• Total Revenue: $3.8 million, down from $6.4 million in Q3 2023.
• Recurring Revenue: Increased 29% year over year to $2.8 million.
• Operating Expenses: Reduced to $5.3 million, down 6% from $5.6 million in Q3 2023.
• Operating Loss: $1.2 million, compared to operating income of $1.1 million in Q3 2023.
• GAAP Net Loss: $1.2 million or 5 per diluted share, compared to GAAP net income of $1.1 million in Q3 2023.
• Adjusted EBITDA Loss: $1.1 million, compared to an adjusted EBITDA gain of $400,000 in Q3 2023.
• Cash, Cash Equivalents, and Marketable Securities: $27.4 million as of September 30, 2024.

• Warning! GuruFocus has detected 2 Warning Signs with AWRE.

Release Date: October 30, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Aware Inc (NASDAQ:AWRE) reported a 29% year-over-year growth in recurring revenue, strengthening its foundation for sustainable long-term growth.
• The company secured a $1 million booking with a European government, showcasing the effectiveness of its enhanced biometric orchestration and identity management platform.
• Aware Inc (NASDAQ:AWRE) successfully reduced operating expenses by $1.3 million in the first nine months of 2024 compared to 2023, demonstrating effective cost management.
• The launch of Aware ID as a no-code plug-in on the WordPress marketplace significantly expands the company's reach, enabling businesses to adopt secure cloud-based biometric authentication.
• The company expanded its ABIS portfolio by securing two new term contracts and added another ABIS account in Q4, reinforcing its commitment to delivering cutting-edge solutions.

Negative Points

• Total revenue for Q3 2024 decreased to $3.8 million from $6.4 million in Q3 2023, primarily due to lower software license revenue.
• Operating loss for Q3 2024 was $1.2 million, compared to an operating income of $1.1 million in the same period last year.
• The company experienced delays in closing some larger deals, pushing them to Q4 or early Q1 of the next year.
• Net loss for the nine months ended September 30, 2024, was $3.2 million, consistent with the net loss of $3.1 million in the prior year.
• Aware Inc (NASDAQ:AWRE) anticipates approximately $900,000 of one-time expenses in Q4 related to the CEO transition and hiring of an executive strategic adviser.

Q & A Highlights

Q: What do you anticipate your run rate revenue will be by year end? A: David Traverse, Principal Financial Officer, Treasurer: We are on track to achieve double-digit revenue growth in 2024. This, along with seven new contracts and expanding partnerships across sectors like access control and digital education, sets us up for a strong recurring base in 2025.

Q: Can you provide more details about the $1 million European government booking secured in October? What were the key factors that led to winning this deal, and how do you see it contributing to future recurring revenue? A: Bob Eckel, Chief Executive Officer & President: The $1 million booking with the European government was a result of enhancements to our BISP solution, including multimodal biometric data orchestration and offline biometric enrollment. This feature was crucial for regions with limited internet connectivity. The deal is expected to contribute to Q4 results and build a foundation for future recurring revenue as the government expands its use.

Q: Can you discuss the impact of the launch of Aware as a plug-in on the WordPress marketplace? How significant do you expect this to be in terms of customer acquisition and market penetration, particularly in sectors like online gaming and e-commerce? A: Bob Eckel, Chief Executive Officer & President: The launch of Aware as a plug-in on WordPress is strategic, opening new customer acquisitions in sectors like online gaming and e-commerce. WordPress powers over 40% of the internet, and our no-code biometric solution allows businesses of all sizes to integrate secure authentication. We expect this to accelerate recurring revenue growth, especially in high-risk industries.

Q: With the delays in contract closure, shifting some deals to Q4 or early Q1, what is your level of confidence in closing these deals within that time frame? Can you elaborate on the nature of the delays and how they impact your overall revenue forecast? A: Bob Eckel, Chief Executive Officer & President: We remain confident that delayed deals will close in Q4 or early 2025. The delays were due to additional scope discussions and expansions requested by customers, not lost business. We believe this will result in greater long-term value and are working to minimize timeline changes.

Q: What will be the focus areas for the executive strategic adviser? A: Bob Eckel, Chief Executive Officer & President: The adviser will enhance Aware's market position, refine its product roadmap, and provide strategic guidance to drive growth and competitiveness. They will support high-level decisions and prepare Aware for sustainable growth and a smooth CEO transition without direct operational responsibilities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.