Aware, Inc.

Good afternoon and welcome to AWARE's fourth quarter and full year 2021 earnings conference call. Joining us today is the company's CEO and President, Robert Eckel, and CFO, David Barcelo. Following their remarks, we will open the call for questions. If you'd 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'd like to remind everyone that the presentation today contains forward-looking statements that are based on the current expectations of AWARE's management Thank you. Thank you. Thank you. These risks and uncertainties are also outlined in the company's SEC filings, including its annual report on Form 10-K 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 to do so from time to time, OER 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 in Regulation G. Non-GAAP financial measures should not be considered in isolation from or a substitute for financial information presented in compliance with GAAP. Accordingly, AWARE has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure 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 link available in the investor relations section of the company's website. Now I would like to turn the call over to AWARE's CEO and President, Bob Eccles. Bob?

Thanks, Matt. Good afternoon, everyone, and thank you for joining us today. After the market closed, we issued a press release announcing our results for the fourth quarter and fiscal year ended December 31st, 2021. A copy of the press release is available in the investor relations section of our website. We're extremely excited to join you here today to review AWARE's financial and operational progress. As we continue to execute on our growth strategy and business model transformation, we are becoming increasingly bullish about the near and long-term prospects of the company. I'll start with a brief review of our 2021 accomplishments and discuss how AWARE is well positioned for meaningful growth in 2022 and beyond. Then our CFO, Dave Barslow, will review our financial results for the fourth quarter and full year 2021. Afterwards, I'll provide insight on our go-forward strategy and initiatives for 2022. Lastly, we'll open a call for questions. Our 2021 performance reflects the early success of our three-part transformational growth strategy and validates that we are on the right track. This past year was highlighted by material growth and infrastructure improvements, solidifying the foundation and enabling AWARE to scale and capitalize on the increasing tailwinds in the authentication industry. We delivered $16.9 million in total revenue, marking the highest annual revenue level in the last five years. Additionally, within that top line revenue, our recurring revenue grew 46% year over year and our subscription revenue more than doubled. Dave will get into financials in more detail momentarily. In 2021, we strengthened our core offerings in our delivery and support systems. This enabled sales expansion while preparing to launch our new SaaS offerings. We expect our December acquisition of Fortress Identity a pioneering provider of digital ID verification and biometric authentication to accelerate the time-to-market of our AwareID SaaS platform while providing a solid foundation for long-term growth going forward. In particular, FortressID's cloud-native platform, FortressID, uses biometric multi-factor authentication to combine onboarding validation and due diligence for compliance and risk management. Second, it expands our offerings for Electronic Know Your Customer, or EKYC, applications and provides a strong foothold in cloud-based service offerings. These include compliance and risk management for secure digital identities. Third, the acquisition accelerates our SaaS transformation by offering a rich portfolio of risk management authentication solutions for secure financial processing and data breach prevention. Lastly, it enables us to expand our strategic relationship with new partners and new customers around the world. Through the integration of Fortress ID and the continued execution of our three-part growth strategy, our focus is now on accelerating growth and expanding recurring revenue. Before discussing our initiatives for 2022 and beyond in more detail, I'll turn the call over to Dave, who will walk us through our financial results for the fourth quarter and full year. Dave, over to you.

Thank you, Bob. And good afternoon to everyone on the call. Let's turn to our financial results for the fourth quarter and fiscal year ended December 31st, 2021. Our total revenue in the fourth quarter was $4 million, up 17%, but $3.4 million in the same year-ago period. For the full year ended December 31, 2021, Our total revenue increased 49% to $16.9 million from $11.3 million in the same year-ago period. And looking at our operating expenses, for the fourth quarter of 2021, our operating expenses increased 5% to $5.5 million from $5.3 million in Q4 of last year. For the full year of 2021, our operating expenses increased 11%. to $23 million from $20.7 million in the same year-ago period. The quarterly and full-year period increases in operating expenses were primarily due to higher sales and marketing, as well as some general and administrative costs related to infrastructure build-out and the fortress identity acquisition in Q4. The corresponding operating loss for the fourth quarter of 2021 was $1.5 million Thank you for joining us. by increases in operating expenses. For the fourth quarter of 2021, gap net loss totaled $1.3 million or $0.06 per diluted share compared to a gap net loss of $1.6 million or $0.08 per diluted share in the same year-ago period. Gap net loss for 2021 totaled $5.8 million or $0.27 per diluted share. This was an improvement compared to a gap net loss of $7.6 million, or $0.35 per diluted share, in the prior year period. Our adjusted EBITDA loss for the quarter, which we reconciled to gap net loss in our earnings release, totaled $0.9 million. This compares to adjusted EBITDA loss of $1.4 million in the same year ago period. For the full year of 2021, Adjusted EBITDA loss totaled $3.8 million, which was a significant improvement, cutting our losses in half from an adjusted EBITDA loss of $8 million in 2020. Looking at our balance sheet, we had $30 million in cash and cash equivalents at the end of the quarter compared to $33.3 million at the end of the prior quarter. The decrease in cash and cash equivalents was primarily due to our acquisition of Fortress Identity. Aware maintains a strong and strategic cash position that enables us to allocate capital to high ROI opportunities. We continue to actively evaluate strategic opportunities to drive growth and scale as an organization. We have seen significant growth from our Nomi subscription accounts. We recorded 42 million transactions in 2021, a 250% year-over-year increase. The growing transaction volumes attest to the strength and scalability of the Nomi product line, which is paving the way for the future growth as new customers onboard and overall usage increases. This completes my financial summary. Now, I would like to turn the call back to Bob for additional insights on key initiatives and priorities for 2022 and beyond. Bob?