Summary
Aware reported first quarter 2022 revenue of $4.7 million, up 6% from $4.4 million in the prior-year quarter. The release called it the highest quarterly revenue since 2018. The year-over-year increase was primarily due to higher subscription-based revenue and higher maintenance revenue. The company also reported an operating loss of $1.3 million and a net loss of $1.3 million, or negative $0.06 per diluted share. Operating margin was negative 27.5%, up from negative 32.8% a year earlier, a 5.3 percentage point improvement. Adjusted EBITDA loss was $0.6 million, compared with an adjusted EBITDA loss of $1.1 million in the same year-ago period. The top line improved while spending remained elevated, leaving the business unprofitable on a GAAP basis.
Aware's recurring revenue strategy showed momentum. Revenue rose 17% sequentially. Recurring revenue grew 30% year over year, driven by a 73% increase in subscription revenue. Recurring revenue represented 57% of total revenue over the last 12 months ended March 31, 2022, up from 54% over the last 12 months ended December 31, 2021. Management said the gains came from expanding existing partners and adding new ones. The company also expanded its reach with strategic resellers and positioned several new customers for full launches in coming quarters. CEO Robert Eckel described the quarter as progress toward becoming a subscription-based SaaS platform company.
Backlog and billings gave a mixed picture. Deferred revenue was $3.3 million, down 6.9% from $3.5 million in the prior-year quarter. Remaining performance obligations were $2.4 million, up 26.3% from $1.9 million. Operating cash flow was negative $2.4 million. The company continued to build partnerships. It formed a strategic partnership with MIRACL and made a $2.5 million strategic investment in MIRACL's parent company, Omlis Limited. It also partnered with Anonybit to address biometric data security. Aware adopted Flutter Version 2.10 in its Knomi mobile biometric authentication platform and won awards for Knomi. The company also continued to integrate FortressID, which it acquired in December 2021 for $2.5 million in cash, with up to $4.0 million in contingent payments tied to 2022 and 2023 revenue targets.
The company did not provide formal guidance for the next quarter or the full fiscal year. Instead, management said it aims to drive topline growth at a rate exceeding the biometric market compound annual growth rate of approximately 15%. That long-term goal depends on converting partner relationships into full launches in coming quarters. The release and 10-Q list several risks. Aware derives a significant portion of revenue from government customers, whose contracting and fiscal policies can change. It also relies on third-party channel partners. The biometrics market may not grow as expected or achieve broad commercial acceptance. The 10-Q notes that operating results may fluctuate significantly and are difficult to predict. Competition is intense, technology changes quickly, and software defects or cybersecurity breaches could harm the business. Other risks include limited intellectual property protection, key personnel retention, acquisitions, tax liabilities, and the ongoing effects of COVID-19.
The quarter showed real progress on revenue mix. Recurring revenue is growing faster than total revenue, and RPO increased. Still, the company remains loss-making, deferred revenue declined, and operating cash flow was negative. Aware's future depends on whether its partner-led strategy produces durable subscription revenue and whether it can control costs as it invests in growth. The first quarter provided evidence of traction, but the path to sustained profitability is not yet visible in the reported results.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2022 | Q4 FY2021 | QoQ | Q1 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $4.7M | $4.0M | +17.4% | $4.4M | +6.2% |
| Gross profit | $4.4M | $3.7M | +17.7% | $4.0M | +8.5% |
| Gross margin | 93.3% | 93.1% | +0.2 pp | 91.3% | +2.0 pp |
| Research & development | $2.4M | $2.2M | +10.6% | $2.4M | +1.2% |
| Sales & marketing | $1.8M | $1.5M | +15.7% | $1.7M | +7.8% |
| General & administrative | $1.5M | $1.5M | -3.5% | $1.4M | +1.7% |
| Total operating expenses | $6.0M | $5.5M | +8.3% | $5.9M | +1.9% |
| Operating income (loss) | -$1.3M | -$1.5M | +15.5% | -$1.4M | +11.1% |
| Operating margin | -27.4% | -38.1% | +10.7 pp | -32.8% | +5.3 pp |
| Net income (loss) | -$1.3M | -$1.3M | -1.9% | -$1.4M | +11.7% |
| Net margin | -27.3% | -31.4% | +4.1 pp | -32.8% | +5.5 pp |
| Diluted EPS | -$0.06 | -$0.06 | ±$0.00 | -$0.07 | +$0.01 |
Risks
Software license and services revenue depend on winning biometrics systems projects directly or through channel partners. Services and other revenue decreased from $0.5 million in FY2021 Q1 to $0.4 million in FY2022 Q1 due to less services performed with system integrators, highlighting exposure to project timing and channel execution.
The strategy includes expanding into commercial biometrics markets, but MD&A states it is unable to predict future revenue from commercial markets because these are emerging markets. If commercial adoption does not materialize, growth may remain dependent on legacy government biometrics markets.
The December 2021 FortressID acquisition includes up to $4.0 million in contingent cash payments based on 2022 and 2023 revenue targets, with fair value of $0.9 million at March 31, 2022. Failure to achieve targets or integrate identity proofing offerings could affect expected benefits and consideration.
Cash and cash equivalents were $25.1 million at March 31, 2022, a decrease of $4.9 million from December 31, 2021. Operating cash flow was negative $2.38 million in FY2022 Q1, up $0.09 million versus FY2021 Q1, and MD&A believes cash is sufficient for at least the next twelve months.
Selling and marketing expense increased 8% to $1.8 million in FY2022 Q1, and general and administrative expense increased 2% to $1.5 million, due to higher employee and professional services costs. These increases partially offset revenue growth and may pressure operating results if they continue.
Services and other revenue decreased from $0.5 million in FY2021 Q1 to $0.4 million in FY2022 Q1, and cost of services and other revenue as a percentage of services and other revenue increased from 74% to 78%. This margin compression could continue as project mix and labor hours fluctuate.
SaaS KPIs
All quarters →Adjusted EBITDA loss
Summary, forecast, risks and KPIs are extracted from AWARE INC /MA/'s SEC filings for Q1 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.