Aware (NASDAQ:AWRE) reported third-quarter fiscal 2026 revenue of $4.4 million, down from $5.1 million a year earlier, as lower perpetual license sales more than offset growth in recurring revenue. Management highlighted a new government agency customer, expanding commercial activity and the first full quarter of savings from its earlier cost-reduction program.
Recurring revenue rose 11% year over year to $4 million from $3.6 million and represented more than 90% of quarterly revenue. Chief Executive Officer and President Ajay Amlani said the company is seeking to build a more scalable business centered on its Awareness Platform, including biometric orchestration, liveness detection and matching capabilities.
Government Customer Win and Federal Pipeline
During the quarter, Aware said a government agency selected its Intelligent Liveness capabilities for deployment from the Awareness Platform. Amlani said the selection moves the platform from the government opportunity pipeline into an active agency-selected deployment opportunity.
He said procurement activity has increased since most Department of Homeland Security funding was restored on April 30, with agencies seeking to modernize biometric and identity systems, improve national security and enhance user experiences. However, he cautioned that federal and national-security procurement cycles remain hard to predict and that progress will not necessarily occur in a straight line.
On the question-and-answer portion of the call, Amlani said the company has seen a record number of procurements emerge after DHS reopened, though the backlog has not yet been fully cleared. He said additional procurements are expected to continue over the next year to year and a half.
Amlani declined to comment on whether Aware is pursuing the USCIS Immigration Biometrics and Identity Services contract, or whether it may be bidding as a prime contractor or subcontractor. He said the company is actively engaging customers and partners where its orchestration, liveness and matching capabilities are relevant and will disclose material wins when appropriate.
Commercial Expansion and Platform Strategy
Aware also cited a new relationship with an Adobe Acrobat Sign distributor to provide biometric security for Adobe Acrobat Sign customers. The company said it has seen new customer activity in Latin America and additional interest from North and South America.
Management said it is working to expand within existing customer accounts by cross-selling platform capabilities to customers that have historically used individual Aware products. Amlani said the company’s customer base spans the United States, United Kingdom, Canada, Germany, Brazil, Turkey and other countries.
Chief Revenue Officer Brian Krause said the company uses a “land and expand” model, seeking to demonstrate the performance and scalability of its technology before expanding relationships. While he did not discuss specific customer contracts or expansions, Krause said Aware has continued to see strong net-dollar-retention indicators across most of its business and consistent market interest in the Awareness Platform.
Management said customers may use either self-hosted deployments or cloud-based offerings. Chief Financial Officer David Traverse said the transition from a products-and-components business to a platform business will not occur in a single quarter, and the company is focused on growing recurring revenue regardless of where customers host the technology.
Costs, Losses and Balance Sheet
Operating expenses declined to $5.4 million in the third quarter from $6.4 million a year earlier, reflecting cost reductions implemented earlier in the year. Traverse said the quarter represented the first full period reflecting approximately $4 million in annualized expense savings.
- Operating loss narrowed to $900,000 from $1.3 million a year earlier.
- Net loss was $800,000, or $0.04 per diluted share, compared with $1.1 million, or $0.05 per diluted share.
- Adjusted EBITDA loss improved to $500,000 from $800,000.
- Cash equivalents and marketable securities totaled $15.4 million at quarter-end, and the company reported no debt.
For the first nine months of fiscal 2026, revenue was $11.1 million, compared with $12.6 million in the prior-year period. Recurring revenue increased to $9.6 million from $9.2 million. Net loss for the nine-month period widened to $6.8 million, or $0.31 per diluted share, from $4.4 million, or $0.21 per diluted share. The company said year-to-date operating expenses included $700,000 of primarily first-quarter severance costs as well as higher compensation costs tied to hires made in 2025.
Traverse did not provide a timetable for reaching sustained net-income breakeven. He said Aware expects to maintain its lower cost structure and will make further expense adjustments as appropriate.
Fourth-Quarter Expectations
Amlani said Aware expects the fourth quarter to follow its typical seasonal pattern of growth, with a generally similar mix of recurring and non-recurring revenue to the third quarter. Traverse said fourth-quarter operating expenses are expected to remain generally consistent with the lower cost base established after the cost actions.
Management emphasized that quarterly results can vary based on license timing, renewals, procurement cycles, customer deployments and services activity. Amlani said the company’s priorities entering 2027 are to expand existing accounts, convert pipeline opportunities, improve the quality and durability of revenue and remain disciplined in investment decisions.
Addressing shareholder questions about the company’s stock price and Nasdaq listing requirements, Traverse said management understands the concerns and is focused on executing its business plan. He said Aware is aware of Nasdaq requirements and would address them if and when necessary.
About Aware (NASDAQ:AWRE)
Aware, Inc (NASDAQ: AWRE) develops biometric software and identity-management solutions for government and commercial organizations. Its technology supports the collection, processing, storage, matching and management of biometric data, including fingerprints, facial images and iris images.
The company’s product portfolio includes automated biometric identification systems, biometric data-management platforms, software development kits and mobile enrollment and authentication tools. These solutions are designed for applications such as civil identity programs, border management, law enforcement, defense, public safety and secure digital authentication.
Aware serves customers in the United States and international markets, working with government agencies, systems integrators and other organizations that require identity verification and biometric processing capabilities.
