OneSpan Reports Results for First Quarter 2022
OneSpan Inc. (NASDAQ: OSPN) reported its first quarter 2022 financial results, with total revenue rising 3% year-over-year to $52.4 million. Recurring revenue saw a significant increase of 22% to $35.2 million, while Annual Recurring Revenue (ARR) grew 21% to $130.7 million. The company achieved GAAP net income of $5.2 million, equating to $0.13 per diluted share. Adjusted EBITDA improved to $0.2 million, a notable recovery from a loss in the previous year. Management anticipates revenue for 2022 will meet or exceed last year's figures, with further details expected at the Investor Day on May 17.
- Total revenue grew 3% YoY to $52.4 million.
- Recurring revenue increased by 22% YoY to $35.2 million.
- Annual Recurring Revenue (ARR) rose 21% YoY to $130.7 million.
- GAAP net income was $5.2 million, or $0.13 per diluted share.
- Adjusted EBITDA improved to $0.2 million, compared to a loss in Q1 2021.
- GAAP operating loss for Q1 2022 was $9.2 million, though slightly improved from last year.
- Despite profit, non-GAAP net loss was $0.3 million, indicating ongoing challenges.
First Quarter Financial Results
-
Total revenue grew
3% year-over-year to$52.4 million -
Recurring revenue grew
22% year-over-year to 1$35.2 million -
Annual Recurring Revenue (ARR) grew
21% year-over-year to 2$130.7 million -
Dollar-based net expansion (DBNE) of
115% 3 -
GAAP net income of
$5.2 million -
Adjusted EBITDA of
4$0.2 million -
GAAP income per diluted share of
; Non-GAAP loss per diluted share of$0.13 4$(0.01)
“We are pleased with our first quarter results, including
First Quarter 2022 Financial Highlights
-
Revenue for the first quarter of 2022 was
, an increase of$52.4 million 3% from for the first quarter of 2021.$50.8 million -
Gross profit was
for the first quarter of 2022, compared to$36.7 million for the first quarter of 2021. Gross margin for the first quarter of 2022 was$34.2 million 70% , compared to67% for the first quarter of 2021. -
GAAP operating loss for the first quarter of 2022 was
, compared to$9.2 million for the first quarter of 2021.$9.3 million -
Other income (expense) for the first quarter of 2022 was
compared to$15.6 million for the first quarter of 2021. The increase was primarily driven by a$(0.4) million gain on the sale of OneSpan’s investment in Promon AS.$14.8 million -
GAAP net income for the first quarter of 2022 was
, or$5.2 million per diluted share. GAAP net loss was$0.13 , or$9.2 million per diluted share, for the first quarter of 2021.$0.23 -
Non-GAAP net loss for the first quarter of 2022 was
, or$0.3 million per diluted share, compared to Non-GAAP net loss of$0.01 , or$6.2 million per diluted share, for the first quarter of 2021.$0.16 -
Adjusted EBITDA for the first quarter of 2022 was
compared to$0.2 million for the first quarter of 2021.$(5.3) million -
Cash, cash equivalents and short-term investments at
March 31, 2022 totaled compared to$119.9 million at$98.5 million December 31, 2021 and at$115.2 million March 31, 2021 .
Outlook
For the Full Year 2022,
- Revenue to meet or exceed full year 2021 revenue.
-
We are finalizing our review of our full year 2022 adjusted EBITDA outlook in context with our strategic plan and will provide an update at our investor day on
May 17 .
Investor Day on
A live webcast will be accessible from the
Conference Call Details
In conjunction with this announcement,
To access the conference call, dial 844-200-6205 for the
The conference call is also available in listen-only mode at investors.onespan.com. The recorded version of the conference call will be available on the
_______________________________ | |
1 |
Recurring revenue is comprised of subscription, term-based software licenses, and maintenance revenue. |
2 |
ARR is calculated as the annualized value of our customer recurring contracts with a term of at least one-year, as of the measuring date. These include subscription, term-based license, and maintenance contracts and exclude one-time fees. To the extent that we are negotiating a renewal with a customer after the expiration of a recurring contract, we continue to include that revenue in ARR if we are actively in discussion with the customer for a new recurring contract or renewal, or until such customer notifies us that it is not renewing its recurring contract. |
3 |
DBNE is defined as the year-over-year growth in ARR from the same set of customers at the end of the prior year period. |
4 |
An explanation of the use of non-GAAP financial measures is included below under the heading “Non-GAAP Financial Measures.” A reconciliation of each non-GAAP financial measure to the most directly comparable GAAP financial measure has also been provided in the tables below. |
About
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of applicable
Unless otherwise noted, references in this press release to “OneSpan”, “Company”, “we”, “our”, and “us” refer to
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) |
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2022 |
|
2021 (1.) |
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Revenue |
|
|
|
|
|
|
|
||
Product and license |
|
$ |
29,485 |
|
|
$ |
28,445 |
|
|
Services and other |
|
|
22,962 |
|
|
|
22,330 |
|
|
Total revenue |
|
|
52,447 |
|
|
|
50,775 |
|
|
|
|
|
|
|
|
|
|
||
Cost of goods sold |
|
|
|
|
|
|
|
||
Product and license |
|
|
9,079 |
|
|
|
10,752 |
|
|
Services and other |
|
|
6,690 |
|
|
|
5,781 |
|
|
Total cost of goods sold |
|
|
15,769 |
|
|
|
16,533 |
|
|
|
|
|
|
|
|
|
|
||
Gross profit |
|
|
36,678 |
|
|
|
34,242 |
|
|
|
|
|
|
|
|
|
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||
Operating costs |
|
|
|
|
|
|
|
||
Sales and marketing |
|
|
15,895 |
|
|
|
17,168 |
|
|
Research and development |
|
|
13,749 |
|
|
|
12,244 |
|
|
General and administrative |
|
|
14,895 |
|
|
|
12,551 |
|
|
Amortization of intangible assets |
|
|
1,382 |
|
|
|
1,573 |
|
|
Total operating costs |
|
|
45,921 |
|
|
|
43,536 |
|
|
|
|
|
|
|
|
|
|
||
Operating loss |
|
|
(9,243 |
) |
|
|
(9,294 |
) |
|
|
|
|
|
|
|
|
|
||
Interest income (expense), net |
|
|
(17 |
) |
|
|
4 |
|
|
Other income (expense), net |
|
|
15,647 |
|
|
|
(362 |
) |
|
|
|
|
|
|
|
|
|
||
Income (loss) before income taxes |
|
|
6,387 |
|
|
|
(9,652 |
) |
|
Provision (benefit) for income taxes |
|
|
1,173 |
|
|
|
(501 |
) |
|
|
|
|
|
|
|
|
|
||
Net income (loss) |
|
$ |
5,214 |
|
|
$ |
(9,151 |
) |
|
|
|
|
|
|
|
|
|
||
Net income (loss) per share |
|
|
|
|
|
|
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||
Basic |
|
$ |
0.13 |
|
|
$ |
(0.23 |
) |
|
Diluted |
|
$ |
0.13 |
|
|
$ |
(0.23 |
) |
|
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|
|
|
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|
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Weighted average common shares outstanding |
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|
|
|
|
|
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Basic |
|
|
39,577 |
|
|
|
39,996 |
|
|
Diluted |
|
|
39,687 |
|
|
|
39,996 |
|
|
(1) | 2021 results have been revised to correct for certain immaterial misstatements. For additional information, see the “Revision of Prior Period Financial Statements” section of this press release. |
CONSOLIDATED BALANCE SHEETS (in thousands, unaudited) |
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2022 |
|
2021 |
||||
ASSETS |
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Current assets |
|
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Cash and equivalents |
|
$ |
83,645 |
|
|
$ |
63,380 |
|
Short term investments |
|
|
36,302 |
|
|
|
35,108 |
|
Accounts receivable, net of allowances of |
|
|
35,704 |
|
|
|
56,612 |
|
Inventories, net |
|
|
10,388 |
|
|
|
10,345 |
|
Prepaid expenses |
|
|
7,656 |
|
|
|
7,594 |
|
Contract assets |
|
|
5,410 |
|
|
|
4,694 |
|
Other current assets |
|
|
9,591 |
|
|
|
9,356 |
|
Total current assets |
|
|
188,696 |
|
|
|
187,089 |
|
Property and equipment, net |
|
|
10,253 |
|
|
|
10,757 |
|
Operating lease right-of-use assets |
|
|
8,849 |
|
|
|
9,197 |
|
|
|
|
94,586 |
|
|
|
96,174 |
|
Intangible assets, net of accumulated amortization |
|
|
19,728 |
|
|
|
21,270 |
|
Deferred income taxes |
|
|
3,679 |
|
|
|
3,786 |
|
Contract assets - non-current |
|
|
318 |
|
|
|
195 |
|
Other assets |
|
|
9,802 |
|
|
|
13,803 |
|
Total assets |
|
$ |
335,911 |
|
|
$ |
342,271 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
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Current liabilities |
|
|
|
|
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|
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Accounts payable |
|
$ |
7,231 |
|
|
$ |
8,204 |
|
Deferred revenue |
|
|
50,988 |
|
|
|
54,617 |
|
Accrued wages and payroll taxes |
|
|
14,109 |
|
|
|
16,607 |
|
Short-term income taxes payable |
|
|
735 |
|
|
|
1,103 |
|
Other accrued expenses |
|
|
7,297 |
|
|
|
7,668 |
|
Deferred compensation |
|
|
80 |
|
|
|
877 |
|
Total current liabilities |
|
|
80,440 |
|
|
|
89,076 |
|
Long-term deferred revenue |
|
|
7,326 |
|
|
|
9,125 |
|
Long-term lease liabilities |
|
|
9,932 |
|
|
|
10,180 |
|
Other long-term liabilities |
|
|
7,554 |
|
|
|
7,770 |
|
Long-term income taxes payable |
|
|
5,054 |
|
|
|
5,054 |
|
Deferred income taxes |
|
|
2,010 |
|
|
|
1,286 |
|
Total liabilities |
|
|
112,316 |
|
|
|
122,491 |
|
Stockholders' equity |
|
|
|
|
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Preferred stock: 500 shares authorized, none issued and outstanding at |
|
|
— |
|
|
|
— |
|
Common stock: |
|
|
40 |
|
|
|
40 |
|
Additional paid-in capital |
|
|
100,975 |
|
|
|
100,250 |
|
|
|
|
(12,501 |
) |
|
|
(12,501 |
) |
Retained earnings |
|
|
148,387 |
|
|
|
143,173 |
|
Accumulated other comprehensive loss |
|
|
(13,306 |
) |
|
|
(11,182 |
) |
Total stockholders' equity |
|
|
223,595 |
|
|
|
219,780 |
|
Total liabilities and stockholders' equity |
|
$ |
335,911 |
|
|
$ |
342,271 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) |
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Three months ended |
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2022 |
|
2021 |
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Cash flows from operating activities: |
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|
|
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|
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Net income (loss) from operations |
|
$ |
5,214 |
|
|
$ |
(9,151 |
) |
Adjustments to reconcile net loss from operations to net cash provided by (used in) operations: |
|
|
|
|
|
|
||
Depreciation and amortization of intangible assets |
|
|
2,097 |
|
|
|
2,310 |
|
Loss on disposal of assets |
|
|
1 |
|
|
|
22 |
|
Gain on sale of equity-method investment |
|
|
(14,810 |
) |
|
|
— |
|
Deferred tax benefit |
|
|
794 |
|
|
|
(732 |
) |
Stock-based compensation |
|
|
1,360 |
|
|
|
1,342 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
19,893 |
|
|
|
8,554 |
|
Allowance for doubtful accounts |
|
|
666 |
|
|
|
34 |
|
Inventories, net |
|
|
(260 |
) |
|
|
1,748 |
|
Contract assets |
|
|
(904 |
) |
|
|
2,346 |
|
Accounts payable |
|
|
(941 |
) |
|
|
140 |
|
Income taxes payable |
|
|
(332 |
) |
|
|
(1,634 |
) |
Accrued expenses |
|
|
(2,723 |
) |
|
|
3,090 |
|
Deferred compensation |
|
|
(797 |
) |
|
|
(1,527 |
) |
Deferred revenue |
|
|
(5,156 |
) |
|
|
322 |
|
Other assets and liabilities |
|
|
(442 |
) |
|
|
(3,281 |
) |
Net cash provided by operating activities |
|
|
3,660 |
|
|
|
3,583 |
|
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|
|
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Cash flows from investing activities: |
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|
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Purchase of short term investments |
|
|
(15,812 |
) |
|
|
(25,234 |
) |
Maturities of short term investments |
|
|
14,500 |
|
|
|
7,565 |
|
Additions to property and equipment |
|
|
(272 |
) |
|
|
(755 |
) |
Additions to intangible assets |
|
|
(7 |
) |
|
|
(16 |
) |
Sale of equity-method investment |
|
|
18,874 |
|
|
|
— |
|
Net cash provided by (used in) investing activities |
|
|
17,283 |
|
|
|
(18,440 |
) |
|
|
|
|
|
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Cash flows from financing activities: |
|
|
|
|
|
|
||
Tax payments for restricted stock issuances |
|
|
(635 |
) |
|
|
(2,139 |
) |
Net cash used in financing activities |
|
|
(635 |
) |
|
|
(2,139 |
) |
|
|
|
|
|
|
|
||
Effect of exchange rate changes on cash |
|
|
(45 |
) |
|
|
(558 |
) |
|
|
|
|
|
|
|
||
Net increase (decrease) in cash |
|
|
20,263 |
|
|
|
(17,554 |
) |
Cash, cash equivalents, and restricted cash, beginning of period |
|
|
64,228 |
|
|
|
89,241 |
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
84,491 |
|
|
$ |
71,687 |
|
Revenue by major products and services (in thousands, unaudited):
|
|
|
Three months ended |
|
||||
|
|
|
2022 |
|
2021 |
|
||
Hardware |
|
|
$ |
15,352 |
|
$ |
17,668 |
|
Term-based software licenses |
|
|
|
13,152 |
|
|
7,977 |
|
Perpetual software licenses |
|
|
|
981 |
|
|
2,800 |
|
Product and license |
|
|
$ |
29,485 |
|
$ |
28,445 |
|
|
|
|
|
|
|
|
|
|
Subscription |
|
|
|
10,117 |
|
|
8,405 |
|
Professional services |
|
|
|
900 |
|
|
1,402 |
|
Maintenance, support, and other |
|
|
|
11,945 |
|
|
12,523 |
|
Services and other |
|
|
$ |
22,962 |
|
$ |
22,330 |
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
$ |
52,447 |
|
$ |
50,775 |
|
|
|
|
|
|
|
|
|
|
Recurring Revenue (in thousands, unaudited):
|
|
|
Three months ended |
||||
|
|
|
2022 |
2021 |
|||
Subscription |
|
|
$ |
10,117 |
|
$ |
8,405 |
Term-based software licenses |
|
|
|
13,152 |
|
|
7,977 |
Maintenance, support, and other |
|
|
|
11,945 |
|
|
12,523 |
Total Recurring Revenue |
|
|
$ |
35,214 |
|
$ |
28,905 |
Non-GAAP Financial Measures
We report financial results in accordance with GAAP. We also evaluate our performance using certain non-GAAP operating metrics, namely Adjusted EBITDA, non-GAAP Net Income and non-GAAP diluted EPS. Our management believes that these measures provide useful supplemental information regarding the performance of our business and facilitates in comparison to our historical operating results.
These non-GAAP financial measures are not measures of performance under GAAP and should not be considered in isolation or as alternatives or substitutes for the most directly comparable financial measures calculated in accordance with GAAP. While we believe that these non-GAAP financial measures are useful within the context described below, they are in fact incomplete and are not measures that should be used to evaluate our full performance or our prospects. Such an evaluation needs to consider all of the complexities associated with our business including, but not limited to, how past actions are affecting current results and how they may affect future results, how we have chosen to finance the business, and how taxes affect the final amounts that are or will be available to stockholders as a return on their investment. Reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures are found below.
Adjusted EBITDA
We define Adjusted EBITDA as net income before interest, taxes, depreciation, amortization, long-term incentive compensation, and certain non-recurring items, including acquisition related costs, lease exit costs, rebranding costs, and non-routine shareholder matters. We use Adjusted EBITDA as a simplified measure of performance for use in communicating our performance to investors and analysts and for comparisons to other companies within our industry. As a performance measure, we believe that Adjusted EBITDA presents a view of our operating results that is most closely related to serving our customers. By excluding interest, taxes, depreciation, amortization, long-term incentive compensation, and certain non-recurring items, we are able to evaluate performance without considering decisions that, in most cases, are not directly related to meeting our customers’ requirements and were either made in prior periods (e.g., depreciation, amortization, long-term incentive compensation, non-routine shareholder matters), deal with the structure or financing of the business (e.g., interest, one-time strategic action costs) or reflect the application of regulations that are outside of the control of our management team (e.g., taxes). Similarly, we find that the comparison of our results to those of our competitors is facilitated when we do not consider the impact of these items.
Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) |
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Three months ended |
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|
||||||
|
|
2022 |
|
2021 |
||||
Net income (loss) |
|
$ |
5,214 |
|
|
$ |
(9,151 |
) |
Interest income (expense), net |
|
|
17 |
|
|
|
(4 |
) |
Provision (benefit) for income taxes |
|
|
1,173 |
|
|
|
(501 |
) |
Depreciation and amortization of intangible assets |
|
|
2,097 |
|
|
|
2,310 |
|
Long-term incentive compensation |
|
|
1,224 |
|
|
|
1,542 |
|
Non-recurring items (1) |
|
|
(9,485 |
) |
|
|
548 |
|
Adjusted EBITDA |
|
$ |
240 |
|
|
$ |
(5,256 |
) |
(1) For the three months ended
Non-GAAP Net Income & Non-GAAP Diluted EPS
We define non-GAAP net income and non-GAAP diluted EPS, as net income or EPS before the consideration of long-term incentive compensation expenses, the amortization of intangible assets, and certain non-recurring items. We use these measures to assess the impact of our performance excluding items that can significantly impact the comparison of our results between periods and the comparison to competitors.
Long-term incentive compensation for management and others is directly tied to performance, and this measure allows management to see the relationship of the cost of incentives to the performance of the business operations directly if such incentives are based on that period’s performance. To the extent that such incentives are based on performance over a period of several years, there may be periods that have significant adjustments to the accruals in the period that relate to a longer period of time, which can make it difficult to assess the results of the business operations in the current period. In addition, the Company’s long-term incentives generally reflect the use of restricted stock unit grants or cash awards while other companies may use different forms of incentives the cost of which is determined on a different basis, which makes a comparison difficult. We exclude amortization of intangible assets as we believe the amount of such expense in any given period may not be correlated directly to the performance of the business operations and that such expenses can vary significantly between periods as a result of new acquisitions, the full amortization of previously acquired intangible assets or the write down of such assets due to an impairment event. However, intangible assets contribute to current and future revenue, and related amortization expense will recur in future periods until expired or written down.
We also exclude certain non-recurring items including one-time strategic action costs and non-recurring shareholder matters, as these items are unrelated to the operations of our core business. By excluding these items, we are better able to compare the operating results of our underlying core business from one reporting period to the next.
We make a tax adjustment based on the above adjustments resulting in an effective tax rate on a non-GAAP basis, which may differ from the GAAP tax rate. We believe the effective tax rates we use in the adjustment are reasonable estimates of the overall tax rates for the Company under its global operating structure.
Reconciliation of Net Income to Non-GAAP Net Income (in thousands, unaudited) |
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|
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||
|
|
Three months ended |
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|
|
|
||||||
|
|
2022 |
|
2021 |
||||
Net income (loss) |
|
$ |
5,214 |
|
|
$ |
(9,151 |
) |
Long-term incentive compensation |
|
|
1,224 |
|
|
|
1,542 |
|
Amortization of intangible assets |
|
|
1,382 |
|
|
|
1,573 |
|
Non-recurring items (1) |
|
|
(9,485 |
) |
|
|
548 |
|
Tax impact of adjustments (2) |
|
|
1,376 |
|
|
|
(733 |
) |
Non-GAAP net income (loss) |
|
$ |
(289 |
) |
|
$ |
(6,221 |
) |
|
|
|
|
|
|
|
||
Non-GAAP net income (loss) per share |
|
$ |
(0.01 |
) |
|
$ |
(0.16 |
) |
|
|
|
|
|
|
|
||
Weighted average number of shares used to compute Non-GAAP diluted earnings per share |
|
|
39,577 |
|
|
39,996 |
(1) For the three months ended
(2) The tax impact of adjustments is calculated as
Revision of Prior Period Financial Statements
As previously disclosed, the Company identified immaterial errors related to certain costs directly attributable to the production and distribution of hardware products. The costs were not properly categorized in certain prior periods, which resulted in an understatement of product and license cost of goods sold and an overstatement of sales and marketing expense.
We evaluated the aggregate effects of the errors to our previously issued financial statements in accordance with
To correct these immaterial errors related to prior periods, the company adjusted the prior period product and license cost of goods sold and sales and marketing expense in this earnings press release and expects to adjust the prior period amounts in future filings with the
The following table tables present the effects of the aforementioned revisions on our consolidated statement of operations for the three months ended
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
||||||||
in thousands |
|
As Previously Reported |
|
Adjustments |
|
As Revised |
||||
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
Product and license |
|
$ |
9,541 |
|
$ |
1,211 |
|
|
$ |
10,752 |
Total cost of goods sold |
|
|
15,322 |
|
|
1,211 |
|
|
|
16,533 |
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
35,453 |
|
|
(1,211 |
) |
|
|
34,242 |
|
|
|
|
|
|
|
|
|
|
|
Operating costs |
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
18,379 |
|
|
(1,211 |
) |
|
|
17,168 |
Total operating costs |
|
|
44,747 |
|
|
(1,211 |
) |
|
|
43,536 |
Copyright© 2022
View source version on businesswire.com: https://www.businesswire.com/news/home/20220503005956/en/
Investor Contact:
Vice President of Investor Relations
+1-312-766-4009
joe.maxa@onespan.com
Source:
FAQ
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