Summary
Aware's third quarter 2024 revenue fell to $3.85 million from $6.38 million in the prior-year quarter, a 39.7% decline. The drop was largely tied to software license revenue, which shrank after the prior-year quarter included a one-time license sale to a federal agency. For the first nine months, revenue was $12.59 million, down 9.2% from $13.87 million. Recurring revenue told a different story. This non-GAAP metric rose 29% to $2.8 million in the quarter and 19% to $8.7 million for the nine months. The mix is shifting toward maintenance and subscriptions, but the absolute revenue base remains volatile because large perpetual license deals dictate quarterly comparisons.
The bottom line swung sharply. Operating loss was $1.47 million in the quarter, compared with operating income of $0.75 million a year earlier. Operating margin was -38.1% versus 11.7%. Net loss was $1.17 million, or -$0.06 per diluted share, versus net income of $1.14 million, or $0.05 per diluted share. The nine-month picture was less dramatic. Operating loss was $4.07 million versus $4.06 million, essentially flat. Net loss was $3.24 million versus $3.08 million, and diluted EPS was -$0.15 in both periods. Cash generation weakened: operating cash flow was -$0.76 million in the quarter versus $2.46 million a year ago, and -$3.84 million for the nine months versus -$1.24 million. Deferred revenue ended the quarter at $5.41 million, down 8.5% from $5.91 million. Remaining performance obligations fell to $0.30 million from $3.70 million, a 91.9% drop that highlights the lumpy nature of backlog. Capital expenditures were $0.04 million for the nine months, up from $0.02 million, while quarterly capital expenditures were $0.00 million in both periods.
Operationally, Aware kept adding commercial and government opportunities. In October 2024, the company secured a $1 million booking with a European government, with license delivery planned within the current year and a portion expected to contribute to annual recurring revenue. It launched AwareID on the WordPress Marketplace, a no-code plug-in for cloud-based biometric and identity authentication. Aware also introduced a new core version of BioSP with offline biometric enrollment capabilities. Management pointed to industry recognition, including a case study in the 2024 Biometric Digital Identity Financial Services Prism report where a Brazilian bank saw an 86% reduction in fraud within six months after implementing an Aware solution. The company hosted its inaugural Partner Summit at GITEX GLOBAL and showcased authentication solutions at several industry events.
Guidance remains focused on the full fiscal year 2024. Management reaffirmed expectations for double-digit annual recurring revenue and recurring revenue growth for 2024. It also said it aims for sustainable positive cash flow in the future. Adjusted EBITDA loss was $1.1 million in the quarter, compared with positive adjusted EBITDA of $0.4 million a year earlier. For the nine months, adjusted EBITDA loss improved to $3.0 million from $3.3 million. The company has been cutting costs, including a reduction of approximately ten percent of headcount across all departments, which it says supported lower operating expenses. Those efforts have not yet offset the revenue decline.
Risks are concentrated. Aware depends on government customers and third-party channel partners, and software license revenue can swing widely based on project timing. The company faces intense competition, rapid technological change, potential software defects, cybersecurity threats, and limited intellectual property protection. Executive turnover adds uncertainty. CEO Robert Eckel will resign effective December 31, 2024. Aware has engaged an executive strategic advisor and an executive search firm, and it expects transition-related expenses in the fourth quarter of 2024. With revenue under pressure, RPO depleted, and operating cash flow negative, the coming quarters will test whether recurring revenue growth and cost discipline can produce the positive cash flow management is targeting.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2024 | Q2 FY2024 | QoQ | Q3 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $3.8M | $4.3M | -10.9% | $6.4M | -39.7% |
| Gross profit | $3.6M | $4.1M | -11.7% | $6.0M | -40.1% |
| Gross margin | 93.0% | 93.8% | -0.8 pp | 93.6% | -0.6 pp |
| Research & development | $1.9M | $1.9M | +0.3% | $2.3M | -17.3% |
| Sales & marketing | $1.9M | $2.1M | -11.2% | $2.2M | -14.5% |
| General & administrative | $1.3M | $1.4M | -8.2% | $1.6M | -17.7% |
| Total operating expenses | $5.3M | $5.7M | -6.1% | $5.6M | -5.6% |
| Operating income (loss) | -$1.5M | -$1.3M | -9.4% | $747.0K | -296.4% |
| Operating margin | -38.1% | -31.0% | -7.1 pp | 11.7% | -49.8 pp |
| Net income (loss) | -$1.2M | -$1.1M | -7.2% | $1.1M | -202.0% |
| Net margin | -30.3% | -25.2% | -5.1 pp | 17.9% | -48.3 pp |
| Diluted EPS | -$0.06 | -$0.05 | -$0.01 | $0.05 | -$0.11 |
Risks
Software license revenue decreased 73% from $4.4 million in the three months ended September 30, 2023 to $1.2 million in the three months ended September 30, 2024, largely because of lower perpetual license sales including the absence of $2.9 million of license revenue from a government contract recognized in the prior-year quarter. This leaves results dependent on lumpy government project awards.
Remaining performance obligations decreased 91.9% to $0.30 million at September 30, 2024 from $3.70 million a year earlier, and deferred revenue decreased 8.5% to $5.41 million. The decline reduces forward revenue visibility.
The company swung to an operating loss of $1.47 million in FY2024 Q3 from operating income of $0.75 million in FY2023 Q3, while net income swung to a net loss of $1.17 million from net income of $1.14 million. Operating margin was negative 38.1% in the current quarter versus positive 11.7% in the prior-year quarter.
Operating cash flow was negative $0.76 million in FY2024 Q3 versus positive $2.46 million in FY2023 Q3, and FY2024 year-to-date operating cash flow was negative $3.84 million, down 209.5% from negative $1.24 million. Cash, cash equivalents and marketable securities decreased $3.5 million from December 31, 2023.
CEO Robert Eckel will resign effective December 31, 2024, and the company expects approximately $0.9 million of general and administrative expenses in Q4 2024 related to the transition. The company has engaged an executive strategic advisor and an executive search firm, creating execution risk during the leadership change.
Cost-control measures included a reduction of approximately ten percent of headcount across all departments, and the chief revenue officer departed in September 2024. These changes could affect sales execution and product development capacity.
The company plans to expand into new commercial biometrics markets but states it is unable to predict future revenue from these emerging markets. This uncertainty adds risk to growth expectations beyond legacy government biometrics markets.
SaaS KPIs
All quarters →Adjusted EBITDA loss
Recurring Revenue
Summary, forecast, risks and KPIs are extracted from AWARE INC /MA/'s SEC filings for Q3 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.