Aware, Inc.

Good afternoon, and welcome to AWARE's second quarter 2025 conference call. Joining us today are the company's CEO and President, AJ Malani, CFO David Traverse, and CRO Brian Krause. For other remarks, we will 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 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 results indicated by such statements. These results and uncertainties are also outlined in the company's SEC filings, including its annual report on Form 10-K, quarterly reports on Form 10-Q. Any forelooking statements should be considered in light of these factors. You are cautioned not to place undue reliance upon any forelooking statements which speak only as of the date made. Although it may voluntarily do so from time to time, awareness takes no commitment to update or revise the forelooking 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 the term is defined by the SEC in 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 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 the 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, AJ Amlani.

AJ. Thank you, Matt, and good afternoon, everyone. This quarter marked another step forward in the strategic transformation we began earlier this year. We're building a durable, scalable business grounded in operational rigor, market alignment, and differentiated technology. Since February, we've laid the foundation for future growth through deeper customer engagement, enhancements to our industry-leading technology, and strategic hires that reinforce our science-forward, customer-obsessed approach to go-to-market execution. At the core of our transformation is AWARE's deep-rooted expertise and three decades of innovation in biometric technology. From pioneering fingerprint and facial recognition to leading in passive liveness and multimodal identity platforms, we've consistently earned the trust of some of the world's most security-conscious institutions. Our proven track record across both public and private sectors gives us a unique advantage in today's market where trust, performance, and interoperability are paramount. As we've engaged with customers, we have identified new opportunities to be their trusted technology partner in biometrics, helping transform data into actionable intelligence. To meet a growing market need, we've harnessed the power of our core technology and repositioned our product suite as the awareness platform. This evolution allows us to deploy our capabilities in new and innovative ways, including strategic partnerships with customers and best-in-class providers. The result for customers is greater flexibility to deliver fast, accurate verification to help fight fraud, prove humanity, and protect revenue with confidence. In Q2, we achieved best-in-class performance in the Department of Homeland Security's remote identity validation technology demonstration for passive likeness detection. This is one of the most rigorous biometric benchmarks in the world, and AWARE excelled. Our solution stood out for its strength in combating identity fraud and reducing friction. These results validate not only our evolving technology, but also our ability to meet real-world performance requirements for secure, seamless identity verification in the ever-changing identity fraud landscape. We also received strong third-party validation of our technological prowess. We were recognized as a luminary in core identity technology in the PRISM Project's DeepFake and Synthetic Identity Report, an independent evaluation of over 200 organizations. Aware was specifically recognized for standout capabilities in deep fake detection, injection detection, and both active and passive liveness, highlighting the depth of our science and the sophistication of our awareness platform. These validations underscore that we're not just keeping pace with the market, but rather helping shape it. Through continuous product innovation and independent validation, AWARE is becoming the trusted biometric infrastructure partner for governments and global enterprises alike. As we outlined last quarter, advancing our core technology remains a central focus for our transformation strategy. In Q2, we continue to focus on our first pillar of transformation to enhance our awareness platform, our system-agnostic infrastructure that integrates the best-in-class biometric algorithms into a single, interoperable, rapidly deployable solution. We improved both facial matching speed and mobile face capture reliability, allowing for a more frictionless user experience. These improvements reflect our science-forward approach, our focus on scalability, and our decades of experience. With large commercial enterprises struggling to build this internally, our platform will give the market a plug-and-play biometric security solution that can be deployed in weeks. To support and accelerate this market opportunity, we further strengthened our leadership team. This quarter, we welcomed Lona Tarian as Chief Marketing Officer. With over 15 years of cybersecurity marketing experience, Lona has a proven track record of building high-performing teams, driving demand, and strengthening brand visibility. Her leadership at companies like ExtraHop, CyberReason, Mimecast, RSA, and SuperTeef at a data-driven, customer-first approach. Her expertise is already helping amplify our voice and drive stronger engagement across both the enterprise and government sectors. We anticipate that Lona's leadership will be instrumental in increasing brand visibility, accelerating pipeline velocity, and generating more consistent marketing source demand in the second half of the year. The second pillar of our transformation is continuing to strengthen our go-to-market strategy to scale the business thoughtfully and sustainably. We're executing effectively against our 2025 plan with strong momentum across both the pipeline and our strategic accounts. To improve win rates and accelerate the onboarding of key customers, we're making targeted investments in critical areas. This intentional and disciplined approach to spending is designed to de-risk long cycle opportunities and position us for accelerated revenue growth in the latter half of 2025. The final pillar of our strategy is deepening our strategic partnerships across both the public and commercial sectors. This quarter, we expanded our presence in the federal space by engaging external experts to support our strategic positioning and drive opportunity development within key U.S. government agencies. These efforts are aimed at increasing our visibility and alignment with government priorities, ultimately strengthening our public sector opportunity pipeline. In addition, we expanded our federal footprint internationally. In Q2, we secured national ID programs for two Middle Eastern governments. These contracts were secured through a new partner, highlighting the strength of our growing network and customer success team. A key customer secured this quarter was a top 15 global financial institution, marking the continued expansion of AWARE in the commercial sector. Our customer-obsessed go-to-market execution is translating into real wins, and a growing pipeline of meaningful opportunities across our target markets. We're building real momentum and doing it with customers that understand the strategic value of what we're offering, and in particular, the uniqueness of our awareness platform. With that, I'll turn it over to David for a closer look at our Q2 financials. Over to you, David.

Thank you, AJ. I'll walk you through our financial results for the second quarter that ends on June 30th, 2025. Total revenue for the quarter is $3.9 million. to $4.3 million in the prior year period. The year-over-year decrease was largely the result of timing of perpetual license sales. As we mentioned in our last call, we expect revenue to fluctuate as we execute and wear strategic transformation, all of which is building the foundation for sustainable future growth. Recurring revenue increased 2% year-over-year to $2.7 million for the second quarter. The slight increase was primarily due to increased software maintenance. Moving down the income statement, operating expenses were $5.9 million compared to $5.7 million in Q2 of 2024. The increase is the result of expanding the AWARE team, particularly the key executive leaders we've hired throughout the year to accelerate growth. Operating loss was $2 million compared to an operating loss of $1.3 million in the prior year period. Gap net loss was $1.8 million, or $0.08 for a doula to share, compared to gap net loss of $1.1 million or $0.05 per dilution year in the same year-ago period. Adjusted EBITDA loss for Q2, which would reconcile the gap net income in our earnings release, was $1.4 million compared to an adjusted EBITDA loss of $1 million in the second quarter of 2024. The year-over-year increase in adjusted EBITDA loss was attributed to lower revenue as discussed above. Turning to our financial results for the six-month end of June 30th, 2025, Total revenue was $7.5 million compared to $8.7 million in the first half of 2024, and recurring revenue was $5.4 million compared to $5.9 million in the first six months of 2024. The year-over-year decrease in revenue was the result of timing of perpetual license sales, as well as the impact to recurring revenue of some customers right-sizing their transaction prepayments based on prior year usage. Our operating expenses were flat year-over-year at $11.3 million, operating loss at $3.8 million compared to an operating loss at $2.6 million in the prior year period. Net loss was $3.4 million, or $0.16 per diluted share, compared to a net loss of $2.1 million, or $0.10 per diluted share in the same year-ago period. Adjusted EBITDA loss was $3 million compared to adjusted EBITDA loss of $1.9 million in the first half of 2024. Transitioning now to the balance sheet, as of June 30, 2025, we have cash, cash equivalent, and marketable securities totaling $23.7 million, compared to $27.8 million as of December 31, 2024. We remain well capitalized, and our strong balance sheet provides the flexibility to continue investing with purpose. In the months ahead, we will focus on spending on areas that directly support growth, including customer success and commercial execution. These investments are designed to accelerate pipeline conversion, improve onboard readiness, and create long-term value. We are monitoring progress closely to ensure spending stays disciplined and aligned with revenue opportunities. While the first half reflected a transitional phase of our business, we're experiencing early traction from the foundational work completed across our go-to-market strategy. leadership additions, and platform enhancements. These efforts are starting to generate signs of momentum that we believe will translate into improved revenue performance as we exit 2025. With that, I'll turn our call over to our Chief Revenue Officer, Brian Cross. Brian?