OneSpan’s Earnings Call: Mixed Results and Optimistic Guidance

Onespan ((OSPN)) has held its Q1 earnings call. Read on for the main highlights of the call.

The recent earnings call for OneSpan painted a mixed picture, reflecting both significant achievements and notable challenges. The company reported impressive gains in cash generation, adjusted EBITDA, and growth in digital agreements. However, these positive outcomes were tempered by declines in total and security revenue, alongside challenges from product transitions.

Record High Adjusted EBITDA

OneSpan achieved a record high adjusted EBITDA of $23 million, marking a nearly 15% increase compared to the previous year’s first quarter. This achievement underscores the company’s effective cost management and operational efficiency.

Strong Cash Generation

The company demonstrated robust cash generation capabilities, producing $29 million in cash from operations. By the end of the quarter, OneSpan had $105 million in cash on hand, highlighting its strong financial position.

Digital Agreements Growth

The digital agreements segment showed promising growth, with Q1 subscription revenue increasing by 13%. This growth was driven by expansion contracts and the acquisition of new clients, indicating a healthy demand for OneSpan’s digital solutions.

High Gross Margin

OneSpan’s gross margin improved to 74% in the first quarter, up from 73% in the previous year. This increase was attributed to a favorable product mix and enhanced operational efficiencies, reflecting the company’s strategic focus on profitability.

Dividend Program Initiation

In a move to return value to shareholders, OneSpan initiated its first quarterly dividend, paying $0.12 per share. This dividend totaled approximately $4.6 million, signaling confidence in the company’s financial health and future prospects.

Overall Revenue Decline

Despite the positive developments, OneSpan faced a 2% decline in total revenue compared to last year’s Q1. This decline was primarily due to reduced hardware revenues and a transition from perpetual maintenance contracts to term-based subscriptions.

Security Revenue Decline

The security solutions segment saw a 5% year-over-year decline in revenue, aligning with the company’s expectations. This decline highlights ongoing challenges within this segment.

Headwinds from Sunsetted Products

OneSpan experienced headwinds from sunsetted products, which impacted revenue growth by $1.4 million in the quarter. The company anticipates similar challenges in the upcoming quarter.

Forward-Looking Guidance

Looking ahead, OneSpan confirmed its full-year 2025 guidance, projecting revenue between $245 million and $251 million, ARR between $180 million and $186 million, and adjusted EBITDA between $72 million and $76 million. The company remains optimistic about its growth prospects, driven by increased demand for its software solutions and strategic shifts from hardware to software.

In conclusion, OneSpan’s earnings call reflected a balanced narrative of achievements and challenges. While the company celebrated record high adjusted EBITDA and strong cash generation, it also faced revenue declines and product transition headwinds. Nevertheless, OneSpan’s forward-looking guidance suggests a positive outlook, with expectations of continued growth in its digital and security solutions.