AWRE - Earnings call transcript Q1 2024

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Matt Glover

Good afternoon, and welcome to Aware's First Quarter 2024 Conference Call.

Joining us today are the company's CEO and President Robert Eckel, Principal Financial Officer David Traverse, and Chief Revenue Officer Craig Herman.

Following their remarks, we'll open the call to 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. that major will risks to those be that are the statements in caution results emphasizes results there management actual statements. that making factors indicated paragraph by uncertainties materially inherent and forward-looking you to such This differ cause from could today. Aware wishes outlined uncertainties reports SEC on XX-Q. the filings, Form including These risks in on quarterly and its XX-K, are also company's annual report Form should be considered in these of statements light factors. forward-looking Any

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

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

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

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

Robert Eckel

of is the March section XX, our for market first ended Thanks, you website. A joining Relations our close, copy Matt. for the today. we us afternoon, reported the Investor the available Good After results of thank release everyone, quarter in press XXXX. and

and of of advanced is platform and financial biometric and complex tackle for learning Before Aware Aware artificial industry. the science, business a and XXXX, what a overview brief operational data quarter identity identity company, global highlights diving like leveraging us intelligence sets in to to challenges. into apart provide I'd machine first the our biometric

increasingly connected mission user best biometric Our balance that technologies experience. is strike and security to innovative delivering by trust world an in the enhance between

level, Ultimately, through results at we improve a business biometrics. help organizations high

For over earning entities biometrics X of trust the industry, commercial the at and has worldwide. forefront of governments Aware decades, been

Our authentication life identities, coupled partnerships globally, agencies us comprehensive our portfolio, including management in enabled strong in Germany. the expertise our Kingdom, of as biometrics to cycle a forge Australia in record multimodal track United digital take our trusted has government We onboarding, and has adaptive Canada, partner. biometric position with U.S., core secure proven solidified pride which with and and

Aware and is widely border data leader management recognized immigration. for global a orchestration biometric in as

leveraging infrastructures, Our solutions at biometric cutting-edge effectively verification expertise management, By processes seamless and while identity systems and security our existing exit streamlining entry points. manage of technologies we data their into travel in trade. risk and and enable to assessment, integration governments and facilitating legitimate critical enhancing empower borders

forefront world equity, learning, demographic and to and of and development are solutions harnessing our created their We take the in being authentication biometric that underscoring neutrality in offerings the we steadfast in industry-leading pride needs. of responsible of for the AI banks trusted fair Our some ensure commitment individuals. have onboarding software machine at largest by all impartial technological treatment by

largest on bias as gender the NIST. verified and trainer secured is based and This meticulous world in development, by practically design, testing algorithms. Our refinement tested #X leverages position the and datasets most research, race to as age, independently diverse or eliminating processes in and rigorous some of the minimizing approach

except in law intelligence if expressly individuals applications. consented use only enforcement, defense solutions they ensuring We prioritize consent-based biometric forensic and specific technology, our

industry prevalent resulting than rather flexibility provides upon with replacements, Our resorting customers to build investments a waste. existing in often approach to practice unnecessary the agnostic costly

is us Aware our and manner. for any threats, relying industry not This independent a upholds Our on identity vectors demonstrated future-proof to biometric integrity attack for ranking outsource solidified a customers. trusted upgrades leads in Aware our in addresses provider status the by sole detection or address liveness all recertifications. does that parties without in portfolio swiftly study. by technology, comprehensive further top serving third emerging the benchmarking NIST as the as enables

We attack security and to so. for in only for provider impersonation evasion the both presentation one of #X do types, have spot detection achieved the the

Furthermore, case. the security who with and and appropriately for provider making top user XX use to evasion, the attack us every successfully across for Aware ranks the security between in struck configure ability balance X has types only top convenience most and presentation experience solutions

retain and base we platform our proactively recurring adapt and ] consumer [ to This required have scale to demands profiles factors, customers, as satisfaction to to allows offerings environmental revenue changing with the level of effortlessly well are tackle customer the challenges. us diligently grow Finally, risk and engineered cultivated. future uphold as

have XXXX Building you revenue throughout and initiatives and streamlined picture let's underscore reduced a cost financial of results our continued we XXXX, leveraging on structure, our focus partner our first to for in upon a and our strategy and dive the our our that our Now implemented XXXX. offerings, our of core our QX breakeven our drive of ecosystem optimizing optimization recurring go-to-market results strategic quarter clear After and growth. operational Aware into record-breaking structure significantly QX enhancing have XXXX, point. revenue cost

as rate X% quarter first expense year-over-year operating or in In quarterly QX, loss. in XXXX, an drove We decrease XXXX. compared the improvement of $X.X anticipate in continued operating we our demonstrated million run to

reflected and is QX success to in our our customer initiatives structure performance. producing operational commitment sustained Our enhancing improvements

our space. base, as sustained in well subscription customer our related the total revenue. XX% this in both increase continue of X% revenue the within year-over-year contracts We and driver momentum secured revenue government in XXXX recurring resulting expanding in large A revenue increase a of maintenance recurring to revenue QX as was

future Craig to him scalability few but customer and foundation let and valuable key his a securing partners strategic quarter, I'll a solid success their on more clients. wins. highlight details team by have provide I'd for built this like

onboarded successfully several leading we our such bank. a Latin customers well existing in as and Imply America, like as with government OpenPass as major a use agency QX, customers and cases expanding Turkish During federal new

We expect contribute awards to these meaningfully to revenue expansion ongoing recurring the base. our of

every As updates, prior on. we announce quarterly to working not mentioned in do plan or we've currently secured contract

consistently to Aware's generating note technology partnerships However, in that and it's markets. new and important competitive strong opportunities exciting are advanced

we be fluctuations, While our there backlog. maintain opportunities may in a pipeline some promising quarter-to-quarter with healthy

to impact of foundation a that the foundation these revenue solid a recurring stabilizer, and for laying acts fluctuations cultivated we've Furthermore, of helping growth. strong as future a mitigate

the Before quarter. discussing call our David, David to to you. over XXXX, take over for initiatives our I'll through results the for us financial turn first to

David Traverse

Bob, afternoon, good you, Thank everyone. and

Turning the revenue year financial for of the first largely $X.X to first ended year-over-year maintenance to to our ago was higher The same results software was for contracts $X.X compared million million revenue XX, related XXXX. period. XXXX. the due quarter to quarter Total March in QX awarded increase X% in

prior increase and XXXX of X% Recurring total revenue revenue a QX was million or quarter. year the $X.X from XX% for

Looking at operating expenses. our

year. compared operating expenses were X% to XXXX last $X.X quarter QX decrease of first $X.X year-over-year an million in Our million,

period. of year-over-year of XXXX same compared first $X.X year loss in ago million for $X.X the XX% improved operating the million to approximately Operating quarter loss to an

$X or improvement last first per of a share, loss For with XXXX, net net quarter or the loss $X.X a of million $X.XX in diluted million totaled diluted year. of per GAAP share GAAP XX% $X.XX QX

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

lower in expenses. to adjusted and loss was The year-over-year primarily improvement due net EBITDA operating continued

is Cash, of our The totaled primarily due March as XX, marketable made with operating our and $XX.X XXXX. XXXX. as of equivalents December the cash traditional balance XX, and quarter. well first compares as in sheet. to payments in line timing year-end and securities of $XX.X at as at Looking This our addition accounts loss collections expectations of decrease to in million receivable to is million

we're potential through accelerate cash growth offering ROI roadmap. move a high backed sheet by we balance the us strong to evaluate XXXX, any our opportunities the As have flexibility to position, and that

us robust standing necessary investments to evaluate any expansion. make Rest point. any enabled that opportunities innovation resources with with this such and to have vision. provides approach assured, that to explore the to rigor prudent drive market strategic diligence us align initiatives the long-term opportunities same and further Our and our reach We carefully financial remain with will we committed

we've made call my Craig focus Our This exceptional value delivering our recurring to strategy. our now to go-to-market our term. the driving the expanding turn profitability, revenue financial over base on to summary. I'd progress like long the to discuss and over completes shareholders Craig? remains on steadfast

Craig Herman

David. Thanks,

and success scale in the through to first for our and ]. remain foundation segments and laid our forward. quarter, growth we of customer led gradual the strategic expand to partnerships, the going fit quarterly efforts base and These in product business retain improvements ID Aware market performance [ During our coordinated fortify steadfast commitment core continued and

As notable successes several Bob quarter. customer mentioned, we achieved this

major security the One of government. government were all the biometric more cases include employees agency's X-letter X agency. And contract U.S. of able agencies Aware's increase enrolling expansion federal and contractors. underscore We within and relationship technology of the the is federal these across products. user to biographic and use friendliness with large our data of utilized our expansions their this to was a significant dozens of of branches U.S. wins

to expansion. in growing In our continue making we global our also domestic footprint, progress addition

with with In This portfolio in QX, contract immigration, part market largest one opportunities a international contract accelerating we is is promising significant border for the renewed growing organizations our of and which management rapidly expanded multiyear of in a and Aware. police Europe.

We Latin ATMs ticketing, LEDs solutions, a Argentina. platform in leading America, is cashless as new prominent is while in online customers OpenPass. Imply several Imply access and in such provider a also OpenPass financial and control, Brazil, onboarded of

live QX signed highlight bank Turkey, from win readiness another was products. excited and is our customer the contract revenue the are contracts team in get to The I'd customer with a to to successful anticipate our swift the success customer final like The and We the recurring future. enhanced our go in out-of-the-box testament turnaround these they of will is excellence securing the to which live getting XXXX. of to contribute leading in live

events, we the we for Conference multitude solutions potential in quarter, showcased West technology a fantastic, among these reception more cutting-edge are biometric Partners shows Conference XXXX magazine's of & at tremendous excitement Expo Aware's recent & at seeing Expo, and industry several Channel has Training been April. this leads. The products including our of Furthermore, Training our ISC trade and

its maximize Our of and enhance their quarter, we to worked use the all access base. Since its marketing within ROI. partner expanding revenue and co-branded of we to past marketing securing strategy program our This formal recurring remains and expanding expenses optimized for by continuously partner materials. instrumental to improving this ease aspects inception, in our have ecosystem program

Additionally, call, access rolled knowledge their as mentioned on solutions. our materials and co-marketing in partner power Aware out a portal increase we dedicated enablement where selling of and partners to can last QX,

We focused product are build on enablement. continuing with ongoing sales this to and

is We us also help will QX deeply ARR. fund we marketing in And is partners increasing globe markets, This partners those partners to resources our future succeed our program development their our footprint into launched the ensuring go-to-market for aggressively at strategy. the can in ample are drive expand translating of that with invest looking officially our to leverage more who forefront across that to momentum qualify. commitment this have

our pipeline. to remain program key drivers partner opportunity our additional for initiatives XXXX. I'd accelerating Aware and outlook focused subscription-based for to generating market product details our the our and on Bob like fit growth turn revenue team's on ahead, promising to the incremental the back Looking call convert now leveraging -- ID, for

Robert Eckel

Craig. Thanks,

reiterating the achieve are to expectations and our growth to full As revenue revenue double-digit we annual look year, recurring in XXXX. we

expanding cash base to opportunities sustainable operating As future, of our recurring with growth partner growing increasing enhanced of revenue positive well position flow. we and combined achieve us and look our the pipeline to leverage momentum, and acquisition

well in and resources customer fulfillment enablement acquisition positioned With and our support we these have objectives. advantages, invest to growth to back-end strategically are the

to business a use biometric targeted at own done we partners solutions build we by common adoption solutions. the drives continued as will our be advancement provider, biometric solutions growth platform their for providing provider results of platforms for and level, deliver sector-specific We providing to are in can that improve further industry we're going as accelerate This next the biometrics. this, a solutions to Aware a this top to our high organizations Through through cases. identity and here line. offerings our help strengthen further stage Ultimately, of

answer Q&A few portion built moving appropriate moments the to call, webcast a into please please player. take instructions. survey before to the provide of our Matt, the Lastly, the

Matt Glover

the [Operator the the in Bob. live with such typical in signing Instructions] in expedited context around an case Can you, QX. Thank with Craig, the going And factors and Turkish rapid time time the this implementation? some you specific drove you what for were the in line that bank highlighted bank line turnaround primary Turkey? provide

Craig Herman

Sure, absolutely. cetera. The a time on products, complexity, resources, factors, line depends of typical number et really right,

velocity a to We've table are like a case, there important technology is what in again, line, been and an to we motivated and market However, Turkey, together just this also of DVA were -- partner a add is that we engaged Turkey. piece lot with milestones customer working with pieces time a In a and number some which, that implementation for can in DVA. it bring knowledgeable a saw They has real customer did. years. knowledge is of the specific this

we we're gathered then to kick reviewed And And of throughout the off, process. finally, the us move needs and really gate when that our had out that understanding got due fast. market, we of the to fast biometrics their sales able

All ways items moved future this well. ones these anticipate as and fast that how of project we are

Matt Glover

to The you the that insights growth? can next for some nature and lower-than-expected the renewal the into one of subscription David. delays is additional provide around underlying contributed any factors context this David,

David Traverse

Yes. Sure.

these, small they're a company, especially that fluctuations of the to we as experience quarter-to-quarter timing largely recognition. due expect to the revenue So

it QX, in first will it the from a within expect of the as example, agency a When quarter software QX there in for on-prem large traditionally partner be well revenue our quarter. to ecosystem second in or completed, contribute was So we delayed reorder in international instead is beyond. our now as completed subscription should that

Matt Glover

Can the development of go-to-market initiative components the you during this additional do funds you development market on support quarter. the Craig, some key the mentioned anticipate will the efforts what or are What launch official going details of forward? you market provide your entails? How fund? it elements

Craig Herman

efforts a stand-alone many technology them integrated supporting the MDF dedication of promoting partner Aware MDF Excellent of our we partners' question. QX, In partner enhancements. made introducing their was program. Yes. program The [ own ] first to program who And within our our one or marketing in solution. underscores as solution

are include trade funds The with program access [indiscernible] covering XX% social support, now of digital costs broader in but to portion generation financial lead select and marketing generation marketing our campaigns, our efforts ensures activity is joint not of foster also up marketplace. that only provide can funded more. and effective lead that the budget specifically. running a shows The campaigns, activities marketing

making are By -- we achieve to few the available, things. funds critical a couple able of a

can brand partners our promoting incentivize awareness we promote more going partners First, we more the opportunities we're brand, to specifically, technology and to develop uncover. the our Aware's more the

et budget, reach, activities, order specific cetera. practices submeter line, the defines our cetera. qualify activities [ request generated, performance, includes time from After Second, and detailed engagement, partners. results must that of metrics ] partners partners target completion audience, insight submit et including which on proven performance, the leads the In funds, corresponding objectives, the for must to we into market the gained activity, marketing

expenditure And documentation financial activity is confirming the critical. on the actual

can through we ecosystem our our overall program our provide tapping partner program go-to-market partner leverage the new efforts. we -- our create expansion As into alignment closer of in this enablement like anticipate enhancements MDF programs, that

Matt Glover

David. Another for one

in driven year-over-year by awarded recurring was XXXX. the contracts mentioned largely increase QX revenue in maintenance You

recognizing the those delay from there in Were some context revenue the circumstances factors delayed around additional provide lines? specific any deals? typical to the what time your led to or that revenue compared caused You recognition

David Traverse

talked Yes. No, the about I the third just we fourth calls. in quarter a this lot and think

that customer. did, And So that. company what $X benefit contracts the agency recurring And is now the government over happens, secured of in what your we largest well [indiscernible] our from as to starting U.S. see we're for that million revenue. added as

Matt Glover

in improvement What drove operating substantial question. The the Great. in next loss QX?

Robert Eckel

success Yes, the focus take loss the say across while And areas. the improvement the these that. in cost initiatives substantial our strategically I'll headcount in and the on initiatives. high-growth a significant also include investing organization reflected operating optimization reduction I'd in

so, able So structure by breakeven streamline doing we're to our significantly cost point. and revenue our lower

Matt Glover

to capital sheet, considering The equivalents focus company's development? strategy next key your priorities to on currently million or $XX your balance growth and question, thinking securities deploy continued you're are marketable forward? about with approximately when capital areas this are What cash of cash, drive going evaluating and allocation how you the the

Craig Herman

take can I this one. Yes.

consistent scalability. So the as few this increase been potential always pretty I opportunities evaluating to have quarters. the last with we've any really We're that think messaging actively in our

our that at evaluation us may that valuation we remain we that the haven't flexibility candidates That in on any any to accelerating that However, our cash gives opportunities have identified [ growth to do the matches position a could But criteria. contribute robust we focused meantime, pursue said, our organic substantive arise. growth. promising ]

Matt Glover

Bob, are your in least expectations given by thinking the [ outperformed ] company outlook at for XXXX, ARR about how XXXX? you its XX%

Robert Eckel

XXXX, going this and and ] [ this growth revenue, in targeting we continuing in to annual XXXX, XX% In we're again, recurring momentum we revenue achieved the anticipate Yes. I'm growth reiterate year. ARR. through both double-digit a for And

Matt Glover

you projections? in ARR this your and opportunities revenue Are are targeting year? pipeline for you giving these confidence in double-digit growth What both in

Craig Herman

that. Sure. I'll take

name of opportunities To negotiation the a the we contracts we QX. in final currently mentioned a opportunities sales very X across are stages exciting for pipeline varying examples, in with of we on immediate few customers and are from have process. Aside robust the the call, stages more

East the a our digital Knomi employ is deal Middle to [indiscernible] in first multiyear management. solution for The

And Second, contract continuing expand we platform, process ABIS the calls. government these and we upcoming international of our our and in looking our on and The with to further BioSP's for the breadth identity international largest diversity footprint are these showcases the of expanding securing flexibility opportunities power in third, forward biometric of an contract. aware are platform. we're to

Matt Glover

gaining partnerships customers? question next more in will is, help The U.S.

Craig Herman

you is control. focus ISC at speak and It focus the to We was where West were absolutely. I'll access a Yes, for us, big recently. show

access players for control including space adoption. is Foods Foods. by So we with now company really your palm biometrics outside the of of palm using see larger speeding that towards are Whole in driven a is [indiscernible] biometrics that A that Amazon market like at a lot Whole pay deploying, to the

and to key So we're closer that like from card, a access over getting be a to a attention misplaced. seeing can control well And or moving away we're be now fob like get as access lost able MSPs or from providers the in to space. things as and lot biometrics control hardware using groups interest of things

So we focus that's area partners public private and for drive one spaces a U.S. that is across where going on really the to see

Matt Glover

talk the over Great. dynamics last X competitive months? Can about you in change the

Craig Herman

Sure.

the changes entered we've is One of markets. into some new

haven't So number time needs brought biometrics. we this that a has the has been they thought up are market of a of gaming amount market, -- in now spending we've of before that concerted which

in that biometrics KYC opened us with to we competed So not compete door gaming to specifically the with past. folks up now the for adding has have for

for integration, give of more the value something different we product customers. of to that's our to key is to open platform have of types and one on the choices being a out our products and the to up of this that outside spent building more pieces ability of side lot And able is

integrating system, which majority the recent So with the WordPress, being integration most gaming for are industries platform. of is a WooCommerce, instead was which closed a open that's our specific is of system an division platforms gaming with being of on this where

go It have us us using competitive for that we now to So that folks are after. gives integration specific also gives more a platform. a advantage lot a targets that plug-and-play

or lot side So again, then on biometrics, what you fence, you're the different to that's grow. to getting we're face, really us help platform other to a palm, into is side [ using we're much see of as the that's And adoption, seeing, we the verticals, more accustomed market the about, which continue whether starting these of we voice, going to really more people other needs. excited really are get see where ] finger, really specific

Matt Glover

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

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

Robert Eckel

and we for joining reminder, our through the I'd everyone to built for support. call forward webcast our into just investor strategy we And the your and learn Further, you as look Matt. Over on our about call. Aware's you, like a you progress feedback their updating us continued insight on presentation survey partners, may next employees, today's thank also shareholders website, thank player. available in on to to on the welcome that's our and

Matt Glover

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

may You disconnect. now

Aware (AWRE) 2 May 242024 Q1 Earnings call transcript