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, based on recommendations from four brokerage firms, with two of those being Strong Buy, representing 50% of all recommendations [2][5]. - Despite the ABR suggesting a Buy for OneSpan, the article cautions against making investment decisions solely based on this information due to studies showing limited success of brokerage recommendations in predicting stock price increases [5][10]. Group 2: Zacks Rank vs. ABR - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) and is based on earnings estimate revisions, which are strongly correlated with near-term stock price movements [8][11]. - The Zacks Rank is updated more frequently than the ABR, as brokerage analysts revise their earnings estimates to reflect changing business trends, making it a more timely predictor of future stock prices [12]. Group 3: Earnings Estimates for OneSpan - The Zacks Consensus Estimate for OneSpan has increased by 5.4% over the past month to $1.45, indicating growing optimism among analysts regarding the company's earnings prospects [13]. - The recent change in the consensus estimate, along with other factors, has resulted in a Zacks Rank 1 (Strong Buy) for OneSpan, suggesting that the Buy-equivalent ABR may serve as a useful guide for investors [14].

Core Insights - The article emphasizes the importance of efficiency ratios in evaluating a company's potential for profitability and stock performance [1] Efficiency Ratios - **Receivables Turnover**: This ratio measures a company's ability to extend credit and collect debts, with a high ratio indicating effective collection practices and quality customers [2] - **Asset Utilization**: This ratio assesses how well a company converts its assets into sales, with higher values suggesting greater efficiency [3] - **Inventory Turnover**: This ratio indicates a company's ability to manage inventory relative to its cost of goods sold, where a high value reflects efficient inventory management [4] - **Operating Margin**: This ratio measures the efficiency of a company in controlling operating expenses, with higher values indicating better expense management compared to peers [5] Screening Criteria - The screening process identified stocks with efficiency ratios above industry averages, narrowing down from over 7,906 stocks to eight candidates [7] - A favorable Zacks Rank of 1 (Strong Buy) was also included in the screening criteria to enhance profitability [6] Selected Stocks - **Quad Graphics (QUAD)**: Specializes in print and multichannel solutions, with an average four-quarter earnings surprise of 71.8% [7] - **ONESPAN (OSPN)**: Develops security software and e-signature solutions, achieving an average four-quarter earnings surprise of 38.6% [8] - **ChampionX (CHX)**: Provides chemistry solutions and technologies for oil and gas production, with an average four-quarter earnings surprise of 9% [9] - **BancFirst (BANF)**: A bank holding company offering commercial banking services, with an average four-quarter earnings surprise of 7% [10]

Core Viewpoint - OneSpan (OSPN) shares have increased by 11.8% in the past four weeks, closing at $15.17, with a potential upside indicated by Wall Street analysts' price targets suggesting a mean estimate of $19.33, representing a 27.4% upside [1] Price Targets and Estimates - The average price targets range from a low of $15 to a high of $23, with a standard deviation of $4.04, indicating variability among analysts [2] - The lowest estimate suggests a decline of 1.1%, while the highest estimate indicates a potential upside of 51.6% [2] - Analysts' consensus on price targets should be approached with caution, as their ability to set unbiased targets has been questioned [3][7] Earnings Estimates and Analyst Agreement - Analysts are optimistic about OSPN's earnings prospects, with a strong agreement in revising EPS estimates higher, which correlates with potential stock price movements [4][11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 5.4%, with one estimate moving higher and no negative revisions [12] Zacks Rank and Investment Implications - OSPN holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not reliably indicate the extent of potential gains, they can provide guidance on the direction of price movement [13]

Financial Data and Key Metrics Changes - The company reported record high adjusted EBITDA of $23 million, nearly 15% higher than last year's first quarter record of $20 million, with adjusted EBITDA reaching 36% of revenue [7][15] - First quarter revenue was $63.4 million, a 2% decline compared to the same period last year [16] - First quarter gross margin increased to 74% from 73% in the prior year [16][17] - GAAP operating income was $17.2 million compared to $14.1 million in the first quarter of last year [18] Business Line Data and Key Metrics Changes - Subscription revenue grew 9%, driven by demand for software authentication, app shielding, and e-signature solutions [8][15] - In the security business, subscription revenue grew 7%, while overall security revenue declined 5% [20] - Digital agreements revenue grew 9%, with subscription revenue increasing by 13% [21] Market Data and Key Metrics Changes - The revenue mix by region remained consistent, with EMEA accounting for 49%, the Americas for 33%, and Asia Pacific for 18% [23] - The company expects potential tariff-related costs of up to $1 million for the full year 2025, primarily affecting hardware revenue [25] Company Strategy and Development Direction - The company aims to continue optimizing its cost structure and driving efficient revenue growth while maintaining profitability commitments [7][12] - There is a focus on operational excellence and a balanced capital allocation strategy, including potential increases in capital return to shareholders and targeted M&A [14][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit subscription revenue growth for the full year 2025 despite macroeconomic uncertainties [24][26] - The company is monitoring the impact of tariffs and foreign currency fluctuations but remains optimistic about its core business [25][61] Other Important Information - The company generated $29 million in cash from operations and ended the quarter with $105 million in cash on hand [13][23] - The board approved a quarterly dividend of $0.12 per share, totaling approximately $4.6 million [13][14] Q&A Session Summary Question: Impact of tariffs on hardware revenue - Management indicated that Europe is the largest market for hardware, with minimal tariff impact observed to date [32][34] Question: Quantifying the impact of large deals slipping into Q2 - Management clarified that the two large contracts would not impact Q1 ARR as their start date was April 1 [40] Question: Confidence in maintaining guidance amid macro uncertainty - Management noted a strong start to the year in terms of bookings, contributing to their confidence in maintaining guidance [44][46] Question: Adjusted EBITDA margin expectations for the full year - Management explained that Q1 typically has a favorable revenue mix, and they expect a shift in the mix for the remainder of the year [50][52] Question: Revenue derived from outside the US - Approximately 90% of security revenue comes from outside the US, while the digital agreements business has a more balanced mix [53] Question: Capital allocation strategy - Management indicated a focus on targeted M&A in the security sector to expand capabilities, alongside potential buybacks or Dutch auctions [70]

Financial Data and Key Metrics Changes - The company reported record high adjusted EBITDA of $23 million, nearly 15% higher than last year's first quarter record of $20 million, with adjusted EBITDA reaching 36% of revenue [7][15][19] - First quarter revenue was $63.4 million, a 2% decline compared to the same period last year [16][20] - First quarter gross margin increased to 74% from 73% in the prior year [16][17] - GAAP operating income was $17.2 million compared to $14.1 million in the first quarter of last year [18] Business Line Data and Key Metrics Changes - Subscription revenue grew 9%, driven by software authentication, app shielding, and e-signature solutions [8][12] - Security subscription revenue increased 7%, while digital agreements subscription revenue grew 13% [12][21] - Security solutions revenue declined 5% to $47.7 million, while digital agreements revenue grew 9% to $15.7 million [16][20] Market Data and Key Metrics Changes - Revenue mix by region remained consistent, with EMEA accounting for 49%, Americas 33%, and Asia Pacific 18% [23] - The company expects potential tariff-related costs of up to $1 million for the full year 2025 due to hardware revenue exposure [25] Company Strategy and Development Direction - The company aims to continue optimizing its cost structure and driving efficient revenue growth while maintaining profitability commitments [7][14][28] - There is a focus on operational excellence and a balanced capital allocation strategy, including potential increases in capital return to shareholders and targeted M&A [14][27][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit subscription revenue growth for the full year 2025 despite macroeconomic uncertainties [24][46] - The company is monitoring the impact of tariffs and foreign currency fluctuations on its business [25][61] Other Important Information - The company generated $29 million in cash from operations and ended the quarter with $105 million in cash on hand [13][23] - The board approved a quarterly dividend of $0.12 per share, totaling approximately $4.6 million [13][14] Q&A Session Summary Question: Impact of tariffs on hardware revenue - Management indicated that Europe is the largest market for hardware, with minimal tariff impact observed to date [32][34] Question: Quantifying the impact of large deals slipping into Q2 - Management clarified that the two large contracts did not impact Q1 ARR as their start date was in April [41] Question: Confidence in maintaining guidance amid macro uncertainty - Management noted a strong start to the year in terms of bookings, contributing to their confidence in maintaining guidance [46][47] Question: Adjusted EBITDA margin expectations for the full year - Management explained that Q1 typically has a favorable revenue mix, and they expect a shift in mix for the remainder of the year [51][52] Question: Capital allocation strategy - Management discussed potential returns to shareholders through dividends, buybacks, and targeted M&A, focusing on expanding security capabilities [68][70]

Revenue Performance - For the quarter ended March 31, 2025, Security Solutions subscription revenue grew by 7% and Digital Agreements subscription revenue grew by 13% compared to the same quarter in 2024[96]. - Total revenue decreased by $1.5 million, or 2%, to $63.366 million for the three months ended March 31, 2025, compared to $64.843 million for the same period in 2024[131]. - Security Solutions revenue decreased by $2.7 million, or approximately 5%, primarily due to lower volumes of hardware devices sold[136]. - Digital Agreements revenue increased by $1.2 million, or 9%, driven by higher cloud subscription revenue from existing customer expansions[136]. - Annual Recurring Revenue (ARR) increased by 9% to $168.4 million at March 31, 2025, compared to $154.6 million at March 31, 2024[178]. - Net Retention Rate (NRR) remained stable at 107% for both March 31, 2025, and 2024, indicating consistent revenue growth from existing customers[180]. Operating Expenses and Profitability - Operating expenses included $2.8 million related to stock-based and long-term incentive plans for the three months ended March 31, 2025, compared to $1.6 million for the same period in 2024[109]. - Operating expenses decreased by $3.4 million, or 10%, during the three months ended March 31, 2025, compared to the same period in 2024[143]. - Sales and marketing expenses decreased by $1.5 million, or 11%, primarily due to lower employee compensation costs and reduced consulting and marketing expenses[145]. - Research and development expenses decreased by $0.3 million, or 4%, to $7.5 million for the three months ended March 31, 2025, primarily due to lower compensation costs from reduced headcount[147]. - General and administrative expenses decreased by $0.5 million, or 5%, to $9.5 million for the three months ended March 31, 2025, driven by lower employee compensation costs[149]. - Adjusted EBITDA for Q1 2025 was $23.0 million, up from $20.2 million in Q1 2024, representing an increase of approximately 9.0%[183]. - Net income for Q1 2025 was $14.5 million, compared to $13.5 million in Q1 2024, reflecting a year-over-year growth of about 7.7%[182]. - Operating expenses decreased, contributing to the increase in Adjusted EBITDA[183]. Restructuring and Headcount Changes - The company incurred restructuring charges of approximately $0.1 million to $0.6 million related to the 2023 Actions, primarily for employee transition and severance payments[98]. - The company reduced headcount by approximately 335 positions as part of its restructuring plan, incurring severance and related benefits costs[100]. - Average full-time sales, marketing, support, and operating employee headcount decreased by 14% to 158 for the three months ended March 31, 2025, compared to 183 in the same period of 2024[146]. - Average full-time research and development employee headcount decreased by 11% to 222 for the three months ended March 31, 2025, compared to 250 in the same period of 2024[148]. - Average full-time general and administrative employee headcount decreased by 23% to 85 for the three months ended March 31, 2025, compared to 111 in the same period of 2024[150]. - The restructuring plan is expected to continue until December 31, 2025, with the vendor contract component planned for completion by the end of 2025[99]. Foreign Exchange and Market Impact - Approximately 84% of the company's revenues and 58% of its operating expenses were generated outside of the U.S. for the three months ended March 31, 2025[118]. - For the three months ended March 31, 2025, approximately 55% of the company's revenue was denominated in U.S. Dollars, 43% in Euros, and 2% in other currencies[119]. - Changes in foreign exchange rates negatively impacted revenue by approximately $1.1 million for the three months ended March 31, 2025[131]. - Foreign exchange rates negatively impacted Adjusted EBITDA by approximately $0.3 million in Q1 2025[183]. - There were no material changes in market risk during the three months ended March 31, 2025[185]. Cash Flow and Financial Metrics - Cash provided by operating activities was $29.4 million for the three months ended March 31, 2025, an increase from $27.0 million in the same period of 2024[166]. - Interest income increased to $0.7 million for the three months ended March 31, 2025, compared to $0.1 million in the same period of 2024, due to higher average excess cash invested[154]. - Long-term incentive compensation and related payroll tax expense increased to $3.2 million in Q1 2025 from $2.0 million in Q1 2024[182]. - Depreciation and amortization of intangible assets was $2.1 million in Q1 2025, slightly up from $2.1 million in Q1 2024[182]. - Restructuring and other related charges were recorded at $0.4 million for Q1 2025, down from $1.5 million in Q1 2024[182]. - Other non-recurring items amounted to $0.04 million in Q1 2025, compared to $0.17 million in Q1 2024[182]. - Employer payroll taxes related to employee stock-based award transactions were $0.5 million in Q1 2025, compared to $0.4 million in Q1 2024[182]. Strategic Focus - The company aims to drive profitable growth with a focus on high-margin software solutions and continued investment in hardware authentication solutions[92]. - The company processes millions of digital agreements and billions of transactions in over 100 countries annually, serving more than 60% of the world's 100 largest banks[94]. - The company expects gross margins to fluctuate over time due to factors such as average selling price and manufacturing costs[105]. - Gross profit decreased slightly by $0.3 million, or 1%, with a gross margin of 74% for the three months ended March 31, 2025, compared to 73% for the same period in 2024[139]. - Security Solutions gross profit decreased by $1.4 million, or 4%, with a gross margin of 76% for the three months ended March 31, 2025[142]. - Digital Agreements gross profit increased by $1.1 million, or 11%, with a gross margin of 70% for the three months ended March 31, 2025[142].

Financial Performance - The company's market capitalization is approximately $570 million as of April 30, 2025 [5] - Total revenue for the trailing twelve months (TTM) is $242 million [5, 9] - The company has $105 million in cash and equivalents [5, 31] - Q1 2025 revenue was $63 million, a decrease of 2% year-over-year [26, 27, 35] - Q1 2025 subscription revenue grew by 9% to $44 million [28, 29] - Annual Recurring Revenue (ARR) grew by 9% to $168 million [5, 30, 31, 40] - Net Recurring Revenue (NRR) is at 107% [5, 31] - Adjusted EBITDA for Q1 2025 was $23 million, representing a 36% margin [31] - Non-GAAP EPS for Q1 2025 was $0.45 [31] - The company paid a quarterly cash dividend of $0.12 per share in Q1 2025 [31] Business Segments - Security Solutions accounted for $180 million (74%) of the total revenue [9] - Digital Agreements contributed $62 million (26%) to the total revenue [9] - Security Solutions subscription revenue grew by 5% [15] - Digital Agreements revenue grew by 16% [20]

OneSpan (OSPN) Q1 2025 Earnings Call May 01, 2025 04:30 PM ET Speaker0 thank you for standing by. Welcome to the Q1 twenty twenty five OneSpan Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Joe Maxa, Vice President of Investor Relations. Please go ahead. Speake ...

OneSpan Reports First Quarter 2025 Financial Results BOSTON, May 1, 2025 – OneSpan Inc. (NASDAQ: OSPN) today reported financial results for the first quarter ended March 31, 2025. Exhibit 99.1 Effective January 1, 2025, the beginning of our fiscal year ending December 31, 2025, we began including employer payroll taxes related to employee stock-based award transactions in the GAAP to non-GAAP reconciliation for our Non-GAAP Financial Measures discussed below, which include Adjusted EBITDA, Non-GAAP Net Inco ...

OneSpan (OSPN) closed the latest trading day at $15.46, indicating a +1.38% change from the previous session's end. The stock outpaced the S&P 500's daily gain of 0.74%. Elsewhere, the Dow saw an upswing of 0.05%, while the tech-heavy Nasdaq appreciated by 1.26%.Shares of the internet security company have depreciated by 4.15% over the course of the past month, outperforming the Computer and Technology sector's loss of 6.23% and the S&P 500's loss of 4.77%.Investors will be eagerly watching for the performa ...