Aware, Inc. Reports Third Quarter 2018 Financial Results
BEDFORD, Mass., Oct. 23, 2018 /PRNewswire/ -- Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software and services, today reported financial results for its third quarter ended September 30, 2018.
Revenue for the third quarter of 2018 was $5.4 million, a decrease of 5% compared to $5.7 million in the same quarter last year. Operating income in the third quarter of 2018 was $1.1 million compared to $1.5 million in the third quarter of 2017.
The decrease in revenue and operating income was primarily due to: i) a large imaging software license sale to a medical imaging customer in the third quarter of 2017 whereas there was no such sale in the current three month period; and ii) no royalty revenue in the third quarter of 2018. The decrease in revenue was partially offset by: i) a large biometrics software license sale to a large commercial customer in the third quarter of 2018; and ii) higher maintenance and services revenue in the third quarter of 2018. To a lesser extent, lower patent related income from an unaffiliated third party and higher total costs and expenses in the third quarter of 2018 also contributed to lower operating income.
Net income in the third quarter of 2018 was $1.3 million, or $0.06 per diluted share, which compares to net income of $1.1 million, or $0.05 per diluted share, in the same period a year ago.
Revenue for the first nine months of 2018 was $12.1 million, a decrease of 3% compared to $12.4 million in the same nine month period last year. Operating income for the first nine months of 2018 was $38,000 compared to operating income of $1.8 million in the same period last year. The decrease in revenue and operating income was primarily due to: i) a large imaging software license sale to a medical imaging customer in the first nine months of 2017 whereas there was no such sale in the first nine months of 2018; and ii) no royalty revenue in the first nine months of 2018. The decrease in revenue was partially offset by: i) a large biometrics software license sale to a large commercial customer in the third quarter of 2018; and ii) higher maintenance and services revenue in the first nine months of 2018. In addition to the above, lower patent related income from an unaffiliated third party in the first nine months of 2018 also contributed to lower operating income.
Net income for the first nine months of 2018 was $0.6 million, or $0.03 per diluted share, which compares to net income of $1.6 million, or $0.07 per diluted share, in the same period a year ago.
Kevin Russell, Aware's chief executive officer and president, said, "Our financial performance in the third quarter represented our strongest quarter year-to-date. Revenue was lifted by a large license sale of our Knomi™ mobile biometric authentication solution to a large commercial customer as well as our continuing work under the United Kingdom Government biometric matching platform project. We are pleased with the level of interest we are receiving for our Knomi solution. We will continue to make investments in product and business development to enhance our opportunities in the government and commercial markets."
Aware is a leading provider of biometrics software products and development services to governments, system integrators, and solution providers globally. Our products include SDKs, software components, workstation applications, and a modular, centralized, service-oriented platform. They fulfill a broad range of functions critical to biometric authentication and search, including face, fingerprint, iris, and voice capture, sample quality assurance, data compliance, capture hardware peripheral abstraction, centralized data processing and workflow, subsystem connectivity, and biometric matching algorithms. The products apply biometrics to enable identity-centric security solutions for applications including banking and payments, border management, credentialing and access control, intelligence and defense, and law enforcement. Aware is a publicly held company (Nasdaq: AWRE) based in Bedford, Massachusetts.
See Aware's website for more information about our biometrics software products.
Safe Harbor Warning
Portions of this release contain forward-looking statements regarding future events and are subject to risks and uncertainties, such as estimates or projections of future revenue and earnings, and the growth of the biometrics markets. Aware wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements.
Risk factors related to our business include, but are not limited to: i) our operating results may fluctuate significantly and are difficult to predict; ii) we derive a significant portion of our revenue from government customers, and our business may be adversely affected by changes in the contracting or fiscal policies of those governmental entities; iii) a significant commercial market for biometrics technology may not develop, and if it does, we may not be successful in that market; iv) we derive a significant portion of our revenue from third party channel partners; v) hardware revenue is likely to be zero in future periods; vi) we face intense competition from other biometrics solution providers; vii) our business is subject to rapid technological change; viii) our software products may have errors, defects or bugs which could harm our business; ix) our business may be adversely affected by our use of open source software; x) we rely on third party software to develop and provide our solutions and significant defects in third party software could harm our business xi) our intellectual property is subject to limited protection; xii) we may be sued by third parties for alleged infringement of their proprietary rights; xiii) we must attract and retain key personnel; xiv) we rely on single sources of supply for certain components used in our hardware products; xv) our business may be affected by government regulations and adverse economic conditions; xvi) we may make acquisitions that could adversely affect our results, and xvii) we may have additional tax liabilities.
We refer you to the documents Aware files from time to time with the Securities and Exchange Commission, specifically the section titled Risk Factors in our annual report on Form 10-K for the fiscal year ended December 31, 2017 and other reports and filings made with the Securities and Exchange Commission.
Aware and Knomi are trademarks or registered trademarks of Aware, Inc. Any other trademarks appearing herein are the property of their respective owners.
AWARE, INC. CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (in thousands, except per share data) (unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
Costs and expenses:
Cost of software licenses
Cost of services
Research and development
Selling and marketing
General and administrative
Total costs and expenses
Patent related income
Income before provision for income taxes
Provision for income taxes
Net income per share – basic
Net income per share – diluted
Weighted-average shares – basic
Weighted-average shares - diluted
AWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (unaudited)