Shares of Aware, Inc. AWRE have lost 7.4% since the company reported its earnings for the year ended Sept. 30, 2025, trailing the S&P 500 Index’s 0.3% decline during the same period. Over the past month, the stock has lost 11.2% against the S&P 500’s 2% gain.
AWRE’s Earnings Snapshot
For the third quarter of 2025, Aware reported revenues of $5.1 million, up 33.3% year over year compared with $3.8 million in the same quarter of 2024. This growth was driven mainly by a $1 million expansion of perpetual license sales to an existing customer and $0.6 million in new term license contracts. Despite higher operating expenses associated with strategic investments, AWRE’s net loss improved to $1.1 million, or $(0.05) per diluted share, from $1.2 million loss, or $(0.06) per share, a year earlier.
Adjusted EBITDA loss narrowed to $0.8 million from $1.1 million year over year, reflecting both higher total revenue and cost discipline. Operating expenses rose 20.8% to $6.4 million from $5.3 million, primarily due to investments in sales, marketing, and product development to support Aware’s go-to-market strategy.
Research and development costs rose 13.8% to $2.1 million from $1.9 million a year earlier, and selling and marketing expenses increased 13.3% to $2.1 million from $1.9 million a year earlier. General and administrative costs climbed 29% to $1.7 million from $1.3 million a year earlier.
For the nine months ended Sept. 30, 2025, revenue remained nearly flat at $12.6 million, while net loss widened to $4.4 million, or $(0.21) per share, from $3.2 million, or $(0.15) per share, in the prior-year period, reflecting increased operating expenses and moderated service revenue.
Aware’s Business Metrics and Segmental Highlights
Recurring revenue continued to gain traction, rising to $3.6 million, or 69.3% of total third-quarter 2025 revenue, from $2.8 million a year earlier, a 26.2% increase. This growth was fueled by software subscriptions, which surged 110.7% to $1.2 million from $0.6 million, and software maintenance revenue that edged up 5.1% to $2.4 million from $2.3 million.
Non-recurring revenue climbed 52.7% to $1.6 million from $1 million, with software license revenue jumping 118.7% year over year. Meanwhile, services and other revenue declined 44.6% to $0.2 million from $0.4 million, indicating some variability in professional service demand.
Cash, cash equivalents, and marketable securities totaled $22.5 million as of Sept. 30, 2025, down from $27.8 million at year-end 2024, mainly due to operating losses and normal working capital fluctuations.
Aware, Inc. Price, Consensus and EPS Surprise
Aware, Inc. price-consensus-eps-surprise-chart | Aware, Inc. Quote
AWRE’s Management Commentary and Strategic Progress
Chief executive officer Ajay Amlani highlighted that Aware’s results demonstrate disciplined execution and early validation of its transformation strategy, which focuses on three pillars — advancing adaptive liveness technology, strengthening a customer-focused go-to-market model and deepening strategic partnerships.
Amlani noted that the quarter’s 33.3% revenue increase reflected expanding government deployments and growing commercial demand for biometric solutions amid heightened cybersecurity and identity verification requirements. The company achieved FIDO Alliance Certification for its face verification technology in October, positioning AWRE among the first to meet stringent global standards for passwordless authentication.
Factors Influencing Aware’s Headline Numbers
According to chief financial officer David Traverse, the revenue surge was mainly driven by license sales, though fluctuations in licensing timing continue to affect quarterly results. Traverse acknowledged that the firm’s cost structure grew due to targeted investments but affirmed its disciplined expense management and strong liquidity position with no debt. He also pointed to a strategic focus on expanding recurring revenue for greater predictability, which should improve consistency in future quarters.
Chief revenue officer Brian Krause emphasized growing demand across both federal and commercial sectors, noting that federal programs — especially within DHS — are driving biometric modernization despite short-term delays caused by government shutdowns. The company’s land-and-expand approach has yielded new wins in financial services and workforce management, underscoring the scalability of its Awareness Platform.
AWRE’s Outlook and Guidance
While Aware did not issue formal quantitative guidance, management reaffirmed its commitment to pursuing large, durable opportunities that can evolve into multi-year recurring revenue streams. Amlani indicated that as the company scales, investors should expect increasing operating leverage and stronger recurring contributions, supported by partnerships, certifications, and integrations that lower adoption barriers. However, near-term results may remain variable due to the timing of government contracts and licensing activity.
Aware’s Other Developments
During the quarter, Aware launched Intelligent Liveness, an upgraded biometric detection system combining passive and active liveness verification with faster processing and improved spoof detection. The company also expanded engagement with a major U.S. federal agency and added a new financial services customer, reflecting progress in both government and enterprise segments.
Additionally, management is prioritizing certifications such as ISO and FedRAMP, which are increasingly required for federal and enterprise contracts. No acquisitions or divestitures were announced during the quarter.
Aware, Inc. (AWRE): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).