Executive Summary

Q1 2025 revenue was $3.60M, down 25% sequentially and 18% year-over-year, driven by lower software license revenue; GAAP diluted EPS was $(0.08) and adjusted EBITDA loss widened to $1.5M as revenue declined .
Recurring revenue was $2.68M (software subscriptions $0.53M; maintenance $2.15M), down from $3.15M in Q1 2024, with management emphasizing a transitional year focused on rebuilding the pipeline and commercial execution .
No formal revenue/EPS guidance provided; management expects expenses to rise through Q2 and into 2H25 toward prior levels to support growth initiatives, with stronger momentum targeted exiting 2025 .
Strategic catalysts: new CRO Brian Krause to scale go-to-market, Board Chairman change, Fortune 500 and U.S. federal engagement, and an open “Awareness” platform strategy; near-term stock narrative is transformation and execution rather than quarterly beats .

What Went Well and What Went Wrong

What Went Well

Leadership upgrades: appointed Brian Krause as CRO to drive scalable commercial execution; Board elevated Gary Evee to Chairman to instill operational rigor and disciplined commercialization .
Strengthening enterprise and government pipeline: active conversations with Fortune 500 firms and aligned positioning across U.S. government initiatives (national security, border modernization, digital identity) .
Platform strategy shift: launching “Awareness” as an open, modular architecture that orchestrates best-in-class algorithms, appealing to large enterprises wanting flexibility and future-proofing .

What Went Wrong

Revenue pressure from licenses: Q1 revenue fell to $3.60M from $4.80M in Q4 and $4.42M YoY due to lower software license sales; recurring revenue also declined YoY on timing of subscription term renewals .
Profitability deterioration: adjusted EBITDA loss widened to $1.5M (from $0.8M in Q4), and net loss increased to $1.6M as revenue fell despite lower opex versus Q1 2024 .
Cash draw: cash, cash equivalents, and marketable securities decreased to $24.8M from $27.8M at year-end, reflecting operating losses during the transition period .

Financial Results

Core Financials vs Prior Periods and Estimates

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$3.85	$4.80	$3.61
GAAP Diluted EPS ($)	$(0.05)	$(0.06)	$(0.08)
Net Income (Loss) ($USD Millions)	$(1.17)	$(1.19)	$(1.60)
Net Income Margin (%)	−30.3% (calc: −1.167/3.849)	−24.9% (calc: −1.192/4.797)	−44.3% (calc: −1.598/3.608)
Adjusted EBITDA ($USD Millions)	$(1.11)	$(0.83)	$(1.53)
Adjusted EBITDA Margin (%)	−28.7% (calc: −1.106/3.849)	−17.3% (calc: −0.829/4.797)	−42.3% (calc: −1.527/3.608)

Notes: All margins are computed directly from cited revenue and profitability figures.

Segment / Revenue Composition

Metric	Q1 2024	Q1 2025
Recurring Revenue ($USD Millions)	$3.15	$2.68
- Software Subscriptions ($USD Millions)	$0.99	$0.53
- Software Maintenance ($USD Millions)	$2.16	$2.15
Non-Recurring Revenue ($USD Millions)	$1.28	$0.92
- Software Licenses ($USD Millions)	$1.16	$0.79
- Services & Other ($USD Millions)	$0.11	$0.14
Total Revenue ($USD Millions)	$4.42	$3.61

KPIs and Balance Sheet

Metric	Q4 2024	Q1 2025
Operating Expenses ($USD Millions)	$6.27	$5.46
Operating Loss ($USD Millions)	$(1.47)	$(1.85)
Cash & Cash Equivalents ($USD Millions)	$12.97	$8.45
Marketable Securities ($USD Millions)	$14.84	$16.38
Cash + Marketable Securities ($USD Millions)	$27.80	$24.83
Deferred Revenue ($USD Millions)	$5.16	$4.54

Actuals vs Estimates (S&P Global)

Metric	Q1 2025 Consensus	Q1 2025 Actual
Revenue ($USD Millions)	N/A*	$3.61
EPS ($)	N/A*	$(0.08)

*Values retrieved from S&P Global; consensus not available for AWRE for Q1 2025 via our query.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	None provided	None provided; 2025 is a “foundational year”	Maintained “no formal guidance”
Operating Expenses	2H 2025	Not specified	Expect expenses to rise through Q2 and into 2H25 back toward levels “more in line with where they were a few quarters ago”	Raised (investment to support growth)
Pipeline/Deal Timing	FY 2025	Not specified	Sales cycles vary; expect some early wins later this year with contributions building over time	New qualitative color

No tax rate, margin, OI&E, dividend guidance was provided in the Q1 2025 materials .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Enterprise pipeline/Fortune 500	Highlighted partner momentum and WordPress AwareID launch to broaden SaaS reach	Emphasis on focused go-to-market and high-value verticals	Active conversations with several Fortune 500 firms; solution-first engagement with CEOs/Boards	Strengthening, more senior-level engagement
U.S. Federal opportunities	$1M Euro gov license booking post-Q3; ABIS accounts expanding	Federal spend is largest; monitoring agency budget changes	Well-positioned across national security, border modernization, digital identity initiatives	Consistent strategic focus; pipeline breadth expanding
Product/platform strategy	AwareID plug-in; BioSP enhancements (offline enrollment)	Consolidation and configurable products; recurring model push	“Awareness” open modular platform; orchestration across best-in-class algorithms	Evolving to platform-led, open architecture
Recurring revenue model	Q3 recurring +29% YoY; ARR trajectory highlighted	Q4 recurring $3.30M; 69% FY recurring revenue	Q1 recurring $2.68M; timing impacted term renewals	Near-term dip on timing; long-term focus intact
Cost discipline	Opex reduced in Q3, nine months	Opex down 14% in FY24; severance costs noted	Expect expenses to rise near-term to invest for growth	Pivot from cuts to targeted investment
M&A posture	Not emphasized	Opportunistic, only if enhances LT value	Continued focus on execution over near-term M&A	Unchanged conservative stance

Management Commentary

CEO: “We made important strides to rebuild Aware’s foundation… strengthening leadership, sharpening our go-to-market, and building a science-forward, customer-obsessed strategy.”
CFO: “We expect expenses to rise, but really just returning to levels more in line with where they were a few quarters ago… critical to driving long-term sustainable growth.”
CRO: “We’re seeing unprecedented interest from Fortune 500 companies actively exploring and testing biometric solutions… we’re building a focused, measurable and scalable commercial engine.”
Chairman: “A deliberate move to fix what has been missing… disciplined commercialization strategy, a strong sales process and clear operational rigor.”

Q&A Highlights

Guidance stance: No specific 2025 revenue guidance; sales cycles vary; focus on quality and strategic alignment—early wins expected later this year with contributions building over time .
Platform architecture: “Awareness” enables orchestration of best-in-class algorithms within a unified, open architecture—flexibility attractive to enterprises and governments .
U.S. federal positioning: Broad alignment with long-term priorities (secure digital identity, modernization, border innovation); focus on being a trusted partner across initiatives .
Pipeline tone: Material expansion over last 90 days; leadership installed to drive execution; growing inbound interest reinforces technology leadership .

Estimates Context

S&P Global consensus for AWRE Q1 2025 was unavailable for EPS and revenue in our query; therefore no beat/miss determination versus Street can be made. Actuals: revenue $3.61M; EPS $(0.08) .
Near-term estimate revisions may reflect: sequential revenue decline driven by lower license sales and commentary that expenses will rise to support growth initiatives, pressuring near-term profitability before expected momentum in 2H25 .
S&P Global disclaimer: Consensus fields were unavailable in our request; values retrieved from S&P Global.*

Key Takeaways for Investors

Transformation underway: New leadership (CEO, CRO, Chairman) and platform strategy shift to “Awareness” suggest a structurally different commercial approach targeting enterprise and federal scale opportunities .
Near-term headwinds: Q1 revenue and adjusted EBITDA deteriorated on lower license activity; recurring revenue dipped on timing, underscoring transitional dynamics rather than demand loss .
Investment phase: Opex expected to rise in Q2/2H25 to fund growth; trajectory should be judged on pipeline conversion and enterprise/federal deal cadence versus quarterly margin prints .
Balance sheet provides runway: $24.8M cash + securities supports execution during the pivot, though cash burn needs monitoring if license variability persists .
Watch catalysts: Evidence of Fortune 500 pilots converting to revenue, federal program awards, and recurring revenue recovery post renewal timing should shift narrative from transformation to execution .
No formal guidance: Position sizing should reflect lack of quarterly visibility and reliance on qualitative pipeline updates until Street coverage/consensus normalizes .
LT thesis: If platform-led, solution-first strategy lands/expands across enterprise and federal, recurring revenue mix and margin durability can improve beyond transitional 2025 .

AWARE INC /MA/ (AWRE)·Q1 2025 Earnings Summary