Good afternoon, and welcome to Aware's Third Quarter 2024 Conference Call.

Joining us today are the company's CEO and President, Robert Eckel; and CFO, David Traverse. [Operator Instructions]

Before we begin today's call, I'd like to remind everyone that the presentation today contains forward-looking statements that are based on the current expectations of Aware's management and involve inherent risks and uncertainties that could cause actual results to differ materially from those described. Listeners should please take note of the safe harbor paragraph that is included at the end of today's press release. This paragraph emphasizes the major uncertainties and risks inherent in forward-looking statements that management will be making today.

Aware wishes to caution you that there are factors that could cause actual results to differ materially from those results indicated by such statements. These risks and uncertainties are also outlined in the company's SEC filings, including its annual report on Form 10-K quarterly reports on Form 10-Q. Any forward-looking statements should be considered in light of these factors.

You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made.

Although it may voluntarily do so from time to time, but Aware undertakes no commitment to update or revise the forward-looking statements, whether because of new information, future events or otherwise, except as required by applicable securities laws.

Additionally, during this call, we will discuss certain non-GAAP financial measures as the term is defined by the SEC and Regulation G. Non-GAAP financial measures should not be considered in isolation from or as a substitute for financial information presented in compliance with GAAP. Accordingly, Aware has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the company's earnings release issued today.

I'd like to remind everyone that the presentation will be recorded and made available for replay via a link available in the Investor Relations section of the company's website.

Now I'd like to turn the call over to Aware's CEO and President, Bob Eckel. Bob?

Thank you, Matt, and good afternoon, everyone. I appreciate you joining us today. After the market closed, we reported our third quarter results for the period ending September 30, 2024. The full press release is available in the Investor Relations section of our website.

On today's call, I'll start with a review of our financial and operational performance and provide updates on our product developments and growing global traction. David will then take you through a detailed breakdown of our financials and then I'll wrap things up with our strategic outlook before we open the floor for questions.

In Q3, we continued to execute our long-term growth strategy, focused on expanding annual recurring revenue, or ARR, while also improving our bottom line. We made strong progress in reducing operating expenses, leading to a $1.3 million decrease in the first 9 months of the year compared to 2023.

Although total revenue for the quarter was lower year-over-year, this was mainly due to the timing of a couple of contract closures and the impact of a significant onetime license sale in Q3 of last year.

The real highlight of the quarter was the 29% year-over-year growth in recurring revenue, which strengthens our foundation for sustainable long-term growth. This builds upon the progress made since 2020, where recurring revenue has grown at a rate of 20% as we continue transitioning from a book-and-ship organization to a recurring revenue business model.

While we encountered delays with some of our larger deals, pushing them to Q4 or early Q1 of next year, we secured a $1 million booking in mid-October just after Q3 ended. This deal is expected to contribute to a strong Q4 and a solid close to 2024, both in terms of top line growth and recurring revenue.

Although we are initially optimistic about the timing, these delays represent extended timelines, not lost opportunities.

The $1 million booking we recently secured with the European government is a testament to the impactful 2024 enhancement of BioSP, our biometric orchestration and identity management platform. We've diligently improved its usability in multimodal biometric data orchestration capabilities, adding features like off-line biometric enrollment, things that are essential for regions with limited internet connectivity or frequent power outages. These updates only position Aware as a leader in addressing complex infrastructure needs but also demonstrate our proactive approach anticipating customer demands. This strategic advancement continues to expand our global footprint in a diverse range of use cases we support.

Additionally, we expanded our ABIS portfolio by securing 2 new term contracts and recently added another ABIS account in Q4, bringing the total number of ABIS accounts to 5.

As part of our long-term strategy, we are actively working to bring all of these accounts to full production.

We expect these projects to generate a steady revenue stream over the next 5 years and beyond. This consistent growth in our ABIS contract reinforces our commitment to delivering cutting-edge solutions and driving value for our clients.

In access control, encompassing both physical and digital solutions remains a key growth area for us with a significant traction in [ steady and exit ] control in Brazil and increasing adoption of AwareID and digital test-taking environments. This demand is especially strong in regions like the Middle East and Latin America where organizations are prioritizing enhanced security across both physical venues such as stadiums and online platforms.

Our partnerships, including those with organizations like PeopleCert are addressing the rising need for secure identity verification in our high stakes testing, helping us acquire new customers in the education sector and expand our reach through a broad partner network.

Our SaaS model is gaining momentum with the recent launch of AwareID as a no-code plug-in on WordPress marketplace, significantly expanding our reach. This integration enables companies across industries like online gaming, retail and e-commerce to adopt secure cloud-based biometric authentication without requiring a deep technical bench.

For example, WooCommerce users on WordPress can now implement facial recognition for fraud prevention and password-free checkout.

As we continue to navigate this dynamic market, we're observing a growing demand for biometric-based KYC solutions driven by stricter identity verification regulations. With WordPress powering over 40% of the web, this development is transformative, offering businesses fast, secure, KYC and authentication capabilities with minimal upfront infrastructure costs. This has led to momentum in the gaming industry, bolstered by key partnerships that have driven strong customer engagement, a testament to our team's dedication and hard work.

The AwareID plug-in complements our broader technology stack which includes SDKs, APIs and the standard industry OpenID Connect integrations, providing customers with a flexible, scalable solution tailored to their available IT resources and specific needs.

Additionally, we made further enhancements to our Aware partnership program this quarter, adding new layers to help grow, support and better incentivize our partners. This included the introduction of new program pillars focused on collaborative business planning, persona-based enablement and investment incentivization initiatives for our key partner relationships. To complement these enhancements, we hosted a Partnership Summit in conjunction with GITEX GLOBAL in the Middle East. This event was a strategic opportunity to reinforce our partner framework. The summit featured a comprehensive agenda covering thought leadership, the state of biometrics, partner insights and Aware strategic initiatives across sales, marketing, product engineering and solutions.

Additionally, it marked the launch of our new partner ecosystem site and we received enthusiastic feedback from partners on the value of the content and the collaborative sessions offered.

While a few deals expected in Q3 were delayed, we remain optimistic about our performance in Q4 and which is shaping up to be strong in terms of recurring revenue, ARR and overall top line revenue.

Our pipeline is robust, and we're confident in our ability to capture these opportunities, thanks in large part to our enhanced product offerings, and the deepening partnerships we fostered driven by our focus on customer feedback.

This year, we've made significant strides in expanding our recurring revenue streams while