OneSpan Inc (OSPN) Reports Modest Revenue Growth and Improved Profitability in Q3 2023
OneSpan Inc (NASDAQ:OSPN) sees a 3% year-over-year revenue increase to $58.8 million in Q3 2023.
Subscription revenue climbs 18% year-over-year, contributing to a 10% growth in Annual Recurring Revenue (ARR).
Net loss narrows to $4.1 million, with non-GAAP net income rising to $3.6 million.
OneSpan plans a "Dutch auction" tender offer to repurchase approximately $20 million of common stock.
On November 8, 2023, OneSpan Inc (NASDAQ:OSPN), a leader in digital agreements security, disclosed its financial results for the third quarter ending September 30, 2023. The company reported a 3% increase in revenue year-over-year, reaching $58.8 million, with subscription revenue showing a significant 18% increase to $26.2 million. This growth in subscription services contributed to a 10% rise in ARR, which now stands at $149.8 million.
Financial Performance Overview
OneSpan's gross profit improved to $40.7 million, reflecting a gross margin of 69%, up from 67% in the same period last year. The company also reported a reduced operating loss of $4.8 million compared to $5.6 million in the previous year. The net loss for the quarter was $4.1 million, or $(0.10) per diluted share, an improvement from a net loss of $7.2 million, or $(0.18) per diluted share, year-over-year. Notably, non-GAAP net income was $3.6 million, or $0.09 per diluted share, compared to $1.3 million, or $0.03 per diluted share, in the same period last year. Adjusted EBITDA also saw an increase to $6.3 million from $4.5 million.
Balance Sheet and Cash Flow Highlights
As of September 30, 2023, OneSpan's cash, cash equivalents, and short-term investments totaled $68.5 million, a decrease from $98.5 million at the end of 2022. The company's balance sheet remains solid, with total assets amounting to $282.7 million. The condensed consolidated statements of cash flows indicate a net cash used in operating activities of $13.8 million for the nine months ended September 30, 2023.
Strategic Initiatives and Share Repurchase Plan
OneSpan CEO Matt Moynahan expressed satisfaction with the company's operational rigor and the execution of business model changes, including the creation of two business units and increased cost reduction initiatives. Moynahan stated,
We plan to continue driving operational excellence while executing on additional cost reduction initiatives in Q4 and subsequent quarters."
Furthermore, OneSpan plans to announce a "Dutch auction" tender offer to repurchase approximately $20 million of its common stock, signaling confidence in the company's future and a commitment to returning value to shareholders.
Looking Forward
For the full year 2023, OneSpan anticipates revenue to be in the range of $228 million to $232 million, with ARR expected to be between $148 million and $152 million. Adjusted EBITDA is projected to be in the range of $2 million to $4 million. For 2024, the company targets revenue growth in the low to mid-single digits and an adjusted EBITDA margin of 20% to 23%.
OneSpan's earnings report reflects a company in the midst of a strategic transformation, with a focus on subscription services and operational efficiency. The planned share repurchase program underscores management's confidence in the company's direction and dedication to shareholder value. Investors and analysts interested in further details can access the conference call hosted by OneSpan on November 8, 2023, or visit the investor relations section of the company's website.
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Explore the complete 8-K earnings release (here) from OneSpan Inc for further details.
This article first appeared on GuruFocus.
