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OneSpan Reports First Quarter 2024 Financial Results

OneSpan Inc. (NASDAQ: OSPN), the digital agreements security company, today reported financial results for the first quarter ended March 31, 2024. “I am very proud of the OneSpan team’s performanc...

Business Wire
  • First quarter revenue grew 13% year-over-year to $64.8 million
  • First quarter subscription revenue grew 34% year-over-year to $40.0 million
  • Annual Recurring Revenue (ARR) increased 9% year-over-year to $154.6 million1
  • Net Retention Rate (NRR) of 107%2

BOSTON: OneSpan Inc. (NASDAQ: OSPN), the digital agreements security company, today reported financial results for the first quarter ended March 31, 2024.

“I am very proud of the OneSpan team’s performance in the first quarter, which resulted in a strong topline, enhanced profitability and positive cash flow generation,” stated OneSpan interim CEO, Victor Limongelli. “Since I’ve taken the helm in January, we have continued to find opportunities for additional cost reductions, as well as operational efficiencies later in the year, totaling incremental savings of approximately $10 million on an annualized basis. These savings, combined with our strong Q1 performance, gives us confidence that we will exceed our previously communicated Adjusted EBITDA guidance. Looking ahead, we will continue to focus on driving efficient revenue growth, profitability and cash flow as we work to improve our long-term operating profile.”

First Quarter 2024 Financial Highlights

  • Total revenue was $64.8 million, an increase of 13% compared to $57.6 million for the same quarter of 2023. Digital Agreements revenue was $14.4 million, an increase of 25% year-over-year. Security Solutions revenue was $50.4 million, an increase of 9% year-over-year.
  • ARR increased 9% year-over-year to $154.6 million.
  • Gross profit was $47.4 million, or 73% gross margin, compared to $39.3 million, or 68% in the same period last year.
  • Operating income was $14.1 million, compared to operating loss of $8.1 million in the same period last year.
  • Net income was $13.5 million, or $0.35 per diluted share, compared to net loss of $8.4 million, or $0.21 per diluted share, in the same period last year. Non-GAAP net income was $16.7 million, or $0.43 per diluted share, compared to net loss of $3.7 million, or $0.09 per diluted share in the same period last year.3
  • Adjusted EBITDA was $19.8 million, compared to $(1.6) million in the same period last year.
  • Cash and cash equivalents were $63.9 million at March 31, 2024 compared to $42.5 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 $160 million to $168 million.
  • Adjusted EBITDA to be in the range of $51 million to $55 million, compared to our previous guidance range of $47 million to $52 million.3

Conference Call Details

In conjunction with this announcement, OneSpan Inc. will host a conference call today, May 2, 2024, at 4:30 p.m. EDT. During the conference call, Mr. Victor Limongelli, Interim CEO, and Mr. Jorge Martell, CFO, will discuss OneSpan’s results for the first quarter 2024.

For investors and analysts accessing the conference call by phone, please refer to the press release dated April 9, 2024, announcing the date of OneSpan’s first 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.

____________________________________________

  • 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 March 31, 2024 for additional information describing how we define ARR, including how ARR differs from GAAP revenue.
  • 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.
  • 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 largest 100 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 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 strategic 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 March 31,

     

    2024

     

    2023

    Revenue

     

     

     

    Product and license

    $

    37,798

     

    $

    33,146

     

    Services and other

     

    27,045

     

     

     

    24,461

     

    Total revenue

     

    64,843

     

     

     

    57,607

     

     

     

     

     

    Cost of goods sold

     

     

     

    Product and license

     

    9,706

     

     

     

    11,288

     

    Services and other

     

    7,742

     

     

     

    7,033

     

    Total cost of goods sold

     

    17,448

     

     

     

    18,321

     

     

     

     

     

    Gross profit

     

    47,395

     

     

     

    39,286

     

     

     

     

     

    Operating costs

     

     

     

    Sales and marketing

     

    12,927

     

     

     

    20,011

     

    Research and development

     

    8,259

     

     

     

    9,463

     

    General and administrative

     

    10,007

     

     

     

    16,653

     

    Restructuring and other related charges

     

    1,497

     

     

     

    706

     

    Amortization of intangible assets

     

    595

     

     

     

    583

     

    Total operating costs

     

    33,285

     

     

     

    47,416

     

     

     

     

     

    Operating income (loss)

     

    14,110

     

     

     

    (8,130

    )

     

     

     

     

    Interest income, net

     

    101

     

     

     

    503

     

    Other income (expense), net

     

    291

     

     

     

    (40

    )

     

     

     

     

    Income (loss) before income taxes

     

    14,502

     

     

     

    (7,667

    )

    Provision for income taxes

     

    1,034

     

     

     

    689

     

     

     

     

     

    Net income (loss)

    $

    13,468

     

     

    $

    (8,356

    )

     

     

     

     

    Net income (loss) per share

     

     

     

    Basic

    $

    0.35

     

     

    $

    (0.21

    )

    Diluted

    $

    0.35

     

     

    $

    (0.21

    )

     

     

     

     

    Weighted average common shares outstanding

     

     

     

    Basic

     

    38,060

     

     

     

    40,057

     

    Diluted

     

    38,463

     

     

     

    40,057

     

    OneSpan Inc.

    CONDENSED CONSOLIDATED BALANCE SHEETS

    (In thousands, unaudited)

     

     

    March 31,

     

    December 31,

     

    2024

     

    2023

    ASSETS

     

     

     

    Current assets

     

     

     

    Cash and cash equivalents

    $

    63,859

     

     

    $

    42,493

     

    Restricted cash

     

    1,022

     

     

     

    1,037

     

    Accounts receivable, net of allowances of $1,472 at March 31, 2024 and $1,536 at December 31, 2023

     

    32,382

     

     

     

    64,387

     

    Inventories, net

     

    14,594

     

     

     

    15,553

     

    Prepaid expenses

     

    6,835

     

     

     

    6,575

     

    Contract assets

     

    4,867

     

     

     

    5,139

     

    Other current assets

     

    10,608

     

     

     

    11,159

     

    Total current assets

     

    134,167

     

     

     

    146,343

     

    Property and equipment, net

     

    20,346

     

     

     

    18,722

     

    Operating lease right-of-use assets

     

    6,215

     

     

     

    6,171

     

    Goodwill

     

    93,069

     

     

     

    93,684

     

    Intangible assets, net of accumulated amortization

     

    10,146

     

     

     

    10,832

     

    Deferred income taxes

     

    1,682

     

     

     

    1,721

     

    Other assets

     

    11,517

     

     

     

    11,718

     

    Total assets

    $

    277,142

     

     

    $

    289,191

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