OneSpan Reports Results for Fourth Quarter and Full Year 2020; Exceeds Full Year 2020 Revenue Guidance
02/23/2021 - 04:01 PM
OneSpan Inc. (NASDAQ: OSPN), the global leader in securing remote banking transactions, today reported financial results for the fourth quarter and full year ended December 31, 2020.
"Improved demand for mobile security and continued strong demand for e-signature solutions resulted in record bookings of recurring revenue contracts and stronger than forecast revenue in the fourth quarter,” stated OneSpan CEO, Scott Clements. “For the full year, ARR grew 29% , near the high-end of our multi-year goal of 25% -30% average growth; 66% of software revenues were recurring, up from 49% in the prior year; and software and services contributed a record 62% of total revenue. In 2021, we expect continued strong growth in ARR and recurring revenue along with a modest decline in hardware revenue. As we near completion of our transition to a recurring revenue led sales model in 2021, we are continuing to invest in our solution portfolio and in expanding our market presence to deliver long-term growth with increasing profitability.”
Fourth Quarter and Full Year 2020 Financial Highlights5
Revenue for the fourth quarter of 2020 was $52.9 million , a decrease of 25% from $70.5 million for the fourth quarter of 2019. Revenue for the full year 2020 was $215.7 million , a decrease of 15% from $253.5 million for the full year 2019. Year-over-year revenue comparisons were affected by the one-time positive impact on full year 2019 revenue of many customers accelerating purchases to comply with the Payment Services Directive 2 (PSD2) regulation and our accelerated transition from perpetual licenses to recurring revenue in 2020.
Gross profit was $39.3 million for the fourth quarter of 2020 and $152.3 million for the full year 2020. Gross profit was $49.2 million for the fourth quarter of 2019 and $171.5 million for the full year 2019. Gross margin for the fourth quarter of 2020 was 74% and for the full year 2020 was 71% . Gross margin for the fourth quarter of 2019 was 70% and for the full year 2019 was 68% .
GAAP operating loss for the fourth quarter of 2020 was $2.0 million , and for the full year 2020 was $5.3 million . GAAP operating income for the fourth quarter of 2019 was $5.4 million , and for the full year 2019 was $14.2 million .
GAAP net loss for the fourth quarter of 2020 was $1.8 million , or $0.04 per share, and was $5.5 million , or $0.14 per share, for the full year 2020. GAAP net income for the fourth quarter of 2019 was $4.6 million , or $0.11 per diluted share. GAAP net income for the full year 2019 was $7.9 million , or $0.20 per diluted share.
Adjusted EBITDA for the fourth quarter of 2020 was $3.2 million , or 6% of revenue, and for the full year 2020 was $14.2 million , or 7% of revenue. Adjusted EBITDA for the fourth quarter of 2019 was $12.8 million , or 18% of revenue, and for the full year 2019 was $31.8 million or 13% of revenue.
Non-GAAP net income for the fourth quarter of 2020 was $1.4 million or $0.03 per diluted share, and for the full year 2020 was $6.6 million , or $0.16 per diluted share. Non-GAAP net income for the fourth quarter of 2019 was $9.1 million or $0.23 per diluted share, and for the full year 2019 was $20.7 million or $0.52 per diluted share.
Cash, cash equivalents and short-term investments at December 31, 2020 totaled $115.3 million compared to $112.7 million and $109.8 million at September 30, 2020 and December 31, 2019, respectively.
During the fourth quarter of 2020, OneSpan repurchased 250,000 shares of its common stock totaling $5.0 million at an average price of $20.10 per share.
______________________
Recurring revenue is comprised of subscription, term-based software licenses, and maintenance revenue.
ARR is calculated as the annualized value of our customer recurring contracts with a term of at least one-year, as of the measuring date. These include subscription, term-based license, and maintenance contracts and exclude one-time fees. To the extent that we are negotiating a renewal with a customer 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, or until such customer notifies us that it is not renewing its recurring contract.
Dollar-based net expansion rate (“DBNE”) is defined as the 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 measures is included below under the heading “Non-GAAP Financial Measures.” A reconciliation of GAAP to non-GAAP financial measures has also been provided in tables below.
2019 results have been revised to correct for certain immaterial errors. For additional information, see the “Revision of Prior Period Financial Statements” section of this press release.
Full Year 2021 Outlook
For the Full Year 2021, OneSpan currently expects:
ARR growth of 22% to 26%
Recurring revenue in the range of $120 million to $125 million
Total revenue in the range of $215 million to $225 million
Adjusted EBITDA approximately break-even
Conference Call Details
In conjunction with this announcement, OneSpan Inc. will host a conference call today, February 23, 2021, at 4:30 p.m. EST. During the conference call, Mr. Scott Clements, CEO, and Mr. Mark Hoyt, CFO, will discuss OneSpan’s results for the fourth quarter and full year 2020.
To access the conference call, dial 866-270-1533 for the U.S. or Canada and 1-412-317-0797 for international callers. The conference ID number is 10150842.
The conference call is also available in listen-only mode at investors.onespan.com . The recorded version of the conference call will be available on the OneSpan website as soon as possible following the call and will be available for replay for approximately one year.
About OneSpan
OneSpan helps protect the world from digital fraud by establishing trust in people’s identities, the devices they use and the transactions they carry out. We do this by making digital banking accessible, secure, easy and valuable. OneSpan’s Trusted Identity platform and security solutions significantly reduce digital transaction fraud and enable regulatory compliance for more than 10,000 customers, including over half of the top 100 global banks. Whether through automating agreements, detecting fraud or securing financial transactions, OneSpan helps reduce costs and accelerate customer acquisition while improving the user experience. Learn more at OneSpan.com .
Forward Looking Statements
This press release contains forward-looking statements within the meaning of applicable U.S. securities laws, including statements regarding the potential benefits, performance and functionality of our products and solutions, including future offerings; our expectations, beliefs, plans, operations and strategies relating to our business and the future of our business; our strategic plans regarding our portfolio, including acquisitions and dispositions; and our expectations regarding our 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: market acceptance of our products and solutions and competitors’ offerings; the potential effects of technological changes; the impact of the COVID-19 pandemic and actions taken to contain it; our ability to effectively manage acquisitions, divestitures, alliances, joint ventures and other portfolio actions; the execution of our transformative strategy on a global scale; the increasing frequency and sophistication of hacking attacks; claims that we have infringed the intellectual property rights of others; changes in customer requirements; price competitive bidding; changing laws, government regulations or policies; pressures on price levels; investments in new products or businesses that may not achieve expected returns; 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 those factors described in the “Risk Factors” section of our Form 10-K. 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
OneSpan Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months ended
Twelve Months Ended
December 31,
December 31,
2020
2019 (1)
2020
2019 (1)
Revenue
Product and license
$
29,093
$
50,638
$
132,986
$
183,313
Services and other
23,835
19,893
82,705
70,171
Total revenue
52,928
70,531
215,691
253,484
Cost of goods sold
Product and license
8,442
16,427
41,820
63,393
Services and other
5,224
4,947
21,619
18,569
Total cost of goods sold
13,666
21,374
63,439
81,962
Gross profit
39,262
49,157
152,252
171,522
Operating costs
Sales and marketing
16,727
16,924
60,856
61,503
Research and development
10,016
10,035
41,194
42,463
General and administrative
12,487
14,357
46,338
43,897
Amortization of intangible assets
2,073
2,419
9,122
9,470
Total operating costs
41,303
43,735
157,510
157,333
Operating income (loss)
(2,041
)
5,422
(5,258
)
14,189
Interest income, net
15
315
404
747
Other income (expense), net
547
1,184
1,434
(527
)
Income (loss) before income taxes
(1,479
)
6,921
(3,420
)
14,409
Provision for income taxes
277
2,336
2,035
6,545
Net income (loss)
$
(1,756
)
$
4,585
$
(5,455
)
$
7,864
Net income (loss) per share
Basic
$
(0.04
)
$
0.11
$
(0.14
)
$
0.20
Diluted
$
(0.04
)
$
0.11
$
(0.14
)
$
0.20
Weighted average common shares outstanding
Basic
39,990
40,076
40,035
40,050
Diluted
39,990
40,176
40,035
40,136
(1)
2019 results have been revised to correct for certain immaterial misstatements. For additional information, see the “Revision of Prior Period Financial Statements” section of this press release.
OneSpan Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, unaudited)
2020
2019 (1)
ASSETS
Current assets
Cash and equivalents
$
88,394
$
84,282
Short term investments
26,859
25,511
Accounts receivable, net of allowances of $4,135 in 2020 and $2,524 in 2019
57,537
62,405
Inventories, net
13,093
19,819
Prepaid expenses
7,837
6,198
Contract assets
7,202
5,240
Other current assets
6,256
6,346
Total current assets
207,178
209,801
Property and equipment, net
11,835
11,454
Operating lease right-of-use assets
11,356
10,580
Goodwill
97,552
94,612
Intangible assets, net of accumulated amortization
27,196
36,209
Deferred income taxes
7,030
7,863
Contract assets - non-current
1,877
3,355
Other assets
11,179
8,668
Total assets
$
375,203
$
382,542
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable
$
5,684
$
10,835
Deferred revenue
43,417
30,338
Accrued wages and payroll taxes
13,649
15,415
Short-term income taxes payable
2,618
7,410
Other accrued expenses
8,334
8,786
Deferred compensation
1,602
1,028
Total current liabilities
75,304
73,812
Long-term deferred revenue
11,730
15,259
Long-term lease liabilities
12,399
11,299
Other long-term liabilities
10,423
8,297
Long-term income taxes payable
6,095
6,958
Deferred income taxes
1,912
4,623
Total liabilities
117,863
120,248
Stockholders' equity
Preferred stock: 500 shares authorized, none issued and outstanding at December 31, 2020 and 2019
—
—
Common stock: $.001 par value per share, 75,000 shares authorized; 40,353 and 40,207 shares issued; 40,353 and 40,207 shares outstanding at December 31, 2020 and 2019, respectively
40
40
Additional paid-in capital
98,819
96,109
Treasury stock, at cost, 250 and 0 shares outstanding at December 31, 2020 and 2019, respectively
(5,030
)
—
Retained earnings
173,731
179,440
Accumulated other comprehensive loss
(10,220
)
(13,295
)
Total stockholders' equity
257,340
262,294
Total liabilities and stockholders' equity
$
375,203
$
382,542
(1)
2019 results have been revised to correct for certain immaterial misstatements. For additional information, see the “Revision of Prior Period Financial Statements” section of this press release.
OneSpan Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, unaudited)
Years ended December 31,
2020
2019 (1)
Cash flows from operating activities:
Net income (loss) from operations
$
(5,455
)
$
7,864
Adjustments to reconcile net income (loss) from operations to net cash provided by (used in) operations:
Depreciation, amortization, and impairment of intangible assets
12,003
11,545
Loss on disposal of assets
118
69
Deferred tax benefit
(1,487
)
(1,624
)
Stock-based compensation
4,740
3,368
Changes in operating assets and liabilities:
Accounts receivable, net
6,792
(3,414
)
Inventories, net
6,725
(5,391
)
Contract assets
(191
)
1,740
Accounts payable
(5,237
)
3,628
Income taxes payable
(5,642
)
158
Accrued expenses
(3,124
)
(1,286
)
Deferred compensation
574
(334
)
Deferred revenue
8,342
1,465
Other assets and liabilities
(3,236
)
456
Net cash provided by operating activities
14,922
18,244
Cash flows from investing activities:
Purchase of short term investments
(34,060
)
(33,839
)
Maturities of short term investments
32,630
31,399
Additions to property and equipment
(3,101
)
(7,453
)
Other
(133
)
—
Net cash provided by (used in) investing activities
(4,664
)
(9,893
)
Cash flows from financing activities:
Repurchase of common stock
(5,030
)
—
Tax payments for restricted stock issuances
(2,030
)
(569
)
Net cash used in financing activities
OSPN Rankings
#3849 Ranked by Stock Gains
OSPN Stock Data
Industry
Computer Systems Design Services
Sector
Professional, Scientific, and Technical Services
Tags
Technology Services, Information Technology Services, Professional, Scientific, and Technical Services, Computer Systems Design Services
Country
US
City
Chicago
About OSPN
onespan enables financial institutions and other organizations to succeed by making bold advances in their digital transformation. we do this by establishing trust in people’s identities, the devices they use, and the transactions that shape their lives. we believe that this is the foundation of enhanced business enablement and growth. more than 10,000 customers, including over half of the top 100 global banks, rely on onespan solutions to protect their most important relationships and business processes. from digital onboarding to fraud mitigation to workflow management, onespan’s unified, open platform reduces costs, accelerates customer acquisition, and increases customer satisfaction.
