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]

[Company Overview and Q2 2025 Highlights](index=1&type=section&id=1.%20Company%20Overview%20and%20Q2%202025%20Highlights) OneSpan achieved strong Q2 2025 profitability, strengthened its product portfolio with the Nok Nok Labs acquisition, and provided updated financial guidance [CEO Statement and Strategic Focus](index=1&type=section&id=1.1.%20CEO%20Statement%20and%20Strategic%20Focus) CEO Victor Limongelli reported a strong quarter, enhancing the product portfolio with Nok Nok Labs' FIDO2 authentication and pursuing profitable growth through performance improvement and strategic acquisitions - CEO Victor Limongelli reported a **strong quarter of profitability** and strengthened the product portfolio by acquiring **Nok Nok Labs**, adding **FIDO2 passwordless authentication software**[3](index=3&type=chunk) - OneSpan will continue to focus on **improving performance** and evaluating targeted inorganic opportunities to drive **profitable, efficient revenue growth**[3](index=3&type=chunk) [Second Quarter 2025 Financial Highlights](index=1&type=section&id=1.2.%20Second%20Quarter%202025%20Financial%20Highlights) OneSpan reported a 38% year-over-year increase in operating income to $10.5 million, despite a 2% decrease in total revenue to $59.8 million, with subscription revenue growing 22% YoY and ARR increasing 8% YoY to $177.8 million Q2 2025 Key Financial Metrics | Metric | Q2 2025 | YoY Change | | :----------------------- | :---------- | :--------- | | Operating Income | $10.5 million | +38% | | Total Revenue | $59.8 million | -2% | | Subscription Revenue | $36.2 million | +22% | | Annual Recurring Revenue (ARR) | $177.8 million | +8% | | Net Retention Rate (NRR) | 101% | N/A | Q2 2025 and Q2 2024 Comparative Financials | Metric | Q2 2025 | Q2 2024 | YoY Change | | :----------------------- | :---------- | :---------- | :--------- | | Total Revenue | $59.8 million | $60.9 million | -2% | | Security Solutions Revenue | $44.2 million | N/A | -3% | | Digital Agreements Revenue | $15.6 million | N/A | +1% | | Gross Profit | $44.0 million | $40.3 million | +9.2% | | Gross Margin | 73% | 66% | +7 pp | | Operating Income | $10.5 million | $7.6 million | +38.2% | | Net Income | $8.3 million | $6.6 million | +25.8% | | Diluted EPS | $0.21 | $0.17 | +23.5% | | Non-GAAP Net Income | $13.3 million | $12.2 million | +9.0% | | Non-GAAP Diluted EPS | $0.34 | $0.31 | +9.7% | | Adjusted EBITDA | $17.6 million | $16.2 million | +8.6% | [Recent Business Highlights](index=1&type=section&id=1.3.%20Recent%20Business%20Highlights) Key business developments include the acquisition of Nok Nok Labs to enhance FIDO passwordless authentication, securing a new $100.0 million five-year syndicated revolving credit facility for general corporate purposes and strategic growth, and the declaration of a quarterly cash dividend of $0.12 per share - Acquired **Nok Nok Labs**, a leading provider of **FIDO passwordless software authentication solutions**, to broaden the multi-factor authentication portfolio[7](index=7&type=chunk) - Entered into a **$100.0 million, five-year syndicated revolving credit facility** for general corporate purposes, including strategic growth priorities[7](index=7&type=chunk) - Declared a quarterly cash dividend of **$0.12 per share**, payable September 5, 2025, to shareholders of record as of August 15, 2025[7](index=7&type=chunk) [About OneSpan](index=3&type=section&id=1.4.%20About%20OneSpan) OneSpan specializes in security authentication, identity, electronic signature, and digital workflow solutions, serving global blue-chip enterprises, including over 60% of the world's largest 100 banks, across 100+ countries - OneSpan provides **security authentication, identity, electronic signature, and digital workflow solutions** to protect and facilitate digital transactions and agreements[18](index=18&type=chunk) - The company serves **global blue-chip enterprises**, including **over 60% of the world's largest 100 banks**, processing millions of digital agreements and billions of multi-factor authentication transactions annually in **100+ countries**[18](index=18&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=2.%20Condensed%20Consolidated%20Financial%20Statements) This section provides OneSpan's condensed consolidated statements of operations, balance sheets, and cash flows for the second quarter and six months ended June 30, 2025 [Condensed Consolidated Statements of Operations](index=4&type=section&id=2.1.%20Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, total revenue decreased 2% YoY to $59.8 million, while gross profit increased to $44.0 million (73% gross margin), operating income rose 38% to $10.5 million, and net income increased 27% to $8.3 million, resulting in diluted EPS of $0.21, with six-month totals of $123.2 million revenue, $22.8 million net income, and $0.59 diluted EPS Condensed Consolidated Statements of Operations (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | Total Revenue | $59,843 | $60,924 | $123,209 | $125,767 | | 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 | | Diluted EPS | $0.21 | $0.17 | $0.59 | $0.52 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=2.2.%20Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $357.1 million from $338.7 million at December 31, 2024, with cash and cash equivalents rising to $92.9 million from $83.2 million, while total liabilities decreased to $114.6 million from $126.2 million, and total stockholders' equity increased to $242.5 million from $212.5 million Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2025 | Dec 31, 2024 | | :-------------------- | :-------------- | :------------- | | Total Assets | $357,099 | $338,734 | | Cash and cash equivalents | $92,886 | $83,160 | | Accounts receivable, net | $35,064 | $56,229 | | Goodwill | $103,262 | $92,365 | | Total Liabilities | $114,592 | $126,204 | | Deferred revenue (current) | $54,460 | $67,465 | | Total Stockholders' Equity | $242,507 | $212,530 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=2.3.%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities increased to $35.6 million from $29.3 million in the prior year, while net cash used in investing activities significantly increased to $15.5 million, primarily due to $12.1 million cash paid for an acquisition, and net cash used in financing activities also increased to $12.2 million, mainly due to dividends paid Condensed Consolidated Statements of Cash Flows (in thousands) | Metric (in thousands) | 6M 2025 | 6M 2024 | | :-------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $35,583 | $29,262 | | Net cash used in investing activities | $(15,540) | $(5,360) | | Cash paid for acquisition of business, net | $(12,052) | $0 | | Net cash used in financing activities | $(12,167) | $(2,031) | | Dividends paid | $(9,196) | $0 | | Net increase in cash | $9,555 | $20,773 | | Cash, cash equivalents, end of period | $92,886 | $64,303 | [Segment Performance Analysis](index=7&type=section&id=3.%20Segment%20Performance%20Analysis) This section analyzes the financial performance of OneSpan's Security Solutions and Digital Agreements operating segments, detailing revenue, gross margin, and operating income trends [Operating Segments Overview](index=7&type=section&id=3.1.%20Operating%20Segments%20Overview) OneSpan operates two reportable segments: Security Solutions and Digital Agreements, with Security Solutions focusing on multi-factor authentication and mobile application security, and Digital Agreements providing cloud-based e-signature, notary, and identity verification solutions - OneSpan reports financial results under two operating segments: **Security Solutions** and **Digital Agreements**[28](index=28&type=chunk) - **Security Solutions** offers software products, SDKs, and Digipass authenticator devices for **multi-factor authentication**, transaction signing, and **mobile application security**, primarily on-premises[31](index=31&type=chunk) - **Digital Agreements** provides largely **cloud-based solutions** including OneSpan Sign **e-signature, OneSpan Notary, and Identity Verification**, enabling secure and automated digital agreement and customer transaction lifecycles[31](index=31&type=chunk) [Security Solutions Segment Performance](index=7&type=section&id=3.2.%20Security%20Solutions%20Segment%20Performance) In Q2 2025, Security Solutions revenue decreased 3% YoY to $44.2 million, but its gross margin improved to 74% from 67% in Q2 2024, with operating income at $19.8 million, and six-month revenue reaching $91.9 million with a 75% gross margin Security Solutions Segment Performance (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | Revenue | $44,235 | $45,461 | $91,948 | $95,891 | | Gross profit | $32,822 | $30,600 | $68,907 | $68,103 | | Gross margin | 74% | 67% | 75% | 71% | | Operating income (loss) | $19,799 | $20,692 | $43,958 | $46,571 | - Security Solutions operating income includes **$0.1 million** and **$0.2 million** of restructuring and other related charges for the three and six months ended June 30, 2025, respectively, a decrease from **$0.3 million** and **$1.4 million** in the prior year periods[34](index=34&type=chunk) [Digital Agreements Segment Performance](index=7&type=section&id=3.3.%20Digital%20Agreements%20Segment%20Performance) Digital Agreements revenue increased 1% YoY to $15.6 million in Q2 2025, with a significant improvement in gross margin to 71% from 63% in Q2 2024, reporting an operating income of $2.9 million, a substantial turnaround from an operating loss of $0.2 million in Q2 2024, and six-month revenue of $31.3 million with a 71% gross margin Digital Agreements Segment Performance (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | Revenue | $15,608 | $15,463 | $31,261 | $29,876 | | Gross profit | $11,145 | $9,741 | $22,151 | $19,633 | | Gross margin | 71% | 63% | 71% | 66% | | Operating income (loss) | $2,879 | $(155) | $6,245 | $(420) | - Digital Agreements operating income includes **$0.1 million** and **$0.2 million** of restructuring and other related charges for the three and six months ended June 30, 2025, respectively, a significant decrease from **$1.2 million** and **$1.3 million** in the prior year periods[35](index=35&type=chunk) [Revenue by Major Products and Services](index=9&type=section&id=3.4.%20Revenue%20by%20Major%20Products%20and%20Services) For Q2 2025, Security Solutions' hardware products revenue decreased significantly to $14.0 million from $19.7 million YoY, while its subscription revenue increased to $20.6 million from $14.9 million, and Digital Agreements' subscription revenue slightly increased to $15.6 million from $14.8 million, with similar growth trends for the six months ended June 30, 2025 Q2 2025 and Q2 2024 Revenue by Type (in thousands) | Revenue Type (in thousands) | Q2 2025 (Security Solutions) | Q2 2024 (Security Solutions) | Q2 2025 (Digital Agreements) | Q2 2024 (Digital Agreements) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Subscription | $20,602 | $14,857 | $15,574 | $14,785 | | Maintenance and support | $8,666 | $9,742 | $25 | $490 | | Professional services & other | $951 | $1,123 | $9 | $188 | | Hardware products | $14,016 | $19,739 | — | — | | **Total Revenue** | **$44,235** | **$45,461** | **$15,608** | **$15,463** | 6M 2025 and 6M 2024 Revenue by Type (in thousands) | Revenue Type (in thousands) | 6M 2025 (Security Solutions) | 6M 2024 (Security Solutions) | 6M 2025 (Digital Agreements) | 6M 2024 (Digital Agreements) | | :-------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Subscription | $48,674 | $41,039 | $31,119 | $28,597 | | Maintenance and support | $16,650 | $19,808 | $49 | $994 | | Professional services & other | $1,545 | $2,728 | $93 | $285 | | Hardware products | $25,079 | $32,316 | — | — | | **Total Revenue** | **$91,948** | **$95,891** | **$31,261** | **$29,876** | [Financial Outlook](index=2&type=section&id=4.%20Financial%20Outlook) This section presents OneSpan's updated full-year 2025 financial guidance, including projections for revenue, Annual Recurring Revenue (ARR), and Adjusted EBITDA [Full Year 2025 Guidance](index=2&type=section&id=4.1.%20Full%20Year%202025%20Guidance) OneSpan updated its full-year 2025 financial guidance, expecting revenue in the range of $245 million to $251 million, raising Annual Recurring Revenue (ARR) guidance to $186 million to $192 million, and projecting Adjusted EBITDA between $72 million and $76 million Full Year 2025 Financial Guidance | Metric | Full Year 2025 Guidance | Previous Guidance | | :---------------- | :---------------------- | :---------------- | | Revenue | $245 million - $251 million | N/A | | ARR | $186 million - $192 million | $180 million - $186 million | | Adjusted EBITDA | $72 million - $76 million | N/A | [Non-GAAP Financial Measures](index=2&type=section&id=5.%20Non-GAAP%20Financial%20Measures) This section outlines OneSpan's non-GAAP financial measures, including recent changes in presentation and detailed reconciliations for Adjusted EBITDA and Non-GAAP Net Income [Changes in Presentation of Non-GAAP Measures](index=2&type=section&id=5.1.%20Changes%20in%20Presentation%20of%20Non-GAAP%20Measures) Effective January 1, 2025, OneSpan began excluding employer payroll taxes related to employee stock-based awards from non-GAAP results and now uses a 20% long-term projected non-GAAP tax rate for Non-GAAP Net Income calculations, with prior periods adjusted to reflect these changes - Effective **January 1, 2025**, **employer payroll taxes** related to employee stock-based award transactions are now **excluded from non-GAAP results** (Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Net Income Per Diluted Share)[8](index=8&type=chunk) - A long-term projected non-GAAP tax rate of **20%** is now used for **Non-GAAP Net Income** and **Non-GAAP Net Income Per Diluted Share**, providing better consistency across interim reporting periods, with prior period amounts adjusted[9](index=9&type=chunk)[10](index=10&type=chunk) Employer Payroll Taxes Related to Stock-Based Awards (in millions) | Item | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :------------------------------------------------ | :-------- | :-------- | :-------- | :-------- | | Employer payroll taxes related to stock-based awards | $0.2 million | < $0.1 million | $0.7 million | $0.4 million | [Adjusted EBITDA Reconciliation](index=10&type=section&id=5.2.%20Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA for Q2 2025 was $17.6 million, up from $16.2 million in Q2 2024, and $40.7 million for the six months ended June 30, 2025, compared to $36.4 million in the prior year, with this non-GAAP measure excluding specific items to provide a clearer view of operational performance Adjusted EBITDA Reconciliation (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------- | :-------- | :-------- | :-------- | :-------- | | Net income | $8,342 | $6,553 | $22,847 | $20,021 | | Provision for income taxes | $2,227 | $1,936 | $5,587 | $2,970 | | Depreciation and amortization | $2,456 | $2,063 | $4,585 | $4,145 | | Long-term incentive compensation and related payroll tax expense | $3,678 | $2,017 | $6,926 | $4,063 | | Restructuring and other related charges | $88 | $3,218 | $534 | $4,734 | | Other non-recurring items | $1,579 | $906 | $1,618 | $1,077 | | **Adjusted EBITDA** | **$17,638** | **$16,172** | **$40,673** | **$36,388** | - Adjusted EBITDA is defined as **net income before interest, taxes, depreciation, amortization, long-term incentive compensation and related payroll tax expense, restructuring and other related charges, and certain non-recurring items**[41](index=41&type=chunk) [Non-GAAP Net Income and Per Diluted Share Reconciliation](index=12&type=section&id=5.3.%20Non-GAAP%20Net%20Income%20and%20Per%20Diluted%20Share%20Reconciliation) Non-GAAP Net Income for Q2 2025 was $13.3 million, up from $12.2 million in Q2 2024, with Non-GAAP diluted EPS of $0.34, and for the six months ended June 30, 2025, Non-GAAP Net Income was $31.0 million, compared to $27.4 million in the prior year, with Non-GAAP diluted EPS of $0.79, excluding specific items and applying a 20% non-GAAP tax rate Non-GAAP Net Income and Per Diluted Share Reconciliation (in thousands, except per share) | Metric (in thousands, except per share) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :-------------------------------------- | :-------- | :-------- | :-------- | :-------- | | Net income | $8,342 | $6,553 | $22,847 | $20,021 | | Long-term incentive compensation and related payroll tax expense | $3,678 | $2,017 | $6,926 | $4,063 | | Amortization of intangible assets | $685 | $666 | $1,241 | $1,381 | | Restructuring and other related charges | $88 | $3,218 | $534 | $4,734 | | Other non-recurring items | $1,579 | $906 | $1,618 | $1,077 | | Non-GAAP provision for income taxes (20%) | $(3,320) | $(3,059) | $(7,751) | $(6,849) | | **Non-GAAP net income** | **$13,279** | **$12,237** | **$31,002** | **$27,397** | | **Non-GAAP net income per share, diluted** | **$0.34** | **$0.31** | **$0.79** | **$0.71** | - Non-GAAP Net Income and Per Diluted Share exclude **long-term incentive compensation, amortization of intangible assets, restructuring costs, and certain other non-recurring items**, using a **20% long-term projected non-GAAP tax rate**[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) [Additional Information](index=2&type=section&id=6.%20Additional%20Information) This section provides details regarding the Q2 2025 conference call and important disclosures concerning forward-looking statements [Conference Call Details](index=2&type=section&id=6.1.%20Conference%20Call%20Details) OneSpan hosted a conference call on August 5, 2025, at 4:30 p.m. EDT, with CEO Victor Limongelli and CFO Jorge Martell, to discuss the Q2 2025 results, with access details available on the investor relations website - OneSpan hosted a conference call on **August 5, 2025**, at **4:30 p.m. EDT**, with CEO Victor Limongelli and CFO Jorge Martell, to discuss Q2 2025 results[12](index=12&type=chunk) - Conference call details and webcast replay are available on the OneSpan investor relations website at **investors.onespan.com**[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=6.2.%20Forward-Looking%20Statements) The press release contains forward-looking statements regarding 2025 financial guidance, the impact of the Nok Nok acquisition, plans for inorganic opportunities, and future operational/financial performance, which involve risks and uncertainties detailed in the company's SEC filings - This press release contains **forward-looking statements** regarding **2025 financial guidance**, the impact of the **Nok Nok acquisition**, plans for evaluating inorganic opportunities, and general operational/financial performance[20](index=20&type=chunk) - Forward-looking statements involve **risks and uncertainties**, such as ability to attract/retain customers, product development, technological changes, competition, and economic conditions, as detailed in Form 10-K and 10-Q filings[20](index=20&type=chunk)

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on OneSpan (OSPN), and highlights the potential misalignment of interests between brokerage analysts and retail investors [1][10]. Group 1: Brokerage Recommendations - OneSpan has an average brokerage recommendation (ABR) of 2.00, indicating a "Buy" on a scale from 1 (Strong Buy) to 5 (Strong Sell) [2]. - Of the four recommendations contributing to the ABR, two are classified as "Strong Buy," accounting for 50% of the total recommendations [2]. Group 2: Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations have limited success in guiding investors toward stocks with the highest price increase potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings due to vested interests, often issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. Group 3: Zacks Rank vs. ABR - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from 1 (Strong Buy) to 5 (Strong Sell) and is based on earnings estimate revisions, making it a more effective indicator of near-term stock price performance [8][11]. - Unlike the ABR, which is based solely on brokerage recommendations and may not be up-to-date, the Zacks Rank reflects timely changes in earnings estimates [12]. Group 4: OneSpan's Current Position - The Zacks Consensus Estimate for OneSpan remains unchanged at $1.45 for the current year, suggesting steady analyst views on the company's earnings prospects [13]. - Due to the unchanged consensus estimate and other factors, OneSpan holds a Zacks Rank of 3 (Hold), indicating caution despite the Buy-equivalent ABR [14].

Company Performance - OneSpan (OSPN) stock decreased by 2.11% to $15.07, underperforming the S&P 500 which gained 0.07% [1] - Over the last month, OneSpan shares fell by 5%, while the Computer and Technology sector rose by 8.22% and the S&P 500 increased by 5.71% [1] Upcoming Earnings - OneSpan is set to release its earnings report on August 5, 2025, with an expected EPS of $0.27, reflecting a 12.9% decline from the previous year [2] - For the fiscal year, Zacks Consensus Estimates project earnings of $1.45 per share and revenue of $0 million, indicating a 9.85% increase in earnings but no change in revenue from the prior year [2] Analyst Estimates - Changes in analyst estimates for OneSpan are crucial as they indicate shifting business trends, with positive revisions suggesting analyst confidence in performance and profit potential [3] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has shown a strong track record, with 1 stocks averaging a 25% annual return since 1988 [5] - OneSpan currently holds a Zacks Rank of 3 (Hold), with no changes in the consensus EPS estimate over the past month [5] Valuation Metrics - OneSpan is trading at a Forward P/E ratio of 10.61, which is a discount compared to the industry average Forward P/E of 29.49 [6] - The Internet - Software industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 73, placing it in the top 30% of over 250 industries [6] Industry Performance - The Zacks Industry Rank evaluates the strength of industry groups based on the average Zacks Rank of individual stocks, with top-rated industries outperforming lower-rated ones by a factor of 2 to 1 [7]

Company Performance - OneSpan (OSPN) closed at $15.77, down 10.14% from the previous trading session, underperforming the S&P 500's loss of 0.33% [1] - Over the past month, OneSpan's shares gained 8%, outperforming the Computer and Technology sector's gain of 5.24% and the S&P 500's gain of 4.07% [1] Earnings Forecast - OneSpan's upcoming earnings report is scheduled for August 5, 2025, with projected earnings per share (EPS) of $0.27, indicating a 12.9% decrease from the same quarter last year [2] - For the fiscal year, Zacks Consensus Estimates project earnings of $1.45 per share and revenue of $0 million, reflecting changes of +9.85% and 0% from the prior year [2] Analyst Estimates - Recent modifications to analyst estimates for OneSpan are crucial, as they reflect the shifting dynamics of short-term business patterns [3] - Upward revisions in estimates indicate analysts' positive outlook on the company's operations and profit generation capabilities [3] Valuation Metrics - OneSpan is currently trading with a Forward P/E ratio of 12.1, which is a discount compared to the industry average Forward P/E of 28.6 [6] - The Internet - Software industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 67, placing it in the top 28% of over 250 industries [6] Zacks Rank System - The Zacks Rank system ranges from 1 (Strong Buy) to 5 (Strong Sell), with 1 stocks historically returning an average of +25% annually since 1988 [5] - OneSpan currently holds a Zacks Rank of 3 (Hold), with no changes in the Zacks Consensus EPS estimate over the last 30 days [5]

Company Performance - OneSpan (OSPN) stock decreased by 1.99% to $17.69, underperforming the S&P 500 which gained 0.61% [1] - Over the past month, OneSpan shares increased by 8.87%, outperforming the Computer and Technology sector's gain of 5.6% and the S&P 500's gain of 3.85% [1] Earnings Forecast - OneSpan is expected to report an EPS of $0.27, reflecting a 12.9% decline compared to the same quarter last year [2] - For the full year, earnings are projected at $1.45 per share, indicating a 9.85% increase, while revenue is expected to remain unchanged at $0 million [2] Analyst Estimates - Recent adjustments to analyst estimates for OneSpan are noteworthy, as they indicate evolving short-term business trends [3] - Positive estimate revisions suggest analyst optimism regarding the company's business and profitability [3] Valuation Metrics - OneSpan currently has a Forward P/E ratio of 12.45, which is a discount compared to the industry average Forward P/E of 28.96 [6] - The Internet - Software industry, which includes OneSpan, has a Zacks Industry Rank of 62, placing it in the top 26% of over 250 industries [6] Zacks Rank System - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), shows that OneSpan currently holds a Zacks Rank of 3 (Hold) [5] - The Zacks Rank has a proven track record, with 1 stocks generating an average annual return of +25% since 1988 [5]