Core Insights - OneSpan (OSPN) reported quarterly earnings of $0.33 per share, exceeding the Zacks Consensus Estimate of $0.28 per share, with an earnings surprise of +17.86% [1] - The company posted revenues of $57.06 million for the quarter ended September 2025, missing the Zacks Consensus Estimate by 2.23% [2] - OneSpan has surpassed consensus EPS estimates three times over the last four quarters but has not beaten revenue estimates during the same period [2] Earnings Performance - The earnings report indicates a consistent performance with earnings of $0.33 per share compared to the same quarter last year [1] - The company had a previous quarter earnings surprise of +25.93%, with actual earnings of $0.34 per share against an expected $0.27 [1] Stock Performance - OneSpan shares have declined approximately 18.2% year-to-date, contrasting with the S&P 500's gain of 17.2% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.35, with projected revenues of $67.72 million, and for the current fiscal year, the estimate is $1.44 on revenues of $249.3 million [7] - The outlook for the industry, particularly the Internet - Software sector, is favorable, ranking in the top 30% of Zacks industries, which historically outperforms the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - Total revenue grew 1% to $57 million, driven by double-digit organic subscription revenue growth, primarily offset by a reduction in security hardware revenue [11][15] - Annual recurring revenue (ARR) increased 10% to $180 million [9][15] - Adjusted EBITDA was $17.5 million, or 31% of revenue, with record adjusted EBITDA of $58 million for the first nine months of the year, representing 32% of revenue [9][12] Business Line Data and Key Metrics Changes - Software business, now over 80% of overall business, delivered double-digit subscription revenue growth and ARR growth [5][9] - Subscription revenue grew 12%, led by 13% growth in security and 11% growth in digital agreements [11][16] - Digital agreements ARR grew 8% to $65 million, with revenue growing 9% to $16.7 million [19] Market Data and Key Metrics Changes - Revenue mix was 46% from the Americas, 38% from EMEA, and 17% from APAC, compared to 39%, 40%, and 21% respectively in the same quarter last year [20] - Strong performance noted in North America and Latin America, while EMEA and APAC experienced declines in hardware revenues [10][21] Company Strategy and Development Direction - Company is focused on enhancing its product portfolio through internal development, acquisitions, and strategic partnerships [8][13] - The acquisition of Knock Knock Labs and investment in ThreatFabric are aimed at improving product offerings and driving future growth [6][12] - Company aims to achieve a Rule of 40 performance level while maintaining strong profitability and cash generation [9][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in the hardware business and lower activity in net expansions, particularly in EMEA and APAC [30][32] - The company updated its revenue guidance for 2025 to a range of $239 million to $241 million, reflecting a modest decline from previous expectations [23][24] - Management remains optimistic about future growth driven by software and services, with expectations for continued improvement in subscription revenue [50][51] Other Important Information - The company returned over $20 million to shareholders in the first nine months of 2025 through share repurchases and dividends [12][13] - The strategic focus remains on mobile authentication and the adoption of FIDO2 protocols, with expectations for significant growth in these areas [6][44] Q&A Session Summary Question: What led to the scale back on revenue and ARR guidance? - Management noted higher headwinds in the hardware business and lower activity in net expansions, particularly in EMEA [30][31] Question: Is the decline in hardware demand a long-term trend? - Management confirmed a long-term shift away from hardware tokens towards mobile authentication, with expectations that hardware will not disappear entirely [35][36] Question: How should gross margin be viewed moving forward? - Management expects gross margin to remain similar to last year's Q4, around 73% [38][39] Question: What products are expected to drive growth in the next 12 to 24 months? - Management highlighted the importance of FIDO2 and mobile authentication technologies as key growth areas [44][45] Question: What is the visibility on late-stage deals and pipeline for Q4? - Management expressed confidence in the Q4 ARR guidance, citing improved visibility and a positive sales environment [66][72] Question: Is the revenue and ARR cut related to gross churn or lower new logos? - Management indicated that the cut was primarily due to lower activity in net expansions, with hardware also contributing to the decline [77][79]

Revenue Performance - Security Solutions subscription revenue grew by 13% and Digital Agreements subscription revenue grew by 11% for the three months ended September 30, 2025, compared to the same period in 2024[126]. - Total revenue for Security Solutions decreased by 1% and 3% for the three and nine months ended September 30, 2025, respectively, due to a shift towards mobile authentication solutions[127]. - For the three months ended September 30, 2025, total revenue was $57.056 million, a slight decrease from $56.242 million in the same period of 2024[161][162]. - For the nine months ended September 30, 2025, total revenue was $180.265 million, compared to $182.008 million for the same period in 2024[162][164]. - Security Solutions segment revenue for the three months ended September 30, 2025, was $40.322 million, while Digital Agreements segment revenue was $16.734 million[161]. - Security Solutions segment revenue for the nine months ended September 30, 2025, was $132.270 million, while Digital Agreements segment revenue was $47.995 million[162]. - Total revenue increased by $0.8 million, or 1%, for the three months ended September 30, 2025, compared to the same period in 2024, while revenue decreased by $1.7 million, or 1%, for the nine months ended September 30, 2025[169]. Profitability and Margins - Gross profit for the three months ended September 30, 2025, was $42.003 million, with a gross margin of 74%[161]. - Operating income for the three months ended September 30, 2025, was $8.227 million, compared to $11.252 million in the same period of 2024[161][162]. - Security Solutions gross profit decreased by $0.5 million, or 2%, during the three months ended September 30, 2025, with a gross margin of 74%[184]. - Digital Agreements operating income for Q3 2025 was $4.2 million, an increase from $3.4 million in Q3 2024, driven by higher gross profit and lower operating expenses[197]. - Adjusted EBITDA for the three months ended September 30, 2025, was $17.5 million, compared to $17.0 million for the same period in 2024, driven by lower costs of goods sold[226]. - For the nine months ended September 30, 2025, Adjusted EBITDA was $58.2 million, an increase from $53.4 million in the same period of 2024[226]. Expenses and Restructuring - The company incurred restructuring charges of approximately $0.1 million to $0.2 million related to the 2023 Actions for the remainder of 2025[133]. - The company reduced headcount by approximately 341 positions as part of the restructuring plan[135]. - Operating expenses included $3.4 million and $2.7 million related to stock-based and long-term incentive plans for the three months ended September 30, 2025, and 2024, respectively[145]. - Operating expenses increased by $3.5 million, or 11%, during the three months ended September 30, 2025, with a negative impact from foreign exchange rates of approximately $0.5 million[182]. - Sales and marketing expenses for Q3 2025 increased by $1.3 million, or 12%, compared to Q3 2024, primarily due to higher employee compensation costs[185]. - Research and development expenses for Q3 2025 increased by $1.3 million, or 17%, compared to Q3 2024, driven by higher compensation and consulting costs related to the acquisition of Nok Nok Labs[187]. - General and administrative expenses for Q3 2025 increased by $0.8 million, or 7%, compared to Q3 2024, largely due to increased stock-based compensation and director fees[189]. - Restructuring charges for the nine months ended September 30, 2025 decreased by $2.7 million, or 70%, compared to the same period in 2024, due to minimal headcount reduction and vendor rationalization costs[191]. Cash Flow and Investments - Cash and cash equivalents as of September 30, 2025 were $85.6 million, up from $83.2 million at December 31, 2024[199][200]. - Net cash used in investing activities for the nine months ended September 30, 2025 was $20.0 million, compared to $7.3 million for the same period in 2024, primarily due to the acquisition of Nok Nok Labs[209]. - Cash provided by operating activities for the nine months ended September 30, 2025 was $46.9 million, an increase from $43.2 million in the same period in 2024[206]. Acquisitions and Strategic Moves - On June 4, 2025, the company acquired Nok Nok Labs, enhancing its passwordless software authentication solutions[136]. - The company entered into a $100.0 million credit agreement on June 23, 2025, with no borrowings outstanding as of September 30, 2025[137]. Foreign Exchange and Geographic Revenue - Foreign exchange rate changes positively impacted total revenue and Security Solutions revenue by approximately $1.3 million for the three months ended September 30, 2025[129]. - Approximately 79% of revenues for the nine months ended September 30, 2025, were generated outside of the U.S.[154]. - For the nine months ended September 30, 2025, 57% of revenue was denominated in U.S. Dollars, 40% in Euros, and 3% in other currencies[155]. - Revenue generated in the Americas increased by $4.0 million, or 18%, for the three months ended September 30, 2025, primarily driven by software authentication products[173]. - Revenue generated in APAC decreased by $2.3 million, or 19%, for the three months ended September 30, 2025, primarily due to lower hardware volumes[175]. Tax and Income - The effective tax rate reflects a geographic mix of earnings, with statutory tax rates for primary foreign jurisdictions ranging from 17% to 30%[153]. - The company’s net income for the three months ended September 30, 2025, was $6.5 million, compared to $8.3 million for the same period in 2024[223]. - Interest income for the nine months ended September 30, 2025 was $1.8 million, an increase from $1.2 million in the same period in 2024, attributed to higher average excess cash invested[194]. Annual Recurring Revenue (ARR) and Retention - As of September 30, 2025, the company reported an Annual Recurring Revenue (ARR) of $180.2 million, a 10% increase from $163.9 million on September 30, 2024, including contributions from the acquisition of Nok Nok Labs[218]. - The Net Retention Rate (NRR) was reported at 103% as of September 30, 2025, down from 106% a year earlier, primarily due to a decrease in expansion contracts[220]. - Changes in foreign exchange rates positively impacted ARR by approximately $0.2 million compared to the prior year[218]. Accounting Policies - The company’s accounting policies are detailed in its Form 10-K for the year ended December 31, 2024[227].

Investor Presentation – Q3 2025 October 30, 2025 Forward Looking Statements This presentation contains forward-looking statements within the meaning of applicable U.S. securities laws, including statements regarding our 2025 financial guidance, our plans to drive profitable, efficient revenue growth, and our general goals and expectations regarding our operational or financial performance in the future. Forward-looking statements may be identified by words such as "seek", "believe", "plan", "estimate", "ant ...

BOSTON--(BUSINESS WIRE)--OneSpan today announced its participation in Authenticate 2025, the premier conference dedicated to the future of authentication, taking place from October 13 to 15, 2025, in Carlsbad, CA. Building on strong industry momentum, OneSpan will highlight its market-leading authentication portfolio and four speaking sessions led by its experts. Attendees can visit OneSpan at Booth #203 to experience hands-on demos of the company's advanced authentication portfolio, including. ...

Core Viewpoint - OneSpan Inc. is highlighted as a strong investment opportunity in the cybersecurity sector, with a 'Buy' rating and a price target of $23 initiated by B.Riley due to strong demand for its solutions [1][2]. Group 1: Company Overview - OneSpan Inc. (NASDAQ:OSPN) specializes in cybersecurity, offering a wide range of digital identity, transaction, and mobile security solutions, including multifactor authentication, electronic signatures, and identity verification [4]. Group 2: Market Demand and Growth Opportunities - The company has a competitive advantage due to its robust blue-chip customer base and is experiencing strong demand for its authentication services, which is expected to grow with the increasing adoption of AI technologies [2]. - OneSpan's eSignature technology is anticipated to see continued demand in the financial sector, driven by its high-end security capabilities and compliance with stringent standards [3]. Group 3: Stock Performance and Investment Perspective - Despite a nearly 20% decline in market value year to date, B.Riley considers OneSpan a fundamentally attractive investment opportunity [3].

Group 1 - The analysis of OneSpan Inc. (NASDAQ: OSPN) has not been conducted since Q4 2024, when the stock experienced a nearly 30% decline in earnings [1] - The investment approach focuses on operational aspects and long-term earnings potential rather than market-driven dynamics [1] - The strategy emphasizes holding companies for the long term, with most recommendations being holds rather than buys, reflecting a cautious market outlook [1] Group 2 - The article does not disclose any current stock positions or plans to initiate positions in the mentioned companies within the next 72 hours [2] - The opinions expressed in the article are solely those of the author and do not represent any business relationship with the companies mentioned [2]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $18 million, representing 29.5% of revenue for Q2 2025, and a record adjusted EBITDA of $41 million for the first half of the year, which is 33% of revenue, the highest first half performance to date [10][11] - Total revenue for Q2 2025 was $59.8 million, down 2% year over year, primarily due to a decline in security hardware revenue [20][30] - GAAP net income per share increased to $0.21 from $0.17 in the same period last year, while non-GAAP earnings per share rose to $0.34 from $0.31 [21][22] Business Line Data and Key Metrics Changes - Subscription revenue grew by 22% in Q2 2025, with security revenue increasing by 39% and digital agreements growing by 5% [12][23] - The security solutions business had an ARR of $114.5 million, up 9% year over year, while the digital agreement business saw an ARR growth of 4.5% to $63 million [22][24] - Security revenue declined by 3% to $44.2 million, with strong subscription growth offset by declines in hardware and maintenance revenues [23] Market Data and Key Metrics Changes - The geographical revenue mix showed 39% from EMEA, 40% from The Americas, and 21% from APAC, compared to 41%, 35%, and 24% respectively in the same quarter last year [29] - The company noted strong bookings performance in Latin America and a dedicated sales effort in North America, which is expected to continue performing well [14] Company Strategy and Development Direction - The company is focused on enhancing profitability and growth, with a strategy that includes targeted M&A to accelerate product delivery [7][8] - The acquisition of Knock Knock Labs is aimed at expanding the product portfolio and enhancing the company's authentication capabilities [9][10] - The company aims to achieve a "Rule of 40" performance, balancing growth and profitability while returning cash to shareholders [7][33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's trajectory and highlighted the importance of innovation in response to emerging threats in the authentication market [16][18] - The company anticipates a return to positive revenue growth in the second half of the year, with expectations of double-digit subscription revenue growth for the full year 2025 [30][31] - Management acknowledged challenges in hardware revenue but expects gradual improvement in the fourth quarter [30] Other Important Information - The company generated $36 million in cash from operations in the first half of the year and ended Q2 with $93 million in cash on hand [15][28] - The Board approved a quarterly dividend of $0.12 per share, totaling close to $10 million returned to shareholders in the first half of the year [15][16] Q&A Session Summary Question: Can you provide more detail on the competitive positioning after acquiring Knock Knock? - Management emphasized that the acquisition complements existing solutions and enhances the company's technology profile, particularly in the security software space [35][36] Question: How does the acquisition impact existing customers versus new customer acquisition? - The acquisition is seen as an opportunity for cross-selling to existing customers rather than primarily for revenue generation [38][39] Question: Can you clarify the ARR guidance increase and its components? - The increase in ARR guidance includes $8 million from Knock Knock but is offset by contractions from a couple of customers, leading to a net increase of $6 million [44][45] Question: How is the pipeline shaping up for the second half of the year? - Management reported a strong first half in bookings and expressed optimism for the second half, despite anticipated challenges in hardware sales [50] Question: What impact did macroeconomic factors have on customer behavior? - The tariff situation had a minimal impact, and while there were some contractions, overall performance remained solid [52][53] Question: Can you elaborate on the go-to-market strategy evolution? - The company is investing in dedicated sales teams for different product lines and refining its approach to new customer acquisition [56][57]

PART I. FINANCIAL INFORMATION This part details OneSpan Inc.'s unaudited financial statements and management's discussion for the first half of 2025 [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents OneSpan Inc.'s unaudited condensed consolidated financial statements and notes for Q2 and H1 2025 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position at June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (In thousands) | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $92,886 | $83,160 | | Accounts receivable, net | $35,064 | $56,229 | | Total current assets | $169,483 | $174,894 | | Total assets | $357,099 | $338,734 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $15,643 | $13,310 | | Deferred revenue | $54,460 | $67,465 | | Total current liabilities | $95,575 | $110,275 | | Total liabilities | $114,592 | $126,204 | | Total stockholders' equity | $242,507 | $212,530 | | Total liabilities and stockholders' equity | $357,099 | $338,734 | - Total assets increased by **$18.365 million** from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents and goodwill[10](index=10&type=chunk) - Total liabilities decreased by **$11.612 million**, mainly due to a reduction in deferred revenue and accrued wages and payroll taxes[10](index=10&type=chunk) - Stockholders' equity increased by **$29.977 million**, reflecting net income and other comprehensive income[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's financial performance for the three and six months ended June 30, 2025 Condensed Consolidated Statements of Operations (In thousands, except per share data) | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $59,843 | $60,924 | $123,209 | $125,767 | | Total cost of goods sold | $15,876 | $20,583 | $32,151 | $38,031 | | Gross profit | $43,967 | $40,341 | $91,058 | $87,736 | | Operating income | $10,506 | $7,637 | $27,688 | $21,747 | | Net income | $8,342 | $6,553 | $22,847 | $20,021 | | Basic EPS | $0.22 | $0.17 | $0.60 | $0.52 | | Diluted EPS | $0.21 | $0.17 | $0.59 | $0.52 | - Net income for the three months ended June 30, 2025, increased by **$1.789 million (27.3%)** to **$8.342 million** compared to **$6.553 million** in the prior year[12](index=12&type=chunk) - For the six months ended June 30, 2025, net income increased by **$2.826 million (14.1%)** to **$22.847 million** compared to **$20.021 million** in the prior year[12](index=12&type=chunk) - Gross profit margin improved to **73%** for the three months and **74%** for the six months ended June 30, 2025, up from **66%** and **70%** respectively in the prior year[12](index=12&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines the company's comprehensive income, including net income and other components Condensed Consolidated Statements of Comprehensive Income (In thousands) | (In thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $8,342 | $6,553 | $22,847 | $20,021 | | Cumulative translation adjustment, net of tax | $5,547 | $(488) | $8,221 | $(2,143) | | Pension adjustment, net of tax | $(24) | $(29) | $(48) | $(59) | | Unrealized gain on available-for-sale securities | $— | $2 | $— | $2 | | Comprehensive income | $13,865 | $6,038 | $31,020 | $17,821 | - Comprehensive income significantly increased, primarily due to a positive cumulative translation adjustment of **$5.547 million** for the three months and **$8.221 million** for the six months ended June 30, 2025, compared to losses in the prior year periods[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section details changes in stockholders' equity, reflecting net income, dividends, and other comprehensive items Condensed Consolidated Statements of Stockholders' Equity (In thousands) | (In thousands) | Balance at Dec 31, 2024 | Net Income (Q2 2025) | Foreign Currency Translation Adjustment (Q2 2025) | Stock-based Compensation (Q2 2025) | Dividends Declared (Q2 2025) | Balance at Jun 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock (Shares) | 38,058 | — | — | — | — | 38,251 | | Common Stock (Amount) | $38 | $— | $— | $— | $— | $38 | | Treasury - Common Stock (Shares) | 3,724 | — | — | — | — | 3,724 | | Treasury - Common Stock (Amount) | $(47,380) | $— | $— | $— | $— | $(47,380) | | Additional Paid-In Capital | $122,534 | $— | $— | $3,451 | $— | $126,356 | | Retained Earnings | $151,256 | $8,342 | $— | $— | $(4,850) | $169,238 | | Accumulated Other Comprehensive Income (Loss) | $(13,918) | $— | $5,547 | $— | $— | $(5,745) | | Total Stockholders' Equity | $212,530 | $8,342 | $5,547 | $3,451 | $(4,850) | $242,507 | - Total stockholders' equity increased from **$212.530 million** at December 31, 2024, to **$242.507 million** at June 30, 2025, driven by net income, foreign currency translation adjustments, and stock-based compensation, partially offset by dividends[16](index=16&type=chunk) - Dividends declared for the three months ended June 30, 2025, totaled **$4.850 million ($0.12 per share)**[16](index=16&type=chunk)[25](index=25&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines the company's cash flow activities from operations, investing, and financing for H1 2025 Condensed Consolidated Statements of Cash Flows (In thousands) | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $35,583 | $29,262 | | Net cash used in investing activities | $(15,540) | $(5,360) | | Net cash used in financing activities | $(12,167) | $(2,031) | | Effect of exchange rate changes on cash | $1,679 | $(1,098) | | Net increase in cash | $9,555 | $20,773 | | Cash, cash equivalents, and restricted cash, end of period | $92,886 | $64,303 | - Net cash provided by operating activities increased by **$6.

Financial Performance - The company's market capitalization is $560 million[5] - Total revenue reached $241 million[5, 9], with Security Solutions contributing $178 million (74%) and Digital Agreements $62 million (26%)[9] - The company's ARR is $178 million[5], with a Net Retention Rate (NRR) of 101%[5] - The company holds $93 million in cash and equivalents[5] - Q2 2025 revenue was $60 million, a decrease of 2%[26] - Q2 2025 subscription revenue grew by 22% to $36 million[26] - Q2 2025 ARR grew by 8% to $178 million[28] - The company paid a quarterly cash dividend of $0.12 per share in Q2 2025[29] Guidance - The company reaffirmed its revenue guidance for FY 2025 at $245 million to $251 million[40] - The company reaffirmed its Adjusted EBITDA guidance for FY 2025 at $72 million to $76 million[40] - The company increased its ARR guidance for FY 2025 to $186 million to $192 million[40] Business Segments - Security Solutions saw a 6% revenue growth, with 9% growth in Software & Services and 27% growth in Subscription revenue[17] - Digital Agreements experienced a 9% revenue growth and 14% Subscription revenue growth[22]