Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $3.9 million, down from $4.3 million in the prior year, primarily due to the timing of perpetual license sales [15] - Recurring revenue increased by 2% year-over-year to $2.7 million, attributed to higher software maintenance [15] - Operating loss was $2 million compared to a loss of $1.3 million in the same period last year [16] - GAAP net loss 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 the prior year [16] - Adjusted EBITDA loss for Q2 was $1.4 million, worsening from a loss of $1 million in the previous year [17] - For the first six months of 2025, total revenue was $7.5 million, down from $8.7 million in 2024 [17] Business Line Data and Key Metrics Changes - The company is focusing on enhancing its awareness platform, which integrates best-in-class biometric algorithms into a single solution [9] - Improvements in facial matching speed and mobile face capture reliability were noted, enhancing user experience [9][21] - The company secured national ID programs for two Middle Eastern governments, indicating growth in the federal space [13] Market Data and Key Metrics Changes - Aware was recognized as a luminary in core identity technology, highlighting its capabilities in deepfake detection and liveness [8] - The company is seeing increased demand for biometric solutions in both commercial and government sectors, particularly in law enforcement [23] Company Strategy and Development Direction - The strategic transformation focuses on building a scalable business grounded in operational rigor and differentiated technology [4] - The company aims to deepen strategic partnerships across public and commercial sectors, enhancing its visibility and alignment with government priorities [12] - Aware is positioning itself as a trusted biometric infrastructure partner for governments and enterprises, emphasizing continuous product innovation [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about early traction from foundational work in go-to-market strategy and leadership additions, expecting improved revenue performance as 2025 progresses [19] - The company is focused on purposeful investments aimed at accelerating deployments and strengthening customer experience [28] - Management highlighted the importance of federal government work and law enforcement as key growth levers for the future [32] Other Important Information - The company welcomed a new Chief Marketing Officer to enhance brand visibility and accelerate pipeline velocity [10] - Aware's cash, cash equivalents, and marketable securities totaled $23.7 million as of June 30, 2025, down from $27.8 million at the end of 2024, indicating a well-capitalized position [18] Q&A Session Summary Question: Insight on Aware's partnership with Leidos following FBI task order announcement - Management expressed excitement about ongoing investments by the US federal government in the biometric industry and looks forward to participating in these growth opportunities [30] Question: Revenue expectations for 2025 and influencing factors - Management views 2025 as a period of progress, focusing on pipeline advancement and customer onboarding, but remains cautious about revenue timing [31] Question: Key revenue growth levers for 2026 and beyond - Key growth levers include federal government work, law enforcement market expansion, and increasing interest in biometric technology in the commercial market [32][34] Question: Steps to accelerate subscription-based business - The company continues to invest in its go-to-market process and teams, focusing on scalable biometric projects and solutions [35] Question: Improving sales cycle velocity and current bottlenecks - Management emphasized strengthening the end-to-end sales process and aligning closely with customer requirements to reduce time to value [36] Question: Trends in global government biometric deployments - Management highlighted significant opportunities in federal government issued digital identities and the growing demand for biometrics in global travel [38][42] Question: Current pipeline and deal flow compared to the first quarter - Management noted significant acceleration in pipeline volume and value, with expectations for revenue acceleration in the second half of the year [47] Question: Customer and revenue retention rates - Retention rates remain consistent with previous years, with ongoing focus on improving customer relationship management [49] Question: Notable recent RFP wins or losses - Management refrained from commenting on specific projects but noted high market activity and validation of their technology [50][51] Question: Aware's M&A pipeline - The company is focused on internal execution and investments rather than external M&A to drive growth [52]

Core Insights - Aware, Inc. (AWRE) experienced a 4.7% decline in share price following its earnings report for the year ended March 31, 2025, contrasting with a 2.3% gain in the S&P 500 Index during the same period [1] - The company reported total revenues of $3.6 million for Q1 2025, an 18.4% decrease from $4.4 million in the same quarter last year, primarily due to a 38.7% drop in software license sales [2] - A net loss of $1.6 million was recorded for Q1 2025, widening from a loss of $0.9 million a year earlier, with net loss per diluted share increasing to $0.08 from $0.05 [3] Revenue and Profitability - Recurring revenues fell 14.7% to $2.7 million from $3.1 million year-over-year, influenced by the timing of license renewals [2] - Operating expenses decreased by 3.9% to $5.5 million, yet the operating loss expanded to $1.9 million from $1.3 million in the prior year [4] - Cash, cash equivalents, and marketable securities totaled $24.8 million at the end of the quarter, down from $27.8 million at the end of 2024 [4] Segment Performance - Software maintenance revenue remained stable at $2.2 million, while software subscriptions dropped 46.1% to $0.5 million [5] - Non-recurring software license revenue decreased by 32.4%, whereas service-related revenue increased by 21.9% [5] Management Strategy - CEO Ajay Amlani described the quarter as transitional, focusing on long-term scalable growth and realigning the go-to-market strategy [6] - The company is engaging with Fortune 500 firms for biometric solutions aimed at identity verification and fraud prevention [6][7] - CFO David Traverse indicated that 2025 is a foundational year, with strategic changes expected to show more impact in 2026 [10] Leadership Changes - Key leadership changes were made, including the appointment of Brian Krause as Chief Revenue Officer and Gary Evee as chairman of the board, reflecting a commitment to a disciplined commercialization strategy [11]