AWRE - Earnings call transcript Q2 2024

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Matt Glover

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

Joining us today are the company's Chief Executive Officer and President, Robert Eckel; Chief Financial Officer, David Traverse; Chief Revenue Officer, Craig Herman; and Chief Product Officer, Heidi Hunter. [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 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.

those to Aware there wishes also quarterly its materially outlined results filings, company's uncertainties XX-K and annual are that such XX-Q. from differ including factors that in on These to could cause are caution and indicated by you report SEC Form statements. the actual Form on

Any should factors. considered light in those forward-looking of statements be

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

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

financial provided should not a considered or call the SEC substitute certain as for the by with from this GAAP financial of term be measures measures Regulation defined information comparable contains issued G. financial as compliance and company's financial in in non-GAAP directly these measures, today. in presented Aware isolation Non-GAAP the GAAP. earnings is a Additionally, to most non-GAAP release reconciliation measures the has Accordingly,

for presentation available of to that like everyone made a website. be company's in the via this remind and recorded available the I'd Investor section replay link will Relations

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

Robert Eckel

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

CRO our for then CFO, conclude cover results, by key biometrics I'll open developments followed our operational customer call, and we review Craig, I'll today's and business start For will who outlook financial and our questions. before and our vision. financial strategic detail our CPO, wins, platform with our will highlights. strategic our David, will with Heidi,

both we and enabling in QX revenue first through year-over-year strong XX% generated In results our us We lines. depth respectively, quarter, continued relationships financial and for the both XXXX. increases product in to go XX% expanded new with of into second Craig core our customer half existing impressive these across will markets momentum revenue, deliver a key and recurring total key contract and more driven clients the moments. on few wins by acquisitions

We on sustainable the year expenses in maintained operating prior We the reflected growth which and our in a the compared of coupled line, robust optimization our improvement cost a line. operational quarter, first substantial efficiency is remarkable with top a yielded period. In bottom our in XX% decrease X% year-over-year to focus our results. a half in also XXXX, increase in XX% achieved

underscore expanding success long-term year. our product in achievements Additionally, demonstrating our initiatives, period market. compared to our to operational by grew and value efficiency recurring revenue us last in recurring the positions portfolio our customer implementing creation our continued revenue These progress securing in the commitment same XX% for and continued base, enhancing effective

our market expansion our product Aware. as impressive in Heidi of Heidi and record enhancement wealth bring a Chief to to track in our driving our product will space, experience brings new development over in sector. of the thrilled with Heidi adoption the decade strategy, commercial her achieving and experience Officer. prevention, identity lead fraud Hunter offerings fit spearhead a We're product appointment and of With of Product the

to a wanted drive mission in leadership for appointment cutting-edge While she for this aware, to background deliver our and forward team. introduce the shortly significant and to and I initial Her and valuable share plans about our solutions Heidi her represents more enthusiasm our to express brings take moment will sustainable our step growth. perspective

David, to year. will over quarter turn results who to of and Over half our now the David. the the financial the you, discuss call second first for I'll

David Traverse

afternoon, and you, everyone. good Bob, Thank

current due demonstrates financial in expansion from building quarter growth X.X last customer. quarter was marking our $XXX,XXX, X additional a in our and revenue expanding to XX, second underscoring million, our was with million the for was increase million. and deal Turning This that international to client of ended European increased results the driven year. ability factors: by stream $X.X our stable, license success sales This June with XXXX. highlights This predictable existing income contributed grow same an XX% primarily an an our revenue by key presence. a base Recurring Total to $X.X

These strategy reflect or recurring for while our year-over-year and larger model continued one-time sales. opportunities and expansion well business both on our substantial streams. capitalizing also dual The us opportunities relationships results of in validates client revenue position for long-term license-based recurring

of to year-over-year of the period. million, last improved $X.XX $X.XX Now $X.X same net loss million improvement year. were Operating or per compared a moving share in X% income down decrease XX% diluted diluted a million a totaled the $X.X compared of $X.X share, $X.X per $X.X $X.X compared to Operating loss a to or XXXX. $X.X GAAP QX million million expenses XX% statement. million QX to in year-ago loss year-over-year loss in million or of

of year-ago which income an loss, compared release totaled $X in EBITDA improvement in to million million, period. we loss a to net the adjusted our $X.X GAAP reconciled Our earnings same

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

of million the was increase driven results and license in recurring million financial XX, $X.X a existing XXXX. first months $XXX,XXX from expansions. revenue Turning our customer June from half to Total sales ended million, a increase $X.X in This by the X year. was $X.X revenue XX% last for in up

continued in increased revenue to solutions and value XX% total towards growth the Recurring our revenue The XX% a provide of more business to model the and revenue our reflects total year-over-year grew predictable shift our $X.X or of revenue, model. both underscoring recurring million strength customers.

for paying well the is us long-term in future. Our client sustainable on focus growth nurturing off, positioning relationships

expenses XX% million improved period. operating operating year-over-year year. million $XX.X million the million to $X.X $X $X.X an X% or in $XX.X year-over-year the year-ago Our Operating loss in compared same to million loss decreased to prior of to compared

$X.X per million of compared of or diluted a $X.XX a per totaled diluted XXXX. or half improvement net $X.XX loss loss in Net first million to share, $X.X XX% share the

improved EBITDA loss of the loss same to compares million Adjusted year-ago $X.X to in a which million, period. $X.X

million sheet. cash as as balance and totaled of our This Cash, June December to to of marketable $XX.X Turning compares XXXX. securities XXXX. XX, XX, $XX.X equivalents million

growth to robust foundation Our us opportunities targeted make empowers pursue strategically investments. and financial

capitalize avenues presence and that remain carefully vision. our technology market are allows emerging ensure and evaluating a We to dynamic align growth and us to expand with our to actively opportunities our in technologies sustainable exploring trends seeking long-term initiatives enhance and approach on market, value agile edge This creation.

allocation, maintaining expand As disciplined we investments our approach to This capital financial we've value increased our shareholders. opportunities ultimately balancing with prudent deliver reach seize maintain a strategy strength. drive our to will and innovation, to positions about, talked that

position have remains focus accelerate existing trajectory that growth our Our potential our also opportunities strengthen on and our not the the market. in competitive complement portfolio, significantly to only but

Heidi? over call introduce my completes turn yourself. financial I'd Heidi the summary. This let to to to like now her

Heidi Hunter

my joined path to to on have and is investor transformative very the to you, leadership share and the on. David. the to excitement team today the why I'm Aware community incredible opportunity Thank perspective happy I Aware speak about

the I identity the working of have my lion's spent share industry. career in

must that imagine various Before I'm over and business to joining identify roles and sure aware, strategy transformation I can identities organizations provider. do in global identity success the you observe product ever-evolving truly they with. customer time, worked in the for how authenticate a of want I

solutions evolve through my help I and with to software. with I customers to business continue career working that engineers delight AI-driven in their advanced technologies. contributions love an identity organization and focused products advancing transformative built build that on the wanted space and biometric them

Aware's part Bob very discussing strategy and and I'm I a vision great After solutions, transformation. of be tenure, opportunity and understanding to fit. legacy excited Aware's and company's it the was of breadth felt with

me, in to depth relatively the Now who those like over I'd background innovation few journey a Aware story. more transformational new discuss is or that have and to the last the in years you on company's for little

X strategically on has transformation technological towards its of and forward-looking foundation shifted biometric practices, This recurring legacy a innovation evolution. our model, and Over capitalizing technology revenue the business Aware our expertise. established years, merging is robust past driven market-driver with by

supplying identity platform. needs, multimodal biometric a and platform whether to on allows this focused to tailor has Software-as-a-Service. through customers Today, Formerly deployed specific solutions integrated biometric Aware to on-premises IT elements integrators, or these restructured their comprehensive components into government

encompass integrators, wider biometric all diverse we've network include value-added By access OEMs to democratizing government of sectors applications, beyond sizes. to expanding market partner technology range our presence IT extended and our commercial across organizational to a resellers,

with evolved into began market biometric varied verification authentication organizations prism and has across framework, with cases. a biometric biometric digital identity by scalable and intelligence, orchestration industries our provider. features leading acuity product, and identity Augmented Aligned platform alongside modular, our approach identity supports Aware technology core use

further to transformation by developing ecosystem. innovation aims preconfigured for solutions Aware biometric partner vertical fostering industry ahead, Looking our within sector-specific markets,

in for cater offerings verification advancing and to technology persists and needs. comprehensively both government facilitating digital solutions identity and our clients, Our authentication ensuring dedication identification, commercial

the the Craig the will I'm that, to with over team. And update made an Aware in advancements join progress go-to-market company's strategy. on I thrilled we've and it to hand give to

Craig Herman

Heidi. solutions our sectors. significant government Thanks, and advanced In growing XXXX, underscoring secured and demand several products geographies, the deals across in both of core our we QX both commercial biometric

BioSP government mix Of federal these deals X key were U.S. and were These we commercial, agencies. enforcement quarter, law of the secured in This categories. with our Knomi, a deals, product and government. ABIS, AwareID several contracts U.S. contracts

XXX not countries. agencies. all also government, U.S. XX trusted than by is over Over branches XX X financial enforcement Aware institutions more law but XX and by of only partners, the

that Our countries, with. used and large familiar you commercial are organizations agencies biometric all solutions by are numerous

traction. within are Our We the market. and platform gain facial continues fingerprint, experiencing which demand achieved of growing all multimodal iris technologies, to wins with recognition also our

and commercial for across seeing platform sectors. this continue, government We expect our to momentum innovative the we both and increasing and are opportunities differentiated

our legacy use breadth we are solutions, With earned increasing capitalize our demand. of hard and to cases on this poised

ecosystem further enhanced also QX. partnership in our We

removed pipeline. network but us partners, place, we will into will partner enablement. healthy future our enhance also right new robust partners nonperforming moving have we emphasized our partnerships which we to help add right partners believe the our network, forward. we to only with to and quarter, onboarding us that resources did the convert optimizing This visibility We in Not enable

We to for AwareID expect and secured launched also drive key we significant growth. that some partnerships

This EMEA. as expanded footprint through including point our securing key global $XXX,XXX share. in our in we ability United proof additional and a Kingdom, Brazil and strong mentioned, of and Bob regions, success, renewed expanding across to relationships underscoring As included this strides Europe, capture significant made contracts a expansion client market foster license the

I'd win revenue stream has increase QX date, out Once million anticipate to notable significantly largest expense like our this going our we live, contract in recurring securing is ABIS X-year Another forward. to bolster will contract a leverage it agreement. call $X.X and operating gone

us security Another for cost being are that contract also recurring expansive is more key without we I of and deliberate diligent and optimization of are our pursue. we compromising on enabling while increase this portfolio, well customer Aware's which experiences or use is in focus increased current strategic reflects mean suited opportunities aspect technology revenue. opportunities cases terms to it that By the prioritizing that, about

In of few with impacts. tools, In breadth analysis technology over I'd XX cold cases, leading law with advanced closed America reduce millions dollars bank in Services, biometric rate. to solving their had save the in significant police has cases year. their rate detection a our a XX% into we by to South algorithms and systems our AI-enabled workflow partnered Financial Aware a Regarding improving leveraged substantially enforcement, integrated use case department like first where in their highlight fraud and liveness of large

partner by in network. move fit we converting AwareID's pipeline robust and market through forward, leveraging steadfast a driving and our revenue enhancing growing remains subscription-based product our As team

Bob turn Bob? outlook. further and our initiatives for the back call XXXX strategic growth I'll details Now to on

Robert Eckel

Thanks, Craig.

revenue Looking half ahead recurring the year, annual second in confident deliver growth to revenue XXXX. our in expectations we the of to remain double-digit and

as XXXX the the we robust believe in we and to Craig pipeline on we visibility year-over-year of line bottom discussed, our increased as the half With consistency top and well our improvements track achieve are in first year generated expectations.

targeted OEM maximize we ecosystem plan, on and established to two, key in executing revolves while focused continually new led reviewing integrators their reach. our our which and revenue emerging through by empowering dedicated markets to four, acquisitions learning partners customer maintaining six, address and predictability through R&D our customer Strategically, our leadership three, team to use technological cross-selling by with entering data, team; partner global one, AI streams; around initiatives: and base several technology capabilities diversify remain commercial multifaceted expanding our strategic and to opportunities partners; success with operational security recurring and and to capabilities collaborations enhancing SaaS machine growth growth revenue models; expand prioritizing cases our upselling market five, challenges; innovation

continue to value both for security solutions experience. We customer preconfigured with balancing drive sector-specific use customer biometric and cases common

in profitability adapting market strong we are changes. financial growth fit foundation, our Given our with we line market closely ARR we poised believe top as work and and to product we innovation clients for as our further

partners providing our as solutions. own their preconfigured as leverage as well to We well our for build our continue partners own offerings enable as relationships, to direct and platforms

Aware consistently biometric as company strives a be simplified. to recognized with associated

are ready We through customers' our and business improve here results to biometrics.

move now of the will Matt, provide please We instructions. to the Q&A our appropriate call. portion

Matt Glover

[Operator Instructions].

question, and key facial demand? growth on driving Could Are fingerprint first across this recognition. technologies, different elaborate Craig, industries, factors particular demand specifically or modalities? highlighted for these this applications you increased trends there wares Iris Our market fueling biometric the you

Craig Herman

Great questions, Yes. Matt.

to the sector, technology. and spent including market as some last years, This evident concerns ratio So bias just over biometric at systems the billion. recognition approximately we've forum and government experience where iris continuing is today reaching $XX the that at next clear iris expansion with is of very discussed. I growth projections as reviewed time federal it's least adoption biometric growth U.S. increased seen in the XX% particularly U.S. rapid multimodal also month indicating biometrics, were about widely well X

also for of convenience consumers. of acceptance by the this with a and coupled We're consumer growing business There's seeing wider are growth. demand need and few for adoption driving a These fueling markets increasing efficiencies. biometrics

government and and commercial propelling regulations, are this both compliance further New requirements and domestically market. internationally

fraud its driving data i.e., on across to biometric these of robust drivers consistent effectively. strategy. and deepfakes increasing This internal solutions. Additionally, escalating verticals rising identity is positioning industry trends breaches the These external align our of are with our sophistication, demand market go-to-market capitalize occurrences frequency closely and are for and all with target Aware along

Matt Glover

to -- market you space? the Aware's commercial initial Heidi, penetration Officer, in talk Chief the Product as can the through your initiatives initial drive

Heidi Hunter

Absolutely.

spending teams I most I think importantly, selling and my with initiation most building and primary and the are was honestly, the executing first the thing supporting love about time that my products job, them.

on. we're So the really how today, X.X spaces year, and within and team it's that need foundation into breadth the about I effort. because Aware capabilities reviewing my to the has think historically, for years. what specifically focused I've the and spent but and that time the the is that done has translate we we understand work since of have apply what important solution joining, And last testing the this the

doing me to areas portfolio conceptualize with ways different opportunity providing want really this space. the commercial to market our and is various strategize in and document So penetrate since we the to applies an joining, the

strategy. the So My are really is our moving of detail there's leadership to a into together now marketing insights with of now focus of customers to that ourselves opinion, our areas. strategic the and our the and sales attract forward incorporating delight aware and presentation execution and market that and lot this all commercial solutions opportunities my folks, sales feature-rich we're

of rate truly my believe to the at to And product experience that also amount we're action corrective identity affords penetration. through enable while commercial learn to market I'm I in with leverage, bring really and together as faster needed work repeatability reducing to time execute of market. the market, to enhancements our taking adding the to drive take that the team to try, care approach new framework and and ability we this work the us going And through a a

Matt Glover

Heidi. Thanks,

this on optimization partners program program partner your You nonperforming what mentioned going you do expect have quarter. this to Could impact partner forward? you removing process? elaborate this business from your Additionally, on

Craig Herman

using certainly. nonperforming performing don't partners Yes, metrics. find multiple We versus

partner. assigned to and focus, indicators partner actually So successful on co-marketing. key the This and biometrics our of marketing resources side, a of business include enablement the resources overall resources could utilization for

the engagement assessed partnership. also in well efforts, in partner's We joint their sales consistency as growth opportunities as the bringing the revenue new through

want Expanding partner partners a lean focus active, enabled consistently efficient regularly to that actively an driving our ecosystem. we who in We falling relies these value-adding We are identify want needle. organization, contribute name. on be partners our review and market on our and revenue invested nonperforming. just metrics recurring partners, success, and heavily our and considered mutual short maybe resources We're revenue not share carry to effective, the to also engaged those

us This ongoing that for By our partnership high support parties. relationships on efficient long-term a standards, ecosystem resources maintaining that helps will growth optimize we're more evaluation drive our creating both focus results program, objectives.

Matt Glover

do the break sustainable? areas could operating Are XX% Bob, loss? And improved most? Great. expense down improvements you overall the these year-over-year management? QX factors growth more strategy? revenue or in align by how reduction financial behind they was with And Which this key the driven

Robert Eckel

back initiatives several quarters The revenue in combination implemented year-over-year loss executed that growth operating we've a was reduction the Yes, cost that over XX% XXXX. Matt. QX of of and optimization in and started past

these has more in from calls, efforts. As we substantial seen anticipated QX indeed our previous benefits earnings

has approach been our twofold. So

offerings demand. product expense leverage spending cost evaluating with objectives. deliberate to before, that are in our This strategic our each enables ensure aligns I've and As management. carefully it mentioned diligent us our with most We've to been

line contracts, through and and which bottom on we impacted positively side, recurring and our On this growth has term revenue the driving subscription focused also growth, revenue increased top simultaneously, line. is

growth between a profitability growth. overall, for us. top So balance committed the We're investments and strategic this the prudent maintaining with priority for remains management cost to

planned loss overall, strategy of achieving in that growth. sustainable while profitability operating our drive long-term in reduction this overall areas still So investing aligns with

Matt Glover

you on got update any us unique event a how biometric showing sector, other technologies, iGaming Could these progress Craig, our to challenges gaming? the at solutions recent positioning our in we've are partnerships? are opportunities? opportunities sectors question or there seeing increasing capitalize What new the reception our for multipart and you demand we here. Also, are in on ourselves for the gaming including

Craig Herman

about been -- and do, excited front. the for still driving what industry able as market in We've biometric-based customers what super been be amount traction a to need solution. this bit and definite. key a learning KY with It short we've is honestly, this nuances. well gaming some time we've We're needs the We're are a industry. secured to really is partnerships that quite Yes. regulation in That new great on a supported. easily the There as implemented complete of

us productized our with momentum this So we couple in great with This Commerce. the integration Wu recent some marketplace. has given

specifically really some both across market especially markets. we're a market. these and see Middle and that becoming to consistent is about and LatAm in network, spans access East a more request. excited through massive issues that seeing We're physical traction partner cases starting and use control our the one are our control arise access is for solutions This access biometric Another control online of the

Matt Glover

an positive a flow you sustainable for target reaching time do have cash frame operation? Bob, Craig. Thanks, updated

Robert Eckel

take that. I'll Yes,

which our As you our includes our and stack across suite, maximizing technology, software we're solutions existing progress in significant investment. to multiple leveraging know, our relative product we've made

reduce XXXX. the XX% to moment I allowed said of same revenue while us, by in operating compared growing has half as also to And X% this a So first in our the period. ago expenses just XXXX

line should flow our we're to feel positioned in cash to that positive near sustainable grow well we that the in continue So result revenue, and top future.

Matt Glover

you Can provide on an question. next the partnership. SoftwareOne update Our

what Additionally, the differentiates marketplace? aware on AWS

Craig Herman

Sure.

with us continue in work fantastic to Brazilian We and us great helped partner to continue market. are technology considerably, to give SoftwareOne, guidance. they've the us and They especially

come decision needed specific focus side, that marketplace requirements as specific to in through to in the line working requirements we some these areas the On the resources invest development that satisfy parallel. to in process. while the We a up have have a of direct in business made really a additional of AWS revenue

markets, feel markets building these the we're we are is our makes that really are differentiation enter as cycles, behaviors momentum part current marketplace AWS still This about really of that based the what opportunities well seeing we on taking The we of a into buying the good coupling targeted short in some the But in advantage strategy. the partner-driven our other gaining term. when of X are as AWS behind by do additional marketplace. in and really us

Matt Glover

Thanks, Craig.

kind your organization next $X.X expansion Europe, Our of what it's regarding is million in question, license user that?

Craig Herman

go is one, government that a a been Sure. with also we alongside and into working Europe, in can't entity it I one partner. the have specific but

touches this our additional government both So as licenses. ecosystem of and it's partnership sector our well as an expansion

our what So seeing and leveraging platform in more we're users our and Europe. more is tools

Matt Glover

Thanks, Craig.

checkout Our next compliance KYC you you identity, and referencing say question. commercial are products? identity When

Heidi Hunter

when is I an identity one's you as of lot into me. And identity, have in you've think am. digital being But it's long that I XX really talk and completely everything know honestly, as think we digified as experience I about KYC Heidi. the traversed the that as covering for if being over you been both. a began was I compliance. years, space Yes, that

state transition in verifying now, a So the phone. I started biometrics, data KYC about collection compliance environment you from collection your we where of there is we're digital was to something there's where doing or on that in primarily anytime for somebody

all. seen I've it So

Matt Glover

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

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

Robert Eckel

support. sincere just you as of And and express employees, for to partners, to us commitment all their thank always, for unwavering to Yes. appreciation today. joining like I shareholders our want my I'd

about our our forward on progress on further next For We provides our webcast. those investor during to seeking review more updating strategic and look you information, encourage corporate I Aware's that presentation details initiatives. website additional you our to

Matt, to back over you.

Matt Glover

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

now may disconnect. You

Aware (AWRE) 8 Aug 242024 Q2 Earnings call transcript