Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
Kevin Russell
Aware, Inc.
781-276-4000
Aware, Inc. Reports Fourth Quarter and 2017
Financial Results
BEDFORD, MASS. – February 22, 2018 – Aware, Inc. (NASDAQ: AWRE), a leading supplier of biometrics software and services, today reported financial results for its quarter and year ended December 31, 2017.
Revenue for the fourth quarter of 2017 was $3.3 million compared to $3.9 million in the same quarter last year. Operating loss in the fourth quarter of 2017 was $0.5 million compared to operating income of $0.6 million in the fourth quarter of 2016. Net loss in the fourth quarter of 2017 was $0.6 million, or $0.03 per diluted share, which compares to net income of $0.5 million, or $0.02 per diluted share, in the same period a year ago.
The decrease in revenue and operating income in the current three month period compared to the corresponding period last year was primarily due to: i) lower imaging software license sales, ii) lower services sales, and iii) lower patent related income from an unaffiliated third party this quarter.
Revenue for the year ended December 31, 2017 was $16.3 million compared to $21.6 million in 2016. Operating income for 2017 was $1.8 million compared to $5.9 million in 2016. The decrease in revenue and operating income in 2017 compared to 2016 was primarily due to: i) lower biometrics license sales to the United States Marine Corps (“USMC”) and the United States Navy (“Navy”), ii) lower imaging product license sales related to a $4.5 million license sale in 2015 that we recognized over the period October 2015 to October 2016 that was only partially offset by a large software license agreement with a medical imaging customer in 2017, iii) lower software maintenance revenue, iv) lower service revenue, v) no hardware sales, vi) lower DSL royalties; and vii) higher operating expenses. This was partially offset by: i) higher patent related income from an unaffiliated third party, ii) lower cost of software licenses; and iii) lower cost of hardware.
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 Fourth Quarter and 2017 Financial Results | Page 2 |
Net income for the year ended December 31, 2017 was $1.3 million, or $0.06 per diluted share, which compared to net income of $4.1 million, or $0.18 per diluted share in 2016. As a result of the enactment of the Tax Cuts and Jobs Act signed into law on December 22, 2017, net income in 2017 was $0.4 million lower due to higher income tax expense caused by the effect of the federal tax rate change on our deferred tax assets.
Kevin Russell, Aware’s chief executive officer and president, said “2017 was a year of investment in new products and technology areas in order to further enhance our position as a leading global supplier of biometrics software and solutions. In 2017, we introduced Indigo|Onboard™, a cloud-based biometric identity solution for better onboarding and Knomi™, a mobile biometric authentication framework offering face, voice and keystroke dynamics. We also added solutions for new biometric modalities in voice and behavioral (keystroke) biometrics to our existing fingerprint, face and iris offerings. While our revenue results for the year were lower than we hoped for, we continue to be encouraged by the interest in and the worldwide opportunities for our biometric solutions in the government, commercial and mobile markets in the future.”
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.
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.
| Aware, Inc. Reports Fourth Quarter and 2017 Financial Results | Page 3 |
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 and Indigo|Onboard and Knomi are trademarks of Aware, Inc. Any other trademarks appearing herein are the property of their respective owners.
| Aware, Inc. Reports Fourth Quarter and 2017 Financial Results | Page 4 |
AWARE, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue: | ||||||||||||||||
| Software licenses | $ | 1,607 | $ | 1,836 | $ | 9,939 | $ | 14,093 | ||||||||
| Software maintenance | 1,301 | 1,377 | 4,923 | 5,126 | ||||||||||||
| Services | 335 | 687 | 1,259 | 1,749 | ||||||||||||
| Hardware | - | - | - | 317 | ||||||||||||
| Royalties | 43 | 29 | 161 | 281 | ||||||||||||
| Total revenue | 3,286 | 3,929 | 16,282 | 21,566 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of software licenses | - | - | 274 | 1,101 | ||||||||||||
| Cost of services | 102 | 249 | 601 | 766 | ||||||||||||
| Cost of hardware | - | - | - | 234 | ||||||||||||
| Research and development | 1,885 | 1,734 | 7,769 | 6,938 | ||||||||||||
| Selling and marketing | 1,002 | 1,042 | 4,021 | 4,142 | ||||||||||||
| General and administrative | 934 | 834 | 3,389 | 3,286 | ||||||||||||
| Total costs and expenses | 3,923 | 3,859 | 16,054 | 16,467 | ||||||||||||
| Patent related income | 159 | 571 | 1,582 | 809 | ||||||||||||
| Operating income (loss) | (478 | ) | 641 | 1,810 | 5,908 | |||||||||||
| Other income | - | - | 36 | - | ||||||||||||
| Interest income | 120 | 65 | 401 | 280 | ||||||||||||
| Income (loss) before provision for income taxes | (358 | ) | 706 | 2,247 | 6,188 | |||||||||||
| Provision for income taxes | 222 | 246 | 965 | 2,085 | ||||||||||||
| Net income (loss) | ($580 | ) | $ | 460 | $ | 1,282 | $ | 4,103 | ||||||||
| Net income (loss) per share – basic | ($0.03 | ) | $ | 0.02 | $ | 0.06 | $ | 0.18 | ||||||||
| Net income (loss) per share – diluted | ($0.03 | ) | $ | 0.02 | $ | 0.06 | $ | 0.18 | ||||||||
| Weighted-average shares – basic | 21,559 | 22,515 | 21,814 | 22,829 | ||||||||||||
| Weighted-average shares - diluted | 21,636 | 22,611 | 21,877 | 22,898 | ||||||||||||
| Aware, Inc. Reports Fourth Quarter and 2017 Financial Results | Page 5 |
AWARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
December 31, 2017 | December 31, 2016 | |||||||
| ASSETS | ||||||||
| Cash and investments | $ | 51,608 | $ | 52,864 | ||||
| Accounts receivable, net | 2,401 | 3,016 | ||||||
| Property and equipment, net | 4,304 | 4,634 | ||||||
| Deferred tax assets | 5,402 | 1,078 | ||||||
| All other assets, net | 221 | 392 | ||||||
| Total assets | $ | 63,936 | $ | 61,984 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Accounts payable and accrued expenses | $ | 1,352 | $ | 1,210 | ||||
| Deferred revenue | 2,932 | 2,933 | ||||||
| Total stockholders’ equity | 59,652 | 57,841 | ||||||
| Total liabilities and stockholders’ equity | $ | 63,936 | $ | 61,984 | ||||
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Aware, Inc. • 40 Middlesex Turnpike • Bedford, MA USA 01730-1432
Tel: (781) 276-4000 • Fax: (781) 276-4001 • E-mail: IR@aware.com