AWRE - Earnings call transcript Q4 2024

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Matt Glover

Good afternoon, and welcome to Aware's Fourth Quarter and Full Year 2024 Conference Call.

Joining us today are the company's CEO and President, Ajay Amlani; and CFO, David Traverse. After 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, involve inherent risks and uncertainties that could cause actual results to differ materially from those described. note the safe release. end take is paragraph please at included of should of harbor the that Listeners today's press paragraph be uncertainties statements major emphasizes inherent This forward-looking in and that today. making risks will management the

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

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

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

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

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

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

Ajay Amlani

afternoon, good everyone. and Matt, you, Thank

Aware and support. the to deep thank trust want I the their First, to my I to for gratitude express also team. want entire Board

home. already past and it over XX warmly the feels me welcomed You've days, like

market on and in will chapter. strategic I vast and beyond. a of joined Aware ahead next our to lead to am I success and XXXX us drive is Aware, priorities want share the Today, that into opportunity I the this talent, why honored exceptional built foundation

While to solving this career role, I'm need address is I new dedicated evolving to to very critical may a the that to not seamless in My Aware mission. the world. been digital secure, positioned for this challenges be identity verification new rapidly has uniquely

worked the sector team For a identity made contribute people of intersection operations. verify nearly wake That began environments. shaping at My I journey a Watching biometric helping Homeland national the government, where I protect the and across Security, security private have at played to shape founding in of innovation technology, to both events of digital September I decades, and and their XX. commitment led its for security. those unfold, Department identities the passion early X the to physical personal in me role how

Our focus was a on infrastructure future robust to prevent security attacks. building

as then, the Since firsthand I've pioneering company working sectors. digital IDs issued the security initiatives the in more lines and as I Defense saw government identity That tool, members serves biometrics, the not helping strategic in frictionless private enables of and continued both -- security, at technologies, beyond. of and biometric the identity and as verification cutting-edge on and leading airports front Through public became less Department cofound that XX which now just identity verification means Clear, but over it work, a realization efficient of ] me million [ power to inspired to that intrusive. make

in of the technology recognize are DHS, Aware's that This all no enough. and deepfakes longer rapid is plays fraud ever. national pivotal of rise at bot-driven traditional methods Today, critical recognized solutions biometric from critical to enterprises my trusted making consumers Aware AI-driven at we is Governments, more where moment. The stands Since time authentication security. are a apart. role than I've impersonation innovative

terrorist attack safety. XX. major technology Aware's of such Few profound In on can utilization claim companies fact, the since preventing a global been September any has in impact instrumental

Aware has most and reputation expertise, names trusted space. been to technology with lead the biometrics in one the of long in this

However, sharper to stronger and to am areas driving capitalize potential, I to meaningful where immense progress need ahead. fully focus committed we execution, greater on our opportunities coordination, realize the

taking The long sharpening we and We biometrics pose in industry macroeconomic revenue are unlock while operates to cycles. already opportunities. go-to-market budget new to new and headwinds constraints strategy efficiency challenges, decisive and government improve action. are And continue our

refine near-term revenue recurring dynamics. our strategy to we While and provides stability, we our -- to fluctuation revenue expected industry acknowledge as adapt

to and we growth. XXXX strategic Aware is I right foundation, essential improving stronger. now talent believe vision the steps we are technology, efficiency turning a accountability. are The and that emerge and to firmly point. our taking action positioning sustainable strengthening One is have for

We on growth. laying for the That most means high-impact and partnerships, the forging differentiated sales are focused revenue enhancing meaningful our technologies. commercialization groundwork accelerating of efficiency

deepening To capitalize government relationships with X commercial enterprises. we agencies on has the Aware priorities: biometric key First, strategic on partnerships. demand growing for will security, long-standing and focus

We and broader in will to these with players adoption scale. industry, drive expand strengthen partnerships, aligning and identity and major the

be essential the is to in goal partner an Our biometric ecosystem.

innovation. Second, advancing technological

in ease solutions will and flexibility. biometric technologies, system security, core best-in-class enhancing By be of authentication. Aware's as must we position agnostic integration a cement our Our for leader

leadership sales revenue to including and targeted to we Third, refine drive taking pricing key scaling growth, steps are optimized sustainably our initiatives, thoughtfully enhanced in go-to-market areas. and strategy, immediate sustainable

teams customer customers. engagement existing we Additionally, success are deepen with to strengthening renewals maximize and our

flexibility a targeted foundation, balance a in strong and strategic investments make to solid disciplined With financial the we our have priorities. sheet

XXXX. operational remains go-to-market strategy, sustainable While we focus sharpen growth on beginning throughout revenue headwinds groundwork anticipate we laying XXXX, in for as improving the efficiency and our our

are to As road into a ahead I lead chapter. Aware focus days discipline, next both best our no ahead. The shareholder, but its am and CEO I honored requires doubt and have

to With I'll a and David. David results. over you, at look fourth quarter financial that, full closer for to our it hand year Over

David Traverse

and forward. your board you to Thank energy on and drive company we have as appreciate you, Ajay. leadership We're the thrilled

full results XX, our December and for quarter year, Let's fourth on ended which dive XXXX. the into

of Starting to increased year. includes million last government. to a of timing to million with $X from XX% as a which prior period. impact by $X.X Total largely the decline in European sale increase the by the in the which due we compared of quarter. was was recognition The onetime compared software million contracts million, This for $X.X quarter-to-quarter, $X.X primarily revenue, mentioned fourth million higher license QX year to revenue license revenue to driven Recurring can fluctuate slight year-over-year is previously. $X.X revenue

compared improved from and the million, $X.X expenses reduced an Operating $X.X $X.X XXXX. $X.X QX loss in in of to period operating to million XX% down same of million million Operating $X.X were diluted of loss last diluted million GAAP or a year, to loss QX $X.X of or net in share $X.XX of compared per $X.XX GAAP million XXXX. loss per of share

and expense $X.X the XXXX of to our $XXX,XXX acceleration receivable CEO that of severance write-down a million note XXXX related investment of related note to onetime XXXX and from included stock-based in our by Limited. termination Omilis XXXX, impacted expense a of December compensation Please was at our

in in reconciled Our was fourth earnings loss which $X.X adjusted the EBITDA million year. our prior are to quarter, an release adjusted loss the compared EBITDA earnings of for $XXX,XXX GAAP

X% the to predictable license XX% was revenue million lower on revenue. revenue to the last our Now software Total up $XX.X compared revenue underscores streams. million This to of full which Recurring in establishing $XX.X year. $XX grew revenue. made growth period continued was year. stable, same for focus million, total due recurring This

XXXX, $X.X prior million the to Operating year. period. and Operating to the totaled million year million in per $XX.X million million for $X.X loss net million share, or expenses share in to $X.XX in diluted compared $XX.X a decreased to by of compared XX% $X.X ago compared $X.XX per period net improved diluted or million to $X.X the loss loss $X.X or

to related of note XXXX Please investment by XXXX. note impacted of by CEO to acceleration was our a prior million contingent to due primarily December offset expenses, payment and to expense from includes that EBITDA our expense the was $X.X value XXXX operating compensation to This lower receivable Adjusted year. related the of in fair million Limited. also gain onetime in onetime our XXXX from the of partially $X.X of our $XXX,XXX was FortressID. And improvement compared loss impacted year Omilis stock-based adjustment the the XXXX And write-down a acquisition $XXX,XXX related in to by $X.X termination severance million acquisition was revenue. XXXX the of for lower

the turning Now balance to sheet.

million at $XX.X XX, had marketable totaling As of million the XXXX. $XX.X cash XXXX, compared securities of December to equivalents cash, and we end

we steadfast we XXXX, of are strategic driving growth the our Looking as about ahead, initiatives anticipated in challenges and in the future. navigate optimistic remain

over back Ajay, to you.

Ajay Amlani

David. Thanks,

of financial to near-term our as the while headwinds uncertainty partner has governments XXXX, precision. innovation our and through authentication, for As growth strong we a we strengthening and priority laying trusted discipline in with worldwide. Aware committed for a are navigating enterprises long-term legacy biometric groundwork remains and position move and

focused pose return I are a sharpening While forward digital progress and forward May. working closely I with on also stakeholders to in identity our to deepening Aware to external challenges, look factors customers position QX go-to-market the partnerships and on security. future execution our shape further advancements accelerating controlling and technological look of can, to our key our providing team, what we updates strategy, call for we to growth. during

instructions. the open questions. Matt, prepared our provide remarks. concludes call That please the now for We'll

Matt Glover

Ajay. first the question, being Instructions] efficiency? Our refining improve sales . [Operator A.J., you, sales implemented What discussed Thank to strategy. are changes you

Ajay Amlani

approach efforts impact. strategy identity areas where a most biometric high-value focused customers more sectors seamless are We and prioritizing taking secure and Aware's is includes our refining where aligning with mission-critical. verification drive sales, our the solutions go-to-market the can by This to strategic

drive model to greater competitiveness optimizing our enhance also are We and adoption. pricing

strengthening improve rates sales engagement, we're retention. conversion teams success long-term our Additionally, and to and customer leadership

relationships central partner and strategy. our Customer remain to

reach These systems in international deepening and while agencies with the and new to providers in our are with steps in essential growth. efficiently technology more and are U.S. partnerships pursuing Aware positioning collaborations both government customers, actively flagship and We scale markets. for domestic expand integrators existing abroad sustainable

Matt Glover

Aware now good go-to-market for time Why do strategy? more Ajay. believe Thanks, a you a effective initiate to is

Ajay Amlani

I know, and is social you That carry you I What names X know. on verifying searchable solve you team Department with core the and of factors to about and addresses, are information user you are. that some the crime-as-a-service there information know of identity, securities, all passwords, who challenges web various Homeland the and become regarding and has other by phone found When that numbers What learned Security now numbers fraudsters. and easily worked is should only you issues home dark what identity. the original of at

and passport struggled to take the And of as a currently factor a have challenge What amounts be core not into There although move trying have you a far digital so an driver's physical from become proven many one. received carry, the a the it to into challenging it's of second a of proven or world are companies significant that document a number consumers businesses. factor to license phone, physical this has also are be or investment It their to identification stick solve problem. is to met solutions a needs to trying. of

Report. known been you back consumers such biometrics, otherwise it lingering biometrics, locations. an from skeptical for become an into The market always Historically, Minority expensive Fortunately, has have physical movies concerns are, to devices the and of Sci-fi to third endeavor the as factor, perceptions dating one deploy easier biometric been to who use. has also as

Now consumers codes. device they even offered manufacturers to carry being everywhere by biometric passwords constantly over also of actually called their use these difficult are letters changing are And they actually planted devices which using are asked that PIN that mobile they're the prefer very They now biometrics AI-trained read prove in pockets difficult and solve a things that unless robot. to very an are with to [indiscernible], puzzles are human you or go.

of customers that are their time industry. have move is in a desires identification are consumers' terms answers that other they are needs this or the they mechanisms. making biometrics consumers in biometric more they being biometrics and the and So time answered to into have that investing the the be sure to wonderful industry Many questions over amounts to

Matt Glover

Thanks, Ajay.

operating in Our year? next the for question for is the reduction David. What drove expenses

David Traverse

Matt. Thanks,

that long-term of which to was discretionary and . reducing will flexibility, goal spending. the to us expenses, which us So decrease approach the operating in and optimization really took And maintain financial EBITDA the we've we operations when allowed reflected growth invest year it that been enable you last to in disciplined including in X% expenses, factor streamlining cost -- that adjustments, drivers the is about. talking the the

Matt Glover

David, our impact next business? to U.S. DOGE you question, recent expect Aware the works federal agencies. Do with activity closely the

Ajay Amlani

on a single key biometric federal various largest impacting government Aware. We the technology evolving They recognize are agencies. and U.S. spender globally. challenges customer for the remains The cybersecurity

impact early too potential and we to changes, budgets. it's agency While shifts assess in monitoring are procurement of the full patterns DOGE-related

does One of is that the drive elements of increased efficiency. it biometric technology

So able effectively to ways be as and the technologies These allow more to government citizens to to to able efficiently. biometrics are allow being be are utilized to services offered United States, to save money. more of the federal be cost

Our long-standing solutions any navigate relationships well position and us mission-critical to changes.

Matt Glover

the fourth declined through increased for year. quarter Thanks, that? but Ajay. David, Can the revenue you year-over-year, total for full walk

David Traverse

about do the can I'll I quarter that. talk Yes, fourth first.

grow for secured And with quarter, the by year, So European the that $X revenue while license in total on we agencies. contract and can period we to revenue million to declined, full government . from for the was license was fourth revenue, government buying that cycles were driven period based October. that that the the able sales to increase in the fluctuate recurring of due the

Ajay and focused earlier, in variability the nonrecurring do anticipate revenue our ahead, due strategic revenue challenges mentioned we largely as approach. Looking some implement to more we near-term and as

deals please results. and that keep in larger short-term the So mind quarter-to-quarter, from revenue fluctuate of can timing impacting project-based

Matt Glover

one another for have I you.

recurring in How XXXX. previously guided double-digit growth trend? to did revenue that You

David Traverse

Yes.

a will helped year-over-year did the -- So to our foundation, in that revenue recurring your missed for -- while be expand increase for our and we continue the it we be a are revenue pleased for to year recurring X% it that moving now year, goal which building necessary . in new place, steps And sustainable we're focus consistent the taking stronger more leadership long-term of forward. with growth and us stronger, the committed especially growth. drive foundation to remain

Matt Glover

of are growth as one you M&A David. strategy? a With your to implement balance for component robust sheet, you, Another a looking potential

David Traverse

Yes.

continue the we've strategic map could organic road growth. as But So acquisition technology any about always talked on reach. our quarters, market driving that our expand primary opportunities we our few last focus remains evaluate to or accelerate

And that being place. said, with new leadership in

priority strategy Any and strengthening operational as and well carefully we long-term Our our near-term it and consider sales if activity, on market execution, be driving only clearly performance M&A as go-to efficiencies. improving shareholder will enhances is our pursued it value.

Matt Glover

own? shareholder. A.J., call How shares you do mentioned a many the you on being

Ajay Amlani

equates X% I -- executing in just and I believe Before the our long-term I'm shares. in in invest to have team to I joined ask are of sustainable I and XXX,XXX wouldn't purchased if I Aware's future in about My about it potential Aware's investment firmly Aware, opportunities believe the with in under just we reflects confidence growth. company, wasn't which strategy to drive other creating long-term I value, and the aligned technology fully personal myself. ahead. investors others to willing our

Matt Glover

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

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

Ajay Amlani

and Thank forward updating shareholders. our support Aware's continued our to during you of and all further webcast. We the for look progress for on joining employees, partners you us next today

hand I'll it to Matt. Now over

Matt Glover

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

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Aware (AWRE) 5 Mar 252024 Q4 Earnings call transcript