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 first quarter ended March 31, 2023.
First Quarter 2023 and Recent
Operational Highlights
- Generated $4.3
million of revenue, compared to $4.1 million in the fourth quarter
of 2022 and $4.7 million in the first quarter of 2022, with a
continued focus on expanding the company’s recurring revenue
base.
- Recurring revenue
for the first quarter 2023 was $3.1 million, a 17% sequential
increase and a 4% year-over-year increase.
- Aligned expectation
to grow total revenue and annual recurring revenue (ARR) by at
least 15% in 2023, and to achieve neutral to positive operating
cash flow exiting 2023.
- Partnered with
Uqoud to integrate Knomi® into its contract management platform and
broadened both biometrics’ use cases and Aware’s footprint in the
Middle East market.
- Incorporated Knomi
into the Electronic Know Your Customer (eKYC) identity verification
process for a leading Pakistani Bank through a new partnership with
Anyline.
- Collaborated with
SoftwareONE to prepare Aware’s world class biometric authentication
solutions for availability on the AWS Marketplace to reach global
enterprise customers.
- Repurchased 191,000
common shares of stock at a weighted average price of $1.79 per
share as part of our previously announced share buyback
program.
Management Commentary“In the
first quarter we continued to execute on our growth strategy to
scale the business and drive revenue,” said Robert Eckel, Aware’s
Chief Executive Officer and President. “We are diligently working
to expand our recurring revenue base through multi-threaded deep
partnerships while continuing to advance the capabilities of our
technologies.”
“Expanding adoption for our SaaS-based solution,
AwareID, remains a top priority as we leverage strategic
partnerships to increase the reach and use cases of our entire
portfolio. The global biometric industry is rapidly evolving, and
we believe we are well positioned to capitalize on the robust
tailwinds in the industry. As we continue to focus on the customer,
our go-to-market model and flexible deployment options make it easy
for them to buy and adopt offerings from our broad portfolio. With
our partner-centric sales strategy, increased global traction for
Knomi and AwareID®, and a promising pipeline of opportunities, we
continue to be confident in our ability to deliver our operational
and financial objectives in 2023. Along that line, our expectation
is to grow total revenue and ARR by at least 15% in 2023. We also
continue to manage operating cash flow, driving to exit 2023 with
cash flow neutral to positive, by managing both inflows and
outflows towards profitability.”
First Quarter 2023 Financial
ResultsRevenue for the first quarter of 2023 was $4.3
million, compared to $4.1 million in the fourth quarter of 2022 and
$4.7 million in the same year-ago period. The sequential
improvement in revenue was primarily due to an increase in software
subscription revenue.
Net loss for the first quarter of 2023 totaled
$1.6 million, or $(0.07) per diluted share, which compares to net
loss of $1.8 million, or $(0.08) per share, in the fourth quarter
of 2022 and net loss of $1.3 million, or $(0.06) per share, in the
same year-ago period.
Adjusted EBITDA loss for the first quarter of
2023 totaled $1.4 million, compared to adjusted EBITDA loss of $1.5
million in the fourth quarter of 2022 and adjusted EBITDA loss of
$0.6 million in the same year-ago period. The improvement from the
prior quarter in adjusted EBITDA was primarily due to higher
revenue.
Cash, cash equivalents and marketable securities
totaled $27.3 million as of March 31, 2023, compared to $29.0
million as of December 31, 2022.
WebcastAware management will
host a webcast today, May 2, 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, May 2, 2023Time: 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 AwareAware is a global
authentication company that validates and secures identities using
proven and trusted adaptive biometrics. Aware’s software and
software-as-a-service 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 the
most diverse data sets in 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 WarningPortions 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.
Company
ContactGina RodriguesAware,
Inc.781-276-4000grodrigues@aware.com |
Investor ContactMatt GloverGateway Group,
Inc.949-574-3860AWRE@gatewayir.com |
|
AWARE, INC.CONSOLIDATED
STATEMENTS OF OPERATIONS(In thousands, except per
share data) (unaudited)
|
|
Three Months
EndedMarch 31, |
|
|
|
2023 |
|
|
2022 |
|
Revenue: |
|
|
|
|
|
|
Software licenses |
|
$ |
2,105 |
|
|
$ |
2,628 |
|
Software maintenance |
|
|
1,835 |
|
|
|
1,661 |
|
Services and other |
|
|
365 |
|
|
|
403 |
|
Total revenue |
|
|
4,305 |
|
|
|
4,692 |
|
|
|
|
|
|
|
|
Costs and expenses: |
|
|
|
|
|
|
Cost of services and other revenue |
|
|
298 |
|
|
|
314 |
|
Research and development |
|
|
2,381 |
|
|
|
2,424 |
|
Selling and marketing |
|
|
1,991 |
|
|
|
1,781 |
|
General and administrative |
|
|
1,504 |
|
|
|
1,461 |
|
Total costs and expenses |
|
|
6,174 |
|
|
|
5,980 |
|
Operating loss |
|
|
(1,869 |
) |
|
|
(1,288 |
) |
Interest income |
|
|
301 |
|
|
|
9 |
|
Net loss |
|
$ |
(1,568 |
) |
|
$ |
(1,279 |
) |
|
|
|
|
|
|
|
Net loss per share – basic |
|
$ |
(0.07 |
) |
|
$ |
(0.06 |
) |
Net loss per share – diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.06 |
) |
Weighted-average shares –
basic |
|
|
21,033 |
|
|
|
21,642 |
|
Weighted-average shares –
diluted |
|
|
21,033 |
|
|
|
21,642 |
|
AWARE,
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(In
thousands)(unaudited)
|
|
March 31,2023 |
|
|
December 31,2022 |
|
ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
8,390 |
|
|
$ |
11,749 |
|
Marketable securities |
|
|
18,912 |
|
|
|
17,229 |
|
Accounts and unbilled receivables, net |
|
|
6,153 |
|
|
|
6,246 |
|
Tax receivable |
|
|
1,362 |
|
|
|
1,362 |
|
Property and equipment, net |
|
|
697 |
|
|
|
726 |
|
Goodwill and intangible assets, net |
|
|
5,823 |
|
|
|
5,926 |
|
Note receivable |
|
|
2,632 |
|
|
|
2,601 |
|
Right of use assets |
|
|
4,470 |
|
|
|
4,538 |
|
All other assets, net |
|
|
961 |
|
|
|
815 |
|
|
|
|
|
|
|
|
Total assets |
|
$ |
49,400 |
|
|
$ |
51,192 |
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Accounts payable and accrued expense |
|
$ |
1,404 |
|
|
$ |
1,921 |
|
Deferred revenue |
|
|
3,796 |
|
|
|
3,733 |
|
Operating lease liability |
|
|
4,621 |
|
|
|
4,517 |
|
Contingent acquisition payment |
|
|
812 |
|
|
|
812 |
|
Total stockholders’ equity |
|
|
38,767 |
|
|
|
40,209 |
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity |
|
$ |
49,400 |
|
|
$ |
51,192 |
|
Non-GAAP MeasuresWe define
adjusted EBITDA as U.S. GAAP net loss minus gain on sale of fixed
assets plus depreciation of fixed assets and amortization of
intangible assets, stock-based compensation expenses, interest
income, and income tax provision or benefit. 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 arrangements 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 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 income (loss),
the most directly comparable U.S. GAAP financial measure, to our
adjusted EBITDA for the three and twelve months ended December 31,
2022 and 2021 and for the three months ended September 30, 2022 and
(ii) our U.S. GAAP revenue, the most directly comparable U.S. GAAP
financial measure, to our recurring revenue for the three and
twelve months ended December 31, 2022 and 2021.
AWARE,
INC.Reconciliation of GAAP Net income (loss) to
Adjusted EBITDA(In
thousands)(unaudited)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Net loss |
|
$ |
(1,568 |
) |
|
$ |
(1,758 |
) |
|
$ |
(1,279 |
) |
Depreciation and Amortization |
|
|
149 |
|
|
|
172 |
|
|
|
225 |
|
Stock based compensation |
|
|
335 |
|
|
|
351 |
|
|
|
429 |
|
Interest Income |
|
|
(301 |
) |
|
|
(311 |
) |
|
|
(9 |
) |
Provision for income taxes |
|
|
— |
|
|
|
49 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
(1,385 |
) |
|
$ |
(1,497 |
) |
|
$ |
(634 |
) |
|
AWARE,
INC.Revenue Breakout (In
thousands)(unaudited)
|
|
Three Months Ended |
|
|
|
March 31, |
|
|
December 31, |
|
|
March 31, |
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
Recurring revenue: |
|
|
|
|
|
|
|
|
|
Software subscriptions |
|
$ |
1,227 |
|
|
$ |
782 |
|
|
$ |
1,287 |
|
Software maintenance |
|
|
1,835 |
|
|
|
1,844 |
|
|
|
1,661 |
|
Total recurring revenue |
|
|
3,062 |
|
|
|
2,626 |
|
|
|
2,948 |
|
|
|
|
|
|
|
|
|
|
|
Non-recurring revenue: |
|
|
|
|
|
|
|
|
|
Software licenses |
|
|
878 |
|
|
|
1,144 |
|
|
|
1,342 |
|
Services and other |
|
|
365 |
|
|
|
293 |
|
|
|
402 |
|
Total non-recurring revenue |
|
|
1,243 |
|
|
|
1,437 |
|
|
|
1,744 |
|
Total revenue |
|
$ |
4,305 |
|
|
$ |
4,063 |
|
|
$ |
4,692 |
|
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.
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