BEDFORD, Mass., Oct. 27, 2020 /PRNewswire/ -- Aware, Inc.
(NASDAQ: AWRE), a leading supplier of biometrics software products,
solutions and services, today reported financial results for the
third quarter and nine months ended September 30, 2020.
Third Quarter 2020 and Recent Operational Highlights
- Implemented a mobile fused face and voice biometric system via
Knomi® to support the authentication of more than
100,000 offenders in the state of Arkansas.
- Affirmed Knomi's industry leadership by passing iBeta
Presentation Attack Detection (PAD) testing levels 1 & 2 with
perfect accuracy and tripling the number of Knomi customers.
- Surpassed 10 million transactions protected by Knomi worldwide
and released Knomi D version 2.7.3, an enhanced version of the
on-device variant of Knomi.
Third Quarter 2020 Financial Results
Revenue for the third quarter of 2020 was $2.5 million, compared to $1.9 million in the second quarter of 2020 and
$3.0 million in the same year-ago
period. The 31% sequential increase in revenue was primarily due to
higher software license revenue. The year-over-year decrease in
revenue was primarily due to lower software license and services
revenue associated with temporary delays caused by COVID-19.
Operating loss for the third quarter of 2020 was $2.5 million, compared to an operating loss of
$3.7 million in the second quarter of
2020 and an operating loss of $1.2
million in the same year-ago period. The higher operating
loss compared with the prior year period was primarily due to lower
revenue and higher operating expenses, including investments in
sales and engineering resources to drive growth in new product
areas, higher personnel costs as well as expenses associated with
COVID-19 remote working.
Net loss in the third quarter of 2020 was $1.8 million, or $(0.08) per diluted share, which compares to net
loss of $3.1 million, or $(0.15) per diluted share, in the second quarter
of 2020 and net loss of $0.2 million,
or $(0.01) per diluted share, in the
same year-ago period.
Cash and cash equivalents totaled $42.3
million as of September 30,
2020, compared to $47.7
million as of December 31,
2019.
Nine Month 2020 Financial Results
Revenue for the nine months ended September 30, 2020 was $7.9 million, compared to revenue of $9.8 million in the same year-ago period. The
decrease in revenue was primarily due to lower services revenue
associated with temporary delays caused by COVID-19.
Operating loss for the nine months ended September 30, 2020 was $7.6 million, compared to operating loss of
$2.4 million in the same year-ago
period. The higher operating loss was primarily due to lower
revenue and higher operating expenses, including investments in
sales and engineering resources to drive growth in new product
areas, higher personnel costs as well non-recurring expenses in the
first half of 2020. During the first six months of 2020, the
company incurred approximately $1.2 million of
non-recurring expenses, including $0.8 million of
recruiting fees and severance payments, and more than $0.2
million in COVID-19 related charges, including remote working
costs and bad debt from disrupted businesses.
Net loss for the nine months ended September 30, 2020 was $6.0 million, or $(0.28) per diluted share, compared to a net loss
of $0.9 million or $(0.04) per diluted share, in the same year-ago
period.
Management Commentary
"During the third quarter of 2020, Aware made significant
improvements in its best-in-class biometrics solutions, receiving
major recognition from the industry's premier software testing
agency iBeta," said Bob Eckel,
Aware's Chief Executive Officer. "In parallel, we've also increased
our focus on operational and growth initiatives, including
expanding our marketing efforts and reallocating resources to align
our go-to-market approach with trends in our target markets. Our
early traction on these initiatives has quadrupled subscription
revenue and tripled the number of Knomi subscription customers
year-to-date, as well as enabled Knomi to facilitate more than 10
million trusted transactions worldwide. We're encouraged by our
progress and look forward to realizing even greater ROI as we roll
out our strategic roadmap in the coming quarters.
"The Aware name is recognized around the world as the biometric
solutions provider of choice for the 'bluest of the blue chip'
government agencies. While we continue to serve and provide the
same customer configurability and intimacy that we've always
provided to our Government partners, we are also increasing our
emphasis on commercial subscription-based growth in the financial
and retail sectors. With a fortified balance sheet and an
industry-leading, comprehensive product portfolio, we are better
positioned than we've ever been to accelerate growth while enabling
customers around the world to own their identities."
About Aware
Aware is a leading provider of productized biometrics software
products, solutions and services to governments, system
integrators, and commercial organizations and solution providers
globally. Our comprehensive portfolio of biometric solutions are
based on innovative, robust products designed explicitly for ease
of integration including customer-managed and integration ready
biometric frameworks, platforms, SDK's and services. They fulfill a
broad range of functions critical to secure biometric enrollment,
authentication, identity and transactions including face,
fingerprint, iris, and voice capture modalities, sample quality
assurance, data compliance, capture hardware peripheral and system
abstraction, centralized data processing and workflow, subsystem
connectivity, and biometric matching algorithms. The products and
solutions apply biometrics to enable identity-centric security and
know-your-customer ("KYC") solutions for applications including
financial institutions, retail, banking and payments, healthcare,
border management, credentialing and access control, intelligence
and defense, and law enforcement. Aware is a publicly held company
(Nasdaq: AWRE) based in Bedford,
Massachusetts.
See Aware's website for more information about our biometrics
software products.
Safe Harbor Warning
Portions of this release contain forward-looking
statements regarding future events and are subject to risks and
uncertainties, such as estimates or projections of future revenue,
earnings and non-recurring charges, and the growth of the
biometrics markets. Aware wishes to caution you that there are
factors that could cause actual results to differ materially from
the results indicated by such statements.
Risk factors related to our business include, but are not
limited to: i) our operating results may fluctuate significantly
and are difficult to predict; ii) we derive a significant portion
of our revenue from government customers, and our business may be
adversely affected by changes in the contracting or fiscal policies
of those governmental entities; iii) a significant commercial
market for biometrics technology may not develop, and if it does,
we may not be successful in that market; iv) we derive a
significant portion of our revenue from third party channel
partners; v) the biometrics market may not experience significant
growth or our products may not achieve broad acceptance; vi) we
face intense competition from other biometrics solution providers;
vii) our business is subject to rapid technological change; viii)
our software products may have errors, defects or bugs which could
harm our business; ix) our business may be adversely affected by
our use of open source software; x) we rely on third party software
to develop and provide our solutions and significant defects in
third party software could harm our business; xi) part of our
future business is dependent on market demand for, and acceptance
of, the cloud-based model for the use of software: xii) our
operational systems and networks and products may be subject to an
increasing risk of continually evolving cybersecurity or other
technological risks which could result in the disclosure of company
or customer confidential information, damage to our reputation,
additional costs, regulatory penalties and financial losses; xiii)
our intellectual property is subject to limited protection; xiv) we
may be sued by third parties for alleged infringement of their
proprietary rights; xv) we must attract and retain key personnel;
xvi) we rely on single sources of supply for certain components
used in our hardware products; xvii) our business may be affected
by government regulations and adverse economic conditions; xviii)
we may make acquisitions that could adversely affect our results,
xix) we may have additional tax liabilities; and xx) we believe the
effects caused by the COVID-19 pandemic will likely have an adverse
impact on our revenue over the next several quarters.
We refer you to the documents Aware files from time to time with
the Securities and Exchange Commission, specifically the section
titled Risk Factors in our annual report on Form 10-K for the
fiscal year ended December 31, 2019
and other reports and filings made with the Securities and Exchange
Commission.
AWARE,
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(In thousands,
except per share data)
|
(unaudited)
|
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue:
|
|
|
|
|
|
|
|
|
Software licenses
|
|
$796
|
|
$1,138
|
|
$3,176
|
|
$3,864
|
Software maintenance
|
|
1,368
|
|
1,291
|
|
4,110
|
|
3,965
|
Services
|
|
310
|
|
581
|
|
597
|
|
1,925
|
Total
revenue
|
|
2,474
|
|
3,010
|
|
7,883
|
|
9,754
|
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Cost of services
|
|
149
|
|
267
|
|
483
|
|
1,106
|
Research and development
|
|
2,332
|
|
2,071
|
|
7,027
|
|
5,922
|
Selling and marketing
|
|
1,306
|
|
930
|
|
3,771
|
|
2,665
|
General and administrative
|
|
1,207
|
|
915
|
|
4,170
|
|
2,510
|
Total costs and
expenses
|
|
4,994
|
|
4,183
|
|
15,451
|
|
12,203
|
Patent related
income
|
|
-
|
|
-
|
|
-
|
|
49
|
|
|
|
|
|
|
|
|
|
Operating
loss
|
|
(2,520)
|
|
(1,173)
|
|
(7,568)
|
|
(2,400)
|
Interest
income
|
|
7
|
|
253
|
|
174
|
|
806
|
Loss before benefit
from income taxes
|
|
(2,513)
|
|
(920)
|
|
(7,394)
|
|
(1,594)
|
Benefit from income
taxes
|
|
(736)
|
|
(769)
|
|
(1,416)
|
|
(733)
|
Net loss
|
|
($1,777)
|
|
($151)
|
|
($5,978)
|
|
($861)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share –
basic
|
|
($0.08)
|
|
($0.01)
|
|
($0.28)
|
|
($0.04)
|
Net loss per share –
diluted
|
|
($0.08)
|
|
($0.01)
|
|
($0.28)
|
|
($0.04)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
shares – basic
|
|
21,476
|
|
21,523
|
|
21,452
|
|
21,541
|
Weighted-average
shares – diluted
|
|
21,476
|
|
21,523
|
|
21,452
|
|
21,541
|
AWARE,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
thousands)
|
(unaudited)
|
|
|
|
September
30,
2020
|
|
December
31,
2019
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
|
$42,318
|
|
$47,742
|
Accounts and unbilled
receivables, net
|
|
4,298
|
|
5,802
|
Property and equipment,
net
|
|
3,818
|
|
3,755
|
Long-term tax
receivable
|
|
1,179
|
|
-
|
All other assets,
net
|
|
625
|
|
256
|
|
|
|
|
|
Total assets
|
|
$52,238
|
|
$57,555
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued
expenses
|
|
$1,952
|
|
$1,283
|
Deferred revenue
|
|
3,041
|
|
2,837
|
Total stockholders'
equity
|
|
47,245
|
|
53,435
|
|
|
|
|
|
Total liabilities and
stockholders' equity
|
|
$52,238
|
|
$57,555
|
Aware and Knomi are registered trademarks of
Aware, Inc.
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SOURCE Aware, Inc.