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OneSpan Reports Second Quarter 2024 Financial Results

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OneSpan Inc. (NASDAQ: OSPN) reported strong financial results for Q2 2024, with total revenue growing 9% year-over-year to $60.9 million. Key highlights include:

- Subscription revenue increased 29% year-over-year to $29.6 million
- Annual Recurring Revenue (ARR) grew 15% year-over-year to $165.3 million
- Net Retention Rate (NRR) of 112%
- Operating income of $7.6 million, compared to a loss of $17.8 million in Q2 2023
- Net income of $6.6 million, or $0.17 per diluted share

OneSpan raised its full-year 2024 guidance, now expecting revenue between $238-$246 million, ARR of $166-$170 million, and Adjusted EBITDA of $55-$59 million.

OneSpan Inc. (NASDAQ: OSPN) ha riportato risultati finanziari robusti per il secondo trimestre del 2024, con un fatturato totale cresciuto del 9% rispetto all'anno precedente, raggiungendo i 60,9 milioni di dollari. I principali punti salienti includono:

- Le entrate da abbonamento sono aumentate del 29% rispetto all'anno precedente, arrivando a 29,6 milioni di dollari
- Le entrate annuali ricorrenti (ARR) sono cresciute del 15% rispetto all'anno precedente, raggiungendo i 165,3 milioni di dollari
- Il tasso di retention netto (NRR) è stato del 112%
- Il reddito operativo è stato di 7,6 milioni di dollari, rispetto a una perdita di 17,8 milioni di dollari nel secondo trimestre del 2023
- Il reddito netto è stato di 6,6 milioni di dollari, ovvero 0,17 dollari per azione diluita

OneSpan ha aumentato le previsioni per l'intero anno 2024, aspettandosi ora un fatturato tra i 238 e i 246 milioni di dollari, un ARR tra i 166 e i 170 milioni di dollari e un EBITDA rettificato tra i 55 e i 59 milioni di dollari.

OneSpan Inc. (NASDAQ: OSPN) reportó resultados financieros sólidos para el segundo trimestre de 2024, con ingresos totales que crecieron un 9% interanual, alcanzando los 60,9 millones de dólares. Los aspectos destacados incluyen:

- Los ingresos por suscripción aumentaron un 29% interanual hasta 29,6 millones de dólares
- Los ingresos recurrentes anuales (ARR) crecieron un 15% interanual hasta 165,3 millones de dólares
- La tasa de retención neta (NRR) fue del 112%
- Los ingresos operativos fueron de 7,6 millones de dólares, en comparación con una pérdida de 17,8 millones de dólares en el segundo trimestre de 2023
- Los ingresos netos fueron de 6,6 millones de dólares, es decir, 0,17 dólares por acción diluida

OneSpan elevó su guía de ingresos para todo el año 2024, ahora esperando ingresos entre 238 y 246 millones de dólares, ARR entre 166 y 170 millones de dólares, y EBITDA ajustado entre 55 y 59 millones de dólares.

OneSpan Inc. (NASDAQ: OSPN)는 2024년 2분기 강력한 재무 성과를 보고했으며, 총 수익이 전년 대비 9% 증가하여 6090만 달러에 달했습니다. 주요 하이라이트는 다음과 같습니다:

- 구독 수익이 전년 대비 29% 증가하여 2960만 달러에 도달했습니다
- 연간 반복 수익 (ARR)이 전년 대비 15% 증가하여 1억 6530만 달러에 달했습니다
- 순 유지율 (NRR)은 112%였습니다
- 운영 소득은 760만 달러로, 2023년 2분기에 1780만 달러의 손실과 비교됩니다
- 순 소득은 660만 달러로, 희석 주당 0.17 달러입니다

OneSpan은 2024년 전체 연도 전망을 상향 조정했으며, 현재 2024년 수익을 2억 3800만 달러에서 2억 4600만 달러, ARR을 1억 6600만 달러에서 1억 7000만 달러, 조정 EBITDA를 5500만 달러에서 5900만 달러 사이로 예상하고 있습니다.

OneSpan Inc. (NASDAQ: OSPN) a annoncé de solides résultats financiers pour le deuxième trimestre 2024, avec un chiffre d'affaires total en hausse de 9 % par rapport à l'année précédente, atteignant 60,9 millions de dollars. Les points saillants incluent :

- Les revenus d'abonnement ont augmenté de 29 % par rapport à l'année précédente, atteignant 29,6 millions de dollars
- Les revenus annuels récurrents (ARR) ont augmenté de 15 % par rapport à l'année précédente, atteignant 165,3 millions de dollars
- Le taux de conservation net (NRR) était de 112 %
- Le revenu opérationnel était de 7,6 millions de dollars, contre une perte de 17,8 millions de dollars au deuxième trimestre 2023
- Le revenu net était de 6,6 millions de dollars, soit 0,17 dollar par action diluée

OneSpan a relevé ses prévisions pour l'année 2024, s'attendant maintenant à des revenus compris entre 238 et 246 millions de dollars, un ARR compris entre 166 et 170 millions de dollars et un EBITDA ajusté compris entre 55 et 59 millions de dollars.

OneSpan Inc. (NASDAQ: OSPN) hat im 2. Quartal 2024 starke finanzielle Ergebnisse gemeldet, mit einem Gesamterlös, der im Vergleich zum Vorjahr um 9% auf 60,9 Millionen USD gestiegen ist. Die wichtigsten Highlights sind:

- Die Abonnementerlöse stiegen im Vergleich zum Vorjahr um 29% auf 29,6 Millionen USD
- Die annualisierten wiederkehrenden Einnahmen (ARR) wuchsen im Vergleich zum Vorjahr um 15% auf 165,3 Millionen USD
- Die Nettobindungsrate (NRR) betrug 112%
- Das Betriebsergebnis belief sich auf 7,6 Millionen USD, verglichen mit einem Verlust von 17,8 Millionen USD im 2. Quartal 2023
- Das Nettoergebnis betrug 6,6 Millionen USD, also 0,17 USD pro verwässerter Aktie

OneSpan hat seine Prognose für das gesamte Jahr 2024 angehoben und erwartet nun Erlöse zwischen 238 und 246 Millionen USD, ARR von 166 bis 170 Millionen USD und bereinigtes EBITDA von 55 bis 59 Millionen USD.

Positive
  • Total revenue grew 9% year-over-year to $60.9 million
  • Subscription revenue increased 29% year-over-year to $29.6 million
  • Annual Recurring Revenue (ARR) grew 15% year-over-year to $165.3 million
  • Net Retention Rate (NRR) of 112%
  • Operating income of $7.6 million, compared to a loss of $17.8 million in Q2 2023
  • Net income of $6.6 million, or $0.17 per diluted share
  • Digital Agreements revenue increased 30% year-over-year
  • Gross profit margin improved to 66% from 62% in the same period last year
  • Cash and cash equivalents increased to $63.8 million from $43.0 million at the end of 2023
  • Raised full-year 2024 guidance for revenue, ARR, and Adjusted EBITDA
Negative
  • None.

Insights

OneSpan's Q2 2024 results demonstrate robust growth and improved profitability, signaling a positive trajectory for the digital agreements security company. The 9% year-over-year revenue increase to $60.9 million and 29% growth in subscription revenue to $29.6 million indicate strong market demand for OneSpan's offerings.

Particularly noteworthy is the 15% year-over-year increase in Annual Recurring Revenue (ARR) to $165.3 million, coupled with a healthy Net Retention Rate (NRR) of 112%. These metrics suggest effective customer acquisition and retention strategies, important for sustainable growth in the SaaS sector.

The company's profitability has significantly improved, with operating income of $7.6 million compared to a loss of $17.8 million in the same period last year. This turnaround, along with the increase in gross margin from 62% to 66%, reflects enhanced operational efficiency and scalability of OneSpan's business model.

The upward revision of the full-year 2024 guidance for ARR and Adjusted EBITDA indicates management's confidence in the company's growth trajectory and operational execution. However, investors should monitor the company's ability to maintain this momentum and continue improving its long-term operating profile amidst potential market challenges.

OneSpan's Q2 2024 results highlight the company's strong position in the digital agreements and security solutions market. The 30% year-over-year growth in Digital Agreements revenue to $15.5 million underscores the increasing adoption of digital transaction management solutions, driven by the ongoing digital transformation across industries.

The 4% growth in Security Solutions revenue to $45.5 million, while modest, demonstrates the continued relevance of OneSpan's core security offerings. This segment's steady performance, combined with the rapid growth in Digital Agreements, creates a balanced portfolio that can weather market fluctuations.

The company's focus on subscription-based offerings, evident from the 29% growth in subscription revenue, aligns with industry trends towards cloud-based, scalable solutions. This shift not only provides more predictable revenue streams but also enhances customer stickiness, as reflected in the strong Net Retention Rate of 112%.

Looking ahead, OneSpan's ability to innovate and adapt to evolving cybersecurity threats and digital transaction needs will be crucial. The company should focus on integrating advanced technologies like AI and blockchain to maintain its competitive edge in the rapidly evolving digital security landscape.

Second Quarter Financial Results

  • Second quarter revenue grew 9% year-over-year to $60.9 million
  • Second quarter subscription revenue grew 29% year-over-year to $29.6 million
  • Annual Recurring Revenue (ARR) increased 15% year-over-year to $165.3 million1
  • Net Retention Rate (NRR) of 112%2

BOSTON--(BUSINESS WIRE)-- OneSpan Inc. (NASDAQ: OSPN), the digital agreements security company, today reported financial results for the second quarter ended June 30, 2024.

“I’m extremely proud of our team, as their hard work and continued focus on operational rigor delivered a strong quarter with 9% revenue growth, 15% ARR growth, and significantly improved profitability,” stated OneSpan CEO, Victor Limongelli. “Looking ahead, we will continue to focus on driving efficient revenue growth, profitability, and cash flow as we continue to work to improve our long-term operating profile.”

Second Quarter 2024 Financial Highlights

  • Total revenue was $60.9 million, an increase of 9% compared to $55.7 million for the same quarter of 2023. Digital Agreements revenue was $15.5 million, an increase of 30% year-over-year. Security Solutions revenue was $45.5 million, an increase of 4% year-over-year.
  • ARR increased 15% year-over-year to $165.3 million.
  • Gross profit was $40.3 million, or 66% gross margin, compared to $34.3 million, or 62% in the same period last year.
  • Operating income was $7.6 million, compared to operating loss of $17.8 million in the same period last year.
  • Net income was $6.6 million, or $0.17 per diluted share, compared to net loss of $17.8 million, or $(0.44) per diluted share, in the same period last year. Non-GAAP net income was $12.0 million, or $0.31 per diluted share, compared to net loss of $7.3 million, or $(0.18) per diluted share in the same period last year.3
  • Adjusted EBITDA was $16.1 million, compared to $(3.8) million in the same period last year.
  • Cash and cash equivalents were $63.8 million at June 30, 2024 compared to $43.0 million at December 31, 2023.

Financial Outlook

For the Full Year 2024, OneSpan expects:

  • Revenue to be in the range of $238 million to $246 million.
  • ARR to finish the year in the range of $166 million to $170 million, as compared to its previous guidance range of $160 million to $168 million.
  • Adjusted EBITDA to be in the range of $55 million to $59 million, as compared to its previous guidance range of $51 million to $55 million.3

Conference Call Details

In conjunction with this announcement, OneSpan Inc. will host a conference call today, August 1, 2024, at 4:30 p.m. ET. During the conference call, Mr. Victor Limongelli, CEO, and Mr. Jorge Martell, CFO, will discuss OneSpan’s results for the second quarter 2024.

For investors and analysts accessing the conference call by phone, please refer to the press release dated July 9, 2024, announcing the date of OneSpan’s second quarter 2024 earnings release. It can be found on the OneSpan investor relations website at investors.onespan.com.

The conference call is also available in listen-only mode at investors.onespan.com. Shortly after the conclusion of the call, a replay of the webcast will be available on the same website for approximately one year.

____________________________________________

  1. ARR is calculated as the approximate annualized value of our customer recurring contracts as of the measurement date. These include subscription, term-based license, and maintenance and support contracts and exclude one-time fees. To the extent that we are negotiating a renewal with a customer within 90 days 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 and the customer has not notified us of an intention to not renew. See our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 for additional information describing how we define ARR, including how ARR differs from GAAP revenue.
  2. NRR is defined as the approximate year-over-year growth in ARR from the same set of customers at the end of the prior year period.
  3. 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. We are not providing a reconciliation of Adjusted EBITDA guidance to GAAP net income, the most directly comparable GAAP measure, because we are unable to predict certain items included in GAAP net income without unreasonable efforts.

About OneSpan

OneSpan provides security, identity, electronic signature (“e-signature”) and digital workflow solutions that protect and facilitate digital transactions and agreements. The Company delivers products and services that automate and secure customer-facing and revenue-generating business processes for use cases ranging from simple transactions to workflows that are complex or require higher levels of security. Trusted by global blue-chip enterprises, including more than 60% of the world’s 100 largest banks, OneSpan processes millions of digital agreements and billions of transactions in 100+ countries annually.

For more information, go to www.onespan.com. You can also follow @OneSpan on X (Twitter) or visit us on LinkedIn and Facebook.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of applicable U.S. securities laws, including statements regarding our 2024 financial guidance and our plans to continue to focus on driving efficient revenue growth, profitability and cash flow as we work to improve our long-term operating profile; and our general expectations regarding our operational or financial performance in the future. Forward-looking statements may be identified by words such as "seek", "believe", "plan", "estimate", "anticipate", “expect", "intend", "continue", "outlook", "may", "will", "should", "could", or "might", and other similar expressions. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could materially affect our business and financial results include, but are not limited to: our ability to execute our updated business transformation plan and cost reduction and restructuring actions in the expected timeframe and to achieve the outcomes we expect from them; unintended costs and consequences of our cost reduction and restructuring actions, including higher than anticipated restructuring charges, disruption to our operations, litigation or regulatory actions, reduced employee morale, attrition of valued employees, adverse effects on our reputation as an employer, loss of institutional know-how, slower customer service response times, and reduced ability to complete or undertake new product development projects and other business, product, technical, compliance or risk mitigation initiatives; our ability to attract new customers and retain and expand sales to existing customers; our ability to successfully develop and market new product offerings and product enhancements; changes in customer requirements; the potential effects of technological changes; the loss of one or more large customers; difficulties enhancing and maintaining our brand recognition; competition; lengthy sales cycles; challenges retaining key employees and successfully hiring and training qualified new employees; security breaches or cyber-attacks; real or perceived malfunctions or errors in our products; interruptions or delays in the performance of our products and solutions; reliance on third parties for certain products and data center services; our ability to effectively manage third party partnerships, acquisitions, divestitures, alliances, or joint ventures; economic recession, inflation, and political instability; claims that we have infringed the intellectual property rights of others; price competitive bidding; changing laws, government regulations or policies; pressures on price levels; component shortages; delays and disruption in global transportation and supply chains; impairment of goodwill or amortizable intangible assets causing a significant charge to earnings; actions of activist stockholders; and exposure to increased economic and operational uncertainties from operating a global business, as well as other factors described in the “Risk Factors” section of our most recent Annual Report on Form 10-K, as updated by the “Risk Factors” section of our subsequent Quarterly Reports on Form 10-Q (if any). Our filings with the Securities and Exchange Commission (the “SEC”) and other important information can be found in the Investor Relations section of our website at investors.onespan.com. We do not have any intent, and disclaim any obligation, to update the forward-looking information to reflect events that occur, circumstances that exist or changes in our expectations after the date of this press release, except as required by law.

Unless otherwise noted, references in this press release to “OneSpan”, “Company”, “we”, “our”, and “us” refer to OneSpan Inc. and its subsidiaries.

OneSpan Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2024

 

2023

 

2024

 

2023

Revenue

 

 

 

 

 

 

 

 

Product and license

 

$

32,438

 

$

30,583

 

 

$

70,236

 

$

63,729

 

Services and other

 

 

28,486

 

 

25,150

 

 

 

55,531

 

 

49,611

 

Total revenue

 

 

60,924

 

 

55,733

 

 

 

125,767

 

 

113,340

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

 

 

 

 

 

 

Product and license

 

 

11,247

 

 

14,038

 

 

 

20,953

 

 

25,326

 

Services and other

 

 

9,336

 

 

7,401

 

 

 

17,078

 

 

14,434

 

Total cost of goods sold

 

 

20,583

 

 

21,439

 

 

 

38,031

 

 

39,760

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

40,341

 

 

34,294

 

 

 

87,736

 

 

73,580

 

 

 

 

 

 

 

 

 

 

Operating costs

 

 

 

 

 

 

 

 

Sales and marketing

 

 

10,510

 

 

19,713

 

 

 

23,437

 

 

39,724

 

Research and development

 

 

8,341

 

 

10,090

 

 

 

16,600

 

 

19,553

 

General and administrative

 

 

11,557

 

 

15,826

 

 

 

21,564

 

 

32,479

 

Restructuring and other related charges

 

 

1,711

 

 

5,846

 

 

 

3,208

 

 

6,552

 

Amortization of intangible assets

 

 

585

 

 

583

 

 

 

1,180

 

 

1,166

 

Total operating costs

 

 

32,704

 

 

52,058

 

 

 

65,989

 

 

99,474

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

 

7,637

 

 

(17,764

)

 

 

21,747

 

 

(25,894

)

 

 

 

 

 

 

 

 

 

Interest income, net

 

 

521

 

 

585

 

 

 

622

 

 

1,088

 

Other income (expense), net

 

 

331

 

 

29

 

 

 

622

 

 

(11

)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

8,489

 

 

(17,150

)

 

 

22,991

 

 

(24,817

)

Provision for income taxes

 

 

1,936

 

 

601

 

 

 

2,970

 

 

1,290

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

6,553

 

$

(17,751

)

 

$

20,021

 

$

(26,107

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

Basic

 

$

0.17

 

$

(0.44

)

 

$

0.52

 

$

(0.65

)

Diluted

 

$

0.17

 

$

(0.44

)

 

$

0.52

 

$

(0.65

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

38,529

 

 

40,399

 

 

 

38,229

 

 

40,435

 

Diluted

 

 

39,007

 

 

40,399

 

 

 

38,680

 

 

40,435

 

OneSpan Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

 

 

 

June 30,

 

December 31,

 

 

2024

 

2023

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

63,843

 

 

$

43,001

 

Restricted cash

 

 

460

 

 

 

529

 

Accounts receivable, net of allowances of $1,506 at June 30, 2024 and $1,536 at December 31, 2023

 

 

43,799

 

 

 

64,387

 

Inventories, net

 

 

12,507

 

 

 

15,553

 

Prepaid expenses

 

 

6,126

 

 

 

6,575

 

Contract assets

 

 

6,036

 

 

 

5,139

 

Other current assets

 

 

11,096

 

 

 

11,159

 

Total current assets

 

 

143,867

 

 

 

146,343

 

Property and equipment, net

 

 

20,251

 

 

 

18,722

 

Operating lease right-of-use assets

 

 

7,262

 

 

 

6,171

 

Goodwill

 

 

93,072

 

 

 

93,684

 

Intangible assets, net of accumulated amortization

 

 

8,679

 

 

 

10,832

 

Deferred income taxes

 

 

1,693

 

 

 

1,721

 

Other assets

 

 

12,039

 

 

 

11,718

 

Total assets

 

$

286,863

 

 

$

289,191

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

14,593

 

 

$

17,452

 

Deferred revenue

 

 

55,928

 

 

 

69,331

 

Accrued wages and payroll taxes

 

 

12,386

 

 

 

14,335

 

Short-term income taxes payable

 

 

2,521

 

 

 

2,646

 

Other accrued expenses

 

 

8,124

 

 

 

10,684

 

Deferred compensation

 

 

151

 

 

 

382

 

Total current liabilities

 

 

93,703

 

 

 

114,830

 

Long-term deferred revenue

 

 

3,374

 

 

 

4,152

 

Long-term lease liabilities

 

 

7,003

 

 

 

6,824

 

Deferred income taxes

 

 

992

 

 

 

1,067

 

Other long-term liabilities

 

 

3,212

 

 

 

3,177

 

Total liabilities

 

 

108,284

 

 

 

130,050

 

Commitments and contingencies

 

 

 

 

Stockholders' equity

 

 

 

 

Preferred stock: 500 shares authorized, none issued and outstanding at June 30, 2024 and December 31, 2023

 

 

 

 

 

 

Common stock: $0.001 par value per share, 75,000 shares authorized; 41,510 and 41,243 shares issued; 37,786 and 37,519 shares outstanding at June 30, 2024 and December 31, 2023, respectively

 

 

38

 

 

 

38

 

Additional paid-in capital

 

 

120,237

 

 

 

118,620

 

Treasury stock, at cost: 3,724 shares outstanding at June 30, 2024 and December 31, 2023

 

 

(47,377

)

 

 

(47,377

)

Retained earnings

 

 

118,960

 

 

 

98,939

 

Accumulated other comprehensive loss

 

 

(13,279

)

 

 

(11,079

)

Total stockholders' equity

 

 

178,579

 

 

 

159,141

 

Total liabilities and stockholders' equity

 

$

286,863

 

 

$

289,191

 

OneSpan Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 

 

 

Six Months Ended June 30,

 

 

2024

 

2023

Cash flows from operating activities:

 

 

 

 

Net income (loss)

 

$

20,021

 

 

$

(26,107

)

Adjustments to reconcile net income (loss) from operations to net cash used in operations:

 

 

 

 

Depreciation and amortization of intangible assets

 

 

4,145

 

 

 

2,835

 

Write-off of intangible assets

 

 

804

 

 

 

 

Write-off of property and equipment, net

 

 

955

 

 

 

2,087

 

Impairments of inventories, net

 

 

 

 

 

1,568

 

Deferred tax benefit

 

 

(108

)

 

 

66

 

Stock-based compensation

 

 

3,448

 

 

 

8,315

 

Allowance for credit losses

 

 

(31

)

 

 

(49

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

19,877

 

 

 

27,356

 

Inventories, net

 

 

2,621

 

 

 

(4,299

)

Contract assets

 

 

(1,666

)

 

 

(1,017

)

Accounts payable

 

 

(2,634

)

 

 

35

 

Income taxes payable

 

 

(107

)

 

 

(2,638

)

Accrued expenses

 

 

(4,046

)

 

 

(1,728

)

Deferred compensation

 

 

(231

)

 

 

(122

)

Deferred revenue

 

 

(13,662

)

 

 

(13,940

)

Other assets and liabilities

 

 

(124

)

 

 

1,248

 

Net cash provided by (used in) operating activities

 

 

29,262

 

 

 

(6,390

)

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Maturities of short-term investments

 

 

 

 

 

2,330

 

Additions to property and equipment

 

 

(5,321

)

 

 

(6,491

)

Additions to intangible assets

 

 

(39

)

 

 

(14

)

Cash paid for acquisition of business

 

 

 

 

 

(1,800

)

Net cash used in investing activities

 

 

(5,360

)

 

 

(5,975

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Contingent payment related to acquisition

 

 

(200

)

 

 

 

Tax payments for restricted stock issuances

 

 

(1,831

)

 

 

(1,546

)

Net cash used in financing activities

 

 

(2,031

)

 

 

(1,546

)

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

(1,098

)

 

 

624

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

20,773

 

 

 

(13,287

)

Cash, cash equivalents, and restricted cash, beginning of period

 

 

43,530

 

 

 

97,374

 

Cash, cash equivalents, and restricted cash, end of period

 

$

64,303

 

 

$

84,087

 

Operating Segments

In May 2022, we announced a three-year strategic transformation plan that began on January 1, 2023. In conjunction with the strategic transformation plan and to enable a more efficient capital deployment model, effective with the quarter ended June 30, 2022, we began reporting under the following two lines of business, which are our reportable operating segments: Digital Agreements and Security Solutions.

  • Digital Agreements. Digital Agreements consists of solutions that enable our clients to secure and automate business processes associated with their digital agreement and customer transaction lifecycles that require consent, non-repudiation and compliance. These solutions, which are largely cloud-based, include OneSpan Sign e-signature, OneSpan Notary, and Identity Verification. This segment also includes costs attributable to our transaction cloud platform.
  • Security Solutions. Security Solutions consists of our broad portfolio of software products, software development kits (SDKs) and Digipass authenticator devices that are used to build applications designed to defend against attacks on digital transactions across online environments, devices, and applications. The software products and SDKs included in the Security Solutions segment are largely on-premises software products and include multi-factor authentication and transaction signing solutions, such as mobile application security and mobile software tokens.

Segment operating income consists of the revenues generated by a segment, less the direct costs of revenue, sales and marketing, research and development expenses, amortization expense, and restructuring and other related charges that are incurred directly by a segment. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment.

Segment and consolidated operating results (unaudited):

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

(In thousands, except percentages)

 

2024

 

2023

 

2024

 

2023

Digital Agreements

 

 

 

 

 

 

 

 

Revenue

 

$

15,463

 

 

$

11,862

 

 

$

29,876

 

 

$

23,414

 

Gross profit (1)

 

$

9,741

 

 

$

8,583

 

 

$

19,632

 

 

$

17,031

 

Gross margin

 

 

63

%

 

 

72

%

 

 

66

%

 

 

73

%

Operating loss (2)

 

$

(155

)

 

$

(7,121

)

 

$

(420

)

 

$

(13,154

)

 

 

 

 

 

 

 

 

 

Security Solutions

 

 

 

 

 

 

 

 

Revenue

 

$

45,461

 

 

$

43,871

 

 

$

95,891

 

 

$

89,926

 

Gross profit (3)

 

$

30,600

 

 

$

25,711

 

 

$

68,104

 

 

$

56,549

 

Gross margin

 

 

67

%

 

 

59

%

 

 

71

%

 

 

63

%

Operating income (4)

 

$

20,693

 

 

$

8,523

 

 

$

46,571

 

 

$

24,154

 

 

 

 

 

 

 

 

 

 

Total Company:

 

 

 

 

 

 

 

 

Revenue

 

$

60,924

 

 

$

55,733

 

 

$

125,767

 

 

$

113,340

 

Gross profit

 

$

40,341

 

 

$

34,294

 

 

$

87,736

 

 

$

73,580

 

Gross margin

 

 

66

%

 

 

62

%

 

 

70

%

 

 

65

%

 

 

 

 

 

 

 

 

 

Statements of Operations reconciliation:

 

 

 

 

 

 

 

 

Segment operating income

 

$

20,538

 

 

$

1,402

 

 

$

46,151

 

 

$

11,000

 

Corporate operating expenses not allocated at the segment level

 

 

12,901

 

 

 

19,166

 

 

 

24,404

 

 

 

36,894

 

Operating income (loss)

 

$

7,637

 

 

$

(17,764

)

 

$

21,747

 

 

$

(25,894

)

Interest income, net

 

 

521

 

 

 

585

 

 

 

622

 

 

 

1,088

 

Other income (expense), net

 

 

331

 

 

 

29

 

 

 

622

 

 

 

(11

)

Income (loss) before income taxes

 

$

8,489

 

 

$

(17,150

)

 

$

22,991

 

 

$

(24,817

)

(1)

 

Digital Agreements gross profit includes intangible asset write-off of $0.8 million and internal capitalized software write-off of $0.7 million for the three and six months ended June 30, 2024.

(2)

 

Digital Agreements operating loss includes $0.6 million and $1.1 million of amortization of intangible assets expense for the three and six months ended June 30, 2024, respectively, and $0.6 million and $1.1 million of amortization of intangible assets expense for the three and six months ended June 30, 2023, respectively.

(3)

 

Security Solutions gross profit includes $1.6 million of inventory impairments related to discontinuation of investments in our Digipass CX product for the three and six months ended June 30, 2023.

(4)

 

Security Solutions operating income includes $1.6 million of inventory impairments and $1.4 million of capitalized software write-offs related to discontinuation of investments in our Digipass CX product for the three and six months ended June 30, 2023.

Revenue by major products and services (unaudited):

 

 

 

Three Months Ended June 30,

 

 

2024

 

2023

(In thousands)

 

Digital Agreements

 

Security Solutions

 

Digital Agreements

 

Security Solutions

Subscription

 

$

           14,785

 

$

           14,857

 

$

           10,486

 

$

           12,499

Maintenance and support

 

 

                   490

 

 

                9,742

 

 

                1,130

 

 

              10,473

Professional services and other (1)

 

 

                   188

 

 

                1,123

 

 

                   246

 

 

                1,253

Hardware products

 

 

                      —

 

 

              19,739

 

 

                      —

 

 

              19,646

Total Revenue

 

$

           15,463

 

$

           45,461

 

$

           11,862

 

$

           43,871

 

 

 

Six Months Ended June 30,

 

 

2024

 

2023

(In thousands)

 

Digital Agreements

 

Security Solutions

 

Digital Agreements

 

Security Solutions

Subscription

 

 

              28,597

 

 

              41,039

 

 

              20,834

 

 

              32,107

Maintenance and support

 

 

                   994

 

 

              19,808

 

 

                2,126

 

 

              20,638

Professional services and other (1)

 

 

                   285

 

 

                2,728

 

 

                   454

 

 

                2,669

Hardware products

 

 

                      —

 

 

              32,316

 

 

                      —

 

 

              34,512

Total Revenue

 

$

           29,876

 

$

           95,891

 

$

           23,414

 

$

           89,926

(1)

 

Professional services and other includes perpetual software licenses revenue, which was approximately 1% of total revenue for both the three and six months ended June 30, 2024 and approximately 1% of total revenue for both the three and six months ended June 30, 2023.

Non-GAAP Financial Measures

We report financial results in accordance with GAAP. We also evaluate our performance using certain Non-GAAP financial metrics, namely Adjusted EBITDA, Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share. Our management believes that these measures, when taken together with the corresponding GAAP financial metrics, provide useful supplemental information regarding the performance of our business, as further discussed in the descriptions of each of these Non-GAAP metrics below.

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 for the purposes described below, they have limitations associated with their use, since they exclude items that may have a material impact on our reported results and may be different from similar measures used by other companies. Additional information about the Non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures appear below.

Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, amortization, long-term incentive compensation, restructuring and other related charges, and certain non-recurring items, including acquisition related 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, restructuring costs, and certain other 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, restructuring costs, impairment charges) or reflect the application of regulations that are outside of the control of our management team (e.g., taxes). In addition, removing the impact of these items helps us compare our core business performance with that of our competitors.

Reconciliation of Net Income (Loss) to Adjusted EBITDA

(in thousands, unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

(In thousands)

 

2024

 

2023

 

2024

 

2023

Net income (loss)

 

$

6,553

 

 

$

(17,751

)

 

$

20,021

 

 

$

(26,107

)

Interest income, net

 

 

(521

)

 

 

(585

)

 

 

(622

)

 

 

(1,088

)

Provision for income taxes

 

 

1,936

 

 

 

601

 

 

 

2,970

 

 

 

1,290

 

Depreciation and amortization of intangible assets (1)

 

 

2,063

 

 

 

1,516

 

 

 

4,145

 

 

 

2,835

 

Long-term incentive compensation (2)

 

 

1,994

 

 

 

4,571

 

 

 

3,615

 

 

 

8,494

 

Restructuring and other related charges (3)

 

 

3,218

 

 

 

5,846

 

 

 

4,734

 

 

 

6,552

 

Other non-recurring items (4)

 

 

906

 

 

 

1,974

 

 

 

1,077

 

 

 

2,559

 

Adjusted EBITDA

 

$

16,149

 

 

$

(3,828

)

 

$

35,940

 

 

$

(5,465

)

(1)

 

Includes cost of sales depreciation and amortization expense directly related to delivering cloud subscription revenue of $0.9 million and $1.7 million for the three and six months ended June 30, 2024, respectively, and $0.2 million and $0.3 million for the three and six months ended June 30, 2023, respectively. Costs are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations.

 

(2)

 

Long-term incentive compensation includes stock-based compensation and cash incentive grants awarded to employees located in jurisdictions where we do not issue stock-based compensation due to tax, regulatory or similar reasons. The immaterial expense associated with these cash incentive grants was $0.1 million for both the three months ended June 30, 2024 and 2023 and $0.2 million for both the six months ended June 30, 2024 and 2023.

 

(3)

 

Includes write-offs of intangible assets and property and equipment, net of $0.8 million and $1.0 million, respectively, for the three and six months ended June 30, 2024 and $0 for both the three and six months ended June 30, 2023. Costs are recorded in "Services and other cost of goods sold" and "Restructuring and other related charges," respectively, on the condensed consolidated statements of operations.

 
   

Includes immaterial restructuring and other related charges of less than $0.1 million for both the three and six months ended June 30, 2024 and $0 for both the three and six months ended June 30, 2023. These charges are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations.

 

(4)

 

For the three months ended June 30, 2024, other non-recurring items consist of $0.9 million of fees related to non-recurring projects.

 
   

For the three months ended June 30, 2023, other non-recurring items consist of $1.6 million of inventory impairment charges and $0.4 million of fees related to non-recurring projects.

 
   

For the six months ended June 30, 2024, other non-recurring items consist of $1.1 million of fees related to non-recurring projects.

 
   

For the six months ended June 30, 2023, other non-recurring items consist of $1.6 million of inventory impairment charges and $1.0 million of fees related to non-recurring projects and our acquisition of ProvenDB.

Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share

We define Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share as net income (loss) or net income (loss) per diluted share, as applicable, before the consideration of long-term incentive compensation expenses, the amortization of intangible assets, restructuring costs, and certain other 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 competitor results.

We exclude long-term incentive compensation expense because our long-term incentives generally reflect the use of restricted stock unit grants or cash incentive grants, including incentives directly tied to the performance of the business, while other companies may use different forms of incentives that have different cost impacts, which makes 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 (Loss) to Non-GAAP Net Income (Loss)

(in thousands, except per share data)

(unaudited)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

2023

 

2024

 

2023

Net income (loss)

 

$

6,553

 

 

$

(17,751

)

 

$

20,021

 

 

$

(26,107

)

Amortization of intangible assets (1)

 

 

666

 

 

 

704

 

 

 

1,381

 

 

 

1,327

 

Long-term incentive compensation (2)

 

 

1,994

 

 

 

4,571

 

 

 

3,615

 

 

 

8,494

 

Restructuring and other related charges (3)

 

 

3,218

 

 

 

5,846

 

 

 

4,734

 

 

 

6,552

 

Other non-recurring items (4)

 

 

906

 

 

 

1,974

 

 

 

1,077

 

 

 

2,559

 

Tax impact of adjustments (5)

 

 

(1,357

)

 

 

(2,619

)

 

 

(2,161

)

 

 

(3,786

)

Non-GAAP net income (loss)

 

$

11,980

 

 

$

(7,275

)

 

$

28,667

 

 

$

(10,961

)

 

 

 

 

 

 

 

 

 

Non-GAAP net income (loss) per share

 

$

0.31

 

 

$

(0.18

)

 

$

0.74

 

 

$

(0.27

)

 

 

 

 

 

 

 

 

 

Shares

 

 

39,007

 

 

 

40,399

 

 

 

38,680

 

 

 

40,435

 

(1)

 

Includes cost of sales amortization expense directly related to delivering cloud subscription revenue of $0.1 million and $0.2 million for the three and six months ended June 30, 2024, respectively, and $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively. Costs are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations.

 

(2)

 

Long-term incentive compensation includes stock-based compensation and cash incentive grants awarded to employees located in jurisdictions where we do not issue stock-based compensation due to tax, regulatory or similar reasons. The immaterial expense associated with these cash incentive grants was $0.1 million for both the three months ended June 30, 2024 and 2023 and $0.2 million for both the six months ended June 30, 2024 and 2023.

 

(3)

 

Includes write-offs of intangible assets and property and equipment, net of $0.8 million and $1.0 million, respectively, for the three and six months ended June 30, 2024 and $0 for both the three and six months ended June 30, 2023. Costs are recorded in "Services and other cost of goods sold" and "Restructuring and other related charges," respectively, on the condensed consolidated statements of operations.

 
   

Includes immaterial restructuring and other related charges of less than $0.1 million for both the three and six months ended June 30, 2024, and $0 for both the three and six months ended June 30, 2023. These charges are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations.

 

(4)

 

See the footnotes to the Reconciliation of Net Income (Loss) to Adjusted EBITDA for a description of the components of other non-recurring items for each period presented.

 

(5)

 

The tax impact of adjustments is calculated as 20% of the adjustments in all periods.

Copyright© 2024 OneSpan North America Inc., all rights reserved. OneSpan™ is a registered or unregistered trademark of OneSpan North America Inc. or its affiliates in the U.S. and other countries.

Investor Contact:

Joe Maxa

Vice President of Investor Relations

+1-312-766-4009

joe.maxa@onespan.com

Source: OneSpan Inc.

FAQ

What was OneSpan's (OSPN) revenue growth in Q2 2024?

OneSpan's total revenue grew 9% year-over-year to $60.9 million in Q2 2024.

How much did OneSpan's (OSPN) subscription revenue increase in Q2 2024?

OneSpan's subscription revenue increased 29% year-over-year to $29.6 million in Q2 2024.

What was OneSpan's (OSPN) Annual Recurring Revenue (ARR) in Q2 2024?

OneSpan's Annual Recurring Revenue (ARR) grew 15% year-over-year to $165.3 million in Q2 2024.

What is OneSpan's (OSPN) revised full-year 2024 revenue guidance?

OneSpan expects full-year 2024 revenue to be in the range of $238 million to $246 million.

How much net income did OneSpan (OSPN) report for Q2 2024?

OneSpan reported net income of $6.6 million, or $0.17 per diluted share, for Q2 2024.

OneSpan Inc.

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