AWRE - Earnings call transcript Q1 2021

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Matt Glover

Good afternoon, and welcome to Aware’s First Quarter 2021 Earnings Conference Call.

Joining us today is the company’s CEO and President, Robert Eckel; and CFO, David Barcelo.

Following their remarks, we will open the call for questions. [Operator Instructions] Before we begin today’s call, I’d like to remind everyone that the presentation today contains forward-looking statements that are based on the current expectations of Aware’s management and involve inherent risks and uncertainties that could cause actual results to differ materially from those described. Listeners should please take note of the safe harbor paragraph that is included at the end of today’s press release. major will risks be the statements in emphasizes management that making paragraph uncertainties inherent and forward-looking This today. results differ Aware the wishes from to factors that such the materially that could to cause actual caution indicated by you statements. results outlined are including report XX-K These Form company’s reports quarterly annual the also and SEC in risks on on and uncertainties filings, its Form XX-Q. be considered factors. these in of should light statements forward-looking Any

reliance made. upon as are any statements, You place cautioned only date to which of undue the not speak forward-looking

Although do to time, or new whether voluntarily securities or it undertakes revise Aware applicable result by events a laws. statements, to may otherwise, time from so required except forward-looking no of update commitment future as as information, the

this certain call Additionally, contains non-GAAP financial measures.

GAAP recorded to be by financial measures issued in non-GAAP G. defined Relations Aware GAAP. everyone isolation and the the will the presentation has link financial substitute in considered with most direct via a term for that measures these be or presented reconciliation the this a Non-GAAP website. to section financial as measures from, a in Accordingly, I’d provided information replay Investor like for today. is company’s available Regulation company’s SEC compliance should in As made remind available release and the earnings the of comparable of

President, CEO Now with that I’d to the Bob Eckel. and Bob? call like Aware’s to turn over

Robert Eckel

Good you afternoon, today. joining Matt. Thanks, everyone thank and us for

section copy website. results very the of A we our is some a market here, exciting soon March release we will investor in have ending the release press XX, first press for After you our relations available news. issued of As the closed, quarter announcing XXXX. the

join again it’s earnings let a our saying pleasure by second So you start all to call together. for me

share provide so more we’ve financial quarters operation I’ll remainder the Barcelo, I long will and After can beyond. realistically it in with with the throughout of results, review that the a made earnings a first Dave months what and over quarter on to to overview company’s time then for turn have will has about the open our managed we’re for he call, the then discuss near accomplish level to the CFO, quarter. and horizons. this our to progress the the year high plan a your you what the time. I’ll ago, some I about Today, XXXX results take questions. discuss long-term to Aware why bit few first On chance Just had that, we I we call throughout call the a optimistic

has transactions were any testament half previously. interact a to quarter as more of these institutions there end This for our our but and Knomi quarter by first I’d course, the third shows delivery excited excited company reputation on our biometric this new like results they of quarterly were a value Knomi will also all transactions greater business to is geographically versatility, models. quarter XXXX than our And Knomi shortly, about significance go-to that and line as I’m of for talk its protected period within potential also about in our I’m the record we Knomi’s U.S. highlight is the increased and see I’m continue for awards. their needs. the federal government proven Knomi bolster about as to I subscription transaction for And way of Dave in providing with various proposition, multiple entering world, Throughout These XXXX. transactions. consecutive to now of sectors. both than number well users. We generated growth. transformation phase working. top of excited throughout a about revenue, as which the our consumption-based

we and We partners optimistic on continued customers for service in counting fluctuate timing revenue clear, modeling. exist. impact the we’re into in our our And tailwinds. To the to a headwinds subscription revenues that implementations all will perpetual consideration be pandemic the into that we’re be to still of timely are these we’ve roll-outs, ensure to are are from and the of requests our to period lumpy of contact in business. attended and a basis. transition transform the and with pandemic and realistically Never convert Quarterly vaccine contracts the that recognition XXXX related of experienced continued license revenue will risks revenues may staying will close investment that continuing due last,

and to degree as who talking you, phase. in in quarterly lies to us results financial a will what little but I’m anticipated bit, to I’ll for about Dave our to you looking Dave. the progress we such, Over this forward now, turn horizon our for we walk results As it on variability through quarter. over through just

David Barcelo

call. everyone Good the Thank afternoon on you, Bob. to

turn the financial our Let’s quarter XXXX. XX, to for ended first March results

of the year-over-year and revenue minimum in amounts Our new volume increased upfront prior $X.X in Sequentially, two international the Both recognition the existing transaction were quarter. increased due quarter from sequential to customers increases subscription-based primarily first from XX% revenue million of related from to total million growing year. wins. and revenue fixed to QX in last million $X.X increased the XX% from $X.X

expenses. to our Turning operating attention

quarter costs of to the in an full was additional AFIX to in acquisition early For increase last of The primarily year. and our first operating of $X.X sales an expenses year-over-year of QX from and our engineering in in corresponding same operating for The from offset the by revenue quarter million loss increased of the in million was $X.X The operating primarily loss from expenses, loss mentioned investment in a due quarterly in the $X.X quarter million to XXXX XX% quarter. XXXX resources $X.X operating the partially ago after XXXX, operating first million year period. XXXX. the operating compared resulted late increase increased

$X.X For ago loss million the the loss net compared to first GAAP $X.XX share per in GAAP net per $X.XX or $X.X a period. million quarter or of of same totaled XXXX share year

the the adjusted loss which same we totaled quarter, loss for compares period. EBITDA million. Our This earnings a year $X.X the EBITDA in reconcile ago in million adjusted of similar $X.X to release,

On we at cash and end cash of XX, had in to million XXXX. the $XX the equivalents balance sheet, as compared the December of million $XX.X quarter

to and For themselves. the in enables to as Aware $X.X maintains capital period, used ROI opportunities operations. cash allocate that a they million three course position month strategic present we us the high of strong

XXXX. actively making we’ve as X accounts. to and XX quarter In scale alone. as growth realize our continuing based of opportunities is and of financial investments recommendations our new growth are Knomi volume significant the the this for onboard The growing completes way subscription comparison, scalability of the for surpassed ensure test we transactions line customers that customer in and from We’re product future million the strength organization. summary. strategic paving Organically, million entire We’ve to to on evaluate had seen to is growth first my this we an year current success This the base.

beyond. I’d QX, operational initiatives insights to priorities for XXXX key Bob? additional to and well in as Bob Now call back and turn as progress on in our like the

Robert Eckel

very Thanks much, Dave.

those as working three-part we I we’ve refer the to you three this growth to pillars made what bringing If to so fruition. strategy. from progress transformational discuss the remember shared core a last discussion and far like frame I’d call, and strategy around my

that Before successes some excitement I getting indicated first though, the to in earlier we my around quarter. had

From in in for be passwordless Let ways general. increased and consumers with time a authentication are verify exciting me in a minute to technology. how and tell in looking biometric remote contactless general, the you, to take there perspective, becoming to a to their confident space identity. are biometric consumers was more an it’s an market Particularly pandemic, attention

an and to well for seeing are in secure We for look for biometric contact. a conduct demand to continue solutions, business touchless face-to-face authentication, transactions ways requiring onboarding as increase remote without as as entities

increasing combined at We’re global strategy expected around growing through that and positions assistance transformational also for trajectory is to recipients grow we’re visibility the to expect of at identity the system is seeing also to SaaS reaffirm And and the expertise of well or our secure, which need as lot of the confident this, with programs. biometric verification. the and We markets the fastest fraudulent to modalities This is making into of pandemic payments grow targeting. across of a market in our to the global its a biometric XX%. pandemic meet authorized are needs expected approach. hands, XX% money a trajectory the the wrong segment, be our convenient Considering multi-factor CAGR be scams assistance CAGR claim market, the authentication that of given of safe, way

create our pillar meet has transformation first the our the decade, strategy, noticed more offerings focused of strategy appropriately and that dramatically. we clients. platforms Have our existing changed pandemic our to back the of needs is world past Now within the the to throughout of continued growth the

face and unproctored along of to industry’s a as requirements. leading systems You Aware hallmark offerings, recognized may and has verification is and over itself again brand. to and and scale software these voice on system of with over Knomi focuses integrators that enterprise demand a integrate Today’s proven proctored recall detection. one grow, frameworks and were It document liveliness various large matching as time build the enables be and meets liveliness required with when Knomi SDKs. you at-the-ready the

largest material one year. quarter, During some on software private In Latin and biometric the to growing global recorded regions. been biometric the up offerings, the around puts the of cyber XX in expanding sectors, Latin last on sector reinforces Dave technology, and is government list private fastest this running spending, in mentioned, Among investments. million of our of as security management million our of and various transactions, X and mitigation, which years, world. public focus us crime there’s financial sector institutions diversity. embrace surpassing driven is America, increased regions the particular, customers a Knomi and the has by the well past in in secured of total both adoption way are market. spends, transactions performance Knomi’s Knomi America’s a few the border a banks and geographic

and well portfolio easy expert easy emerge go-to share integrate, relationships are install combined to capture in that existing easy as additional offerings biometric to our of the to the us with Our market use, position to region. and

call, security, data a of of personal and and new continue and we list security, shared from financial involves On areas other that also our we go-forward that on government focused remain applications. economy. growing while These include mentioned to biometric healthcare, markets, recognize core networks, services, tenet we benefit penetrating growing strategy can the the consumer emerging last services,

institute opportunity. unified foray closely we secure managing with next working CAGR to years, quarter, digital biometrics This healthcare is company of strategies our XX% help for by and global made presents The over space market an a healthcare encouraging into to identities. which the a at identity patient expected four grow the

As previously growth markets we new partners onboard within win continue we can the the customers, and healthcare additional channel that we space foothold expand our believe and new to we’ve identified.

healthcare. expansion didn’t partnership Our with stop

of will win. year We of multifactor issuance authentication and and Intercede. solutions contract with department and a will also stages, with on still a XX the federal digital early biometric enterprises. issue Together larger be Intercede, strategic identities already significant lifecycle of MyID Intercede to for secured its recently the in we’ve to working in state digital integration we’ll Intercede hardware. providing in their for identity management system performing a dollar secure U.S. our partner be order and thousands agencies announced and Though, manage employees. power multi-million enable a

to and keep providing all as focus be reinforce and us strengths our core with edge success the evolves stories. Intercede the process. new backend. share you on on software updated throughout will intend This to the engagements our and We technological partnership We our enables

followed and SaaS base, third piece revenue a recurring our have obligation customers final what strategy renewing customer usage and exceeding drive Management subscription need their term is commensurate Both offerings level, their the offer that of stronger Identity configurable models ultimately our by our or as customer’s major grow. recurring revenue. and Service. sustain These growth recognition services. you verticals minimum The use SaaS shift with minimums. multiple base a revenues the upfront as for usage transaction provide customers Biometric grows across will These particular towards Most our and transformational our are

timing the cause revenue earlier, of quarterly I fluctuate. As recognition may mentioned revenue to

that these subscription illustrative For growth approaches we material we’ll of Independent year our revenue example, finish all business subscription of level our as Knomi XXXX. same the QX we this, success XXXX with look revenue And XXXX. as anticipate models. at over fiscal with

secured our business as revenue, or growth customers. Knomi serves new proxy For we more with of whenever now, the less by trajectory transactions overall lumpy for a the onboard of number some subscription

effect an and just described material customers We as and usage felt a or and and revenue a transitioned we as revenues steady subscription creating offerings. game committing to The or of emphasize performance expect our a that that lumpy this increases are perpetual historically customers’ play who SaaS with lumpiness from increase also we that revenue, having the model. I to model our based our appear we deploy subsequently in quarter, to to timelines smaller enables transactions time revenue continue pace, implementation join a also mindful more long-term increased quarter-to-quarter. newer pleased performance legacy model to consistent by customers That off license. it important may a commit own some for while put at we’re left and their have our allows out It’s may from quality in recognition subscription that

didn’t Lastly, our remiss corporate I’d briefly if be on development touch initiatives. I

that core and our capabilities We complement pursuing growth external sectors. are aggressively opportunities market

please pipeline questions. continue the term to However, remain open great instructions. on executing year. the near throughout ready are on growth to a multi-pronged strategy strategy. to and for end With continues strong executing our call on our appropriate and expanding We the we’re of in the our a our first that, rest the Matt, note provide focus quarter

Matt Glover

first with on right to the company’s headquarters what you congratulations discuss question the real time now sale. Why Our Bob. plan? incremental is, the do property estate [Operator you Instructions] you, Can is Thank capital? future the plan and to sell

Robert Eckel

of building project. that. answer that an Dip] I’ll and Matt, office was bid year, for [Audio received as is government purchase this when that our to the that So for they’re a part Earlier unsolicited a developer from we submitting request big

did. in order are sign the and include to just negotiate sale the purchase just that. which required completed We potential in agreement, so terms And bid, purchase and to we we

signing which doesn’t why As must SEC that filings, our lot said, such mean will Timelines we our be sold. be that included it as in X-K, But uncertain, event, disclosed building is the in material a necessarily our must more happen. is we know to will time, some from that outcome the the government. competitive be disclosed we importantly, to this do the developer is the proceed has a details regulations And relative to of win bid the for don’t SEC. sale, but if before

Matt Glover

Thanks, Bob.

when Our revenue? company disclosing intend does next question the is, to start subscription

David Barcelo

take our can not I is This the Barcelo. are Matt. are financials space Dave Thanks, since on have the XX-Q. of upcoming They revenues that. not they subscription And in disclosed quarter. some have as yet, subscription are – threshold we eye grow, keeping an for disclosed the materiality a that, but hit continue they but we on of to the the revenues

Matt Glover

Thanks, Dave.

current question progress judge next the you would how in biometrics? Our is commercial

David Barcelo

Yes.

this of government and wins. from quarter, coming is with XX-XX, with believe I XX% roughly progress our our good split customers. been commercial sales recent commercial the so So especially far, has very the between

with success commercial that happy the we which with we’re trend progress around very the from revenues, are and largely continue. subscription that the expect So having our customers – to coming to there

Matt Glover

Thanks, Dave.

have We the probably are revenues? more minimum new for Can another question you color you. that two a international generating provide wins on

David Barcelo

Yes.

bit. let little unpack a So me that

in customers various parts are world. the from two coming international new wins the So of

both parts to in region. of Brazil, We in Mexico, great continue Latin the see other progress America and

So added a America over well Europe. customer customer got Latin new we’ve as in in as

is recurring for customers, up with we the annual levels. And then two these will same it and So see a expansion front terms here at subscription seeing of minimum our could in it the revenue renewals great bit but recognized geographic progress.

Matt Glover

Dave. Thanks,

revenues Can would have just these be get on deck, into bit another are quarter, these We context the a question. how the provide transaction interpreting very more impressive you you volumes? consumption-based you how that trying and this sense of converted a transaction in mentioned transactions revenue to count

David Barcelo

question. great It bit. to a opportunity bit little expand on a last a me That’s little Yes. the gives

direct So our subscription correlation of necessarily transaction quarter. count isn’t the a revenue the for

got monthly before, at As we’ve these minimum. I was hinting

fall without. commitments subscription-based into our of minimum So customers two those annual those and categories, with one

annual a customer when if occurs in over their be upfront as time the recognized So is commitment, the that that recognized that in period counts, transaction the quarter. they in go they the each But then minimum a customers revenue has throughout then for no will fall quarter. usage that of year. it minimum latter majority we’ll their And of minimum revenue that into minimum, the have and of recognize category at part

for volumes will on be for we think you base. lumpy quarterly these correlation good to more revenues, aggregate customer a a the of in some should when basis, upfront So due but much annual be minimums about

Matt Glover

Thanks, Dave.

activity room acquisition Do there’s relates significant this M&A how next particularly it We’ve space of is as think How the compete become. Our healthcare? you big growth recently, word, ability think given you like high effect much has noticed been of there in do some the speech on pretty side? question. that any acquisition Microsoft’s compete now recognition they’ve an in to Nuance, the on to verticals a to

Robert Eckel

call routed first Matt. recognition. appropriate you our against of Like compete cases never the to it line use to speech all, when and get speak Their around recognition answer the specialty associated that. Nuance with representative. the speech in and and Well, to call have was intention a is center customer Thanks,

face you person about is, specialty identity mean, just eliminate recognition, to did some multi-factor the voice. some it’s is relative becomes difference will more also mentioned, finger friction. speaker on the a the focused I important about the or and needs are so of iris, this less speaker as of as adjunct or of authentication or We recognition or what as fused I more say our add speaking. verifying on, in option the voice and an or

said, it’s recognition, that know of opting-in we’re or the yes, all about speaker So recognition. the about really identification we the being to their speech individual – so do on it’s all their use, how but based

we impact going heard and right we so those to high separately, you’ve close additionally, And able And we we’re matter said, piece. in enrollment multimodal have speaker a combination targeting a is healthcare proven for ability think were often a overlooked and It’s which to in that about our speech working I it’s That’s recognition. or in of growth process. fact, as and in verticals, expertise critical authentication experience this cases. go a now biometrics our don’t use quarter. acquisition on the process And healthcare. couple just that and the talk the specialize to use opportunity after the me include we’re recognition by companies And

confident our deter serviceable acquisition we’re success that addressable our So market. in this won’t

Matt Glover

Bob. Thanks,

digital Our next OEMs lot to question, I’ve are a It IDs. competitors larger noticed that and close healthcare, emerged seems providing passes, post-COVID and is a larger. be travel trend growing that of and

Aware this a partner this? on other solution work implementing play to As plans space, a with have in there a like or

Robert Eckel

topic close use fraudulently information Thanks. a now. the the and to and a is health to app vaccine they’re one And actively the the documented create believe regarding real biometrics and is year. and another as user. trusted one public discussing of secure focused long-term or to control. to health being those before, strategy that the contact on right I and with able We we’re protect the of or need identity resellers carries in tie of applications facing that that we customers obviously The our day passports monitoring mean, that around remain stated I to

your biometrics individual to, that providing the now, help enable to steal want able that use nefariously. to identity we be not So vaccine we that can or are be case an to and

many customer biometrics develop do software will in for of integrators, enable facing turn them applications. apps we provide many system types and of So we to to these

Matt Glover

a transformation? Can speed? to on revenue subscription you’ve we’ll – the been should What few up some overtake to the that are Bob. Thanks, in revenue expect seeing Should indicators some transformation see license quarters, more few light be bulk years? you see we when expect shed through of we the pick

Robert Eckel

we’ve be high it, our color of longer-term, initial able little we’re up certainty currently looking and stages customers that as our up. past us in good can’t subscription and also calls, contracts transformation, with key of steady And positive also the then long I’ve and may a you the subscriptions, and and add subscription to to switching that we quality do the we XX-Q cuts some both on to we stand number as time. as we’re their and Dave got down more talked also increase subscriptions of legacy get this. services. also go for bit to minimum, about in with Well, five see, also a the at transformation, set perpetual in term mentioned some that sure and a of but a to set the transactions through the but revenue where talked a license And speak greater in the But costs our years can SaaS gives we’ve indicators, make it Dave And we the see are us that. in about three

the customers biometrics more disruptive make been able type the at impact largest. time, smaller So market. to we’re able service, speed the we’ve enable bigger, we’ve a it them a I’ll players to to onboard provide And with there our up work pick smallest to since we’re to and from in a to subscription say, this been seeing

Matt Glover

Bob. Thanks,

another have We question.

payments a You [Audio there a initial subscription quarter may anything as Dip] repeat quarter next talked to not signify Is such payments about that this license bit lumpiness. the in quarter? was or

Robert Eckel

that do a you to, one? I we just ago. it address either don’t Dave, to want minute can I way. about want that you if I But mean, think take talked

David Barcelo

some will is some the our overall, be what not message QX, doing and main that basis. looked basis. do at for our we’re we a revenue Bob. be consecutive projecting in have Yes, third out growth. from looking quarter is we lumpiness There we’re quarterly can, And should the but on to I here yes, and But this what annual ups QX achieve think of downs.

Robert Eckel

Yes.

to bit. little that a add me Let

lumpiness, I transactions of think earlier some to them XXXX have let’s five-year or some XXX,XXX transactions. do just contracts, are three-year they discussed minimum, we’re our or so subscription the a of contracts, to be term. on let’s Most clear, say going say, Dave okay, added term

of So minimum And it’ll them that then minimum. as the a for that quarter. have a quarters. those out, in lot is exceed be Whenever minimum decided, will the from minimums, that subsequent entry then there they level recognized revenue particular be added to

following So hit in the year, you’ll the again quarter. that same get

for have you three-year and If happen years forth. contract, a five will so it three or

So there got if and any you’ve again, that Matt. be things, for at – your it’s is a clear same revenue we’re see contract yearly just wouldn’t the at value. question, looking it’s month you other year, term Hopefully But things a that pulled three-year lumpiness, to basis. to answered but whole recognition some relative the one if very maintenance that’s a the out

Matt Glover

Yes.

if you is, is tell in subscription revenue what quarter last the revenue year? the and the question can next us Our in please XX-Q, was the disclosed subscription

Robert Eckel

that one? to you Dave, want take

David Barcelo

grab be Yes, we revenue. Bob. this’ll first so Yes. disclosing I are can time subscription that, the

to released we’ve think shortly. it it be have call, earnings last about our so that Q the in I at talked will happy

or becomes of we we go we have last under it to noted same sorry, to as progress. expect – so as will the forward, as for that about be our it subscription same face Our that disclose roughly And was the revenue quarter subscription of happy was the face revenue you the And of year, disclose to as material the release, mentioned once certainly we it revenue. And for the shade the $XXX,XXX. all only continue should may in continue quarterly included earnings XX-Q. a was the contract in subscription –

Matt Glover

Thanks, Dave.

repurchase plans question. you XXXX via the of on have versus for strategic light So company the love We’d acquisitions, in thinks the growth share how share a understand company’s we adding M&A. for inorganic color repurchase about especially follow-up authorization. Thank to

Robert Eckel

Yes.

I thing, was mentioned see up I that. call I call a take one mentioned just we can picked mean, in have, think Well, opportunities, match looking we’re we believe in the I good we and Let me you that at the I what what us. for know

use And doing go as relative so the trade-offs what’s to way our to cash. best we’re we

the actively long-term quarterly in do I looking overall, opportunity that, and have to focus growth make that have decisions some And opportunities fits good discussion whether flexibility basis. SaaS where also around there’s want if we’re have we as that instance, services and there’s those we we our that accelerate pending our find strategy a and and make externally. we offerings. or a for So we we on the to And said, to on internally

way are able know do into best We or what’s and up the I simple, going of not a for option we to it’s to it’s there we a be company. long-winded bunch set question, are to go the a but So are trades that that, resume not resume? have the

Matt Glover

time, session. Bob. question-and-answer Thanks concludes this our this At

answered, e-mail at question aware@gatewayir.com. If your wasn’t please IR team Aware’s

remarks. to I’d for Bob turn back Now the to closing like over call

Robert Eckel

us to thank all I want call. joining Well, on for of you today’s

in on on more I call, an that information of we’d investor support. relations During I’d available a next strategy continued the our Aware’s our thank And, about didn’t you be mentioned detaining employees, And outlined their last time presentation website. be bit presentation, your updating to we here. look now for is we call. if last releasing And and investor we remiss especially that forward partners, our investors that

Matt… So with that,

Matt Glover

quarter of a Aware’s call. via Thank the available the first company’s XXXX conference in for be will today’s We’d you earnings Investors recording replay available that like today website. remind link to call section for of everyone for joining

may now You disconnect.

Aware (AWRE) 28 Apr 212021 Q1 Earnings call transcript