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    AWRE
    Earnings call· Jun 2026(Q2 FY26)

    AWARE INC /MA/ Q2 FY26 earnings call AWRE

    Jul 29, 2026 Source

    Executive summary

    Aware, Inc. Q2 FY26 — Revenue Miss Amidst Federal Shutdown and Platform Transition

    Aware, Inc. experienced a challenging Q2 FY26 with revenue below expectations, primarily due to slower federal procurement and the ongoing transition to its SaaS-based Awareness Platform. Despite the near-term variability and increased losses, the company is sharpening its strategic focus on biometric orchestration, liveness, and matching, while implementing cost reductions. Management anticipates a stronger second half driven by typical seasonality and subscription renewals, emphasizing the long-term potential of its platform strategy amidst rising AI-driven fraud.

    Highlights

    4

    • Ended the quarter with a strong balance sheet, holding approximately $16.8 million in cash, cash equivalents, and marketable securities with no debt.

    • Successfully renewed a key customer, a top 15 global financial institution, for its second year and is exploring expanding the relationship.

    • Made significant updates to the Awareness Platform, including 10x lower false non-match rate for matching algorithms and under 2-second passive liveness detection.

    • Secured two new integrated technology partners, ROC and Mitek, strengthening the Awareness Platform's capabilities.

    Concerns

    4

    • Q2 FY26 revenue was $3.3 million, below expectations and down from $3.9 million in the prior year period.

    • Net loss for Q2 FY26 increased to $2.6 million ($0.12 per diluted share) from $2.0 million ($0.08 per diluted share) in Q2 FY25.

    • Adjusted EBITDA loss for Q2 FY26 widened to $2.3 million from $1.4 million in the prior year period.

    • Federal procurement activity was slower due to a government shutdown, creating a meaningful headwind during the quarter.

    Guidance & targets

    6
    CategoryTargetConfidence
    Revenue seasonality
    weighted more heavily toward the back half of the year compared to the first half of the year
    medium materiality
    Medium
    Revenue
    improve from Q2 levels
    high materiality
    Medium
    Expenses
    to be lower
    medium materiality
    Medium
    Recurring revenue baseline
    support a more normalized baseline
    medium materiality
    Medium
    Operating profile
    stronger operating profile than Q2
    high materiality
    Medium
    Business scalability
    continue as the Awareness Platform helps to unlock a more scalable model
    high materiality
    High

    Operational metrics

    27
    Revenue
    $3.3 millioncompared with $3.9 million in the prior year period
    Q2 FY26

    Revenue for the quarter was below expectations.

    Revenue
    $3.9 million
    Q2 FY25

    Prior year period revenue.

    Operating expenses
    $6 millioncompared to $5.9 million in the prior year quarter
    Q2 FY26

    Higher expenses include costs related to hires made in 2025, partially offset by spending reductions.

    Operating expenses
    $5.9 million
    Q2 FY25

    Prior year quarter operating expenses.

    Net loss
    $2.6 millioncompared to $2 million in the prior year period
    Q2 FY26

    Net loss for the quarter.

    Diluted EPS
    $0.12compared to $0.08 per diluted share in the prior year period
    Q2 FY26

    Diluted earnings per share for the quarter.

    Net loss
    $2 million
    Q2 FY25

    Prior year period net loss.

    Diluted EPS
    $0.08
    Q2 FY25

    Prior year period diluted earnings per share.

    Adjusted EBITDA loss
    $2.3 millioncompared to $1.4 million in the prior year period
    Q2 FY26

    Adjusted EBITDA loss for the quarter.

    Adjusted EBITDA loss
    $1.4 million
    Q2 FY25

    Prior year period Adjusted EBITDA loss.

    Total revenue
    $6.6 millioncompared to $7.5 million in the prior year period
    H1 FY26

    Total revenue for the 6 months ended June 30, 2026.

    Total revenue
    $7.5 million
    H1 FY25

    Prior year period total revenue for the 6 months.

    Operating expenses
    $13 millioncompared to $11.3 million in the prior year period
    H1 FY26

    Operating expenses for the 6 months ended June 30, 2026.

    Operating expenses
    $11.3 million
    H1 FY25

    Prior year period operating expenses for the 6 months.

    One-time severance costs
    $700,000
    H1 FY26

    Included in higher operating expenses for the 6 months.

    Operating expenses reduction
    $4 million
    annualized

    Reduced on an annualized basis starting in Q2 2026.

    Net loss
    $6 millioncompared to $3.4 million in the prior year period
    H1 FY26

    Net loss for the 6 months ended June 30, 2026.

    Diluted EPS
    $0.28compared to $0.16 per diluted share in the prior year period
    H1 FY26

    Diluted earnings per share for the 6 months ended June 30, 2026.

    Net loss
    $3.4 million
    H1 FY25

    Prior year period net loss for the 6 months.

    Diluted EPS
    $0.16
    H1 FY25

    Prior year period diluted earnings per share for the 6 months.

    Adjusted EBITDA loss
    $5.5 millioncompared to $3 million in the prior year period
    H1 FY26

    Adjusted EBITDA loss for the 6 months ended June 30, 2026.

    Adjusted EBITDA loss
    $3 million
    H1 FY25

    Prior year period Adjusted EBITDA loss for the 6 months.

    Cash and investments balance
    $16.8 million
    Q2 FY26

    Cash, cash equivalents and marketable securities with no debt.

    Organizations interested in biometric orchestration
    98%
    current

    Based on company research, 98% of organizations currently using biometrics are interested in biometric orchestration capabilities.

    Average biometric vendors used
    3
    current

    Organizations already using an average of 3 biometric vendors.

    Matching algorithm improvement
    10x
    current

    Compared to previous generations, along with scalable architecture for sub-second one-to-end matching.

    Liveness detection speed
    under 2 seconds
    current

    Passive user experience, typically operates in under 2 seconds without requiring user actions.

    Industry KPIs

    3
    MetricValueDetails
    Revenue growth$3.3MUSD
    Operating FCF margin rule of 40—
    Ai product adoption monetization98%%

    Product announcements

    3
    ProductTypeDetails
    Awareness Platform updatesupdate
    Intelligent Liveness enhancementsupdate
    Intelligent Matching advancementsupdate

    Deals & partnerships

    2
    ROCintegrated technology partner

    ROC's biometric matching technologies provide a high-performance foundation for identity decisioning workflows within the Awareness Platform.

    Mitekintegrated technology partner

    Mitek's identity verification and liveness detection capabilities bring additional high assurance fraud protection functionality into the platform.

    Risks & headwinds

    4
    Slower federal procurement activityQ2 FY26

    meaningful headwind

    Mitigation: Renewed activity across the federal government market particularly in areas tied to homeland security, border modernization, airport infrastructure, traveler processing and biometric identity verification.

    Near-term variability during business transformationongoing

    Q2 is a difficult quarter

    Mitigation: Focusing the company, building around the Awareness Platform, strengthening liveness and matching, pursuing near-term opportunities with discipline and aligning resources to the markets where we believe we can win.

    Cyclicality of businessongoing

    Our business can be cyclical, and individual quarters can vary based on procurement timelines, renewal schedules and customer decision-making

    Mitigation: Expect the second half of the year should reflect a stronger operating profile than Q2.

    AI-enabled threats (deepfakes, synthetic identities, injection attacks)ongoing

    As deepfakes, synthetic identities, injection attacks and other AI-enabled threats become more sophisticated, identity is becoming critical infrastructure

    Mitigation: Focused so deliberately on the Awareness Platform, Intelligent Liveness enhancements, and Intelligent Matching advancements.

    What to watch in Q3 FY26

    4

    Revenue improvement from Q2 levels

    H2 FY26
    Current$3.3 million in Q2 FY26
    TargetStronger revenue than Q2 FY26

    Why it matters

    Indicates successful execution of seasonal patterns and customer activity, crucial for overall financial health.

    Looking at the second half of the year, we expect revenue to improve from Q2 levels and expenses to be lower as the cost reduction actions we discussed last quarter became more visible in our results.

    Q&A highlights

    5

    How does the emphasis on government opportunities impact the commercial business?

    Ajay Amlani explained that both government and commercial organizations face similar challenges (AI-enabled fraud, regulatory pressure) and benefit from a "two-way exchange" where commercial views government-adopted tech as high-grade, and government seeks commercial-like usability. The Awareness Platform is highly relevant for both.

    “Commercial organizations view technologies adopted by government vendors or -- by government as government grade, right? Like they look at it as a higher threshold, a higher bar for security, for accuracy, for scalability, for reliability.”

    asked by Delaney Gembis · answered by Ajay Amlani

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Transformation and Platform Focus

    Aware is undergoing a significant transformation, shifting from a fragmented product portfolio to focusing on the SaaS-based Awareness Platform. This platform unifies biometric orchestration, decisioning, liveness detection, matching, and partner technologies, addressing the increasing complexity of biometric environments for government and commercial organizations. The transition creates near-term variability but is aimed at building a more scalable business around competitive areas.

    02

    Awareness Platform Enhancements

    During the quarter, Aware made important updates to the Awareness Platform, positioning it as an intelligent control plane for identity. This includes enabling configuration of enrollment, verification, authentication, and identification workflows, orchestrating multiple liveness detection and identity verification providers, and benchmarking vendors in production. The platform is designed to address the fragmentation customers face with multiple biometric systems.

    03

    Advanced Biometric Capabilities

    The company advanced its Intelligent Liveness capabilities to combat sophisticated AI-driven fraud, using optical and spectral analysis for passive, sub-2-second verification without user interaction. Additionally, advancements in Intelligent Matching delivered approximately 10x lower false non-match rates and scalable architecture for sub-second one-to-end matching across large datasets. These improvements are foundational for high-confidence identity systems in critical environments.

    04

    Federal Government Market Activity

    Renewed activity in the federal government market, particularly in homeland security, border modernization, and traveler processing, is noted. Following the normalization of DHS operations in May, Aware has seen increased conversations, RFIs, and procurement activity. This reinforces confidence in the federal government market as a key focus area, aligning with broader priorities for modernizing security infrastructure and leveraging trusted U.S.-based technology providers.

    05

    Partnerships and Ecosystem Expansion

    Aware welcomed two new integrated technology partners, ROC and Mitek, to the Awareness Platform. These partnerships enhance the platform's capabilities by providing high-performance biometric matching and additional high-assurance fraud protection functionality. This strategy reinforces the principle that the future of identity lies in better orchestration across multiple technologies and vendors, offering flexibility and visibility to customers.

    06

    Financial Performance and Outlook

    Q2 FY26 revenue was $3.3 million, below expectations, impacted by timing of📎 product business and federal shutdown. The company reported increased net and Adjusted EBITDA losses for both the quarter and the first half of the year. However, management expects revenue to improve and expenses to be lower in the second half due to typical seasonality, subscription renewals, and previously implemented cost reductions, including $4 million annualized savings starting in Q2 2026.

    AI-generated summary of the company’s earnings call. Not investment advice.