Summary
Aware posted second quarter revenue of $4.3 million, up 35.7% from the prior-year quarter. The increase came as recurring revenue rose 31% to $2.7 million and management pointed to an expansion sale to an existing customer in Europe. For the first half of 2024, revenue reached $8.7 million, up 16.7% year over year. Recurring revenue for the six months rose 14% to $5.9 million. Those gains matter for a company trying to shift more of its biometrics business toward subscriptions and maintenance contracts.
The bottom line improved more sharply. Operating loss for the quarter was $1.34 million, an improvement from the prior-year quarter. Net loss was $1.09 million, or $0.05 per diluted share, also an improvement from the prior-year quarter. For the first six months, operating loss was $2.60 million and net loss was $2.07 million, or $0.10 per diluted share. Both year-to-date figures improved from the prior-year period. Operating margin was negative 31.0% in the quarter, compared with negative 92.2% a year earlier. Management credited cost-control measures, including a reduction of approximately ten percent of headcount across all departments.
Cash generation remained negative but less so. Operating cash flow was negative $0.67 million for the quarter, an improvement from the prior-year quarter. For the first half, operating cash flow was negative $3.08 million, also an improvement from the prior-year period. Capital expenditures were $0.04 million for the first half, up from the prior-year period. Management stated in the 10-Q that cash and cash equivalents should be sufficient to fund operations for at least the next twelve months. The company also reported a decline in cash, cash equivalents, and marketable securities from December 31, 2023.
Forward-looking indicators were mixed. Deferred revenue was $4.44 million at June 30, 2024, up 1.9% from a year earlier. Remaining performance obligations were $3.60 million, down 10.0% from the prior-year quarter. Management said the company is positioned to deliver efficient double-digit growth in the full year 2024 and sustainable positive cash flow in 2025. That is a full-year and next-year outlook, not a quarterly target.
Operationally, Aware renewed and expanded key contracts across the United Kingdom, Brazil, and EMEA. It appointed Heidi Hunter as Chief Product Officer, citing more than 10 years of product strategy, development, and fraud prevention experience. The company also showcased authentication solutions at industry events including iGaming BiS SiGMA Americas 2024, SBC North America, Identity Week Europe, the NSA Annual Conference, and Febraban Tech. These efforts target commercial organizations, law enforcement, and government agencies.
Risks remain concentrated. The company derives a significant portion of revenue from government customers, and changes in contracting or fiscal policies could hurt results. A significant commercial market for biometrics may not develop, and Aware faces intense competition, rapid technological change, and dependence on third-party channel partners. Other named risks include software defects, open source and third-party software exposure, cloud adoption uncertainty, cybersecurity threats, limited intellectual property protection, litigation, key personnel retention, government regulation, adverse economic conditions, acquisitions, and additional tax liabilities.
Non-GAAP adjusted EBITDA loss was $1.0 million in the quarter, compared with $2.4 million in the prior-year quarter. For the first half, adjusted EBITDA loss was $1.9 million, compared with $3.8 million. Those figures exclude stock-based compensation, depreciation and amortization, interest income, and income tax expense. The GAAP net loss still tells the main story: losses are shrinking, revenue is growing, but the company has not yet reached profitability.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $4.3M | $4.4M | -2.2% | $3.2M | +35.7% |
| Gross profit | $4.1M | $4.1M | -2.2% | $2.9M | +41.7% |
| Gross margin | 93.8% | 93.8% | -0.0 pp | 89.8% | +4.0 pp |
| Research & development | $1.9M | $2.2M | -14.4% | $2.3M | -17.6% |
| Sales & marketing | $2.1M | $1.9M | +10.6% | $2.0M | +6.9% |
| General & administrative | $1.4M | $1.3M | +7.6% | $1.6M | -8.8% |
| Total operating expenses | $5.7M | $5.7M | -0.4% | $6.1M | -7.5% |
| Operating income (loss) | -$1.3M | -$1.3M | -6.3% | -$2.9M | +54.3% |
| Operating margin | -31.0% | -28.6% | -2.5 pp | -92.2% | +61.2 pp |
| Net income (loss) | -$1.1M | -$982.0K | -10.9% | -$2.7M | +58.9% |
| Net margin | -25.2% | -22.2% | -3.0 pp | -83.3% | +58.1 pp |
| Diluted EPS | -$0.05 | -$0.05 | ±$0.00 | -$0.13 | +$0.08 |
Risks
Software license sales have historically fluctuated and management expects software license revenue to continue to fluctuate because sales depend on the timing of projects with customers and partners. Software license revenue increased 75% to $1.8 million in the three months ended June 30, 2024, but the timing-driven volatility remains.
The company's strategy is to continue focusing on legacy government biometrics markets and expand into new commercial biometrics markets, and it states it is unable to predict future revenue from these emerging markets.
Services and other revenue fluctuate depending on when new projects commence and when projects started in previous periods are completed. Services and other revenue decreased 37% from $0.7 million in the six months ended June 30, 2023 to $0.5 million in the six months ended June 30, 2024.
Gross margins on services and other revenue are expected to continue to fluctuate based on project nature, engineering difficulty, labor hours, and pricing. Cost of services and other revenue as a percentage of services and other revenue increased from 84% in the six months ended June 30, 2023 to 117% in the current year period.
Cash, cash equivalents and marketable securities were $27.4 million at June 30, 2024, a decrease of $3.5 million from December 31, 2023. Management states that if additional capital resources are required, external financing may not be available on terms it finds attractive or at all.
The company recorded a full valuation allowance against its net deferred tax assets as of June 30, 2024 and December 31, 2023 because it concluded it is more likely than not that it will not realize the benefits of those assets. Income tax expense was $39 thousand for the three and six months ended June 30, 2024 due to limitations on net operating loss carryforwards.
SaaS KPIs
All quarters →Adjusted EBITDA loss
Recurring Revenue
Summary, forecast, risks and KPIs are extracted from AWARE INC /MA/'s SEC filings for Q2 FY2024 (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.