Aware, Inc.

Good afternoon, and welcome to our second quarter 2024 conference call. Joining us today are the company's Chief Executive Officer and President, Robert Echol, Chief Financial Officer, David Traverse, Chief Revenue Officer, Craig Herman, and Chief Product Officer, Heidi Hunter. Following their remarks, we'll open the call to 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 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 wishes to caution you that there are factors that could cause actual results to differ materially from those indicated by such statements. 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 those factors. Viewer caution 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 undertakes no commitment to update or revise the forward-looking statements, whether because of new information, future events, or otherwise except as required by applicable securities laws. Additionally, this call contains certain non-GAAP financial measures, as the 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, OR 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'd 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'd like to turn the call over to our CEO and President, Bob Eckel. Bob?

Thanks, Matt. Good afternoon, everyone, and thank you for joining us today. After the market closed, we reported our results for the second quarter ending June 30th, 2024. A copy of the press release is available in the investor relations section of our website. For today's call, I'll start with our financial and operational highlights. David, our CFO, will then detail our financial results. followed by Heidi, our CPO, who will review our biometrics platform and strategic vision. Craig, our CRO, will cover key business developments and customer wins, and I'll conclude with our strategic outlook before we open for questions. We continued our strong momentum through Q2, enabling us to deliver impressive financial results for the first half of 2024. In the second quarter, we generated 36% and 31% year-over-year increases in total revenue and recurring revenue, respectively, driven both by new customer acquisitions and expanded relationships with existing clients across both our key markets and core product lines. Craig will go into more depth on these key contract wins in a few moments. We also maintained our cost optimization in the quarter. which is reflected in a 7% decrease in operating expenses compared to the prior year period. In the first half of 2024, our focus on operational efficiency and sustainable growth yielded remarkable results. We achieved a robust 17% year-over-year increase in our top line, coupled with a substantial 51% improvement in our bottom line. Additionally, our recurring revenue grew by 14% compared to the same period last year. These achievements underscore our continued progress in expanding and securing our recurring revenue customer base, enhancing our product portfolio, and implementing effective operational efficiency initiatives, demonstrating our commitment to long-term value creation and positions us for continued success in the market. We're thrilled with our appointment of Heidi Hunter as our new Chief Product Officer. With over a decade of experience in the identity space, product strategy, development and fraud prevention, Heidi brings a wealth of experience to AWARE. Heidi will bring her impressive track record in achieving product market fit and driving adoption to lead the enhancement of our product offerings and spearhead our expansion in the commercial sector. While Heidi will shortly share more about her background and initial plans for AWARE, I wanted to take this moment to introduce her and express our enthusiasm for the valuable perspective and leadership she brings our team. Her appointment represents a significant step forward in our mission to deliver cutting-edge solutions and drive sustainable growth. I'll now turn the call over to David, who will discuss our financial results for the second quarter in the first half of the year. Over to you, David.

Thank you, Bob, and good afternoon, everyone. Turning to our financial results for the second quarter ended June 30, 2024. Total revenue was $4.3 million. marking a 36% increase from $3.2 million in the same quarter of last year. This growth was driven by two key factors. Recurring revenue increased by $600,000, underscoring our success in building a stable, predictable income stream, and license sales that contributed an additional half a million dollars. This was primarily due to an expansion deal with an existing European customer. This demonstrates our ability to grow with our current client base and highlights our expanding international presence. These results reflect our dual strategy of nurturing long-term client relationships while also capitalizing on opportunities for larger recurring opportunities or one-time sales. The substantial year-over-year growth validates our business model and position as well for continued expansion in both recurring and license-based revenue streams. Now, moving down the income statement, operating expenses were $5.7 million, a half a million or 7% year-over-year decrease compared to $6.1 million in Q2 of last year. Operating loss improved 54% year-over-year to $1.3 million compared to a loss of $2.9 million in the same year-ago period. Gap net loss totaled $1.1 million or $0.05 per diluted share. a 59% improvement compared to a loss of $2.7 million, or $0.13 per diluted share in Q2 of 2023. Our adjusted EBITDA loss, which we reconciled the gap net income in our earnings release, so $1 million, an improvement compared to a loss of $2.4 million in the same year-ago period. The year-over-year improvement in net loss and adjusted EBITDA was primarily due to increased revenue and continued reductions in operating expenses. Turning to our financial results for the six months ended June 30th, 2024, total revenue was 8.7 million, up 17% from 7.5 million in the first half of last year. This was driven by a $700,000 increase in recurring revenue and a half a million dollar increase in license sales from existing customer expansions. Recurring revenue grew 14% year over year to 5.9 million, or 67% of total revenue, underscoring our continued shift towards a more predictable revenue model. The growth in both total and recurring revenue reflects the strength of our business model and the increased value our solutions provide to customers. Our focus on nurturing long-term client relationships is paying off, positioning us well for sustainable growth in the future. Our operating expenses decreased $1 million, or 8% year-over-year, to $11.3 million, compared to $12.3 million in the prior year. Operating loss improved 46% year-over-year to $2.6 million compared to an operating loss of $4.8 million in the same year-ago period. Net loss totaled $2.1 million or $0.10 per diluted share. A 51% improvement compared to a net loss of $4.2 million or $0.20 per diluted share in the first half of 2023. Adjusted EBITDA loss improved to $1.9 million, which compares to a loss of $3.8 million in the same year-ago period. Turning to our balance sheet, cash, cash equivalents, and marketable securities totaled $27.4 million as of June 30, 2024. This compares to $30.9 million as of December 31, 2023. Our robust financial foundation empowers us to strategically pursue growth opportunities and make targeted investments. We are actively exploring initiatives to enhance our technology edge. seeking avenues to expand our market presence and carefully evaluating opportunities that align with our long-term vision. This approach allows us to remain agile in a dynamic market, capitalize on emerging trends and technologies, and ensure sustainable growth and value creation. As we've talked about, we maintain a disciplined approach to capital allocation, balancing prudent investments with maintaining our financial strength. This strategy positions us to seize opportunities that will drive innovation, expand our reach, and ultimately deliver increased value to our shareholders. Our focus remains on opportunities that not only complement our existing portfolio, but also have the potential to significantly accelerate our growth trajectory and strengthen our competitive position in the market. This completes my financial summary. I'd now like to turn the call over to Heidi and let her introduce herself. Heidi?