AWARE INC /MA/
For the period ended Jun 30, 2026. Filed Jul 31, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 31, 2026
AWRE$0.97+1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-01.
0001193125-26-201370
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-31.
0001193125-26-328344
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 45 previous paragraphs and 59 current paragraphs.
29 unchanged; 12 reworded; 10 added; 3 removed; 1 previous and 8 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Software maintenance decreased 4% from $4.3 million in the six months ended June 30, 2025 to $4.1 million for the six months ended June 30, 2026. As a percentage of total revenue, software maintenance revenue increased from 57% in the six months ended June 30, 2025 to 61% in the current year period.
Current report
The slight decrease in software maintenance was primarily due to the non-renewal of maintenance contracts by certain customers.
Current report
Services and other revenue was $0.3 million in the three months ended June 30, 2025 and 2026. As a percentage of total revenue, services and other revenue increased from 8% in the three months ended June 30, 2025 to 9% in the current year period.
Current report
Cost of revenue increased 97% from $0.4 million in the six months ended June 30, 2025 to $0.9 million in the six months ended June 30, 2026. Cost of revenue as a percentage of total revenue increased from 6% in the six months ended June 30, 2025 to 13% in the current year period. The $0.5 million increase was the result of increased software license costs.
Current report
Selling and marketing expense decreased 11% from $3.6 million in the six months ended June 30, 2025 to $3.2 million in the same six month period of 2026. As a percentage of total revenue, selling and marketing expense was 48% in the six months ended June 30, 2025 and 2026.
Current report
The decrease in selling and marketing expense for the three and six months ended June 30, 2026, compared to the same periods in the prior year, was primarily due to lower personnel-related costs resulting from the cost saving plan implemented in March 2026 to better align the Company's cost structure with current business needs.
Current report
General and administrative expense decreased 7% from $1.7 million in the three months ended June 30, 2025 to $1.6 million in the three months ended June 30, 2026. As a percentage of total revenue, general and administrative expense increased from 43% in the three months ended June 30, 2025 to 47% in the corresponding period of 2026.
Current report
General and administrative expense decreased 5% from $3.4 million in the six months ended June 30, 2025 to $3.2 million in the same six month period of 2026. As a percentage of total revenue, general and administrative expense increased from 45% in six months ended June 30, 2025 to 48% in the corresponding period of 2026.
Current report
The decrease in general and administrative expense for the three and six months ended June 30, 2026, compared to the same periods in the prior year, was primarily due to lower personnel-related costs resulting from the cost saving plan implemented in March 2026 to better align the Company's cost structure with current business needs.
Current report
Cash provided by financing activities was $47 thousand in the first six months of 2026, which primarily consisted of proceeds from issuances of common stock.
Removed paragraphs (3)
Previous report
ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Previous report
The spending increases for the three months ended March 31, 2026, compared to the same period in the prior year was primarily due to one time severance cost of $0.1 million and $0.1 million related to higher headcount hired in 2025.
Previous report
General and administrative expense was $1.7 million for each of the three months ended March 31, 2026 and 2025. As a percentage of total revenue, general and administrative expense was 47% in the first quarter of 2025 and 49% in the corresponding period of 2026. Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.
Reworded paragraphs (12)
Previous wording
Revenue and operating loss for the three months ended March 31, 2026 were $3.4 million and $3.7 million, respectively. These results compared to revenue of $3.6 million and operating loss of $1.9 million for the three months ended March 31, 2025. The decrease in revenue was primarily due to lower software license revenue. The increase in operating loss was primarily due to lower revenue, one-time severance costs in the current quarter of $0.7 million and a $0.6 million increase in salary-related expenses resulting from additional headcount hired in 2025. These severance costs relate to workforce reduction actions taken during the quarter as part of our efforts to align our cost structure with current business conditions. These actions are expected to reduce operating expenses in future periods.
Current wording
Revenue and operating loss for the six months ended June 30, 2026 were $6.6 million and $6.4 million, respectively. These results compared to revenue of $7.5 million and operating loss of $3.8 million for the six months ended June 30, 2025. The decrease in revenue was primarily due to lower software license revenue. The increase in operating loss was primarily due to lower revenue, one-time severance costs in the current period of $0.7 million and a $0.6 million increase in salary-related expenses resulting from additional headcount hired in 2025. These severance costs relate to workforce reduction actions taken during the period as part of our efforts to align our cost structure with current business conditions. We expect to realize incremental cost savings from these actions throughout the remainder of 2026.
Previous wording
Software license revenue decreased 22% from $1.3 million in the three months ended March 31, 2025 to $1.0 million for the three months ended March 31, 2026. As a percentage of total revenue, software license revenue decreased from 36% in the first quarter of 2025 to 30% in the current year quarter. The $0.3 million decrease in software license revenue was due primarily to a decrease in perpetual licenses sales due to a decrease in one-time license deals in the current quarter.
Current wording
Software license revenue decreased 33% from $1.4 million in the three months ended June 30, 2025 to $1.0 million for the three months ended June 30, 2026. As a percentage of total revenue, software license revenue decreased from 36% in the second quarter of 2025 to 29% in the current year quarter. The $0.4 million decrease in software license revenue was due primarily to a decrease in perpetual licenses sales due to a decrease in one-time license deals in the current quarter.
Previous wording
Software maintenance was $2.1 million in each of the three months ended March 31, 2026 and 2025. As a percentage of total revenue, software maintenance revenue increased from 58% in the first quarter of 2025 to 61% in the current year first quarter. Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.
Current wording
Software maintenance decreased 7% from $2.1 million in the three months ended June 30, 2025 to $2.0 million for the three months ended June 30, 2026. As a percentage of total revenue, software maintenance revenue increased from 55% in the second quarter of 2025 to 61% in the current year period.
Previous wording
Services and other revenue increased 54% from $0.2 million in the three months ended March 31, 2025 to $0.3 million in the three months ended March 31, 2026. As a percentage of total revenue, services and other revenue increased from 5% in the three months ended March 31, 2025 to 8% in the current year period. The increase was primarily due to growth in SaaS revenue, which increased from $47 thousand in the three months ended March 31, 2025 to $0.1 million in the current year first quarter. The increase in SaaS revenue reflects expansion of subscription-based customer arrangements. Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.
Current wording
Services and other revenue increased from $0.5 million in the six months ended June 30, 2025 to $0.6 million in the six months ended June 30, 2026. As a percentage of total revenue, services and other revenue increased from 7% in the six months ended June 30, 2025 to 9% in the current year period. The increase was primarily due to growth in SaaS revenue, which increased from $0.1 million in the six months ended June 30, 2025 to $0.3 million in the current year period and was partially offset by lower services revenue. The increase in SaaS revenue reflects expansion of subscription-based customer arrangements.
Previous wording
Cost of revenue increased 93% from $0.2 million in the three months ended March 31, 2025 to $0.3 million in the three months ended March 31, 2026. Cost revenue as a percentage of total revenue increased from 5% in the first quarter of 2025 to 10% in the current year first quarter. The $0.1 million increase was the result of increased software license costs. Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.
Current wording
Cost of revenue increased 95% from $0.3 million in the three months ended June 30, 2025 to $0.5 million in the three months ended June 30, 2026. Cost of revenue as a percentage of total revenue increased from 7% in the second quarter of 2025 to 16% in the current year second quarter. The $0.2 million increase was the result of increased software license costs.
Previous wording
Total engineering costs increased 62% from $2.0 million in the three months ended March 31, 2025 to $3.3 million in the three months ended March 31, 2026. As a percentage of total revenue, total engineering costs increased from 56% in the three months ended March 31, 2025 to 97% in the same current year quarter.
Current wording
Total engineering costs increased 28% from $2.1 million in the three months ended June 30, 2025 to $2.6 million in the three months ended June 30, 2026. As a percentage of total revenue, total engineering costs increased from 53% in the three months ended June 30, 2025 to 81% in the same current year quarter. The spending increase for the three months ended June 30, 2026 compared to the same prior year period was primarily due to salary related costs in relation to additional headcount hired in 2025.
Previous wording
The spending increase for the three months ended March 31, 2026 compared to the same prior year period was primarily due to one-time severance costs of $0.6 million including the termination of our chief technology officer and $0.7 million increase in salary related costs in relation to additional headcount hired in 2025. We anticipate engineering expenses to decrease during the remainder of 2026 as we focus on strategic product development initiatives.
Current wording
Total engineering costs increased 45% from $4.0 million in the six months ended June 30, 2025 to $5.9 million in the six months ended June 30, 2026. As a percentage of total revenue, total engineering costs increased from 54% in the six months ended June 30, 2025 to 89% in the same current year period. The spending increase for the six months ended June 30, 2026 compared to the same prior year period was primarily due to one-time severance costs of $0.6 million including the termination of our chief technology officer and a $1.3 million increase in salary related costs in relation to additional headcount hired in 2025. We anticipate engineering expenses to decrease during the remainder of 2026 as we focus on strategic product development initiatives.
Previous wording
Selling and marketing expense increased 10% from $1.7 million in the three months ended March 31, 2025 to $1.8 million in the same three month period of 2026. As a percentage of total revenue, selling and marketing expense increased from 45% in the first quarter of 2025 to 49% in the corresponding period in 2026.
Current wording
Selling and marketing expense decreased 29% from $2.0 million in the three months ended June 30, 2025 to $1.4 million in the same three month period of 2026. As a percentage of total revenue, selling and marketing expense decreased from 50% in the second quarter of 2025 to 42% in the corresponding period in 2026.
Previous wording
Interest Income. Interest income was $0.2 million and $0.3 million in the three months ended March 31, 2026 and 2025, respectively. The decrease in interest income in the three months ended March 31, 2026 was primarily the result of lower average cash balances during the current year period.
Current wording
Interest income was $0.4 million and $0.5 million in the six months ended June 30, 2026 and 2025, respectively. The decrease in interest income in the six months ended June 30, 2026 was primarily the result of lower average cash balances during the current year period.
Previous wording
Income taxes. Total income tax expense was $8 thousand and $7 thousand for the three months ended March 31, 2026 and 2025, respectively. The income tax expense relates to state income taxes.
Current wording
Income taxes. Total income tax expense was $1 thousand and $26 thousand for the three months ended June 30, 2026 and 2025, respectively. The income tax expense relates to state income taxes.
Previous wording
At March 31, 2026, we had cash, cash equivalents and marketable securities of $19.6 million, which represented a decrease of $2.7 million from December 31, 2025. The decrease in cash, cash equivalents and marketable securities was primarily due to the impact of $2.7 million of cash used in operating activities.
Current wording
At June 30, 2026, we had cash, cash equivalents and marketable securities of $16.8 million, which represented a decrease of $5.5 million from December 31, 2025. The decrease in cash, cash equivalents and marketable securities was primarily due to the impact of $5.4 million of cash used in operating activities.
Previous wording
Cash used in investing activities was sixteen thousand in the first three months of 2026, which primarily consisted of net purchases of marketable securities.
Current wording
Cash provided by investing activities was $1.0 million in the first six months of 2026, which primarily consisted of net sales of marketable securities.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
Revenue and operating loss for the three months ended June 30, 2026 were $3.3 million and $2.7 million, respectively. These results compared to revenue of $3.9 million and operating loss of $2.0 million for the three months ended June 30, 2025. The decrease in revenue and increase in operating loss was primarily due to lower software license revenue.
Current report — wording carried from elsewhere
Software license revenue decreased 27% from $2.7 million in the six months ended June 30, 2025 to $2.0 million for the six months ended June 30, 2026. As a percentage of total revenue, software license revenue decreased from 36% in the first six months of 2025 to 30% in the current period. The $0.7 million decrease in software license revenue was due primarily to a decrease in perpetual licenses sales due to a decrease in one-time license deals in the current year period.
Current report — wording carried from elsewhere
Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.
Current report — wording carried from elsewhere
Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.
Current report — wording carried from elsewhere
Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.
Current report — wording carried from elsewhere
Prior period amounts have been reclassified to conform to the current period presentation. See Note 1 to the consolidated financial statements for additional information regarding these reclassifications.
Current report — wording carried from elsewhere
Interest Income. Interest income was $0.2 million in the three months ended June 30, 2026 and 2025.
Current report — wording carried from elsewhere
Total income tax expense was $9 thousand and $34 thousand for the six months ended June 30, 2026 and 2025, respectively. The income tax expense relates to state income taxes.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
We expect selling and marketing expenseto decrease during the remainder of 2026 as we focus on strategic product development initiatives.