Q1 2022 Aware Inc Earnings Call
Good afternoon and welcome to AWARE's first quarter 2022 conference call. Joining us today is the company's CEO and President, Robert Eckel, and CFO , David Barcelo. Following their remarks, we'll open the call for questions.
And welcome to <unk> first quarter 2022 conference call.
As the company's CEO , and President Robert Echo and CFO , David Barcelona.
Following their remarks, we'll 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.
If you'd like to submit a question you can do so at any type of music 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 four looking statements that are based on the current expectations of awareness management and involve inherent risks and uncertainties that could cause actual results to differ materially from those described.
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 a waste 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 pressure.
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.
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.
We're wishes to caution you that there are factors that could cause actual results to differ materially from those results 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 these factors.
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 do.
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 undertakes no commitment to update or revise the forward-looking statements, either as a result of new information, future events, or otherwise except as required by applicable security laws.
From time to time, where undertakes no commitment to update or revise any 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 the term is defined by the SEC and Regulation G. non-GAAP financial measures should be considered in isolation from or a substitute for financial information presented in compliance with GAAP.
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 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 in the most directly comparable GAAP measures in the company's earnings release issued today.
Currently aware has provided a reconciliation of these non-GAAP financial measures and 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.
To remind everyone that this presentation will be recorded and made available for replay via <unk>.
Link available in the investor relations section of the company's website. Now I would like to turn the call over to our CEO and President Bob Eckel. Bob.
A 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 <unk> Bob.
Thanks, Matt. Good afternoon, everyone, and thank you for joining us today.
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 first quarter ended March 31st, 2022.
After the market close we issued a press release announcing our results for the first quarter ended March 31 2022.
A copy of the press release is available in the investors relations section of our website.
A copy of the press release is available in the investors relations section of our website.
We are pleased to join you today, and on today's call, I will discuss how the progress we've made on our strategic roadmap during the first quarter has paved the way for continued long-term, predictable growth for AWARE.
We are pleased to join you today and.
On today's call I will discuss how the progress we've made on our strategic roadmap. During the first quarter has paved the way for continued long term predictable growth for aware.
After the high-level overview of our operational progress, our CFO Dave Barcelo will provide additional details on our first quarter financial results.
After the high level overview of our operational progress our CFO , Dave Barcelona, who will provide additional details on our first quarter financial results.
Then I'll review our 2022 focus in business drivers and outlook. Lastly, we'll open the call for questions.
Then I'll review, our 2022 focus and business drivers and outlook.
Astley, we'll open the call for questions.
Our first quarter financial results demonstrate the continued progress we have made towards building a solid recurring revenue base as we continue to transition aware into a subscription base SaaS platform company.
Our first quarter financial results demonstrate the continued progress we have made towards building a solid recurring revenue base as we continue to transition aware into a subscription-based SaaS platform company.
Our top line increased 17% sequentially and 6% year over year to $4.7 million, marking the highest quarterly revenue level since 2018.
Our top line increased 17% sequentially and 6% year over year to $4 7 million, marking the highest quarterly revenue level since 2018.
Even more encouraging, recurring revenue grew 30% year over year, driven by a 73% increase in subscription revenue over Q1 of last year.
Even more encouraging recurring revenue grew 30% year over year, driven by a 73% increase in subscription revenue over Q1 of last year.
The 73% growth in subscription revenue reflects the expansion of existing partners in the addition of new partners all over the world.
The 73% growth in subscription revenue reflects the expansion of existing partners and the addition of new partners all over the world.
As I talked about on our call in March, adding strategic partners is a top priority for us this year. It allows us to create a foundation for growth without increasing costs, as well as expanding our reach into new geographies and end markets.
As I talked about on our call in March adding strategic partners is a top priority for us this year.
It allows us to create a foundation for growth without increasing costs as well as expanding our reach into new geographies and end markets.
Several new customers are currently ramping their integrated solution in anticipation of a full launch in the coming quarters.
Several new customers are currently ramping their integrated solution anticipation of a full launch in the coming quarters.
In Q1, we announced two strategic partnerships.
first with Ananabid and the other with Miracles.
The first with a non a bit.
Any other with Miracle.
These partnerships align seamlessly with the capabilities of Fortress ID, which we acquired in December , and whose integration into our platform is ongoing.
These partnerships align seamlessly with the capabilities of <unk>, which we acquired in December and whose integration into our platform is ongoing.
When combined, we expect these three parts and technology to enable us to accelerate the development of our solutions aimed at the financial services market.
Combined we expect these three parts and technology to enable us to accelerate the development of our solutions aimed at the financial services market.
The partnership with a non a bit which we announced in February and briefly mentioned on our call in early March specifically addresses biometric data privacy concerns.
Partnership with Ananabid, which we announced in February and briefly mentioned on our call in early March, specifically addresses biometric data privacy concerns.
Anonabit's decentralized approach to identity data storage uses anonymized data in a distributed network to thwart data breaches and enhance data privacy.
Non of bits decentralized approach to identity data storage users anonymised data in a distributed network to thwart data breaches and enhanced data privacy. We are working closely with the <unk> team spring highly secure privacy enhanced biometric solutions to customers and their users. This.
We are working closely with the Inonabit team to bring highly secure, privacy enhanced biometric solutions to customers and their users.
This will allow customers to utilize all the benefits of AWARE's best-in-class biometric technology, while remaining confident that their individual biometric data will be protected from it.
Will allow customers to utilize all the benefits of a where's best in class biometric technology, while remaining confident that their individual biometric data will be protected from it.
We anticipate the combined offering to be deployed across a range of use cases, including passwordless authentication, access control, time independence, and visitor management.
We anticipate the combined offering to be deployed across a range of use cases, including password less authentication access control time and attendance and visitor management.
In March, we announced a strategic partnership with Mirco, a cybersecurity software company that specializes in single-step, secure multi-factor authentication.
In March we announced a strategic partnership with Miracle Cyber security software company that specializes in single step secure multifactor authentication to America partnership enhances our cloud based biometric authentication technology to protect against data breaches and ransomware by adding miracles risk managed.
The Miracle partnership enhances our cloud-based biometric authentication technology to protect against data breaches and ransomware. By adding Miracle's risk management functionality to our platform, we can deliver greater value to our customers and increase the number and variety of our easily integrated cloud and SaaS-based adaptive authentication services to best fit our customers' needs and flexibility requirements.
<unk> functionality to our platform, we can deliver greater value to our customers and increase the number and variety of our easily integrated cloud and SaaS based adaptive authentication services to best fit our customers' needs and flexibility requirements.
The added MFA solution to Wares Biometrics allows us to deliver more layers of security beyond passwords, one-time passwords, two-factor authentication, and others. In addition, it significantly enhances the security of consumer identity and better supports regulatory compliance.
The added MFA solution to wears biometrics allows us to deliver more layers of security beyond passwords onetime passwords, two factor authentication and others. In addition, it significantly enhances the security of consumer identity and better supports regulatory compliance.
The combined solution easily integrates with single sign-on, or SSO, solutions and adapts better to growing and emerging cybersecurity threats.
<unk> solution easily integrates with single sign on or SSO solutions, and adapt better to growing and emerging cyber security threats.
It is important to note that while these technologies are layers, they are carefully orchestrated to not add complexity or friction. As such, we still maintain speed in a frictionless experience.
It is important to note that while these technologies are layers. They are carefully orchestrated to not add complexity or friction as such we still maintain speed and a frictionless experience.
The partnership with Americal is structured as a mutual reseller arrangement so each company can sell each other's products and integrate them within their own product lines, thereby accelerating the market availability of passwordless multi-factor authentication that incorporates advanced biometrics.
It's a partnership with a miracle is structured as a mutual reseller arrangement. So each company can sell each other's products and integrate them within our own product lines, thereby accelerating the market availability of password list multifactor authentication that incorporates advanced biometrics.
We also made a $2.5 million strategic investment in a convertible note issued by the parent company of Miracle OMLIS Limited to support its growth.
We also made a $2 5 million strategic investment in a convertible note issued by the parent company of Miracle Armless limited to support its growth.
Facilitating market adoption of NOMI is a key aspect of growing our recurring revenue base. To that end, we now support Flutter.
Facilitating market adoption of Nuomi is a key aspect of growing our recurring revenue base to that end, we now support flutter.
application framework in Nomi version 5.0, transforming the application development process for biometric onboarding and authentication by empowering developers to build and deploy advanced applications across web, mobile and desktop environments with a single code base.
Application framework.
<unk> version five point O transforming the application development process for biometric onboarding and authentication by empowering developers to build and deploy advanced applications across web mobile and desktop environments with a single code base.
Developers are now able to integrate Nomi's state-of-the-art multiple biometric authentication capabilities into advanced customized applications more quickly and cost-effectively, expanding Nomi's reach while accelerating customers' time to market.
<unk> is now able to integrate <unk> state of the art multiple biometric authentication capabilities into advanced customized applications more quickly and cost effectively expanding <unk> reach while accelerating customers' time to market.
Overall, we made tremendous progress in the first quarter, executing our partner strategy, continuing to build a strong recurring revenue base, and setting the foundation for continued long-term growth. Now, before discussing our focus for 2022, I'll turn the call over to Dave to walk us through our financial results for the first quarter. Dave, over to you. Thanks a lot, Dave.
Overall, we made tremendous progress in the first quarter executing our partner strategy continuing to build a strong recurring revenue base and setting the foundation for continued long term growth now before discussing our focus for 2022, I will turn the call over to Dave to walk us through our financial results for the first.
Dave over to you.
Thank you Bob and good afternoon to everyone on the call.
Turning to our financial results for the first quarter, March 31st, 2022, revenue was
Turning to our financial results for the first quarter ended March 31 2022.
Revenue was $4 7 million, an increase of 17% compared to $4 million in the fourth quarter of 2021, and an increase of 6% compared to $4 4 million in the same year ago period.
17% compared to 4 million in the fourth quarter of 2021 and an increase of 6% compared to 4.4 million in the same year ago period.
As Bob mentioned, the year-over-year increase in revenue was primarily the result of higher subscription-based revenue as well as higher maintenance.
As Bob mentioned the year over year increase in revenue was primarily the result of higher subscription based revenue as well as higher maintenance revenue.
Looking at our expenses for the first quarter of 2022, our operating expenses increased 2% to $6 million from $5 9 million in Q1 of last year.
Looking at our expenses, for the first quarter of 2022, our operating expenses increased 2% to $6 million from $5.9 million in Q1 of last year.
The $100,000 increase in operating expenses was due primarily to higher sales and marketing
The 100000 increase in operating expenses was due primarily to higher sales and marketing costs.
The corresponding operating loss for the first quarter of 2022 was $1.3 million, an improvement from an operating loss of $1.4 million in the same year-ago period.
The corresponding operating loss for the first quarter of 2022 was $1 3 million an improvement from an operating loss of $1 4 million.
The same year ago period.
The year over year improvement in operating loss is primarily due to higher risk.
The year over year improvement in operating loss was primarily due to higher revenues.
For the first quarter of 2022, gap net loss totaled 1.3 million, or $0.06 per diluted chair, compared to a gap net loss of 1.4 million, or $0.07 per diluted chair in the same year ago.
For the first quarter of 2022, GAAP net loss totaled $1 3 million or <unk> <unk> per diluted share compared to a GAAP net loss of $1 4 million or seven cents per diluted share in the same year ago period.
Our adjusted EBITDA loss for the quarter, which we reconcile to GAAP net loss in our earnings release.
Our adjusted EBITDA loss for the quarter, which we reconciled a gap net loss in our earnings release, totaled
<unk> 6 million.
This is an improvement from adjusted EBITDA loss of 1.1 million in the same year ago.
This is an improvement from adjusted EBITDA loss of $1 1 million in the same year ago period.
Looking at our balance sheet, we had $25 1 million in cash cash equivalents at the end of the quarter compared to $30 million at the end of the prior quarter.
Looking at our balance sheet, we had $25.1 million in cash and cash equivalents at the end of the quarter compared to $30 million at the end of the prior quarter.
For the three-month period, we used $2.5 million for our strategic investment in Miracle and $2.5 million for our operations.
For the three months period, we used $2 5 million for our strategic investment in Miracle and $2 5 million for operations.
Aware maintains a strong and strategic cash position that enables us to allocate capital to high ROI operations.
Aware maintains a strong and strategic cash position that enables us to allocate capital to high ROI opportunities.
to actively evaluate strategic opportunities to drive growth and scale as an organization.
Continue to actively evaluate strategic opportunities to drive growth and scale as an organization.
We also continue to see significant growth from our Noemie subscription account.
We also continue to see significant growth from our newly subscription accounts historically disclosed transaction volumes because it was an early indicator of nuomi adoption.
Historically, it would disclose transaction volumes because it was an early indicator of NOMA adoption.
However, with the continued growth in recurring revenue and a mix of subscription contracts based off the number of transactions or based off the number of...
However, with the continued growth in recurring revenue and a mix of subscription contracts based off the number of transactions or based off the number of users. We believe recurring revenue is it more reflective indicator of the continued adoption of Nuomi and our companies transition into a subscription based SaaS platform.
We believe recurring revenue is a more reflective indicator of the continued adoption of NOMI and our company's transition into a subscription-based SaaS platform company.
Company.
This completes my financial summary, now I'd like to turn the call back to Bob for additional insights on our key initiatives for 2022 and beyond Bob.
Now I'd like to turn the call back to Bob for additional insights on our key initiatives for 2022 and beyond.
Thanks, Dave.
Our financial results reflect the continued traction we're realizing on our three-year business model transformation into a SAS platform company with consistent subscription and recurring revenue. As I noted on our fourth quarter call last month, the next phase of our growth journey is to launch our Aware ID SAS platform. We're laser...
Our financial results reflect the continued traction we're realizing on our three year business model transformation into a SaaS platform company with consistent subscription and recurring revenue.
As I noted on our fourth quarter call last month.
The next phase of our growth journey is to launch our aware I'd SaaS platform. We are laser focused on executing on our operational initiatives to accelerate our growth and expand recurring revenue.
A key driver of our growing recurring revenue, particularly subscription revenue as our partner led sales efforts, adding partnerships is a top priority and we are seeing great traction in that regard.
We recently added new partners in the Middle East Asia, and South America, and we're continuing to secure new partnerships that will expand our reach into end markets globally.
We've recently added new partners in the Middle East, Asia, and South America, and we're continuing to secure new partnerships that will expand our reach into end markets globally.
Our partners, well established customer relationships and deep insights into their customers' needs facilitate higher adoption of <unk> offerings. Moreover, partnerships with commercial resellers integrated product resellers and prime contractors for government initiatives allow us to build operational leverage.
Moreover, partnerships with commercial resellers, integrated product resellers, and prime contractors for government initiatives allow us to build operational leverage.
Enabling us to expand our revenue without adding additional expenses.
We anticipate additional partnerships coming online over the next several quarters and to be able to announce those.
We anticipate additional partnerships coming online over the next several quarters and to be able to announce those customers wins and related accomplishments. Once they are fully launched.
Furthermore, we are structuring these partnerships around our future as a SaaS platform company.
Furthermore, we are structuring these partnerships around our future as a SaaS platform company as we get ready to launch <unk> in the second half of the year. We are working with partners to prepare future offerings based on that platform. We're also ramping our sales and marketing emphasis on <unk> and our cloud offerings to expand brand awareness.
We are working with partners to prepare future offerings based on
We're also ramping our sales and marketing emphasis on Aware ID and our cloud offerings to expand brand awareness in North America.
In North America and across the globe.
We remain focused on driving topline revenue growth that exceeds the biometric market CAGR of 15% with recurring revenue and commercial market sales, becoming a larger share of our total revenue in 2022.
We remain focused on driving top line revenue growth that exceeds the biometric market category of 15%. With recurring revenue, laughter and
Additionally, we expect to derive increasing operating leverage from our partnerships with
Additionally, we expect to derive increasing operating leverage from our partnerships with indirect resellers and the scalability of our SaaS platform.
anticipate crossing over to adjusted EBITDA profitability by the end of 2014.
We anticipate crossing over to adjusted EBITDA profitability by the end of 2023, although the exact timing is unknown at this point.
We also remain committed to achieving scale and executing our growth strategy, both organically and through inorganic means. We will continue to review strategic opportunities with an emphasis on SaaS offerings and expansion that would accelerate our growth and or advance our product roadmap. We will remain judicious with our capital.
We also remain committed to achieving scale and executing our growth strategy, both organically and through inorganic means we will continue to review strategic opportunities with an emphasis on SaaS offerings and expansion that would accelerate our growth and our advance our product roadmap.
We will remain judicious with our capital to ensure any acquisitions or investments are and coordinates with our growth strategy.
In summary, given our strong first quarter results and operational progress we are increasingly bullish about our company's prospects for 2022 and beyond.
Our recurring revenue base continues to grow steadily with subscription revenue up 73% year over year. We are excited for the upcoming launch of our SaaS platform aware I'd, which.
We are excited for the upcoming launch of our SAS Platform AWARE-ID, which has been enhanced with the capability as a FORTRESS-ID. And now our
Which has been enhanced with the capability is a fortress.
And now our new strategic partnerships with miracle in a non a bit.
We believe we are well positioned for sustainable growth and remain highly confident in our ability to outperform the broader biometric industry growth rates.
All of us at AWARE appreciate your continued support and look forward to what is ahead for our company.
All of US are aware I. Appreciate your continued support and look forward to what is ahead for our company and industry.
With that, we are ready to open a call for questions.
With that we are ready to open the call for questions. Matt Please provide the appropriate instructions.
Thank you Bob as a reminder, you can submit a question using the built in ask a question feature in the webcast player. Please hold will be populate the questions.
Thank you, Bob. As a reminder, you can submit a question using the built-in Ask a Question feature in the webcast player. Please hold while we populate the question.
First question is for you, Bob. What does ramping mean with respect to integrated resellers?
First question is for you Bob what does ramping mean with respect to integrated resellers.
Yes.
Matt, I think we have an audio problem with Bob. So let me go ahead and.
We had I think we.
They are an audio problem with Bob So let me go ahead and.
Answer that for you.
Yeah.
When we talk about ramping in the context of our integrated resellers, it means we've signed an initial partnership.
When we talk about ramping in the context of our integrated resellers. It means we signed an initial partnership agreement.
This is typically a minimum initial level. And while we...
This is typically a minimum initial level and while we.
Okay.
Okay.
Yes.
Okay.
Okay.
We're experiencing technical difficulties if you could please hold while we get the situated we appreciate it a moment hey, Matt can you hear me now.
We're experiencing technical difficulties. If you can please hold while we get this situated, we appreciate it. One moment. Hey, Matt. Can you hear me now?
We can.
Let me ask the question again, Bob. What does ramping mean with respect to integrated resellers?
Yes.
Question again, Bob.
Yes go ahead, it's a sponsor what does ramping mean with respect to integrated resellers.
Okay. Yeah, when we talk about ramping, it's about
Okay.
Yeah, when we talk about ramping it's about.
where we sign an initial partnership agreement. And we typically have a minimum initial level. And this is done while we collaborate with them and we work to integrate the AWARE technology.
Where we signed an initial partnership agreement.
And we typically have a minimum initial level.
And this is done while we collaborate with them and we work to integrate the aware technology.
And this includes like our mobile NOMI biometric framework or our Wear ID adaptive authentication platform. And this is when we integrated into the product offerings and we anticipated full product launch anywheres from six to 18 months after that.
And this includes like our mobile nomi biometric framework or are aware I D adaptive authentication platform.
And this is when we integrated into their product offerings, and we anticipate a full product launch.
Anywhere from six to 18 months after that.
And most of our partners will not allow us to publicize this relationship prior to their full launch. They want to make sure that it's up and running and fully QA'd at that time.
And most of our partners will not allow us to publicize this relationship prior to their first launch full launch.
They want to make sure that it's.
Up and running and fully Kuwait at that time.
Thanks, Bob.
Dave, would you please elaborate on the use of approximately $5 million in cash in Q1?
Dave would you. Please elaborate on the use of approximately $5 million in cash in Q1.
Yeah, thanks, Matt. Sorry, I got dropped a moment ago. But with the earthsore cash balance, as of March 31, we were at 25.1 million.
Yes, Thanks, Matt sorry, I got dropped a moment ago, but.
With regards to our cash balance as of March 31st we were at $25 1 million.
And in the first quarter, we used approximately $2.5 million for operating purposes.
And in the first quarter, we used approximately $2 5 million for operating purposes.
pretty consistent with our usage last year in the first quarter.
Which is pretty consistent with our usage last year in the first quarter.
And then as discussed, we also made about a $2.5 million strategic investment in Miracle.
And then as discussed we also made about a 2.5 million strategic investment in Miracle, which was a convertible note.
Thanks, everyone for you Dave aware recently filed an 8-K regarding the office building sale would you. Please provide everyone with an update on that transaction.
Thanks another one for you Dave. AWARE recently filed an 8K regarding the office building sale. Would you please provide everyone with an update on that transaction?
Yes.
Absolutely. So this has been about a year now in the process and we're coming to the finish line. So as we discussed or sorry, as we disclosed.
It's been about a year now in the process, and we're coming to the finish line. So, as we discussed – or, sorry, as we disclosed –
We filed an 8K on April 5th and we recently entered into a 5th amendment of the original purchase agreement and updated the
We filed the 8-K on April 5th and do we recently entered into a fifth amendment.
The original purchase agreement and updated the closing date to June 30th 2022.
There's still a possibility of an earlier closing date if both parties...
There's still a possibility of an earlier closing date, if both parties agree.
In that same 8K filing, we advised that we had entered into a first amendment.
In that same 8-K filing we advised that we'd entered into a first amendment of the previously announced lease of an office building in Burlington mass where new headquarters.
Of the previously announced lease of an office building in Burlington, Mass where
This amendment allows us to terminate the lease at any point prior to June .
This amendment allows us to terminate the lease at any point prior to June 30th.
We amended, we added this amendment so that we could match our new lease date with the closing date of the purchase agreement and avoid paying for two offices simultaneously.
We amended we added this amendment so that we can match our newly state with the closing date of the purchase agreement and avoid paying for two offices simultaneously.
We expect to move into the New office building before the end of Q3.
Copies of the amendments can be found in that April 5th 8K Fight
Copies of amendments can be found in that April 5th 8-K filing.
Thanks Dave, it seems like our audio issues are continuing here so I'm going to jump in with this next question for Matt. Are you seeing deals getting pushed out because of the macro?
Thanks, Dave It seems like our audio issues are continuing here, so I'm going to jump in with this next question for Matt.
Are you seeing deals getting pushed out because its a macro.
Thanks.
Interesting question. Obviously, with respect to the macro environment, such as inflation and rising interest rates and the geopolitical climate, we're seeing a slight impact on the activity level since one
Interesting question obviously.
Obviously with respect to the macro environment such as inflation in.
A rising interest rates.
And the geopolitical climate.
We're seeing a slight impact on the activity level since one.
one of our biometrics use cases onboarding customers for credit applications. So it's kind of a key thing. And as the interest rates go up, the demand for that goes down slightly, depending. And also we don't have any direct business in the area of conflict at this time.
One of our biometrics used cases onboarding customer for credit applications.
It's kind of a key thing.
And as the interest rates go up the demand for that goes down slightly depending.
And also we don't have any direct business in the area of conflict at this time.
Thanks, Bob are you seeing any change in deal size.
Not at this time. You know, deal sizes still, as I said before, fall into the small, medium, and large category. They all look about the same and it depends on the readiness or the availability of the user base of our client.
Not at this time deal size is still as I said before fall into the small medium and large category.
And Nate.
They're all they all look about the same and it depends on the readiness or the.
Availability of the user base of our clients.
Great, thanks. Can you provide an update on the SaaS offering? How many customers are trialing this? What has been the pushback from customers? When will this contribute to the P&L?
Great. Thanks can you provide an update on the SaaS offering how many customers are trialing. This what has been the pushback from customers when will this contribute to the P&L.
So, a couple of things on this, to ensure that our offering, our SaaS offering is really addressing or properly addressing the use cases that it's meant to, we have a selective group in financial access workforce in a range of customers trying the SaaS platform and providing this feedback. And we're going to use that to adapt and enhance our offering.
So a couple of things on this to ensure that our operating our SaaS offering is really addressing are properly addressed in the use cases that.
It's meant to have a selective group and financial access workforce.
In a range of customers trying the SaaS platform and providing us feedback.
And we're going to use that to adapt and enhance our offerings.
Typically when we go live with or bring things new to market, we have about a dozen or so that participate in these early reviews to provide that feedback. And as far as the timing goes, we're looking forward to our launch in the second half of the year. And to date, the majority of feedback has really been positive. In particular, prospective customers reviewing the early version have commented on how there's nothing really like it in the industry. Easy to use.
Typically when we go live with.
Or bring things new to market, we have about a dozen or so that participate in these early reviews to provide that feedback.
And as far as the timing goes we're looking forward to our launch in the second half of the year.
And to date the majority of feedback has really been positive in particular perspective customers. Reviewing the early version of commented on how Theres nothing really like it and the industry.
Easy to use.
And the constructive feedback has been helpful in augmenting our robust quality assurance process to ensure the optimal user experience. So that's kind of a key area that we're getting good feedback on. And all in all, we're excited about the launch, and we'll be ramping up our sales and marketing activities closer in the second half.
And a constructive feedback has been helpful and augmenting our robust quality assurance process to ensure the optimal user experience. So that's kind of a key area that.
We're getting good feedback on.
All in all we're excited about the launch and will be ramping up our sales and marketing activities.
Closure in the in the second half.
Thanks, Bob. Dave, how should investors think about OpEx ramping this year?
Thanks, Bob Dave how should investors think about opex ramping this year.
Okay.
Nothing too exciting, Matt. Overall, our operating expenses are relatively flat. We invested significantly in previous quarters, as you know.
Nothing too exciting match overall, our operating expenses are relatively flat, we invested significantly in previous quarters says you know hows.
However, we will see a slight uptick as we fill some of our plant positions in the latter part of the year.
However, we will see a slight uptick as we fill some of our planned positions in the latter part of this year.
Great, thanks. Bob, this one's a more industry-specific question for you. What is EI-DAS and does that impact AWARE's product offering?
Great. Thanks, Bob this one's more industry specific question for you what does he eidos does that.
<unk> product offering.
Okay.
That's a great question. The short answer is there's little impact on the worst product offering. So EI DEV
That's a great question. The short answer is there is little impact on the worst product offering.
<unk> <unk> <unk>.
stands for Electronic Identification, Authentication and Trust Services.
For electronic identification authentication and trust services.
And it's really a certification based on European Union regulation focused on compliance for electronic signatures and the aim of EIDAS, I should say, is to spur digital growth within the EU.
And it's really certification based on European Union regulations focus on compliance for electronic signatures.
The aim of Eidos.
So I should say is to spur digital growth within the EU.
And by creating these standards for electronic signatures and advanced electronic signature, electronic seals, time stamps, and other proof for authentication mechanisms.
And by creating these standards for electronic signatures and advanced electronic signature.
Electronic sealed timestamps and other proof for authentication mechanisms.
EIDAS enables electronic transactions to have a
<unk> enables electronic transactions to ever.
an equivalent legal standing as transactions performed on paper. I would say this would have a greater impact for companies like DocuSign and OneSpan than it does for us.
An equivalent legal standing as transactions performed on paper.
I would say this would have a greater impact for companies like Doc you sign and one span than it does for us.
Thanks, Bob. What were NOMI transactions in Q1? How should we expect these to ramp throughout the remainder of the year?
Thanks, Bob what word nomi transactions in Q1, how should we expect these to ramp throughout the remainder of the year.
As Dave mentioned previously, we disclosed transaction volumes because it was an early indicator of NOMI adoption.
As Dave mentioned.
Previously, we disclosed transaction volumes.
Because it was an early indicator of Nuomi adoption.
But we're finding as we continue to get growth in this recurring area, the mix is now
But we're finding as we continue to get growth in this recurring area.
The mix is now.
of the subscription contract based on transactions, based on number of users. And so we believe that recurring revenue will be a more reflective indicator of the continued adoption of NOMI in our company's transition, you know, as we get into a subscription-based SaaS platform. So I, you know, as we, as we talk, it's becoming more and more of a combination and, and depending on what's easier to consume. So really recurring revenue is going to be the indicator.
Of the subscription contract based on transactions based on number of users and so we believe that recurring revenue will be more reflective indicator of the continued adoption of Dolby and our company's transition as we get into a subscription based SaaS platform.
Right.
As we as we talked it's becoming more and more of a combination.
And depending on whats easier to consume so really recurring revenue is going to be the indicator.
Thanks, Bob. Any color on how Q2 2022 looks so far?
Thanks, Bob any color on how Q2 2020 to look so far.
Well, you know, overall, we believe the strong Q1 results have really put a good foundation for predictable long-term growth, and it reflects a
Overall, we believe the strong Q1 results have really put a good foundation for predictable long term growth and reflects a.
solid execution of our growth strategy, especially when you look at the recurring revenue relative to the total actual value of the revenue.
Solid execution of our growth strategy, especially when you look at the recurring revenue relative.
Relative to the total actual value of the revenue.
And as we talked in prior calls, our overall performance and execution is best measured on the longer-term 12-month period, and we encourage everyone to focus on our annual growth plan. You know, there's going to be variations quarter to quarter, as we all know, but focusing on a growth rate greater than the biometric CAGR rate, and we're working on performance relative to that plan. Thank you.
And as we've talked on prior calls our overall performance and execution is best measured on the longer term 12 month period.
We encourage everyone to focus on our annual growth plan.
There's going to be variations quarter to quarter as we all know but.
But focusing on a growth rate on a go.
Greater than a biometric CAGR rate and we're working our performance relative to that plan.
How should we think about seasonality.
I'll take that Matt avionics.
In general, our seasonality is minimal.
Yes, yes.
In general our seasonality is minimal.
do have some dependency or opportunity.
You have.
Some dependency or our opportunity.
Okay.
around the federal fiscal year. So as September rolls around and budgets are being used up, you know, we might get a little uptick here or there. In addition, our NOMI volumes, they've got some...
Around the federal fiscal year, so as September rolls around and budgets are being used up.
We might get a little uptick here or there.
In addition, our nomi volumes they've got some.
seasonality dependency related to the holiday season in Q4.
Seasonality dependency.
Related to the holiday season in Q4.
But, but overall, we don't anticipate or forecast any real significant spikes related.
But but overall, we don't anticipate or forecast any real significant spikes related to the season.
Okay.
Thanks, Dave. Another one for you. What is the impact of the adoption of Flutter?
Thanks, David another one for you what is the impact of the adoption of flutter.
Okay.
Nothing on our financials just yet. We're currently supporting the first customers. They're leveraging this capability and we anticipate more sales to come based off of the release of our our flood.
Nothing on our financials just yet we're currently supporting this first cut first customers.
They are leveraging this capability and we anticipate more sales to come in based off of the release of our letter version.
Next question is what is included in recurring revenue is it just subscription revenues and software maintenance.
Next question is, what is included in recurring revenue? Is it just subscription revenues and software maintenance?
Basically, yes. Our recurring revenue is our subscription sales and our software maintenance sales, both of which have a recurring cadence to them in contrast to our one-time license sales.
Basically yes.
Our recurring revenue is our subscription sales and our software.
Maintenance sales, both of which have a recurring cadence to them.
In contrast to our onetime license sales.
Thanks, Dave and other work for you how much of the subscription revenue in the quarter was upfront recognition of annual minimums.
Thanks, Dave. Another one for you. How much of the subscription revenue in the quarter was upfront recognition of annual minimums?
Okay.
Well, let me dissect this one a little bit, Matt. So.
Well, let me dissect.
<unk> this one a little bit so.
To clarify, our annual minimums are not necessarily upfront as we come to our second or third year of a contract. To clarify, our annual minimums are not necessarily upfront as we come to our second or third
To clarify our annual minimums are not necessarily upfront as we come to our second or third year of the contract.
So, in the quarter, we did onboard a couple new customers, and that contributed to a couple hundred thousand of upfront minimums. But we also had around half a million or so of existing customers hitting their annual renewal minimums in this quarter.
So in the quarter, we did onboard a couple of new customers and that contributed to a couple hundred thousand of upfront minimums, but.
But we also had around half a million or so of existing customers hitting their annual renewal minimums in this quarter.
And then the balance of our subscription revenue comes from the overages that customers hit or their recurring monthly revenues that are essentially a maintenance stream.
And then the balance of our subscription revenue comes from the Overages that customers hit or their recurring monthly.
Revenues that are essentially a maintenance stream.
Thanks, Dave what was recurring revenue for the quarter.
I believe it was a bit over 2.9 million for Q1. Great.
I believe it was a bit over 2.9 million for Q1.
Great.
Cash used for repurchases.
No, not in Q1. We announced our repurchase plan last time we were on the call, but we have not yet executed on any reason.
No not in Q1, we announced our repurchase plan.
Last time, we were on the call, but we have not yet.
Executed on any repurchases.
When do you expect to be cash flow break even on an operating basis?
Okay.
When do you expect to be cash flow breakeven on an operating basis.
Yeah, as I mentioned earlier, we anticipate crossing over to adjusted EBITDA profitability by the end of 2023. The exact timing is unknown at this point, but that's still...
Yeah as I mentioned earlier, we anticipate crossing over to adjusted EBITDA profitability by the end of 2023.
The exact timing is unknown at this point, but that's still.
The plan.
Thanks, Bob or any of the senior management team bought stock in the employee purchase plan in 2022.
Thanks, Bob. Have any of the senior management team bought stock in the employee purchase plan in 2022?
Well that.
Decent question. I mean, the plan is still in process. It's a six-month plan. So until it's over, you know, beginning and end of it.
Is it.
Decent question I mean, the plan is still in process. It's a six month plan so until it's over.
In.
At the beginning end of it.
it doesn't get disclosed. So it's still in process right now for 2022.
It doesn't get disclosed so it's still in process right now for 2022.
Great, thanks, Bob. At this time, this concludes our question and answer session. If your question wasn't answered, please email AWARE's IR team at awre at gatewayir.com. I'd now like to turn the call back over to Bob for closing remarks.
Alright. Thanks.
At this time. This concludes our question and answer session. If your question wasn't answered. Please E mail <unk> IR team at AWS E at Gateway IR Dot Com I would now like to turn the call back over to Bob for closing remarks.
I'd like to thank everybody for joining us today and also I'd like to remind you about the investor presentation that's available on our website. And if you haven't already downloaded it, please do so and learn more about our overall strategy. And as always, I'd like to thank our employees, our partners and investors once again for the continued support and we look forward to updating you on our next call. Matt, over to you.
I'd like to thank everybody for joining us today.
And also I'd like to remind you about the investor presentation, that's available on our website.
And if you haven't already downloaded it please do so and learn more about our overall strategy.
And as always I'd like to thank our employees our partners and investors once again for their continued support and we look forward to updating you on our next call Matt over to you.
Thanks, Bob. A recording of today's call will be available for replay via link in the investor relations section of the company's website. Thank you for joining us today for Aware's first quarter 2022 earnings conference call. You may now disconnect.
Thanks, Bob a recording of today's call will be available for replay via a link in the Investor Relations section of the company's website. Thank you for joining us today for <unk> first quarter 2022 earnings Conference call you may now disconnect.
Okay.