Aware, Inc.
Jul 25, 2017

Aware, Inc. Reports Second Quarter 2017 Financial Results

BEDFORD, Mass., July 25, 2017 /PRNewswire/ -- Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software and services, today reported financial results for its second quarter ended June 30, 2017

Revenue for the second quarter of 2017 was $2.7 million, a decrease of 60% compared to $6.9 million in the same quarter last year. Operating income in the second quarter of 2017 was $0.2 million compared to $2.1 million in the second quarter of 2016. The decrease in revenue and operating income were primarily due to: i) a large biometrics software license sale to a U.S. government military customer in the second quarter of 2016 whereas there was no such sale in the current three month period; and ii) revenue from a large medical imaging license sale in the second quarter of 2016 whereas there was no such revenue in the current three month period.  The resulting decline in operating income was partially offset by: i) patent related income from an unaffiliated third party; and ii) lower cost of software licenses.

Net income in the second quarter of 2017 was $0.2 million, or $0.01 per diluted share, which compares to $1.4 million, or $0.06 per diluted share, in the same period a year ago.

Revenue for the first six months of 2017 was $7.1 million, a decrease of 40% compared to $11.7 million in the same six month period last year. Operating income for the first six months of 2017 was $0.6 million compared to $3.0 million in the same period last year. The decrease in revenue and operating income were primarily due to: i) a large biometrics software license sale to a U.S. government military customer in the second quarter of 2016 whereas there no such sale in the first six months of 2017, ii) revenue from a large medical imaging license sale in the first six months of 2016 whereas there was no such revenue in the corresponding period of 2017; and iii) no hardware sales in the first six months of 2017.  The resulting decline in operating income was partially offset by: i) patent related income from an unaffiliated third party, ii) lower cost of software licenses; and iii) lower cost of hardware sales.

Net income for the first six months of 2017 was $0.6 million, or $0.03 per diluted share, which compares to $2.1 million, or $0.09 per diluted share, in the same period a year ago.

Kevin Russell, Aware's chief executive officer and president, said, "Our revenue results for the second quarter did not meet our expectations.  Our quarterly revenue and earnings fluctuate based on project wins and the timing of the delivery of licenses and services for those projects.  Financial results this quarter are a reflection of these fluctuations.  The ability to forecast the timing of revenue remains a challenge.  We continue to be encouraged by the interest in and opportunities for our biometric solutions in the government, commercial and mobile markets."

About Aware
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, and iris autocapture, image quality assurance, data compliance, capture hardware peripheral abstraction, centralized data processing and workflow, subsystem connectivity, and biometric matching algorithms. The products are used to enable identity-centric security solutions with biometrics for applications including 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 decline 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) our intellectual property is subject to limited protection; xi) we may be sued by third parties for alleged infringement of their proprietary rights; xii) we must attract and retain key personnel; xiii) we rely on single sources of supply for certain components used in our hardware products; xiv) our business may be affected by government regulations and adverse economic conditions; xv) we may make acquisitions that could adversely affect our results, and xvi) 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, 2016 and other reports and filings made with the Securities and Exchange Commission.

Aware is a registered trademark of Aware, Inc. Any other trademarks appearing herein are the property of their respective owners.

 

AWARE, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(unaudited)




Three Months Ended
June 30,


Six Months Ended
June 30,



2017


2016


2017


2016

Revenue:









    Software licenses


$1,214


$5,347


$3,900


$8,121

    Software maintenance


1,282


1,181


2,534


2,462

    Services


206


216


580


635

    Hardware


-


31


-


317

    Royalties


43


129


78


203

           Total revenue


2,745


6,904


7,092


11,738










Costs and expenses:









    Cost of software licenses


-


858


247


1,101

    Cost of services


104


158


320


372

    Cost of hardware


-


29


-


234

    Research and development


1,876


1,802


3,733


3,451

    Selling and marketing


1,024


1,111


1,966


2,031

    General and administrative


816


872


1,605


1,595

       Total costs and expenses


3,820


4,830


7,871


8,784

 

Patent related income


 

1,313


 

-


 

1,403


 

-










Operating income


238


2,074


624


2,954

Other income


36


-


36


-

Interest income


88


72


172


138

Income before provision for income taxes


362


2,146


832


3,092

Provision for income taxes


134


710


198


1,022

Net income


$228


$1,436


$634


$2,070



















Net income per share - basic


$0.01


$0.06


$0.03


$0.09

Net income per share - diluted


$0.01


$0.06


$0.03


$0.09



















Weighted-average shares - basic


21,774


22,964


22,013


22,978

Weighted-average shares - diluted


21,919


23,124


22,119


23,064

 

AWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)




June 30,

2017


December 31,

2016

 

ASSETS





     Cash and investments


$49,425


$52,864

     Accounts receivable, net


3,321


3,016

     Property and equipment, net


4,479


4,634

     Deferred tax assets


5,843


1,078

     All other assets, net


343


392






     Total assets


$63,411


$61,984






 

 

LIABILITIES AND STOCKHOLDERS' EQUITY










     Accounts payable and accrued expenses


$1,324


$1,210

     Deferred revenue


2,291


2,933

     Total stockholders' equity


59,796


57,841






     Total liabilities and stockholders' equity


$63,411


$61,984

 

 

 

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SOURCE Aware, Inc.

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