AWRE - Earnings call 3 2023

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Matt Glover

Good afternoon and welcome to Aware's Third Quarter 2023 Conference Call. [Operator Instructions] Before we begin today's call, I would 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. This paragraph emphasizes the major uncertainties and risks inherent in forward-looking statements that management will be making today. Aware wishes to caution you that there are factors that could cause actual results to differ materially from those results indicated such statements. These risks and uncertainties are also outlined in the company's SEC filings, including its annual report on Form 10-K and quarterly reports on Form 10-Q. be light should these statements forward-looking considered of in factors. Any

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

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

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

to Bob? turn Eckel. our and to CEO the over call Bob like President, I'd Now

Robert Eckel

Investor Thanks, to Matt. at about market to the third quarter we everyone, XXXX. copy section Good release exciting XX, for going our A Relations our the talk been that of announced of things press have you results website. Aware. today. I'm available After thank for the joining on you us afternoon, the our excited closed, and on ended September is

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XXXX, XX, to annually we've since XX% ended joined September or XXXX. the I revenue million million XX-month period $X.X $XX grown trailing at nearly the end from over XX% in recurring fact, of In the company XXXX

We recurring solid $XX expect year. with going new XXXX visibility providing than more revenue, into the to million end in

and In financial we base a the and made through the recurring very discuss market-leading customer predictable our our partner Now for ecosystem. more for and of expanded QX, with technology strong our we've was and that efforts QX continuous enhance develop background our I'd profitable XXXX. to to and third quarter achievements driving growth. progress context, our operational reflects quarter Aware tremendous like

in us X-year foundation in upon generated over for has the we future as Both our and we were secured past value building us the contribute combined recurring more our our to $X contract that expands annual government annual months, operating a customer quarter, a $X.X leading X-year the secured contracts with which and recurring to along in several with of well few $X.X revenue cash quarters delayed through the AwareABIS footprint largest million million, revenue. expected working BioSP place up as recognize reflect continued with than are the from $X.X million This revenue. in million maintenance contract beginning flow our contracts we QX. agencies $X.X After U.S. deals to to that million options, government trust when and new

selling to pace. our at reduce while costs us increasing have new business our motions selling enabled conversion partner-focused Additionally, an accelerated

with new partners during for fact, had In we X AwareID. new contracts QX, go signed X and live our accounts

our wallet convert we partnership success us team has finally and the for quarter After wins commitment over strong our detail. our to collaborating strong more with our on partners demand efforts the few and ARR to progress to emphasizing touch key increase will partners. in But success, initiatives wanted formal third performance a past in Our our partner directly you few continued to our through future a the quarters, more of development forward customer and I more drive highlights share reflects growing sustainable first. walk go-to-market market program to into look and we're growth. Craig have Aware place. customer on excited to a

in revenue X facial accessible we as offering also revenue The more on-prem market. improving intended, are believe identification X the producing excellent Of capabilities AwareABIS We agencies, X introducing conjunction enhanced cloud-based. enforcement delivered optimized began back-end recurring has an solution in ecosystem, deployed is other of niche secure and make QX, to Our and the in which producing will recurring the the and deployments, an and partner and to it QX. In even begin found with AwareABIS underserved AwareID law by X functionality. X we versatile, X

important continuing is the engineering though and easily biometric to to incorporate large are AwareID's authentication opening affinity Now with businesses and all changing market to end. Furthermore, back build opportunities platform, our capabilities help without high-quality across hub AwareID world-class names. developer their that doors note experiment which a to solutions developers size of fit, recognizable with we to all amongst we biometric added AwareID's encourages developer it's optimize brand our can communities. Even brand

earlier, both recently impersonation role for recognized most as and is our fake industry-wide the top in Type technology an in model presentation has catalyst evasion #X Report. test. also and I recently, industry Identity our performer for security a ranked and XXXX Digital attack benchmarking As pad been Prism named the mentioned Aware algorithms Biometric NIST in were XA

plan in and every can't don't or Aware competitive is we secured working secure, While we've are contract that announce consistently winning business to markets. to

to contribute our market award-winning anticipate to solutions specific leadership. to customer continues our and Our adapt ability needs market trends to

to week's Now moving I'd X-K filing. financial before our last performance, to like address on briefly

is longer with streamlined As noted Aware filing, the no the Barcelo its Aware. in organization. has financial Dave

of him part contributions Aware realignment, As very for Corporate endeavors. in years, to fortunate have Officer. his to was Controller, over our David have we leadership. future enough this the with his cannot promoted Principal for and and Financial best are Barcelo Dave Traverse, all X We we thank wish his him

the confidence Traverse total David leadership fulfilling have financial in role. We

Controller. at previous joining Financial filing several X anticipate on in for of public do our worked to and Finance in David or time He's as SeaChange firms. Vice He and Chief Relations not background David Aware, Vice was when years Barcelo. you accounting. Prior Aware finance a Controller Some and impact Systems. to extensive earnings Officer an may and accounting filed ago Video certified David XX-Q a public President as track International call account Investor at Corporate may joined Airtel and President, this from a recall stood change Corporate public activities. We in also Dave has he got Vice cadence and not President

cash and now as are exiting XXXX. maximizing neutral our third on quarter structure, us our committed optimize continue David results we through walk focus with year prepare for David, cash and our turn XXXX. I'll to to the financial enter to you. to operating flow Lastly, to we flow operating over over cost call this

David Traverse

It's and on here call. the Bob, again with be Thank you, everyone, today. to you good back pleasure a afternoon,

Turning ago revenue increase was for the in XXXX for to XX, period. higher $X.X and for quarter $X of year was the ended quarter million the total XXXX. to to our due financial in September second sales software million license same revenue third million The period. primarily the $X.X results Total compared

Operating million recurring $X.X revenue recurring up quarter sequentially and The For QX $X.X revenue of compared of was in year-over-year. the $X.X in same usage quarter year in million. million ago X% million and the prior XXXX, $X.X $X million to usage for the X% cash flow was period. was

of operating impact events. Looking the onetime including expenses, at our

$XXX,XXX of from in were third million Operating of the $X.X period. loss compared operating year $X.X of XXXX in was quarter last of from $X.X Our the year. QX third quarter up and $X.X the million decrease operating XXXX same operating a income year quarter the prior for ago quarter in in an million expenses million, income prior $XXX,XXX to and

net share or income compared operating of XXXX to July our QX Bedford, diluted expenses, related the diluted For or $X.X gain operating value FortressID of the contingent the income XXXX diluted third onetime QX million or net to our of a that $X.X acquisition for and GAAP expenses, to XXXX. per company's last of loss in of onetime fair located in income quarter $X.X QX of million of related $X.XX gain income included per and the year. Please GAAP that Massachusetts from acquisition million adjustment and income note XXXX and building sale $X.X income operating payment million share XXXX, net to in share QX of $X.XX operating XXXX net per $X.XX in a included $XXX,XXX net of totaled of GAAP an the

to to our in period. Our in the million ago significant higher GAAP of quarter EBITDA the compares EBITDA which earnings primarily release, which in was improvement $XXX,XXX, year $X.X in loss EBITDA for the totaled adjusted revenue. reconcile and of same million $X.X prior adjusted we due to income adjusted quarter, The loss net a

an buyback share average of stock our sheet. equivalents marketable compared shares and $X.XX ended of price end our given in believe at the valuation share Looking $XX.X XX,XXX cash at quarter. our certain sheet to common part repurchasing presents and We We million the an stock prior levels cash, of common strong at the We announced our balance $XX.X prospects. previously quarter million securities repurchased per of balance opportunity at program. attractive growth as at

are exit strong we by and As no balance debt. we XXXX, improving supported a cash and

to strategic our we high-ROI now Craig the over every Craig? go-to-market call to robust in evaluate to the our financial that advance advances Our sheet has made I'd to potential road map. That to us summary. strategy. growth balance my opportunity discuss enables like turn completes

Craig Herman

Thanks, David. be It's you today. with here all great to

a Aware. very quarter As Bob was for strong discussed, QX

We were revenue federal mentioned multiyear closed opportunities large facial continue earlier. After U.S. better into formal document we the in that enhancements pushed functionality and including front-end implementation to base the high-quality from contract positive foundation capabilities protect and and feedback partner scale processing program, a the multimillion-dollar, laid recurring of deals previously customers, several lot Bob the further to the capture receiving enhanced the incorporated for government a of we on our our we identification and capabilities, last right, upon quarter pipeline. Building AwareID. revenue, through product recurring future capitalizing

value React included AwareID provides for security various experience levels technical use and accessibility, improvements, experience and various In provides the Native. cases addition frameworks, new without an mobile improved to The user user and access support developers. now application Flutter and for platform back-end compromising of we

customers. As developer and a access for which development providing also generating easier is developer our resources to we the for platform Bob mentioned, community and hub, debuted the excitement

outside reach of partnered the to One. firm our previously announced AwareID's a reputable We with SaaS with harden infrastructure also partnership potential to expand Software

a have our will changes in a market Latin opportunities as these the expect commercial in impact whole. We positive America on U.S.

formal global partner to reach. expand of a launched our our we offerings QX, accelerate During adoption program and

is Our program's potential to areas built maximize partner X ecosystem reach. the focus of around

products, future clarity are tiers incentives into and crucial being integrating around road partnerships first and and simply to transparency. the The than vendor. rather Providing partners a ecosystem current pricing being for our map, greater transparency

be consultant, that of offers, education. we why not became are of our access is now library our on the had understanding has our Along them Partners is focus Aware agents. more our outside those enabled it a has survey sales with and solutions partners be everything second and all sales formal guides, armed better a lines, our product After which doing decks, allowed our clear guides, to to cetera, marketing API leveraging resources. opened clear partners product et to them with educated and which an effective

piece of entails and so a together, attending speak, co-marketing shows regular is which as approach, internal marketing pie, and The helping costs trade the assisting to third signage. collateral such with communications, with

with of in months the topics to sat UKAD. same industry. A on our Recently, system with the thought in now Eastern both local to we as integrator over launch of the the at and footprint Knomi's product the marketing positioned solutions announcing to formal done they capitalize evolution in leadership year, this portfolio Since believe our have company we and relationship And Aware's example Middle through our leverage We of partner presence to partners region. With well Conference, is that largest booth at East. their last grown in UKAD ecosystem, have opportunities partner instrumental market Gitex. webinars a with and ecosystem the to Technology we our of several the an flowing Aware's reach expanding high-quality few our great from partner pipeline. our all Middle Yuquan continue well. March relevant the showcase to knowledge are the ecosystem product in a partnership on broaden been them has resources the The ever-improving allows

by strong agencies Kingdom, translating leads are North the where we side opportunities. commercial multiple confidence the government uptick on Brazil, U.S. our protection our most robust deals Canada, U.S. in the prominent accelerate working traction we market. demand fraud U.S. space with seen into commercial see can interest Lat in in and to We market, lot the The Am We've competitive breakthrough gained continuing on multiple and Middle our federal the these government the competitive with Europe a America well. Latin in especially into United remains East. Moreover, have America as have recent government. in and and are relationships, strongest side encouraging gaming a Aware government promising of has the close is the government to leveraging for and

with optimistic deep Israel demand geopolitical and prospects bullish also about Middle Iraq. Previously, very in opportunities and and in in American the selling East, Chile in turmoil the the we Latin Jordan. on UAE the are Egypt, deals in countries. Despite remain and other Mexico, We process several were our we

However, considering outside recent better consulted events, an we gain have understanding the it source of a how to affect market. will

a incremental government securing QX and generating around leader XXXX as commercial our fit, As and driving my we additional customers, for building team's markets our in the closing out AwareID target its look revenue our and side pipeline. as evolve as momentum forward, upon amongst initiatives solidifying well market from will

Now Bob for more turn our the like Bob? business color would call to I drivers. on back key to

Robert Eckel

past we in upon meaningful efforts of Thanks, to quarters, quarterly base. technology to secured structure in efforts highest the over we've laid Craig. and highest and team level QX quarterly and recurring continuous platform. I'm and have we've partner spending, in and the since the and revenue XXXX. revenue adoption our Through flow flow led evolution our for optimize relationships the a XXXX the our cash accelerate Building expanded operating generated that customer of to newly foundation our revenue few program, of proud recurring of QX leverage cash revenue continue the of customer of new their launch contract the our drive through QX since SaaS-based formal

neutral towards ability timing inflows profitability we at both cash total manage in includes recurring QX, operating Matt, which and driving can cash the and open and our of are exceed cash exceed and well the outlays. With and for and call seasonal by please our We're outflows which ARR growth. instructions. to this Looking ready especially questions. increasingly while everyone's excited means we are continue financial and with appropriate our exit year support. With believe positioned appreciate of revenue XXXX XX% growing to goals into strong that, year, sustained are taking provide the in our confident confident goals, the we we consideration for continued up or reach remainder year performance to to we flow, are we ramping or future Aware's the revenue achieve

Matt Glover

much what David, Instructions] quarter? versus revenue [Operator for the How was the from maintenance? that was subscriptions recurring of

David Traverse

of from $X.X million was for of Thanks, quarter the subscription-based revenue. our that $X.X that with Matt. Recurring rest revenue and maintenance coming the from million

Matt Glover

from space, in? gaming markets increased you interest David. on the commercial Apart other what Thanks, the are side seeing

Craig Herman

Sure. Thanks, Matt.

We are online seeing education, health management, care services. a lot gambling, in opportunity of and workforce financial

we past, we're cases. An gain to As use the We've sector. Turkey in financial relationships this to government the example our geographies market talked in leveraging new expand to breakthrough North strong share our in Africa. of and continuing commercial into been our streamline foundation about leverage our able is

our accelerated really has expansion this in Middle the so And East.

Matt Glover

David, are Thanks, another you. Craig. capital one allocation what balance strong With sheet, a your for plans?

David Traverse

quarter the well the We're rates capitalize debt. marketable ended $XX.X and share no interest and higher previously as on million equivalents as announced We continuing with our securities in cash Yes. program. cash, to repurchase

to Moving will our us cash and XXXX, scale. evaluate to into robust is opportunities the potential maximize position then strategic drive enable that -- to maintaining maintain remainder goal XXXX and of shareholder value with we're a

Matt Glover

a Principal Bob, you Officer? appoint to you Financial opposed you. chose as a give as question Chief for Financial a color to to some Can Officer why

Robert Eckel

feel companies. -- Obviously, have optimization initiatives scale, not I management our going it But we that needs we organizational it structure that our Matt. our most and and current feel with with a also public cost this well Sure, for on. aligns well is traditional

having reduce goals. our it promoting to our over fantastic I'll growth team without And compromising plans. David right cash and X Financial again, also the has a So the costs Controller and the with strategic past for as our years, financial feel to job position. achieve and he's done ability say person Corporate Principal allows streamlined we us And aligns our David financial operational to Officer

Matt Glover

items and questions I'm severance specifically some going pending. of for legal are of Barcelo's is violations, if owed proceedings or any We've to combine received consequence here. transpired around Dave details a couple questions if or more looking departure,

David Traverse

that Barcelo's any not take I'll company matter. result dispute from the one. on of any departure is or Dave the disagreement

full of thankful XXXX reflected are X As severance our in costs, earlier, Bob mentioned incurring during We all onetime for which these year years. anticipate be leadership QX Dave's do results. will some we past and

we with due the However, exit remain cash to on flow. to track still operating year

Matt Glover

A question for Craig. Thanks, David.

evolution Over How the announced past couple are technology? of you've a few product quarters, of the enhancements. Aware's picturing you

Craig Herman

by rapidly in finally, to being in Right areas, for ability this is on case trends learning and greater technology cloud-based support; Aware's market: to Sure. increased these focused are needs. we first primarily deployable our or X tailor on AI. By predict X and mobile now, the any deep easily to focusing our the adapt changes interest two, and market's both adoption of solutions; market. can in cross-platform technology the we be emerging use driven and

Following more the became widespread. advanced pandemic, crime digital and

Matt Glover

Thanks, Craig.

for you. one Another

You've the you're What business. focused calls you that on mentioned of previous made. growing progress commercial have in side the

Craig Herman

Yes.

brands, earlier, then about starting government on side. into the governments space. we recognizable in more leverage generating breakthrough which U.S. Aware's technology confidence for especially talked the larger momentum have strong with space The has been reputation conversations our in those can our the we and the agencies, commercial larger, like to government as Europe, company is in the commercial So accelerate

Matt Glover

a was this? operating in What there Bob, last improvement cash drove flow compared question, Next year. to significant

Robert Eckel

Well, thanks, Matt.

our the improvement the adoption on as and think of to ramp been efforts. cost to for growth know. I down And optimization working continue persistent optimizing it costs, all in we've talking strategy solutions really accessible in this press our our you cash structure driving execution flow we and the really, and of our boils We've cases our model. Through more for was our formal more about use it partnership releases, the we've a technologies made been expanded launch of about ecosystem, with leaner enhancements really product operational and talking Craig to earlier recent population. our

sales and market Knomi partners solutions, in increased and So team easy-to-use and that more to rolled out go versatile, the sales with this we AwareID to resulted upselling. enabled and year secure, our to upgrades

Additionally, all increasing the and sizes start-ups our to pricing our partnerships future our adopt technology. maximize ecosystem view organizations formal Aware's potential allows And from reach without of of now of the enterprises global and partnership tiers go-to-market current costs. partner our program really to lastly, significantly

Matt Glover

Thanks, Bob.

at CIO Our relationship the America the last Banco opportunities the evolved impact in month. Week Deceval How of Aware? next has question, years? has terms Aware for other had Identity spoke with what partnership over the of And

Craig Herman

last Deceval, into Sure. Bank Europe. the financial like Aware digitization increase for throughout of in validate a customers. opportunities To account events, applications for the Knomi, more and market sporting Since years gain exported become increasing fraud levels had the success online to deploying is States sector. translate pioneers et malware of created and one advanced Aware's the credit access the the warding to nearly activity. Digital with being additional Brazilian was very bank and number everyday financial could as even in for the attack widespread This an sectors within United Brazil part of designed Banco fraud Deceval to life. of opportunities past like has the technology in the to global has X banks integral it now software sector criminal e-commerce, incorporate has recent new used to share biometrics as of evolution the became cetera. Moreover, and crime Knomi and tenfold has they low their in transactions of and years, X

Manager watch YouTube interview the Lat on between General our interested, channel. that's Am and the Banko can Deceval Aware's anyone you For CIO

I our channel. fact, checking would recommend In YouTube out

build audiences continue to out of from different it is big marketing focus our prospects. a message to piece and build ways continue We as to a on we our and our perspective

Matt Glover

receiving AwareID you regarding other your are feedback or customers of solutions? kind What from

Craig Herman

The things: from of X feedback use breadth offering. focused and very on of the Sure. clients AwareID, around the our the ease

and and user very gone speed to using the AI-driven resources. online a so Edge deploy, Ping the addition in experience. their assist with customers our latest The months replace experience better, authentication and/or customers of days are little is secure of face delivering or app of to user with has technologies and developer presence. The test On liveness heels AwareID multiple prospects that deployment more documentation, can from iterate release, improve

Matt Glover

a the program? back its you. David, Why question buying not for company aggressive in in more -- was buyback

David Traverse

Yes. Thanks, Matt.

earlier, mentioned and believe we capital. I stock as use So do be can buying our in attractive of back

we can buy much are on Nasdaq of we rules volumes. on back trading historical limited However, based based how

Matt Glover

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

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

Robert Eckel

Yes. the continued they joining of employees, as I'd our like course, for to support us. reminder, shareholders you thank for of and today's provide also, thank partners, that call And a all Aware's you may call. Matt, on presentation on on you. available updating our in that's to progress our we learn forward more our strategy the you about And investor website. look next to over

Matt Glover

replay that call Investors XXXX for section will Third the in Thank today's a joining Quarter today us Conference be via link Thanks, Bob. company's of recording for available Aware's everyone website. like to remind the of you I'd Call. for

disconnect. You now may

Aware (AWRE) 1 Nov 232023 Q3 Earnings call transcript