AWRE - Earnings call transcript Q4 2021

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Matt Glover

Good afternoon, and welcome to Aware's Fourth Quarter and Full Year 2021 Earnings Conference Call.

Joining us today is the company's CEO and President, Robert Eckel; and CFO, David Barcelo. [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 risk be the statements in emphasizes management that making paragraph uncertainties inherent and forward-looking This today. the to Aware there wishes materially results are that by from differ factors that statements. to could cause caution results indicated you such actual also uncertainties Form filings, on in the and quarterly reports These including are company's annual its risks outlined and XX-Q. report XX-K SEC on Form statements light of forward-looking these in should considered be Any factors.

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

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

financial as SEC not a by Accordingly, that term Additionally, provided in call from in information this is presented a and reconciliation measures with should G. compliance measures the Non-GAAP everyone measures for in remind in issued to be like financial considered the for GAAP financial or isolation via will GAAP. available contains Relations recorded certain available Investor substitute financial today. has Regulation defined the of replay section website. I'd and Aware of non-GAAP earnings measures link directly the be made company's comparable this the release non-GAAP company's presentation that these most to

and Aware's Now Bob? the I turn would President, Paul Eckel. CEO to over to call like

Robert Eckel

After to operational our Aware's the the year results we press website. available progress. today Thanks, Matt. close, to for and today. of fiscal quarter review Investor section copy join Good A afternoon, you XX, market fourth ended here and of us in everyone, the and is a joining you XXXX. announcing the We're press extremely thank excited issued financial Relations December release release our for

our Barcelo, of our XXXX insight for full is with results the company. will for discuss the on review well strategy for brief accomplishments on business prospects growth beyond. how review positioned provide Aware and in Afterwards, are and increasingly we becoming go-forward our and XXXX Dave execute initiatives model financial to our near- a the and I'll quarter I'll bullish and CFO, growth XXXX. meaningful start about year strategy XXXX. our transformation, continue long-term we As Then fourth of and

Lastly, we'll questions. call the open for

enabling and Our XXXX performance are delivered of level X-part tailwinds we last on track. marking and Aware that on foundation industry. infrastructure This the solidifying reflects revenue, the scale We our past highest total $XX.X the million capitalize in the right growth annual highlighted was early in to X transformational increasing success and year material the validates revenue growth improvements, years. by authentication in the in strategy

revenue, recurring into Dave than Additionally, In in detail revenue SaaS get within new to momentarily. This revenue in delivery our that more our top will year-over-year grew and our subscription our doubled. more support expansion preparing offerings. our while launch we XXXX, enables sales strengthened and line offerings XX% systems. financials core

the provider time compliance a ID, a December providing and market biometric our platform, uses solid while going verification forward. foundation authentication, for In authentication to ID's combine accelerate diligence particular, onboarding to long-term digital ID biometric cloud-native of platform, multifactor our expect We and SaaS Identity, pioneering due Fortress growth for Fortress risk validation management. and of to ID acquisition Aware Fortress of

digital eKYC, foothold provides include management strong compliance our your customer, or a in offerings These and secure electronic expands identities. applications cloud-based for and will service offerings. it for risk Second, know

prevention. transformation SaaS financial a our accelerates rich management risk portfolio acquisition data by the offering and processing authentication secure solutions of breach Third, for

now X-part the new Fortress ID our growth execution focus growth of relationship new Through and continued and partners strategic recurring integration is us enables around customers revenue. to the and it expanding accelerating world. Lastly, with on strategy, of our our the expand

discussing will Dave, I'll full our detail, Dave us turn initiatives call the you. financial in through over for over who to to more and beyond fourth walk year. quarter Before our results and XXXX for the

David Barcelo

you, and afternoon on Bob, everyone the call. to good Thank

to the XX, fourth ended our quarter for December turn results and Let's year financial fiscal XXXX.

Our total the XX% in up quarter in was million $X revenue million, ago the period. or same year fourth $X.X

For And increased in ago the $XX.X total looking XX, expenses. $XX.X XXXX, revenue at year to from million full our year period. same our ended December the XX% operating million

$X.X operating our to year. from of For the in increased expenses fourth million $X.X million quarter of last 'XX, X% QX

an million an administrative loss year in same was year full period. million $X.X in operating ago operating XXXX the decrease was million higher The to the were operating the higher from year-over-year period. in of from and year same and was result the of due primarily decrease our was costs due build-out loss primarily quarterly million XXXX QX. Operating related The operating ago year in For Identity higher revenues The $X.X improvement in operating for acquisition XXXX, loss of in expenses. operating marketing the million, of of to general and $X.X loss the some well to fourth to an revenues. by for primarily prior million in increased partially infrastructure expenses $XX loss as $X.X Fortress year $XX.X operating to compared full corresponding increases and increases the XX% loss period. offset The expenses as operating period quarter sales in and

GAAP share. share in to share $X.XX period. $X.X $X.XX or quarter GAAP $X.X GAAP compared loss year net GAAP diluted million a million This $X.X net a net diluted or in per the per or $X.XX loss same diluted per or net loss totaled improvement XXXX of an year prior diluted of $X.X of million $X.XX For XXXX, compared ago to share fourth million period. loss was the totaled for the per

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

'XX, of XXXX. in a totaled which half loss full million, was in EBITDA $X.X the improvement, million year adjusted adjusted significant our $X cutting For EBITDA losses an from of loss

was $XX our at to We due cash decrease the equivalents cash end compared of cash at acquisition Fortress a of enables The million to in our balance us the strategic had opportunities. and Identity. that the million and quarter primarily equivalents the Looking at cash end and capital position of prior to sheet. cash Aware $XX.X to in maintains allocate quarter. strong high-ROI

tested in usage the to and of increase. XXX% way actively line, XX year-over-year a customers recorded as continue product drive Knomi subscription to evaluate volumes we growth our XXXX, transactions organization. summary. from We is Organically, opportunities scale This We had my financial significant an growing strength have growth the and overall accounts. which seen for The strategic growth future scalability and onboard completes increases. new transaction the as Knomi the paving million

Bob like call back to key additional and Bob? turn to XXXX I on Now the initiatives would for for priorities beyond. insights and

Robert Eckel

Thanks, Dave.

who We're Aware to For authentication those back a new step is and may identity. own create you me for we provide and who where moment company, company. you let an of a driven world brief what to do. a our we of be your are overview

legacy mention I that. everyday but is late solve When to way to and a mission and I'm joined the privacy, proven authentication. improving date. Aware company biometrics trusted Our protection started offerings with XXXX, we've problems beyond, effectively supporting business outlook book-and-ship and security while in great by services, adaptive strong Aware model. a that growing Aware is future When a was significant using the acceptance controlled be people, just and business a transformational progress products, strategy. do still, next had an excited key often have a Not of everyday year and I elements: data convinced problems because that great we its to of joined, a Even its looking low to individual. in to X outdated I and made financials solve on market X-part had it to adoption and can its was say company business growth and for friction I the the was

centered markets. And emerging and revenue acceptance our bring and streams high-margin the emerging up capitalize the core As authentication of of general, value calls concentrate adoption, use and biometrics perpetual penetrated like earnings into offering you the recurring core to individual over many emphasized leverage our the market We them our markets, on establishing focus but infrastructure. chain increased discussions investor and and we I growing with licenses. company's we on and towards on new, in our we subscriptions and presentation, trends offerings, shared during shifted the building model, of moving also

As X-year transition part growth X a strategy, now years of to a model. subscription are we this into

next just our in is intrinsic ways. product resellers a product in results of XXXX several address selling business. and show project growing focus instead They and our We goal the and sales financial integrated in launches our as components reach. to journey resellers services. show emphasizing value to step plan XXXX had partnering increasing new our SaaS lines this and expand product The we've clear around Our in also with product our and success growth

success Since by The segments have strengthening seen verticals with management. target customers our solidify in key these already through for these we Knomi first and our SaaS and marketing positioning verticals, is to commitment plan additional account we offerings. our to in our

wins more announcements accomplishments visible We and customer more we as working able. be to also will be and make are other of

indirect driving channels. sales by is second The

Our prime partnerships on continue end our and government commercial integrated said, resellers. fostering product integrated is in resellers focus with contractors for resellers commercial parallel, and initiatives. markets we'll That and

marketing emphasis accelerating integration step adoption. SaaS Fortress of offerings. acquisition cloud-native ID The a our cloud third the our our The towards into platform and sales Fortress through important Aware Identity, an of cloud and ID marks is offerings, and a on subsequent company,

line in sales plateau our improve Lastly, we exceed we optimize as market Also, expect platform, to long-term XXXX. part and greater so revenue as target the built To In to become continues growth. growth XXXX, total of growth in we Aware's value our scalable we a biometric commercial effectiveness. intrinsic expect organizational a XX% of continue we expenses building recurring growth. that and rate revenue through top our the are the our positioning, market our continued

As cash to exit flow are such, positive. cash XXXX to targeting we neutral flow

million we'll to X to to In strategy and for to look market review achieving on line at opportunities. growth inorganically. we a and remain of valued growth, will Nonetheless, SaaS scale, doesn't and but particular, acquire mentioned on emphasis place product a that we we calls, remain to $XX our are than the accretive prudent million are top committed price. wouldn't years, we Valuations continue our summary, scalability growth further XX% X with advance our ensure next reasonable on our are in that with XXXX. offerings. expected $XX tailwinds. an greater with top grew robust immediately the organically are in growth, balance With both our we've opportunities will XX% to equates elevated, particular in in line In sheet, XXXX strategic strategic This line As capitalizing and we strategy. we synergistic stay executing We map. prior and on targeting aforementioned capital accelerate road quite mean and our and grow

building us on growth enable model and revenue account for we revenue recurring focus recurring Our streams transitioning revenue, in XX% to XXXX. our of subscription-centric a more in total anticipate and revenue our recurring deliver will to

cross we we'll We are In model, we across And have to with and and further industry believe I sheet can't their are though continue our will verticals our allow our in Aware increase that top capitalize identities. bullish be team execute And and strategic to And the XXXX achievements customers' trends. a exact employees to and XX% able focused we systems growth. made on be on act increasing biometric on future, scale almost we works long-term we of our far. by personal revamped us their to and authentication. timing in and big-picture rapidly. XX% strategy as operational capitalize in expenses. biometrics and short, excited the XXXX companies expertise expect using adopting contrasted note, geographies secure line and operating focused these a to milestones operating in in in more I'm several growth, the to we the number those to for are so XXXX on On opportunities of authenticate infrastructure to EBITDA We a achieved profitability balance predicted. XXXX, strong demonstrating entire the financial demonstrate over for leverage digital is have on our reflected to and have the be governments and An progress opportunities on outlook. the market growth

realization strong model. growth strategy on the momentum execution of subscription We focus our of and operational have and our our revenue the

a confident leveraging ability and platform transformation our into ourselves SaaS solid company sustainable business to are for in in remain growth. XXXX We our deliver and results We beyond. future position to

about us ahead your appreciate of Aware we we questions. the for call and you. is open With All at our provide that, industry, appropriate what are ready are to excited continued and company Thank please the Matt, instructions. support. for

Matt Glover

Instructions]. [Operator

Bob, to get you've mentions a during Can before questions, we gotten of choppy you points? couple repeat summary. audio summary Okay, your your of

Robert Eckel

Yes. Sure. and our we're XXXX. grow top than to Summary grew XXXX, greater in points. line in We targeting XX% XX%

to have expenses. strong increase though execute allow will strategic growth. cross timing future, leverage And for revamped recurring be operating growth, model the operating And our to contrasted streams XX% to we revenue a bullish our to focus believe of with is scale XX% exact revenue the revenue. recurring XX% in to us more reflected on that of growth a enabled we balance we're opportunities our more This account line transitioning the Our predicted. a cannot strategy on -- model. in subscription-centric we'll in short, more building team to anticipate and rapidly. act by profitability be focused is our growth and recurring demonstrating and also on sheet to almost on us XXXX. We and XXXX, in EBITDA able deliver over We're infrastructure top entire In to our than total revenue

Matt Glover

any you Are size? change in seeing deal

Robert Eckel

overall period does while changed different by licenses from to definition, hasn't a size size transformation subscription of the perpetual Matt, the the of a deal out model, over significantly, spread time. a deal

apples-to-apples used compared be still been we've range values can't the the we're typical financials. fall it contract That seeing So within in said, that to. total

and/or come contract happy adoption more higher-than-anticipated their with addition, customers value customers. total rate by with seeing deal we're are and existing back our also their In a add to given product they're because size seeing

Matt Glover

Next question, any offering? update on SaaS your

Robert Eckel

as addressing And initial initial use We've a to our the using to well our ensure solve. now got question. Fortress Good customers and customers offering of ID as their it combination that problem our cases at out customers is that it reviewing we're together we looking set offering. and

Matt Glover

next with Our how many question, customers trialing are you today?

Robert Eckel

feedback, willing offering the our set of criteria makes provide what through working current, offering. enhance call, customers us feedback is try the are selective going with we're welcome because to We're to now. prospective use want to our that that fits adapt to that I'll selective and multi-tenant our we're going of customer And Any offer. the them process a that's we and what that

Matt Glover

is Next question, team the sales built-out you think fully do this point? at

Robert Eckel

team we're to sales where our going question and our to continues traction as continue a invest marketing to grow. Here's in sales

resellers resellers, -- reach. place. basis, partner a also is integrated believe We our strategy mindful of our product sales cost to reasonable we're with we're expand and in current But of which we our part

are invest area. in we to that continuing So

Matt Glover

or particular geographies Next are of you seeing weakness? strength question, any

Robert Eckel

also region traction with can working to and strong have where We're customer seek we and biometrics expand several achieve. partners. We'll benefits base continue strengthen also Latin government. world got in the current base the in the rest been also footholds the in that with We've and believe to the we've beyond of the where U.S. because partners our we customer our looking EMEA America

leverage don't trying set base a that salespeople. given door-to-door to we're So partners of we huge can, to up want we wherever

Matt Glover

year? Great. we ramping think How this OpEx should about

Robert Eckel

to to of changes year's any We XX% approximately with in we XX%. And percentages line changes don't expect grow significant last operating the would expenses. any plan

Matt Glover

were Knomi this we received What transactions. couple QX? should in about transactions in Knomi think How Next questions of about ramping a XXXX? we've question,

Robert Eckel

XX forward, transaction-based Well, year, go for and traction we're million we revenue. the seeing both But saw over transactions. as user-based we recurring with

plan than we one focus that a rather another. on whole as as on revenue So recurring categorizing revenue or

so at we're transaction-based, look subscription, a enterprise-based So recurring user-based, to whole. revenue there's we're requests for and as getting going

Matt Glover

deals Omicron right? out to pushed Has the

Robert Eckel

sooner. It's an It face-to-face it us say it's still lot to for especially shows but more have and activities, and our done are we've been a more impacts seeing depends trade with hard our activities. effect face-to-face from still Well, start been able shows sure. just a what factor, it's Nevertheless, seeing get to on Omicron, sales now. are and could to to we

Matt Glover

Next question, Anonybit's does homomorphic how technology encryption? differ from

Robert Eckel

a an be best that's an pretty encrypted implemented database. I'll answer can. Matt, technical to requires to try question. And homomorphic inside the encrypted encryption it computation I

So that the algorithms. this such, the the upgrades, biometric happens supported any and with those which and would we performance we've to And seen implication know the frequently. risk happen in frequently, about require databases and is algorithm, the encryption And algorithms cost. homomorphic improvements by too bringing to would the restricted functions coded as be also

that organizations systems to deal impact want the we suboptimal the keep deal our with don't of with Some of old and changes. the because they

So is owning to this distribute the they're decentralization Anonybit sovereign because biometric encryption. to the data network-based and owner. data-hosting activities organization the comes your through homomorphic shortcomings contrary aspiration eliminates network homomorphic and identity identity nodes of the a our and and the sole encryption of approach provides across model

from we're to doing simplify easy the the the And better of of so, requirements. keys, any decentralization the securing compliance compliance user on securing in the and ownership opinion, of and leads this the implication to is use data our related device way of matching, considerably biometrics

but difference. there is So we're a in there, the early stages

Matt Glover

it's partnership. Got it? around what's Can And about good Great. you so why questions Anonybit us tell exciting a Aware? few for

Robert Eckel

to biometric best-in-class partnership of the the enjoy Well, it of a network in biometric vast latest we approach benefits enable combines all bits. data throughout the believe technology since form the anonymized and to Aware's customers storing peer-to-peer will Anonybit's the technology

data confidence users, stolen in or be opinion, gives biometric cannot that individual So their compromised. our it

Matt Glover

Can alignment Identity the you Fortress elaborate and Aware? on between technical

Robert Eckel

Yes. own ID. ID, offering, or their expands Fortress our to Aware enabled ID The electronic know Fortress acquisition of SaaS know us around digital This offerings customer. platform, Identity integrate eKYC has into your verification -- our

Fortress they ID complementary and each capabilities. platforms, are Aware other's and ID enhance

address ID in and onboarding digital strong into And with how ID, risk it. so capability authentication, of counterterrorism that a Aware exposed the capabilities Fortress due and want had in management validation ID onboarding, ID And options checks finance, Fortress document strong orchestration anti-money-laundering, by diligence they the online and and Aware solution integrating like politically onboarding persons. do have for to customers comprehensive things did biometrics, they can they to choose authentication. more has

Matt Glover

We the got a that couple provide you plan. was stock questions buyback on plan Could details filed of on today? the additional XXbX-X

David Barcelo

one. take Matt, this let me

we be XXbX-X you more As support XXbX-X in plan our stock manner. this common permit an with to mentioned, our earnings plan, with We've a trading purchased systematic common today. our at share filed times independent stock will with The insider implemented our restrictions precluded when X-K release along to under plan from that self-imposed subject we're preset might timing that we and broker, XXbX-X or broker. trading volume an otherwise set trading is doing it's we're laws administered plan This price to or and by be repurchase so a restrictions.

as or in set they're various Act. forth factors, subject the all market So timing plan will XXbX-X Rule and They're amount other that under we'll any to the the the the under assurance repurchases. the to Exchange parameters based conditions of in which disclosed periodic these we repurchases plan. There's reports, off file of or the prices and no actual be

Matt Glover

Dave, for another insider stock? more isn't of you, one Aware there why buying

David Barcelo

so we our Since Matt. funds Thanks, program The provide is in these between of predetermined and employee participate information. purchases, buying. on shares our are purchasing can date. employees base indicate predetermined, shares Aware our possession an executives of being in overlap insider this stock purchase purchase all executives to different of where this filings material for type Yes. nonpublic might potential lack and how employee I The avoid and understand planned a

confident future company in as direction the in indicative by However, the our of this plan. is active team participation

Matt Glover

that lease. XX-year mean building Does You the sold? announced has a

David Barcelo

in to agreement of an that we Burlington, we executive landlord rentable been X-K the in offices that complete. today's lease substantially XX the intend X notifies entered for years principal date into X lease yes, months. term and March approximately the premises as construction use on that to this forward. our the the a So has commences term XX,XXX disclosed Mass going We'll square on on feet of The us

this in file on be we details XX-K found December additional can our that year ended So when XXXX. for XX, lease the

sale We building. have of not office yet purchase closed Bedford the on our

prior it in to expect to We earnings completion. upon X-K disclosed and that call, an our will next be transaction close

Matt Glover

far? XXXX QX so How's looking

David Barcelo

our performance and overall period. we execution is a strategy Well, XX-month of measured think best our on

guidance investors focus So I'd and our on encourage to instead. performance our annual you and

Matt Glover

in generally X Next types versus of be months What the color private the ago at observed question, context any were appear valuations? perhaps market where moment? to multiples general multiples

David Barcelo

been XX Yes. This that year. most to Thanks, been seeing higher were And say, they've what analysis market increasing XX% Aware over you for couple has quarters, initiatives beginning extremely been of valuations last Matt. over months. I'd time. than of The XX% recently the the point we're in a of last have probably at high, pursuing the the for strategic

Matt Glover

et sense Next their a of SMB, you acquired, large you corporation, question, customers give can number of cetera? ID Fortress size, us

David Barcelo

Yes.

for Their customers that small in, The us. aligned but Aware with So fairly was financial institution, primarily acquisition little banks. is numerous. a were base not is customer type nice customers of interested Fortress the

our was capabilities aligned Our and the more to to ID acquisition ability Aware offering. accelerate the

primary was the not base focus. So customer the

Matt Glover

M&A? mentioned next Can in years. that assume million to there Our you question, in you next get to Or X organically? $XX the million $XX revenue X does

David Barcelo

Yes. Thanks, Matt.

focused on are our growth. projections organic So primarily

we're everything at can everything so reach And mentioned, We with have to those been to doing we are numbers disposal. our opportunistic I very taking a approach M&A. valuations as high,

Matt Glover

revenue? within included How define are recurring do items you that? Which line

David Barcelo

Yes.

revenues as customers recurring locked are of disclosed made is basis into on of are our which annual up And revenue these stream, as subscription both an our contractual recurring that recurring well for stream maintenance terms. in our are Our statements. financial

Matt Glover

was much the revenue upfront subscription How was What quarter? annual of that recognition of minimums? in

David Barcelo

$X.X million. as subscription about more fourth on are quarter revenue renew customers, Our continue minimums to execute and annual recurring. more And we these was and

not recognize we forward. same did smoothing go those along type the it we lines, we last quarter, and we out spike of as So that anticipate did

Matt Glover

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

I'd your to back the please to awre@gatewayir.com. Aware's remarks. wasn't turn If now at like call for over question answered, e-mail Bob IR team closing

Robert Eckel

Thanks, website. Matt. about updated for that. also thank the I'd that's like investor to We everyone on our I'd to like you today. -- call just available joining remind that on the us presentation

So if you haven't our already downloaded for it, strategy, as are Matt? I next invite their overall that you I'd you our the to to new, again to call. maybe. look do thank so usual, And especially our And and updating we learn on support. like continued more about once you of partners, also, employees, forward investors some

Matt Glover

will today's Earnings Call. available Year Investor and in company's the website. XXXX via for Full Relations Quarter A Thank Fourth recording Bob. of of replay Aware's be Conference today section call for for the joining Thanks, link you us

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Aware (AWRE) 2 Mar 222021 Q4 Earnings call transcript