Aware, Inc. Reports Decline in Revenue and Wider Losses for Q1 2025
Shares of Aware, Inc. (AWRE) have decreased by 4.7% since the company disclosed its earnings for the year ending March 31, 2025. In contrast, the S&P 500 Index saw a gain of 2.3% during the same period. Over the past month, Aware’s stock gained 14.1%, while the S&P 500 rose 12.3%.
Year-Over-Year Revenue and Profit Decline
For the first quarter of 2025, Aware reported total revenues of $3.6 million, marking an 18.4% drop from $4.4 million in the same quarter last year. This downturn primarily resulted from a 38.7% decline in software license sales, which fell to $1.3 million from $2.1 million year-over-year. Additionally, recurring revenues, including subscriptions and maintenance, dropped 14.7% to $2.7 million, down from $3.1 million a year ago, largely due to the timing of license renewals.
The company posted a net loss of $1.6 million for Q1 2025, compared to a loss of $0.9 million in the previous year. The net loss per diluted share widened to $0.08 from $0.05. (For the latest EPS estimates and surprises, visit Zacks Earnings Calendar.)
Adjusted EBITDA loss worsened to $1.5 million from $0.9 million the previous year, reflecting revenue drops despite slight reductions in operating expenses.
Aware, Inc. Price, Consensus, and EPS Surprise
Aware, Inc. price-consensus-eps-surprise-chart | Aware, Inc. Quote
Additional Business Metrics
Operating expenses were recorded at $5.5 million, down 3.9% from $5.7 million in the previous year, indicating some progress in cost management. However, the operating loss increased to $1.9 million from $1.3 million year-over-year. Cash, cash equivalents, and marketable securities stood at $24.8 million at the end of the quarter, down from $27.8 million at the close of 2024.
In terms of segments, software maintenance revenue remained stable at approximately $2.2 million year-over-year. Conversely, software subscriptions decreased significantly by 46.1% to $0.5 million from $0.9 million in the prior-year quarter, illustrating ongoing difficulties in building recurring revenue. Non-recurring software license revenue dropped by 32.4%, while service-related revenue increased by 21.9%.
Management Insights
CEO Ajay Amlani described the quarter as a transitional phase aimed at establishing a foundation for long-term growth. Aware realigned its go-to-market strategy and added Brian Krause as chief revenue officer to its leadership team. Amlani highlighted a science-forward, customer-focused platform strategy, mentioning active discussions with Fortune 500 firms regarding biometric solutions for identity verification, fraud prevention, and digital modernization.
Krause reinforced this narrative, recognizing opportunities in sectors such as financial services, healthcare, and hospitality. He noted that Aware’s credibility with federal agencies, including the Department of Defense and Homeland Security, positions it favorably for growth in both public and private sectors.
Factors Behind Financial Performance
The revenue decline was primarily a result of reduced sales of software licenses, which are often project-driven and can vary significantly. Additionally, recurring revenue faced pressure due to timing issues surrounding subscription renewals. Although operating expenses were slightly reduced, they did not compensate for the declines in revenue.
Despite current challenges, Aware remains committed to increasing market share through direct engagements with key customers, offering an open, modular architecture via its “awareness platform.” This approach is designed to provide customers with flexibility in algorithm selection and deployment, creating a distinct competitive advantage in the biometrics sector.
Future Guidance and Expectations
Although Aware did not provide formal guidance, management emphasized that 2025 is a foundational year. CFO David Traverse mentioned that some early successes are expected later this year, but the full effects of strategic changes will likely only become apparent in 2026. The company projects a modest rise in expenses in upcoming quarters to support these strategic initiatives, moving back to levels seen before recent cost-cutting measures.
Leadership Changes
During the quarter, Aware implemented significant leadership changes to facilitate its transformation. Aside from appointing Brian Krause as CRO, former IBM executive Gary Evee was named chairman of the board. These adjustments reflect a deliberate effort by the board and management to enhance commercialization strategies and improve operational efficiency. The leadership team has pledged to keep a focus on transparent practices, goal-setting, and long-term shareholder value creation.
