Aware (AWRE) Q1 2026 Earnings Transcript

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DATE

Wednesday, April 29, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer and President — Ajay Amlani
• Chief Financial Officer — David Traverse

TAKEAWAYS

• Revenue -- $3.4 million, a reduction from $3.6 million due mainly to lower perpetual software license sales, with some offset from increased maintenance, services, and other revenue.
• Operating Expenses -- $7 million, up from $5.5 million, attributed to a $700 thousand severance charge and higher compensation costs from 2025 hires.
• Annualized Cost Reductions -- $4 million eliminated from expenses on an annualized basis beginning in 2026 as part of a platform-first strategic transformation.
• Net Loss -- $3.5 million, or $0.16 per diluted share, compared to a $1.6 million net loss, or $0.08 per diluted share, in the previous year.
• Adjusted EBITDA Loss -- $3.2 million, greater than the $1.5 million loss reported previously.
• Cash and Liquidity -- $19.6 million held in cash, cash equivalents, and marketable securities, with no debt outstanding.
• Strategic Focus Shift -- Transition away from a fragmented software portfolio toward a unified biometric orchestration platform, prioritizing the awareness platform and scaling focus on federal government and enterprise customers.
• Product and Platform Validation -- "Our intelligent liveness solution demonstrated the ability to stop sophisticated attack vectors while maintaining a high-quality user experience" according to Ajay Amlani, in the DHS Remote Identity Validation Rally, Track 3.
• Go-to-Market Model Update -- "We took deliberate steps during the quarter to further align the business with our platform-first strategy. This included removing approximately $4 million in expenses and simplifying our go-to-market operating model," Ajay Amlani said.
• Market Research Feedback -- Internal survey showed 98% of organizations using biometrics are interested in orchestration capabilities, while nearly 90% express concerns related to AI-driven biometric attacks.

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RISKS

• Ajay Amlani stated, "Revenue for the first quarter was $3.4 million, which was below our expectations," with market shifts and delayed product architecture adaptation cited as contributing factors.
• Ajay Amlani admitted, "We did not move fast enough to get ahead of that reality, and this quarter's results reflect that," signaling execution risk in previous strategy alignment.
• David Traverse highlighted, "higher expenses included one-time severance cost of $700 thousand as well as higher compensation costs," impacting near-term profitability.
• Ongoing restructuring and investment shifts indicate management expects "near-term variability to continue," suggesting persistent earnings volatility in coming quarters.

SUMMARY

Management launched a major reset by removing $4 million in annualized expenses and narrowing investment to a unified orchestration platform, signaling a shift away from legacy and fragmented products. The company highlighted government test results demonstrating the efficacy of its liveness detection technology for combating advanced identity threats. Internal market research data was cited to support the strategy, showing significant customer interest in orchestration-driven biometric solutions and growing concerns about AI-driven fraud. Cash reserves of $19.6 million and an absence of debt aim to underpin continued transformation amid expense reductions and ongoing investment in targeted growth opportunities.

• Nearly all surveyed biometric-using organizations reported demand for orchestration solutions and cited escalating AI-related threat concerns, providing a data-driven rationale for the new product focus.
• Financial performance was hampered by a decline in perpetual license revenues, compounded by higher operating expenses and severance; net loss and adjusted EBITDA loss both widened sequentially from the prior year.
• Company leadership clearly attributes underperformance to delays in adapting to AI-driven market needs and is repositioning the business for a scalable enterprise and government platform rollout later in the year.

INDUSTRY GLOSSARY

• Liveness Detection: Biometric capability assessing whether biometric input (such as fingerprint or face) is from a live person rather than a spoofed, synthetic, or replayed artifact.
• Biometric Orchestration Platform: A software system integrating, managing, and scaling multiple biometric modalities and workflows within large organizational environments.

Full Conference Call Transcript

Operator: Good afternoon and welcome to Aware, Inc.'s First Quarter FY 2026 Conference Call. Joining us today are the company's CEO and President, Ajay Amlani, and CFO, David Traverse. Following their remarks, we will open the call to questions. If you would like to submit a question, you can do so at any time using the built-in Ask a Question feature in the webcast player. Before we begin today's call, I would like to remind everyone that the presentation today contains forward-looking statements that are based on current expectations of Aware, Inc.'s management and involve inherent risks and uncertainties that could cause actual results to differ materially from those described.

Listeners should please take note of the safe harbor paragraph that is included at the end of today's press release. This paragraph emphasizes the major uncertainties and risks inherent in forward-looking statements that management will be making today. Aware, Inc. wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements. These risks and uncertainties are also outlined in the company's SEC filings, including its annual reports on Form 10-Ks and quarterly reports on Form 10-Q. Any forward-looking statements should be considered in light of these factors. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made.

Although it may voluntarily do so from time to time, Aware, Inc. undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws. Additionally, this call contains certain non-GAAP financial measures as that term is defined by the SEC and Regulation G. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. Accordingly, Aware, Inc. has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the company's earnings release issued today.

I would like to remind everyone that this presentation will be recorded and made available for replay via a link available in the Investor Relations section of Aware, Inc.'s website. Now I would like to turn the call over to Aware, Inc.'s CEO and President, Ajay Amlani. Ajay Amlani?

Ajay Amlani: Thank you, Delaney, good afternoon, everyone. First, let me start with our performance this quarter. Revenue for the first quarter was $3.4 million, which was below our expectations. Transparently, we underestimated the pace at which the market was shifting and the degree to which our existing product infrastructure and architecture needed to evolve to meet it. The rapid advancement of AI has simultaneously raised the stakes and expanded the threat surface for biometric systems, making liveness detection and identity assurance more critical than ever, while making the job of protecting against spoofing and deepfakes more demanding. We did not move fast enough to get ahead of that reality, and this quarter's results reflect that.

As part of our ongoing transformation, we took deliberate steps during the quarter to further align the business with our platform-first strategy. This included removing approximately $4 million in expenses and simplifying our go-to-market operating model. These actions represent a meaningful reset of our cost structure and are designed to support a more focused, efficient organization aligned with our highest-return opportunities. Stepping back, this quarter marks the next phase of our transformation. 2025 was about building the foundation, strengthening our technology, expanding certifications, and deepening our understanding of customer requirements. We are now in step two, focusing the company around a single scalable platform strategy. At the center of that strategy is the awareness platform.

We are moving away from a fragmented portfolio of components and SDKs and toward a unified biometric orchestration platform designed to serve both federal government and enterprise customers at scale. We believe biometric orchestration represents a critical layer in modern identity infrastructure, enabling organizations to integrate, manage, and scale biometric systems and workflows across their environments with increased efficiency and simplicity. More importantly, this is not just a product decision. It is grounded in market demand and data. In our recently published market research, The State of Biometric Security in the Age of AI Fraud, an astounding 98% of organizations already using biometrics said they are interested in investing in orchestration capabilities.

Additionally, nearly 90% report concern over AI attacks targeting biometric systems, further illustrating why they need visibility into orchestrating biometric workflows. The report is available on our website, and I would encourage you to read it. Taken together, this feedback reinforces that we are aligned with where the market is headed, allowing us to build with a clear understanding of the opportunity in front of us. We also believe Aware, Inc. is uniquely positioned to lead in this category. Our decades of experience, our deep scientific foundation, and our strong intellectual property portfolio, particularly in liveness detection, represent a durable competitive advantage.

It is the critical capability that will determine winners and losers in this space, and it is where we have historically been strong and intend to lead. As part of this shift, we are prioritizing investment in the awareness platform and aligning our resources accordingly. This includes downshifting investment in certain legacy product areas, including portions of our law-enforcement-focused offerings, while continuing to fully support our existing customers and deliver on our commitments. At the same time, we are increasing our focus on the federal government, where our foundational capabilities have long been proven and where we continue to see demand for modernization and biometric interoperability.

In parallel, we have gained important insight from enterprise customers, whose requirements are increasingly centered around cloud-based, multi-tenant architectures. This feedback has directly shaped the design of the awareness platform, which is built to support scalable, enterprise-grade deployments. The platform continues to evolve; we are actively engaging with customers to refine capabilities and ensure strong product-market fit. We are encouraged by the feedback we are seeing and believe this positions us well as we plan for a broader platform rollout later this year.

Step three, which we expect to begin in the coming quarters and accelerate into the fall, is about scaling, bringing expanded platform capabilities to market, including continued advancements in liveness, and providing single-integration access to top-performing systems so that customers can test and evaluate performance as well as quickly deploy biometrics anywhere across their business. As we move through this transition, expect near-term variability to continue. Our focus is not on optimizing for quarter-to-quarter results, but on building a more durable, modern, and scalable business that can deliver steady, long-term growth and broader adoption of the platform.

While the business did not meet our expectations this quarter, we are confident that the actions that we have taken position us more effectively for the future. A key example of continued progress is our performance in independent real-world government evaluations. During the quarter, we delivered strong results in the DHS Remote Identity Validation Rally, Track 3, where our intelligent liveness solution demonstrated the ability to stop sophisticated attack vectors while maintaining a high-quality user experience. We view results like these as more than technical milestones. They are a direct reflection of our commitment to building high-assurance, production-ready technology that can operate at scale with speed and accuracy in the most demanding environments.

These validations are critical prerequisites for winning large government and enterprise deployments, and they reinforce our confidence in the platform as we continue to build. With that, I will turn the call over to David Traverse to review our financial results in more detail. Over to you, David Traverse.

David Traverse: Thank you, Ajay Amlani. I will review our financial results for the first quarter ended on 03/31/2026. Revenue for the quarter was $3.4 million compared to $3.6 million in the prior-year period. This decrease reflects lower perpetual software license revenue and was partially offset by higher maintenance, services, and other revenue. Operating expenses for the quarter increased to $7 million from $5.5 million in the prior-year quarter. The higher expenses included one-time severance cost of $700 thousand as well as higher compensation costs related to hires we made in 2025.

As noted earlier, we have reduced operating expenses by $4 million on an annualized basis starting in 2026, and we continue to make adjustments to our operating expenses as we focus on our strategic objectives. Net loss for the quarter was $3.5 million, or $0.16 per diluted share, compared to $1.6 million, or $0.08 per diluted share, in the prior-year period. Adjusted EBITDA loss was $3.2 million compared to $1.5 million in the prior-year period. We ended the quarter with approximately $19.6 million in cash, cash equivalents, and marketable securities, and we have no debt. Our balance sheet remains strong and provides flexibility as we execute on our strategic plan.

We expect the savings from the actions taken this quarter to be more visible as we align our expenses with our strategic priorities. Given the nature of our business and the transition underway, we expect quarterly variability to continue, and as a result, we continue to believe performance is best evaluated over multiple quarters. With that, I will hand it back to Ajay Amlani for closing remarks.

Ajay Amlani: Thanks, David Traverse. We have been transparent with you today about where we fell short. We underestimated both the fit and capability demands of the current market and the speed at which AI is reshaping what customers need from biometric infrastructure. That is on us, and the restructuring actions we have taken this quarter reflect genuine accountability—not a reaction to one quarter, but a deliberate reset toward our opportunity to lead as a biometric orchestration platform player. We are intentionally moving away from products that will not be relevant in our new paradigm and concentrating our resources on the areas where we have a proven durable advantage.

Chief among those is our liveness capability to help combat AI-powered spoofing and deepfake threats and our proven track record serving the federal government. The awareness platform is how we bring this to market at scale, giving customers a single integration point to access, evaluate, and deploy best-in-class biometric capabilities across their environments. The early feedback reinforces that this is the right direction, and we remain focused on executing the rollout with discipline. We are building toward consistent, long-term growth from a sharper, more defensible position. We believe the path forward is clear, and we are committed to it. We will now open the call for questions. Delaney, please provide the instructions.

Operator: Thank you, Ajay Amlani. At this time, there are no questions. That completes our call. As a reminder, this presentation is recorded and made available for replay via a link available in the Investor Relations section of Aware, Inc.'s website. Thank you, and you may now disconnect.

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