Craig Herman: Yes. Excellent question. In Q1, we made the first of many partner program enhancements. And one of them who was introducing our partner MDF program, the MDF program underscores our dedication to supporting our partners’ marketing efforts in promoting Aware technology as a standalone solution or integrated within their own solution. All the partners now can access funds covering up to 50% of select marketing activity costs that foster lead generation specifically. The activities include running digital marketing campaigns, social campaigns, trade shows and more. The program is funded with a portion of our broader marketing budget and not only provide financial support, but also ensures that our joint lead generation efforts are effective in the marketplace.
By making the funds available, we are able to achieve a few – a couple of critical things. First, we incentivize our partners to promote Aware’s technology specifically. The more partners promoting our brand, the more brand awareness we can develop and the more opportunities we are going to uncover. Second, we gained insight into the marketing practices and corresponding results from our partners. In order to qualify for the funds, partners must submit a request that defines the market activity, specific objectives, target audience, timeline, budget, etcetera. After completion of the activities, partners must submit proven performance, which includes detailed metrics on the activities performance, including reach, engagement, leads generated, etcetera.
And financial documentation confirming the actual expenditure on the activity is critical. As we create closer alignment through our partner program enhancements like this new MDF program, our enablement programs, we anticipate tapping into the leverage of our expansion partner ecosystem that can provide in our overall go-to-market efforts.
Matt Glover: Thanks Craig. Another one for David, you mentioned the year-over-year increase in recurring maintenance revenue was largely driven by contracts awarded in Q3 2023. You provide some additional context around what caused the delay in recognizing the revenue from those deals? Were there any specific factors or circumstances that led to the delayed revenue recognition compared to your typical timelines?
David Traverse: Yes. Thanks Matt. No, I think we just talked about this a lot in the third quarter and the fourth quarter calls. So, what happens, we secured contracts for U.S. government agency as well as our largest BioSP customer. And what that did, that added over $1 million of the company’s annual recurring revenue. And now we are starting to see the benefit from that.
Matt Glover: Great. Thanks David. The next question, what drove the substantial improvement in operating loss in Q1?
Robert Eckel: Yes, I will take that. I would say the substantial improvement in operating loss reflected the success and the focus on our cost optimization initiatives. And these initiatives include a significant reduction in headcount across the organization while also strategically investing in the high-growth areas. So, by doing so, we are able to significantly streamline our cost structure and lower our revenue breakeven point.
Matt Glover: Thanks Bob. The next question, with approximately $29 million of cash, cash equivalents and marketable securities on your balance sheet, are you currently thinking about your capital allocation strategy going forward? What are the key priorities or focus areas you are considering when evaluating how to deploy this capital to drive the company’s continued growth and development?
Craig Herman: Yes. Thanks Matt. I can take this one. So, as I think we have been pretty consistent with this messaging in the last few quarters, we are always actively evaluating any opportunities that really have the potential to increase our scalability. However, we haven’t identified any candidates that could contribute to our substantive growth at evaluation – that matches our valuation criteria. That said, we do have a robust cash position that gives us the flexibility to pursue any promising opportunities that may arise. But in the meantime, we remain focused on accelerating our organic growth.
Matt Glover: Bob, given the company outperformed its expectations to grow ARR by at least 15% in 2023, how are you thinking about your outlook for 2024?
Robert Eckel: Yes. In 2023, we achieved a 23% growth in annual recurring revenue, and we anticipate continuing this momentum through this year. And again, I am going to reiterate for 2024, we are targeting double-digit growth in both the revenue and ARR.
Matt Glover: Thank you. Are you targeting double-digit growth in both ARR and revenue for this year? What opportunities in your pipeline are giving you confidence in these projections?
Craig Herman: Sure. I will take that. Aside from the contracts and customers we mentioned on the call, we have a robust pipeline of opportunities are in varying stages across the sales process. To name a few more immediate examples, we are currently in the final stages of negotiation with three very exciting opportunities for Q2. The first is a multiyear deal in the Middle East to employ our Knomi solution for digital identity management. Second, we are continuing to expand BioSP’s international footprint with an international government contract. And third, we are in the process of securing our largest contract for our ABIS platform. The breadth and diversity of these opportunities showcases the power and flexibility of the Aware biometric identity platform, and we are looking forward to expanding on these further in our upcoming calls.
Matt Glover: Thanks Craig. The next question is, will partnerships help in gaining more U.S. customers?
Craig Herman: Yes, absolutely. It is a big focus for us, and I will speak to you. Pretty recently, we were at the ISC West show where focus was access control. So, we really see a market for biometrics in access control that is speeding towards adoption. A lot of that is driven by larger players outside of the biometrics space that are now deploying, including a company like Amazon with the palm branch at Whole Foods using your palm to pay at Whole Foods. So, we are now seeing access control moving over closer to biometrics to be able to get away from things like using a fob or a key card, things that can be lost or misplaced. And we are getting a lot of attention and interest from groups like MSPs and as well as hardware providers in the access control space. So, that’s one area where we really see a focus on partners is going to drive that for private and public spaces across the U.S.
Matt Glover: Great. Thanks Craig. Can you talk about the change in competitive dynamics over the last six months?
