Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

 

Contact:

Kevin Russell

Aware, Inc.
781-276-4000

 

Aware, Inc. Reports Third Quarter 2018

Financial Results



BEDFORD, MASS. – October 23, 2018 – 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.

 

 

 

Aware, Inc. • 40 Middlesex Turnpike • Bedford, MA USA 01730-1432

Tel: (781) 276-4000 • Fax: (781) 276-4001 • E-mail: IR@aware.com

 

 
Aware, Inc. Reports Third Quarter 2017 Financial ResultsPage 2

 

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.”

 

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, 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.

 

 
Aware, Inc. Reports Third Quarter 2017 Financial ResultsPage 3

 

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. Reports Third Quarter 2017 Financial ResultsPage 4

 

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,
 
   2018   2017   2018   2017 
Revenue:                
Software licenses   $3,449   $4,233   $6,582   $7,732 
Software maintenance    1,297    1,088    3,993    3,622 
Services    655    343    1,498    924 
Royalties    -    43    -    127 
Total revenue    5,401    5,707    12,073    12,405 
                     
Costs and expenses:                    
Cost of software licenses    20    27    20    274 
Cost of services    320    179    740    499 
Research and development    1,816    2,151    5,579    5,884 
Selling and marketing    1,297    1,028    3,234    2,938 
General and administrative    807    849    2,463    2,454 
Total costs and expenses    4,260    4,234    12,036    12,049 
                     
Patent related income    1    19    1    1,422 
                     
Operating income    1,142    1,492    38    1,778 
Other income    -    -    -    36 
Interest income    224    109    587    281 
Income before provision for income taxes    1,366    1,601    625    2,095 
Provision for income taxes    89    456    31    535 
Net income   $1,277   $1,145   $594   $1,560 
                     
                     
Net income per share – basic   $0.06   $0.05   $0.03   $0.07 
Net income per share – diluted   $0.06   $0.05   $0.03   $0.07 
                     
                     
Weighted-average shares – basic    21,564    21,679    21,548    21,900 
Weighted-average shares - diluted    21,639    21,758    21,604    21,967 

 

 
Aware, Inc. Reports Third Quarter 2017 Financial ResultsPage 5

 

AWARE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(unaudited)

 

 

  

September 30,

2018

  

December 31,

2017

 
ASSETS          
Cash and investments   $48,963   $51,608 
Accounts and unbilled receivables, net    7,514    3,818 
Property and equipment, net    4,128    4,304 
Deferred tax assets    5,199    5,071 
All other assets, net    386    234 
           
Total assets   $66,190   $65,035 
           

LIABILITIES AND STOCKHOLDERS’ EQUITY

          
           
Accounts payable and accrued expenses   $1,893   $1,569 
Deferred revenue    3,115    2,932 
Total stockholders’ equity    61,182    60,534 
           
Total liabilities and stockholders’ equity   $66,190   $65,035 

 

 

###

 

 

 

Aware, Inc. • 40 Middlesex Turnpike • Bedford, MA USA 01730-1432

Tel: (781) 276-4000 • Fax: (781) 276-4001 • E-mail: IR@aware.com

 

 

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