Core Insights - Aware, Inc. (AWRE) has experienced a 6.9% decline in share price since its earnings report for the year ended June 30, 2025, compared to a 2.1% decline in the S&P 500 Index, although the stock rallied 18.3% over the past month, outperforming the S&P 500's 0.4% gain [1] Financial Performance - For Q2 2025, Aware reported total revenues of $3.9 million, a 9.9% decrease from $4.3 million in Q2 2024, primarily due to the timing of perpetual license sales [2] - Revenues for the first half of 2025 were $7.5 million, down 14.2% from $8.7 million a year earlier [2] - The net loss widened to $1.8 million, or $(0.08) per diluted share, in Q2 2025, compared to a loss of $1.1 million, or $(0.05) per share, a year ago [3] - For the six-month period, the net loss increased to $3.4 million or $(0.16) per share from $2.1 million or $(0.10) per share last year [3] - Adjusted EBITDA loss expanded to $1.4 million in Q2 2025 from $0.9 million in the prior-year quarter [3] Segment Performance - Recurring revenue grew 1.5% to $2.7 million in Q2 2025, thanks to stronger software maintenance revenue [4] - Non-recurring revenue declined sharply by 28.9%, falling to $1.1 million from $1.6 million, with software license revenue dropping 31% from $1.3 million to $0.9 million [4] Business Metrics - Operating expenses in Q2 2025 rose 3.4% to $5.9 million from $5.7 million in the prior-year quarter, mainly due to investments in headcount and executive leadership [5] - Aware reported a cash position of $23.7 million as of June 30, 2025, down from $27.8 million at the end of 2024 [5] - Gross margin remained solid, with cost of revenue increasing 25.6% to $339,000 from $270,000 [6] Management Commentary - CEO Ajay Amlani emphasized a strategic roadmap focused on advancing the Awareness platform, refining go-to-market execution, and deepening partnerships [7] - The company received recognition from the Department of Homeland Security's RIVTD test and the Prism Project's identity technology report [7] - Management acknowledged the current revenue decline as part of a transformation strategy aimed at long-term growth [8] Revenue Influences - The revenue dip was largely due to the absence of large perpetual license deals, which are subject to variability based on customer purchasing cycles [9] - Some adjustments in recurring revenues occurred as clients modified their prepayment commitments based on historical usage trends [9] Future Outlook - Aware did not provide specific revenue guidance for the remainder of 2025 but expects progress in customer onboarding and potential revenue realization in the second half of the year [11] - For 2026, Aware aims to leverage growth opportunities in federal government programs, law enforcement upgrades, and commercial sector demand for biometric security solutions [12] - The company clarified that its current focus is on internal execution and technological innovation rather than mergers or acquisitions [13]

Core Viewpoint - Aware, Inc. reported a decrease in revenue for the second quarter of 2025, primarily due to the timing of perpetual license sales, while continuing to focus on strategic transformation and growth in biometric identity solutions [4][3]. Financial Results - Revenue for Q2 2025 was $3.9 million, down from $4.3 million in Q2 2024, reflecting a year-over-year decrease of approximately 9.3% [4][5]. - Operating expenses increased to $5.9 million in Q2 2025 from $5.7 million in Q2 2024 [5]. - The net loss for Q2 2025 was $1.8 million, or $(0.08) per diluted share, compared to a net loss of $1.1 million, or $(0.05) per diluted share, in Q2 2024 [5][8]. - Adjusted EBITDA loss for Q2 2025 was $1.4 million, compared to a loss of $1.0 million in Q2 2024 [6]. Six-Month Financial Overview - Revenue for the first half of 2025 was $7.5 million, down from $8.7 million in the same period of 2024 [7]. - Operating expenses remained stable at $11.3 million for both the first half of 2025 and the previous year [7]. - The net loss for the first half of 2025 totaled $3.4 million, or $(0.16) per diluted share, compared to a net loss of $2.1 million, or $(0.10) per diluted share, in the same period of 2024 [8]. Operational Highlights - Aware developed new product innovations, including a 14X faster face matching performance and smarter face capture for mobile applications [9]. - The company was recognized as an industry Luminary in Core Identity Technology in the Prism Project's Deepfake and Synthetic Identity Report [9]. - Aware achieved best-in-class performance in the Department of Homeland Security's Remote Identity Validation Technology Demonstration for passive liveness detection [9]. Strategic Focus - The management emphasized a clear roadmap focused on advancing the purpose-built platform, strengthening go-to-market efforts, and deepening strategic partnerships [3]. - The company aims to convert its growing late-stage pipeline and drive durable growth as it enters the second half of 2025 [4].

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $3.6 million, down from $4.4 million in Q1 2024, primarily due to lower software license sales [13] - Recurring revenue decreased to $2.7 million from $3.1 million year-over-year, attributed to the timing of subscription term license renewals [14] - Operating expenses were reduced to $5.5 million, down 5% from $5.7 million in the prior year [14] - GAAP net loss was $1.6 million or $0.08 per diluted share, compared to a net loss of $1.0 million or $0.05 per diluted share in Q1 2024 [14] - Adjusted EBITDA loss for the quarter was $1.5 million, compared to a loss of $1.0 million in the prior year [15] - Cash, cash equivalents, and marketable securities totaled $24.8 million as of March 31, 2025, down from $27.8 million at the end of 2024 [16] Business Line Data and Key Metrics Changes - The company is focusing on high-impact customers and sectors where biometric authentication is critical, leading to active conversations with several Fortune 500 companies [7][8] - The leadership team has been strengthened with the appointment of a new Chief Revenue Officer and a chairman with extensive experience in cybersecurity [9] Market Data and Key Metrics Changes - There is strong interest in biometric solutions across various sectors, including financial services, healthcare, and e-commerce, as enterprises recognize the inadequacy of traditional authentication methods [30] - The U.S. Federal government's commitment to biometric modernization remains strong, providing a significant market opportunity [20][37] Company Strategy and Development Direction - The company is undergoing a strategic transformation with a focus on durable, scalable growth and a streamlined go-to-market strategy [5][6] - Key strategic priorities include deepening partnerships, advancing core technology, and scaling the business sustainably [6][10] - The Awareness platform is being developed as an open, flexible architecture that allows customers to integrate best-in-class algorithms, differentiating the company from competitors [22][34] Management's Comments on Operating Environment and Future Outlook - Management views 2025 as a foundational year for the company, with expectations of building momentum heading into the second half of the year [12][25] - There is confidence in the strategic groundwork laid, which positions the company for leadership in the biometrics industry [25][39] Other Important Information - The company has revitalized its brand presence and increased visibility at key industry events [11][24] - A culture of transparency and accountability has been instilled within the organization to support the transformation [11] Q&A Session Summary Question: Will Aware continue to pursue growth in annual recurring revenues via sales of the Aware ID product? - The focus is on solving large-scale identity challenges for enterprises and government agencies rather than driving growth through a single product [28] Question: Has Aware made progress in adding customers or growing sales on the AWS Marketplace or any of the other partner programs? - The top priority is direct engagement with customers, and partnerships will be selective, focusing on those that add strategic value [29] Question: Could you provide more color on the types of industries or use cases these companies are exploring with Aware's biometric solutions? - Strong engagement is seen across industries such as financial services, healthcare, and e-commerce, where secure identity verification is critical [30] Question: How should we think about the timing and potential revenue contribution from some of the new strategic opportunities? - 2025 is viewed as a foundational year, with expectations for early wins later in the year and contributions building over time [32][33] Question: How does the open architecture approach differentiate Aware from competitors? - The Awareness platform offers an open modular architecture, allowing customers to choose algorithms and ensuring scalability and future-proofing [34] Question: Are there specific programs or initiatives where you feel particularly well positioned today? - The company is well positioned across the U.S. Government portfolio, focusing on secure digital identity and modernization initiatives [36][37] Question: What early indicators are you seeing that give you confidence Aware is on the right trajectory for scalable, sustainable growth? - Tangible progress is noted in pipeline expansion, leadership installation, and growing customer interest in Aware's technology [38]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $3.6 million, down from $4.4 million in Q1 2024, primarily due to lower software license sales [14] - Recurring revenue decreased to $2.7 million from $3.1 million in the prior year, attributed to the timing of subscription term license renewals [15] - Operating expenses were reduced to $5.5 million, down 5% from $5.7 million in Q1 2024 [15] - GAAP net loss was $1.6 million or $0.08 per diluted share, compared to a net loss of $1 million or $0.05 per diluted share in Q1 2024 [15] - Adjusted EBITDA loss for the quarter was $1.5 million, compared to a loss of $1 million in the prior year [16] Business Line Data and Key Metrics Changes - The company is focusing on deepening strategic partnerships and has realigned its go-to-market model to prioritize high-impact customers and sectors [8] - Active conversations are ongoing with several Fortune 500 companies, indicating a shift in engagement and potential revenue opportunities [8][30] Market Data and Key Metrics Changes - There is strong interest in biometric solutions across various sectors, including financial services, healthcare, and e-commerce, as enterprises recognize the need for secure identity verification [30] - The U.S. Federal government's commitment to biometric modernization remains strong, providing a significant market opportunity [21][38] Company Strategy and Development Direction - The company is undergoing a strategic transformation with a focus on durable, scalable growth and a streamlined go-to-market strategy [6] - Key strategic priorities include deepening partnerships, advancing core technology, and scaling the business sustainably [7] - The Awareness platform is being developed to offer an open, flexible architecture that differentiates the company from competitors [35][36] Management's Comments on Operating Environment and Future Outlook - Management views 2025 as a foundational year for the company, with expectations of building momentum heading into the second half of the year [13][40] - The leadership team is confident in the strategic groundwork laid, which positions the company for leadership in the biometrics industry [26] Other Important Information - The company has strengthened its leadership team, appointing a new Chief Revenue Officer and a chairman with extensive experience in cybersecurity [9][10] - The brand has been revitalized, focusing on modernizing its presence and increasing visibility in key markets [12][25] Q&A Session Summary Question: Will Aware continue to pursue growth in annual recurring revenues via sales of the Aware ID product? - The focus is on solving large-scale identity challenges for enterprises and government agencies rather than driving growth through a single product [28] Question: Has Aware made progress in adding customers or growing sales on the AWS Marketplace? - The priority is direct engagement with customers, and partnerships will only be pursued if they add strategic value [29] Question: Can you provide more color on the types of industries or use cases these companies are exploring with Aware's biometric solutions? - Engagement is strong across industries like financial services, healthcare, and e-commerce, where secure identity verification is critical [30] Question: What is the timing and potential revenue contribution from new strategic opportunities in the second half of 2025? - 2025 is viewed as a foundational year, with expectations for early wins later in the year and contributions building over time [32][34] Question: How does the Awareness platform differentiate Aware from competitors? - The platform offers an open modular architecture, allowing customers to orchestrate best-in-class algorithms, providing flexibility and scalability [35][36] Question: Are there specific programs or initiatives where Aware feels particularly well positioned? - Aware is well positioned across the U.S. Government portfolio, focusing on secure digital identity and modernization initiatives [38] Question: What early indicators show Aware is on the right trajectory for growth? - The pipeline has expanded significantly, and there is growing interest from customers recognizing Aware's technology leadership [39]