Aware (AWRE) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $3.8M, down 41% year-over-year due to lower license revenue and absence of a $2.9M one-time license sale from prior year.

• Recurring revenue grew 29% year-over-year in Q3 to $2.8M, and 19% for the nine months to $8.7M, offsetting lower total revenue.

• Operating expenses decreased 6% in Q3 and 7% for the nine months, reflecting ongoing cost optimization and a $1.3M reduction over nine months year-over-year.

• CEO Robert Eckel will resign effective December 31, 2024; a strategic advisor and executive search firm have been engaged for the transition, with $0.9M in related expenses expected in Q4.

• Secured a $1M European government contract post-Q3, expected to boost Q4 results and future recurring revenue.

Financial highlights

• Q3 2024 total revenue was $3.8M (down 41% YoY); recurring revenue reached $2.8M (up 29% YoY); nine-month revenue was $12.6M (down from $13.9M), with recurring revenue at $8.7M (up 19%).

• Q3 net loss was $1.1M ($0.05/share) versus net income of $1.1M ($0.05/share) last year; nine-month net loss was $3.2M ($0.15/share).

• Adjusted EBITDA loss for Q3 was $1.1M (vs. $0.4M gain YoY); nine months: $3.0M loss (improved from $3.3M loss YoY).

• Cash, equivalents, and marketable securities totaled $27.4M as of September 30, 2024.

• Operating expenses reduced to $5.3M in Q3 (down from $5.6M YoY); nine months: $16.7M (down from $17.9M YoY).

Outlook and guidance

• Double-digit recurring revenue growth expected for 2024, with a strong recurring base projected for 2025.

• Management confident in closing delayed deals in Q4 or early 2025, with delays attributed to expanded project scopes.

• Anticipates sustainable positive cash flow and sufficient cash resources to fund operations for at least the next twelve months.

• $0.9M in general and administrative expenses anticipated in Q4 2024 related to CEO transition.