrollment capabilities for areas with low internet connectivity.
  • Industry Recognition: Aware was featured in the 2024 Biometric Digital Identity Financial Services Prism report, where it was recognized for its innovative biometric authentication solutions that enhance fraud detection and regulatory compliance in a case study in which implementation of an Aware solution by a Brazilian bank resulted, in significant customer satisfaction and an 86% reduction in fraud within six months.
  • Global Presence: Showcased Aware's advanced authentication solutions at key industry events, including the International Association for Identification Forensic Educational Conference, Identity Week America, the 2024 Global Security Exchange, and the 10th Mind the Sec conferences. Aware also hosted its inaugural Partner Summit at GITEX GLOBAL in the Middle East. The summit featured a robust agenda of topics presented by both partners and Aware Leadership in Sales, Solutions, Marketing, Product, and Engineering. This event reinforces Aware’s commitment to investing in partners and aligns with the company’s strategy to better support, enable, and grow through its Partnership Program.

Management Commentary

“In the third quarter of 2024, we maintained our focus on operational efficiency, achieving a 7% reduction in operating expenses in the first nine months of 2024, while also accelerating the evolution of our product offerings, enhancing our go-to-market strategy, and expanding our recurring revenue,” said Robert Eckel, CEO and President of Aware. “Our strategic efforts, particularly in expanding our partner ecosystem, resulted in securing key partnerships in high-growth sectors such as e-commerce, access control, and online gaming powered by our AwareID SaaS offering. We’ve successfully refined our biometric solutions to meet the diverse needs of these industries, enabling seamless integration for a wide range of customers.

“As we approach the fourth quarter and look to 2025, our priorities remain clear to continue to secure and expand the use cases for our biometric solutions, by enhancing their ease and simplicity of integrability and to continue to grow our recurring revenue base. With a robust pipeline, significant progress in product development and sales execution, and a recently secured $1.0 million booking with a European government, we are confident in our ability to close 2024 strong and leverage our business model to achieve double-digit recurring revenue growth and sustainable positive cash flow in the future.”

Third Quarter 2024 Financial Results
Revenue for the third quarter of 2024 was $3.8 million, a decrease of 40% compared to $6.4 million in the same year-ago period. The decrease in revenue was primarily due to lower software license revenue, including the impact of a one-time license sale of $2.9 million to a federal agency in the prior year period.

Recurring revenue for the third quarter of 2024 totaled $2.8 million, an increase of 29% compared to $2.2 million in the same year-ago period.

Operating expenses for the third quarter of 2024 were $5.3 million, a 6% decrease compared to $5.6 million in the year-ago period, primarily due to the company's ongoing cost reduction initiatives. Operating expenses for the third quarter of 2023 included a $0.8 million one-time gain related to a fair value adjustment to the contingent acquisition payment from the company’s acquisition of FortressID in 2021.

Net loss for the third quarter of 2024 totaled $1.1 million, or $(0.05) per diluted share, compared to net income of $1.1 million, or $0.05 per diluted share, in the same year-ago period.

Adjusted EBITDA loss (a non-GAAP metric reconciled below) for the third quarter of 2024 totaled $1.1 million, compared to adjusted EBITDA of $0.4 million in the same year-ago period. The decrease in adjusted EBITDA was primarily due to lower license revenue, partially offset by lower operating expenses.

Cash, cash equivalents, and marketable securities totaled $27.4 million as of September 30, 2024, compared to $30.9 million as of December 31, 2023.

Nine Month 2024 Financial Results
Revenue for the nine months ended September 30, 2024, was $12.6 million, a decrease of 9% compared to $13.9 million in the same year-ago period. The decrease in revenue was primarily due to lower software license revenue, including a one-time license sale of $2.9 million to a federal agency in the prior year period.

Recurring revenue for the nine months ended September 30, 2024, was $8.7 million, an increase of 19% compared to $7.3 million in the same year-ago period.

Operating expenses for the nine months ended September 30, 2024 were $16.7 million, a 7% decrease compared to $17.9 million in the year-ago period, primarily due to the company's ongoing cost reduction initiatives. Operating expenses for the nine-month period ended September 30, 2023 included a $0.8 million one-time gain related to a fair value adjustment to the contingent acquisition payment from the acquisition of FortressID in 2021.

Net loss for the nine months ended September 30, 2024, totaled $3.2 million, or ($0.15) per diluted share, which compares to net loss of $3.1 million, or $(0.15) per diluted share, in the same year-ago period.

Adjusted EBITDA loss (a non-GAAP metric reconciled below) for the nine months ended September 30, 2024, was $3.0 million, compared to adjusted EBITDA loss of $3.3 million in the same year-ago period. The improvement in adjusted EBITDA was primarily due to lower operating expenses and partially offset by lower revenue.

Webcast
Aware management will host a webcast today, October 30, 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: Wednesday, October 30, 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; and xvii) we may make acquisitions that could adversely affect our results, xiii) we may have additional tax liabilities.

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 quarter ended December 31, 2023 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
September 30,
  Nine Months Ended
September 30,
 
  2024  2023  2024  2023 
Revenue:            
Software licenses $1,175  $4,391  $5,137  $7,535 
Software maintenance  2,257   1,889   6,571   5,491 
Services and other  417   101   884   844 
Total revenue  3,849   6,381   12,592   13,870 
             
Costs and expenses:            
Cost of services and other revenue  270   410   817   1,033 
Research and development  1,873   2,264   5,922   6,909 
Selling and marketing  1,856   2,171   5,838   6,118 
General and administrative  1,317   1,601   4,086   4,679 
Fair value adjustment to contingent acquisition payment     (812)     (812)
Total costs and expenses  5,316   5,634   16,663   17,927 
Operating (loss) income  (1,467)  747   (4,071)  (4,057)
Interest income  315   397   886   982 
Loss before provision for income taxes  (1,152)  1,144   (3,185)  (3,075)
Provision for income taxes  15      54    
Net (loss) income $(1,167) $1,144  $(3,239) $(3,075)
             
Net (loss) income per share – basic $(0.06) $0.05  $(0.15) $(0.15)
Net (loss) income per share – diluted $(0.06) $0.05  $(0.15) $(0.15)
Weighted-average shares – basic  21,186   21,049   21,123   21,017 
Weighted-average shares – diluted  21,186   21,131   21,123   21,017 


AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
 
  September 30,
2024
  December 31,
2023
 
ASSETS      
Cash and cash equivalents $11,223  $10,002 
Marketable securities  16,167   20,913 
Accounts and unbilled receivables, net  5,446   3,855 
Property and equipment, net  515   579 
Goodwill and intangible assets, net  5,200   5,511 
Right of use assets  4,040   4,260 
All other assets, net  1,134   1,176 
       
Total assets $43,725  $46,296 
       
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Accounts payable and accrued expenses $2,118  $1,986 
Deferred revenue  5,407   5,537 
Operating lease liability  4,308   4,475 
Total stockholders’ equity  31,892   34,298 
       
Total liabilities and stockholders’ equity $43,725  $46,296 
 

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 and six months ended June 30, 2024 and 2023  and 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, 2024 and 2023.

AWARE, INC.
Reconciliation of GAAP Net loss to Adjusted EBITDA
(In thousands)
(unaudited)
 
 Three Months Ended  Nine Months Ended 
 September 30,  September 30,  September 30,  September 30, 
 2024  2023  2024  2023 
Net (loss) income$(1,167) $1,144  $(3,239) $(3,075)
Depreciation and Amortization 141   140   421   437 
Stock based compensation 220   360   628   1,097 
Fair value adjustment to contingent acquisition payment    (812)     (812)
Interest income (315)  (397)  (886)  (982)
Provision for income taxes 15      54    
Adjusted EBITDA loss (income)$(1,106) $435  $(3,022) $(3,335)


AWARE, INC.
Revenue Breakout
(In thousands)
(unaudited)
 
 Three Months Ended  Nine Months Ended 
 September 30,  September 30,  September 30,  September 30, 
 2024  2023  2024  2023 
Recurring revenue:           
Software subscriptions$561  $292   2,099   1,824 
Software maintenance 2,257   1,889   6,571   5,491 
Total recurring revenue 2,818   2,181   8,670   7,315 
            
Non-recurring revenue:           
Software licenses 614   4,099   3,038   5,711 
Services and other 417   101   884   844 
Total non-recurring revenue 1,031   4,200   3,922   6,555 
Total revenue$3,849  $6,381  $12,592  $13,870 


Aware is a registered trademark of Aware, Inc.

Investor Contact
Matt Glover
Gateway Group, Inc.
949-574-3860
AWRE@gateway-grp.com

FAQ

What was Aware's (AWRE) recurring revenue growth in Q3 2024?

Aware's recurring revenue grew 29% year-over-year to $2.8 million in Q3 2024.

How much did Aware (AWRE) reduce operating expenses in the first nine months of 2024?

Aware reduced operating expenses by $1.3 million in the first nine months of 2024 compared to the same period last year.

What was the value of Aware's (AWRE) new European government contract in October 2024?

Aware secured a $1 million booking with a European government in October 2024.

What was Aware's (AWRE) cash position as of September 30, 2024?

Aware's cash, cash equivalents, and marketable securities totaled $27.4 million as of September 30, 2024.

Aware Inc

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32.02M
12.44M
41.32%
21.54%
0.19%
Software - Application
Services-prepackaged Software
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United States of America
BURLINGTON