Summary
Aware's fiscal 2025 second quarter showed a smaller revenue base carrying a larger cost structure. Revenue for the three months ended June 30, 2025 was $3.9 million, down 9.9% from $4.3 million in the prior-year quarter. Company commentary tied the decline to the timing of perpetual license sales, which move with customer purchasing cycles. Revenue for the six months ended June 30, 2025 was $7.5 million, down 14.2% from $8.7 million in the same period of 2024. Net loss for the quarter was $1.8 million, or $(0.08) per diluted share, compared with a net loss of $1.1 million, or $(0.05) per diluted share, a year earlier. Year-to-date net loss was $3.4 million, or $(0.16) per diluted share, against a net loss of $2.1 million, or $(0.10) per diluted share, in the first six months of 2024. The loss widened on both a quarterly and a year-to-date basis.
Operating loss widened to $2.0 million for the quarter from $1.3 million in the prior-year quarter, and to $3.8 million year to date from $2.6 million. Operating margin fell to -50.3% from -31.0% in the quarter and to -50.8% from -29.8% year to date. The company pointed to lower total revenue and higher personnel-related expenses, reflecting strategic investments in headcount made in the first half of 2025, as the main drivers. Adjusted EBITDA loss, a non-GAAP measure, was $1.4 million for the quarter compared with $1.0 million a year earlier, and $3.0 million for the six months compared with $1.9 million. Costs tied to the chief executive transition, including higher stock compensation and professional services around the new leadership, added to the expense base as well.
Recurring revenue, which Aware defines as term-based maintenance and subscription contracts, held at $2.7 million in the quarter, close to the $2.7 million reported a year earlier, but fell to $5.4 million for the six months from $5.9 million. Software license sales remain the lumpy part of the mix and the main source of the swings. Deferred revenue was $4.22 million at June 30, 2025, down 5.0% from $4.44 million a year earlier. Remaining performance obligations fell to $0.30 million from $3.60 million, a 91.7% decline, which leaves little contracted backlog visible on the balance sheet.
Cash generation stayed negative. Operating cash flow was -$1.15 million for the quarter, compared with -$0.67 million in the prior-year quarter, and -$4.09 million for the six months against -$3.08 million. Capital expenditures were $0.00 million in the quarter and $0.04 million year to date, flat with the prior-year six-month period. Cash, cash equivalents and marketable securities totaled $23.7 million at June 30, 2025, down from $27.8 million at December 31, 2024, a decline the company attributed to cash used in operating activities. Management stated that existing cash should fund operations for at least the next twelve months.
Product and go-to-market news carried the quarter's operational story. Aware reported new innovations including 14X faster face matching performance and smarter face capture for mobile devices. It was named an industry Luminary in Core Identity Technology in the Prism Project's Deepfake and Synthetic Identity Report. Its passive liveness detection earned best-in-class marks in the Department of Homeland Security's Remote Identity Validation Technology Demonstration. The company also appointed Lona Therrien as chief marketing officer, citing 15 years of cybersecurity marketing experience.
Management framed 2025 as a transformation year built on three pillars: the platform, the go-to-market effort, and partnerships across public sector and commercial markets. The second-half emphasis is on converting a late-stage pipeline and accelerating onboarding. No numeric revenue guidance appears in the materials. On the expense side, the company expects engineering costs to increase during the remainder of 2025 as product investment ramps, and selling and marketing costs to rise as it backfills the chief product officer role and adds sales headcount. It also expects interest income to decline slightly on a lower projected average cash balance. The risk list is familiar for this business: a significant share of revenue comes from government customers whose contracting and fiscal policies can shift, a meaningful portion flows through third-party channel partners, perpetual license deals are difficult to predict, competition in biometrics is intense, and the commercial market for the technology is still emerging. Aware also flags dependence on key personnel and the possibility that demand for cloud-based delivery does not develop as expected.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $3.9M | $3.6M | +8.0% | $4.3M | -9.9% |
| Gross profit | $3.6M | $3.4M | +5.7% | $4.1M | -12.2% |
| Gross margin | 91.3% | 93.2% | -1.9 pp | 93.8% | -2.5 pp |
| Research & development | $2.0M | $1.9M | +2.0% | $1.9M | +5.0% |
| Sales & marketing | $2.0M | $1.7M | +18.1% | $2.1M | -6.1% |
| General & administrative | $1.6M | $1.6M | -2.3% | $1.4M | +11.0% |
| Total operating expenses | $5.9M | $5.5M | +7.3% | $5.7M | +3.4% |
| Operating income (loss) | -$2.0M | -$1.9M | -5.9% | -$1.3M | -46.2% |
| Operating margin | -50.4% | -51.3% | +1.0 pp | -31.0% | -19.3 pp |
| Net income (loss) | -$1.8M | -$1.6M | -10.7% | -$1.1M | -62.4% |
| Net margin | -45.4% | -44.3% | -1.1 pp | -25.2% | -20.2 pp |
| Diluted EPS | -$0.08 | -$0.08 | ±$0.00 | -$0.05 | -$0.03 |
Risks
Software license revenue decreased 22% in the three months ended June 30, 2025 and 31% for the six months ended June 30, 2025 due to fewer one-time license deals and timing of renewal of subscription licenses. Total revenue was down 9.9% in the quarter and down 14.2% year to date, and management expects software license revenue to continue to fluctuate.
Operating loss widened to $1.96 million in the three months ended June 30, 2025 from $1.34 million in the prior-year quarter, and to $3.81 million for the six months ended June 30, 2025 from $2.60 million. Net loss also widened to $1.77 million in the quarter and $3.37 million year to date, while operating margin declined 19.3 percentage points in the quarter and 21.0 percentage points year to date.
Remaining performance obligations fell to $0.30 million at June 30, 2025 from $3.60 million at June 30, 2024, down 91.7%, while deferred revenue declined 5.0% to $4.22 million. This may signal reduced visibility into future software license and maintenance revenue.
Cost of revenue as a percentage of total revenue increased from 6% to 9% in the three months ended June 30, 2025 and from 6% to 8% year to date. Engineering costs are expected to increase during the remainder of 2025, and selling and marketing expense is also expected to increase as positions are backfilled, which could further pressure margins.
The company transitioned CEOs after Robert Eckel resigned effective December 31, 2024 and Ajay Amlani was appointed on February 3, 2025. General and administrative expense increased 11% in the quarter and 17% year to date partly due to the CEO transition, and the company plans to backfill the chief product officer position and add sales hires.
Operating cash flow was negative $4.09 million for the six months ended June 30, 2025, down $1.01 million from negative $3.08 million in the prior-year period. Cash, cash equivalents, and marketable securities decreased $4.1 million from December 31, 2024 to $23.7 million, and management cautions that liquidity beyond the next twelve months depends on future growth, operating results, and investment needs.
Management is focused on legacy government biometrics markets while expanding into emerging commercial biometrics markets, and states it is unable to predict future revenue from commercial markets. This creates uncertainty if legacy project timing or government demand weakens.
SaaS KPIs
All quarters →Adjusted EBITDA loss
Total recurring revenue
Summary, forecast, risks and KPIs are extracted from AWARE INC /MA/'s SEC filings for Q2 FY2025 (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.