Aware(US:AWRE)2022-10-30 13:45Financial Data and Key Metrics Changes - In Q3 2022, the company reported revenue of $3 million, a decrease from $4.2 million in Q2 2022 and the same period last year [12][13] - Net income for Q3 2022 was $2.6 million, compared to a net loss of $1.6 million in Q3 2021, largely due to a one-time gain of $5.7 million from the sale of a building [14][15] - Adjusted EBITDA loss for Q3 2022 was $2.5 million, compared to a loss of $1 million in the same period last year [15][16] - The company maintained a strong cash position with $31 million in cash and marketable securities at the end of Q3 2022, up from $25 million at the end of the previous quarter [16] Business Line Data and Key Metrics Changes - Recurring revenue increased by $0.3 million year-to-date, totaling $7.1 million compared to the first nine months of the previous year [7] - Subscription revenue saw a 42% decline year-over-year, with $400,000 in Q3 2022 compared to $1.1 million in Q3 2021, attributed to differences in revenue recognition practices [49][50] Market Data and Key Metrics Changes - The company noted that several customers delayed purchases due to a challenging macroeconomic environment, impacting revenue generation [7][11] - AwareID, the new SaaS platform, was launched at Money2020, receiving positive feedback for its low-cost and easy-to-implement solution [10][36] Company Strategy and Development Direction - The company is transitioning from a traditional business model to a SaaS-based platform, focusing on increasing recurring revenue and optimizing the go-to-market strategy [26][27] - Key initiatives include expediting customer adoption, evolving the partner program, and realigning the revenue organization to meet growth objectives [21][23][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate macroeconomic headwinds and achieve long-term growth despite short-term challenges [27] - The company anticipates Q4 2022 revenue to be better than Q3, with expectations for growth in 2023 [40][46] Other Important Information - The company relocated its headquarters to a smaller, more modern facility in Burlington, Massachusetts, to better suit current business needs [9] - AwareID is expected to nominally contribute to Q4 revenue, with a focus on increasing its impact on the top line in the future [44] Q&A Session Summary Question: Why is there a difference in cash proceeds from the building sale? - The building was sold for about $8.9 million, netting $8.6 million after commissions, with a one-time gain of $5.7 million recognized on the income statement [30] Question: What does success look like for Aware? - Success is defined as being the biometrics industry leader with strong recurring revenue and a robust client pipeline [32] Question: Can you provide updates on the customer pipeline? - The company has a robust pipeline, with long-standing customers increasing their spend and new customers moving towards full launch [34] Question: What feedback was received after launching AwareID? - Feedback was overwhelmingly positive, highlighting AwareID as a low-cost, easy-to-implement solution [36] Question: When will the business model transformation be complete? - The transformation is ongoing, with cash flow breakeven being a key metric to track [38] Question: What are the plans for deploying cash? - The company is investing in marketable securities to take advantage of attractive interest rates while evaluating high ROI opportunities [42] Question: How many customers are trialing AwareID? - Approximately a dozen customers were in a beta program prior to the launch of AwareID [57] Question: What impact has Craig had on the organization? - Craig has identified personnel gaps, refined sales processes, and engaged with partners to accelerate expansion [55]