Aware(US:AWRE)2024-05-04 16:35Financial Data and Key Metrics Changes - Total revenue for Q1 2024 was $4.4 million, a 3% increase from $4.3 million in the same period last year, driven by higher software maintenance revenue [17] - Recurring revenue for Q1 2024 was $3.2 million, representing 71% of total revenue and a 3% increase year-over-year [17] - Operating loss improved approximately 32% year-over-year to $1.3 million compared to $1.9 million in Q1 of the previous year [18] - GAAP net loss for Q1 2024 totaled $1 million, or $0.05 per diluted share, a 30% improvement from a net loss of $1.6 million, or $0.07 per diluted share, in Q1 2023 [18] - Cash, cash equivalents, and marketable securities totaled $28.5 million as of March 31, 2024, down from $30.9 million as of December 31, 2023 [19] Business Line Data and Key Metrics Changes - Subscription maintenance revenue increased by 18% due to contracts secured in Q3 2023, contributing significantly to total revenue growth [14] - The company expanded its recurring revenue customer base, resulting in a 3% year-over-year increase in both total and recurring revenue [14] Market Data and Key Metrics Changes - Aware successfully onboarded new customers in Latin America, including Imply and OpenPass, and expanded use cases with existing customers such as a major federal government agency and a leading Turkish bank [15][24] - The company renewed and expanded a significant multiyear contract with a large international police organization in Europe, indicating growth in border management and immigration markets [23] Company Strategy and Development Direction - Aware aims to achieve double-digit revenue and annual recurring revenue growth in 2024, supported by an expanding pipeline of opportunities and increasing partner acquisition momentum [28] - The company plans to strengthen its offerings as a biometric solutions provider by delivering industry sector-specific solutions and enhancing its partner ecosystem [29] - Aware is focused on driving profitability, expanding its recurring revenue base, and delivering exceptional value to shareholders over the long term [20] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of cost optimization initiatives, which have significantly streamlined the cost structure and lowered the revenue breakeven point [41] - The company remains committed to evaluating high ROI opportunities that align with its long-term vision while focusing on organic growth [20][43] - Management expressed confidence in achieving sustainable growth and positive cash flow due to a robust financial standing and a healthy pipeline of opportunities [28] Other Important Information - Aware's technology is recognized for its ability to minimize bias based on age, gender, or race, as independently tested and verified by NIST [9] - The company has launched a marketing development fund program to support partners in promoting Aware technology, covering up to 50% of select marketing activity costs [36] Q&A Session Summary Question: Context around the rapid turnaround with the Turkish bank - The expedited timeline was due to a knowledgeable partner in Turkey, a motivated customer, and Aware's understanding of the market needs [32] Question: Nature of subscription renewal delays - Delays were largely due to the timing of revenue recognition, with a significant reorder expected to complete in Q2 instead of Q1 [34] Question: Details on the market development funds initiative - The MDF program supports partners' marketing efforts, covering up to 50% of select marketing activity costs to foster lead generation [36] Question: Factors driving substantial improvement in operating loss - Improvement reflected success in cost optimization initiatives, including a reduction in headcount and strategic investments in high-growth areas [41] Question: Capital allocation strategy with $29 million cash position - The company is evaluating opportunities for scalability but remains focused on accelerating organic growth in the meantime [43] Question: Outlook for 2024 following strong 2023 performance - Aware anticipates continuing momentum with a target of double-digit growth in both revenue and annual recurring revenue [45] Question: Role of partnerships in gaining more U.S. customers - Partnerships are crucial for expanding the customer base, particularly in the access control market [49] Question: Changes in competitive dynamics over the last six months - Aware has entered new markets, such as gaming, and is focusing on building integrations to enhance competitive advantage [51]