Latest news with #SecuritySolutions
Yahoo
11-03-2025
- Business
- Yahoo
Telos Corp (TLSRP.PFD) Q4 2024 Earnings Call Highlights: Strong Revenue Growth and Expanding ...
Total Revenue: $26.4 million, up 11% sequentially. Security Solutions Revenue: $21.9 million, 83% of total revenue, up 20% sequentially. Secure Networks Revenue: $4.5 million, 17% of total revenue. GAAP Gross Margin: 40.3%, expanded nearly 600 basis points year over year. Cash Gross Margin: 47%, expanded nearly 900 basis points year over year. Adjusted Operating Expenses: Declined by $2.4 million sequentially. Adjusted EBITDA: Improved from a $4.2 million loss to a $200,000 loss sequentially. Cash Flow from Operations: $10.5 million outflow. Free Cash Flow: $14.8 million outflow. TSA PreCheck Enrollment Centers: Increased from 26 to 218 locations in 2024. First Quarter 2025 Revenue Guidance: $28.2 million to $30.2 million, 7% to 15% sequential growth. First Quarter 2025 Adjusted EBITDA Guidance: Loss of $1.8 million to $800,000. First Quarter 2025 Cash Flow: Expected to be positive. Warning! GuruFocus has detected 3 Warning Signs with Release Date: March 10, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Telos Corp ( delivered fourth quarter revenue near the top end of the guidance range, with total company revenue growing 11% sequentially. Security Solutions revenue grew 20% sequentially, contributing 83% of total company revenue, driven by significant growth in TSA PreCheck enrollments and the Defense Manpower Data Center program. GAAP gross margin expanded nearly 600 basis points year over year to 40.3%, and cash gross margin expanded nearly 900 basis points year over year to 47%, marking the highest quarter since the IPO in 2020. The company successfully expanded its TSA PreCheck program, increasing enrollment centers from 26 to 218 locations in 2024, with plans to reach 500 locations by the end of the year. Telos Corp ( expects positive cash flow from operations and positive free cash flow in the first quarter of 2025, driven by high growth programs and one-time CapEx investments. Secure Networks revenue declined sequentially as expected due to the ramp down of existing programs, contributing only 17% of total company revenue. Cash flow from operations was a $10.5 million outflow, and free cash flow was a $14.8 million outflow, reflecting a short-term buildup of working capital. The company is experiencing delays in the timing of awards from the government on single awards due to a change in administration and uncertainty around near-term priorities. Revenue recognition for the DMDC and DHS programs is impacted by the mix of third-party solutions, leading to a decrease in estimated revenue for these programs in 2025. Despite the positive outlook, the company forecasts an adjusted EBITDA loss of $1.8 million to $800,000 for the first quarter of 2025. Q: With the change in administration, how is Telos adapting to the impact on single award programs? A: John Wood, CEO, explained that while the new administration is generally positive for Telos, there are delays in single awards as the administration reviews opportunities. Telos is focusing on task orders from existing contract vehicles to mitigate this impact. Q: Can you elaborate on the revenue recognition for the DMDC and DHS programs in 2025? A: Mark Bendza, CFO, clarified that the revenue recognition is influenced by the mix of third-party content, which is more software-heavy than hardware. Software revenue may be recognized over a period, affecting first-year revenue recognition. However, cash flow benefits are expected at the time orders are filled, supporting positive cash flow projections for 2025. Q: How should we think about the current TSA PreCheck revenue given the rollout progress? A: Mark Bendza confirmed that the framework for TSA PreCheck revenue is based on the number of enrollment locations. With 218 locations, Telos is progressing towards capturing a significant share of the $200 million market, though full potential will be realized as more locations open. Q: What are the expectations for cash flow in Q1 and the full year 2025? A: Mark Bendza stated that Q1 will benefit from working capital liquidation. For the full year, even at a break-even adjusted EBITDA, Telos expects positive free cash flow due to favorable changes in working capital, with revenue breakeven for free cash flow being lower than for adjusted EBITDA. Q: Can you provide more detail on the cash flow dynamics for 2025? A: Mark Bendza explained that at a break-even adjusted EBITDA, Telos anticipates negative free cash flow of about $8 million before working capital changes. However, working capital improvements should offset this, leading to positive free cash flow for the year. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
27-02-2025
- Business
- Yahoo
OneSpan Reports Fourth Quarter and Full Year 2024 Financial Results
Fourth quarter operating income was $11.8 million compared to $1.8 million in the fourth quarter of 2023; full year operating income was $44.8 million compared to an operating loss of $28.9 million for the full year 2023 Fourth quarter revenue decreased 3% year-over-year to $61.2 million; full year revenue increased 3% year-over-year to $243.2 million Fourth quarter subscription revenue increased 32% year-over-year to $36.1 million; full year subscription revenue increased 31% year-over-year to $139.4 million Annual Recurring Revenue (ARR) increased 8% year-over-year to $167.7 million1 Net Retention Rate (NRR) of 106%2 BOSTON, February 27, 2025--(BUSINESS WIRE)--OneSpan Inc. (NASDAQ: OSPN) today reported financial results for the fourth quarter and full year ended December 31, 2024. "We ended the year with another strong quarter of subscription revenue growth, profitability and cash generation," stated OneSpan CEO, Victor Limongelli. "With the improvements we have made to our operating profile over the last year, combined with planned disciplined investments and an ongoing focus on operational excellence, I believe we are in a strong position to drive efficient revenue growth and profitability over the long-term." Fourth Quarter 2024 Financial Highlights Total revenue was $61.2 million, a decrease of 3% compared to $62.9 million for the same quarter of 2023. Security Solutions revenue was $45.5 million, a decrease of 6% year-over-year. Digital Agreements revenue was $15.7 million, an increase of 8% year-over-year. ARR increased 8% year-over-year to $167.7 million. Gross profit was $45.3 million, or 74% gross margin, compared to $43.5 million, or 69% in the same period last year. Operating income was $11.8 million, compared to operating income of $1.8 million in the same period last year. Net income was $28.8 million, or $0.72 per diluted share, compared to net income of $0.4 million, or $0.01 per diluted share, in the same period last year. Non-GAAP net income was $9.7 million, or $0.24 per diluted share, compared to net income of $7.6 million, or $0.19 per diluted share in the same period last year.3 Adjusted EBITDA was $19.8 million, compared to $11.2 million in the same period last year.3 Cash and cash equivalents were $83.2 million at December 31, 2024 compared to $43.0 million at December 31, 2023. Full Year 2024 Financial Highlights Total revenue was $243.2 million, an increase of 3% compared to $235.1 million for the same period of 2023. Security Solutions revenue was $182.2 million, a decrease of 1% year-over-year. Digital Agreements revenue was $61.0 million, an increase of 20% year-over-year. Gross profit was $174.6 million, or 72% gross margin, compared to $157.7 million, or 67% in the same period last year. Operating income was $44.8 million, compared to an operating loss of $28.9 million in the same period last year. Net income was $57.1 million, or $1.46 per diluted share compared to a net loss of $29.8 million, or $0.74 per diluted share in the same period last year. Non-GAAP net income was $51.5 million, or $1.32 per diluted share, compared to net income of $0.3 million, or $0.01 per diluted share in the same period last year.3 Adjusted EBITDA was $72.5 million compared to $12.0 million in the same period last year.3 Financial Outlook For the Full Year 2025, OneSpan expects: Revenue to be in the range of $245 million to $251 million. ARR to be in the range of $180 million to $186 million. Adjusted EBITDA to be in the range of $72 million to $76 million. Quarterly Cash Dividend On December 16, 2024, OneSpan announced that its Board of Directors had approved a regular quarterly cash dividend as part of the initiation of a recurring quarterly dividend program. The initial quarterly cash dividend of $0.12 per share was paid on February 14, 2025 to shareholders of record at the close of business on January 31, 2025. Conference Call Details In conjunction with this announcement, OneSpan Inc. will host a conference call today, February 27, 2025, at 4:30 p.m. ET. During the conference call, Mr. Victor Limongelli, CEO, and Mr. Jorge Martell, CFO, will discuss OneSpan's results for the fourth quarter and full year 2024. For investors and analysts accessing the conference call by phone, please refer to the press release dated January 15, 2025, announcing the date of OneSpan's fourth quarter and full year 2024 earnings release. It can be found on the OneSpan investor relations website at The conference call is also available in listen-only mode at 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 Annual Report on Form 10-K for the year ended December 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 secure authentication, identity, electronic 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 100 largest banks, OneSpan processes millions of digital agreements and billions of multi-factor authentication transactions in 100+ countries annually. For more information, go to You can also follow @OneSpan on X (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 2025 financial guidance, our plans to make disciplined investments, continue our focus on operational excellence, and drive efficient revenue growth and profitability over the long-term 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 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; 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, or employee turnover; 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, tariffs or trade disputes, and political instability; claims that we have infringed the intellectual property rights of others; 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 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. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended December 31, Years Ended December 31, 2024 2023 2024 2023 Revenue Product and license $ 33,203 $ 35,387 $ 132,078 $ 130,848 Services and other 27,968 27,541 111,101 104,258 Total revenue 61,171 62,928 243,179 235,106 Cost of goods sold Product and license 8,385 12,346 36,732 48,676 Services and other 7,494 7,116 31,871 28,715 Total cost of goods sold 15,879 19,462 68,603 77,391 Gross profit 45,292 43,466 174,576 157,715 Operating costs Sales and marketing 10,972 13,847 44,546 70,235 Research and development 8,290 8,734 32,423 38,420 General and administrative 13,100 14,229 46,007 58,267 Restructuring and other related charges 539 4,235 4,444 17,311 Amortization of intangible assets 585 604 2,351 2,353 Total operating costs 33,486 41,649 129,771 186,586 Operating income (loss) 11,806 1,817 44,805 (28,871 ) Interest income, net 561 415 1,807 2,090 Other income (expense), net 1,168 (874 ) (125 ) (532 ) Income (loss) before income taxes 13,535 1,358 46,487 (27,313 ) (Benefit) provision for income taxes (15,253 ) 917 (10,595 ) 2,486 Net income (loss) $ 28,788 $ 441 $ 57,082 $ (29,799 ) Net income (loss) per share Basic $ 0.74 $ 0.01 $ 1.49 $ (0.74 ) Diluted $ 0.72 $ 0.01 $ 1.46 $ (0.74 ) Weighted average common shares outstanding Basic 38,836 39,716 38,387 40,193 Diluted 39,887 40,095 39,085 40,193 OneSpan Inc. CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) December 31, 2024 2023 ASSETS Current assets Cash and cash equivalents $ 83,160 $ 43,001 Restricted cash 171 529 Accounts receivable, net of allowances of $1,600 in 2024 and $1,536 in 2023 56,229 64,387 Inventories, net 10,792 15,553 Prepaid expenses 6,547 6,575 Contract assets 8,687 5,139 Other current assets 9,479 11,159 Total current assets 175,065 146,343 Property and equipment, net 20,966 18,722 Operating lease right-of-use assets 7,725 6,171 Goodwill 92,365 93,684 Intangible assets, net of accumulated amortization 7,481 10,832 Deferred income taxes 20,516 1,721 Other assets 14,616 11,718 Total assets $ 338,734 $ 289,191 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 13,310 $ 17,452 Deferred revenue 67,465 69,331 Accrued wages and payroll taxes 13,793 14,335 Short-term income taxes payable 4,403 2,646 Dividend payable 4,765 — Other accrued expenses 6,339 10,684 Deferred compensation 200 382 Total current liabilities 110,275 114,830 Long-term deferred revenue 3,390 4,152 Long-term lease liabilities 6,932 6,824 Deferred income taxes 3,680 1,067 Other long-term liabilities 1,927 3,177 Total liabilities 126,204 130,050 Commitments and contingencies Stockholders' equity Preferred stock: 500 shares authorized, none issued and outstanding at December 31, 2024 and 2023 — — Common stock: $0.001 par value per share, 75,000 shares authorized; 41,782 and 41,243 shares issued; 38,058 and 37,519 shares outstanding at December 31, 2024 and 2023 38 38 Additional paid-in capital 122,534 118,620 Treasury stock, at cost, 3,724 shares outstanding at December 31, 2024 and 2023 (47,380 ) (47,377 ) Retained earnings 151,256 98,939 Accumulated other comprehensive loss (13,918 ) (11,079 ) Total stockholders' equity 212,530 159,141 Total liabilities and stockholders' equity $ 338,734 $ 289,191 OneSpan Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Years Ended December 31, 2024 2023 Cash flows from operating activities: Net income (loss) $ 57,082 $ (29,799 ) Adjustments to reconcile net income (loss) from operations to net cash used in operations: Depreciation and amortization of intangible assets 8,364 6,479 Write-off of intangible assets 804 — Write-off of property and equipment, net 1,081 3,183 Impairment of inventories, net — 143 Deferred tax (benefit) expense (16,156 ) 118 Share-based compensation 8,955 14,252 Provision for credit losses, net 64 (65 ) Changes in operating assets and liabilities: Accounts receivable 6,855 1,571 Inventories, net 4,079 (3,275 ) Contract assets (5,669 ) (574 ) Accounts payable (3,854 ) (253 ) Income taxes payable 1,782 (2,367 ) Accrued expenses (4,149 ) (1,531 ) Deferred compensation (182 ) 9 Deferred revenue (1,647 ) 2,015 Other assets and liabilities (1,742 ) (641 ) Net cash provided by (used in) operating activities 55,667 (10,735 ) Cash flows from investing activities: Maturities of short-term investments — 2,330 Additions to property and equipment (9,245 ) (12,484 ) Additions to intangible assets (60 ) (59 ) Cash paid for acquisition of business — (1,800 ) Net cash (used in) provided by investing activities (9,305 ) (12,013 ) Cash flows from financing activities: Contingent payment related to acquisition (200 ) — Tax payments for restricted stock issuances (5,041 ) (2,939 ) Repurchase of common stock, net of excise tax (3 ) (29,155 ) Net cash used in financing activities (5,244 ) (32,094 ) Effect of exchange rate changes on cash (1,317 ) 997 Net increase (decrease) in cash 39,801 (53,845 ) Cash, cash equivalents, and restricted cash, beginning of period 43,530 97,375 Cash, cash equivalents, and restricted cash, end of period $ 83,331 $ 43,530 Operating Segments We report our financial results under the following two lines of business, which are our reportable operating segments: Security Solutions and Digital Agreements. Security Solutions. Security Solutions consists of our broad portfolio of software products, software development kits (SDKs), and Digipass authenticator devices that are used to build applications designed to defend against attacks on digital transactions across online environments, devices, and applications. The software products and SDKs included in the Security Solutions segment are on-premises and, to a lesser extent, cloud software products, and include multi-factor authentication and transaction signing solutions, such as mobile application security and mobile software tokens. Digital Agreements. Digital Agreements consists of solutions that enable our clients to secure and automate business processes associated with their digital agreement and customer transaction lifecycles that require consent, non-repudiation and compliance. These solutions, which are largely cloud-based, include OneSpan Sign e-signature, OneSpan Notary, and Identity Verification. Segment operating income (loss) consists of the revenues generated by a segment, less the direct costs of revenue, sales and marketing expenses, research and development expenses, general and administrative expenses, restructuring and other related charges, and amortization of intangible assets expense that are incurred directly by a segment. Sales and marketing and research and development expenses were deemed significant segment expenses. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. Segment and consolidated operating results (unaudited): Three Months Ended December 31, 2024 (In thousands) SecuritySolutions DigitalAgreements Corporateand Other Total Revenue $ 45,459 $ 15,712 $ — $ 61,171 Cost of goods sold 11,211 4,666 2 15,879 Gross profit 34,248 11,046 (2 ) 45,292 Gross margin 75 % 70 % * 74 % Sales and marketing 6,304 3,718 950 10,972 Research and development 4,191 3,999 100 8,290 Other segment items (3)(5) 460 715 13,049 14,224 Operating (loss) income (4)(6) 23,293 2,614 (14,101 ) 11,806 Interest income, net 561 Other income (expense), net 1,168 Income (loss) before income taxes $ 13,535 Three Months Ended December 31, 2023 (In thousands) SecuritySolutions DigitalAgreements Corporateand Other Total Revenue $ 48,429 $ 14,499 $ 62,928 Cost of goods sold 15,865 3,597 — 19,462 Gross profit (2) 32,564 10,902 — 43,466 Gross margin 67 % 75 % * 69 % Sales and marketing 7,149 5,647 1,051 13,847 Research and development 3,992 4,542 200 8,734 Other segment items (3)(5) 1,060 1,418 16,590 19,068 Operating (loss) income (4)(6) 20,363 (705 ) (17,841 ) 1,817 Interest income, net 415 Other income (expense), net (874 ) Income (loss) before income taxes $ 1,358 Year Ended December 31, 2024 (In thousands) SecuritySolutions DigitalAgreements Corporateand Other Total Revenue $ 182,187 $ 60,992 $ — $ 243,179 Cost of goods sold 49,319 19,281 3 68,603 Gross profit (1) 132,868 41,711 (3 ) 174,576 Gross margin 73 % 68 % * 72 % Sales and marketing 24,684 15,658 4,204 44,546 Research and development 16,132 16,117 174 32,423 Other segment items (3)(5) 1,990 4,321 46,491 52,802 Operating income (loss) (4)(6) 90,062 5,615 (50,872 ) 44,805 Interest income, net 1,807 Other income (expense), net (125 ) Income (loss) before income taxes $ 46,487 Year Ended December 31, 2023 (In thousands) SecuritySolutions DigitalAgreements Corporateand Other Total Revenue $ 184,181 $ 50,925 $ — $ 235,106 Cost of goods sold 64,207 13,183 1 77,391 Gross profit (2) 119,974 37,742 (1 ) 157,715 Gross margin 65 % 74 % * 67 % Sales and marketing 35,356 31,566 3,313 70,235 Research and development 18,894 18,687 839 38,420 Other segment items (3)(5) 5,534 6,014 66,383 77,931 Operating (loss) income (4)(6) 60,190 (18,525 ) (70,536 ) (28,871 ) Interest income, net 2,090 Other income (expense), net (532 ) Income (loss) before income taxes $ (27,313 ) (1) Digital Agreements gross profit includes an intangible asset write-off of $0.8 million and an internal capitalized software write-off of $0.7 million for the year ended December 31, 2024. (2) Security Solutions gross profit includes $1.6 million of inventory impairments incurred throughout 2023 related to discontinuation of investments in our Digipass CX product, of which $1.4 million was reversed in the quarter ended December 31, 2023. (3) Security Solutions other segment items includes general and administrative expense, restructuring and other related charges, and amortization of intangibles for the three months and years ended December 31, 2024 and 2023. (4) Security Solutions operating income includes total amortization and depreciation expense of $0.3 million and $0 for the three months ended December 31, 2024 and 2023, respectively, and $0.9 million and $0 of total amortization and depreciation expense for the years ended December 31, 2024 and 2023, respectively. Security Solutions operating income includes $2.0 million and $5.5 million of restructuring and other related charges for the years ended December 31, 2024 and 2023, respectively. (5) Digital Agreements other segment items includes general and administrative expense, restructuring and other related charges, and amortization of intangibles for the three months and years ended December 31, 2024 and 2023. (6) Digital Agreements operating income includes total amortization and depreciation expense of $1.6 million and $0.6 million for the three months ended December 31, 2024 and 2023, respectively, and $6.2 million and $3.7 million for the years ended December 31, 2024 and 2023, respectively. Digital Agreements operating income includes $1.7 million and $3.7 million of restructuring and other related charges for the years ended December 31, 2024 and 2023, respectively. Revenue by major products and services (unaudited): Three Months Ended December 31, 2024 2023 (In thousands) SecuritySolutions DigitalAgreements SecuritySolutions DigitalAgreements Subscription $ 20,913 $ 15,207 $ 14,065 $ 13,245 Maintenance and support 9,217 415 10,326 1,022 Professional services and other (1) 891 90 1,423 232 Hardware products 14,438 — 22,615 — Total Revenue $ 45,459 $ 15,712 $ 48,429 $ 14,499 Year Ended December 31, 2024 2023 (In thousands) SecuritySolutions DigitalAgreements SecuritySolutions DigitalAgreements Subscription $ 80,555 $ 58,848 $ 60,550 $ 45,886 Maintenance and support 38,342 1,736 42,240 4,143 Professional services and other (1) 4,439 408 5,425 896 Hardware products 58,851 — 75,966 — Total Revenue $ 182,187 $ 60,992 $ 184,181 $ 50,925 (1) Professional services and other includes perpetual software licenses revenue, which was immaterial for both the three months and year ended December 31, 2024, and approximately 1% of total revenue for both the three months and year ended December 31, 2023. Non-GAAP Financial Measures We report financial results in accordance with GAAP. We also evaluate our performance using certain Non-GAAP financial metrics, namely Adjusted EBITDA, Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share. Our management believes that these measures, when taken together with the corresponding GAAP financial metrics, provide useful supplemental information regarding the performance of our business, as further discussed in the descriptions of each of these Non-GAAP metrics below. These Non-GAAP financial measures are not measures of performance under GAAP and should not be considered in isolation or as alternatives or substitutes for the most directly comparable financial measures calculated in accordance with GAAP. While we believe that these Non-GAAP financial measures are useful for the purposes described below, they have limitations associated with their use, since they exclude items that may have a material impact on our reported results and may be different from similar measures used by other companies. Additional information about the Non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures appear below. Adjusted EBITDA We define Adjusted EBITDA as net income (loss) before interest, taxes, depreciation, amortization, long-term incentive compensation, restructuring and other related charges, and certain non-recurring items, including acquisition related costs, rebranding costs, and non-routine shareholder matters. We use Adjusted EBITDA as a simplified measure of performance for use in communicating our performance to investors and analysts and for comparisons to other companies within our industry. As a performance measure, we believe that Adjusted EBITDA presents a view of our operating results that is most closely related to serving our customers. By excluding interest, taxes, depreciation, amortization, long-term incentive compensation, restructuring costs, and certain other non-recurring items, we are able to evaluate performance without considering decisions that, in most cases, are not directly related to meeting our customers' requirements and were either made in prior periods (e.g., depreciation, amortization, long-term incentive compensation, non-routine shareholder matters), deal with the structure or financing of the business (e.g., interest, one-time strategic action costs, restructuring costs, impairment charges) or reflect the application of regulations that are outside of the control of our management team (e.g., taxes). In addition, removing the impact of these items helps us compare our core business performance with that of our competitors. Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands, unaudited) Three Months Ended December 31, Years Ended December 31, (In thousands) 2024 2023 2024 2023 Net income (loss) $ 28,788 $ 441 $ 57,082 $ (29,799 ) Interest income, net (561 ) (415 ) (1,807 ) (2,090 ) (Benefit) provision for income taxes (15,253 ) 917 (10,595 ) 2,486 Depreciation and amortization of intangible assets (1) 2,278 1,955 8,364 6,479 Long-term incentive compensation (2) 2,814 4,136 9,172 14,562 Restructuring and other related charges (3) 609 4,235 6,063 17,311 Other non-recurring items (4) 1,163 (112 ) 4,223 3,048 Adjusted EBITDA $ 19,838 $ 11,157 $ 72,502 $ 11,997 (1) Includes cost of sales depreciation and amortization expense directly related to delivering cloud subscription revenue of $1.0 million and $3.4 million for the three months and year ended December 31, 2024, respectively, and $0.8 million and $1.5 million for the three months and year ended December 31, 2023, respectively. Costs are recorded in "Services and other cost of goods sold" on the consolidated statements of operations. (2) Long-term incentive compensation includes share-based compensation and cash incentive grants awarded to employees located in jurisdictions where we do not issue share-based compensation due to tax, regulatory or similar reasons. The immaterial expense associated with these cash incentive grants was less than $0.1 million for both the three months ended December 31, 2024 and 2023, and $0.2 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively. (3) Includes write-offs of intangible assets and property and equipment, net, of $0.8 million and $1.0 million, respectively, for the year ended December 31, 2024 and $0 for both the three months and year ended December 31, 2023. Costs are recorded in "Services and other cost of goods sold" and "Restructuring and other related charges," respectively, on the consolidated statements of operations. Includes restructuring and other related charges of less than $0.1 million and $0.1 million for the three months and year ended December 31, 2024, respectively, and $0 for both the three months and year ended December 31, 2023. These charges are recorded in "Services and other cost of goods sold" on the consolidated statements of operations. (4) For the three months ended December 31, 2024 other non-recurring items consist of $1.2 million and of fees related to non-recurring projects. For the three months ended December 31, 2023, other non-recurring items consist of an inventory write-off reversal of $1.4 million, offset by $1.4 million of fees related to non-recurring items, primarily severance payable to our former chief executive officer. For the year ended December 31, 2024, other non-recurring items consist of $4.2 million of fees related to non-recurring projects. For the year ended December 31, 2023, other non-recurring items consist of $1.6 million of fees related to non-recurring projects and our acquisition of ProvenDB, and $1.4 million of fees related to non-recurring items, primarily severance payable to our former chief executive officer. Non-GAAP Net Income (Loss) and Non-GAAP Net Income Per Diluted Share We define Non-GAAP Net Income (Loss) and Non-GAAP Net Income (Loss) Per Diluted Share as net income (loss) or net income (loss) per diluted share, as applicable, before the consideration of long-term incentive compensation expenses, the amortization of intangible assets, restructuring costs, certain other non-recurring items, and one-time tax benefit adjustments. We use these measures to assess the impact of our performance excluding items that can significantly impact the comparison of our results between periods and the comparison to competitor results. We exclude long-term incentive compensation expense because our long-term incentives generally reflect the use of restricted stock unit grants or cash incentive grants, including incentives directly tied to the performance of the business, while other companies may use different forms of incentives that have different cost impacts, which makes comparison difficult. We exclude amortization of intangible assets as we believe the amount of such expense in any given period may not be correlated directly to the performance of the business operations and that such expenses can vary significantly between periods as a result of new acquisitions, the full amortization of previously acquired intangible assets, or the write down of such assets due to an impairment event. However, intangible assets contribute to current and future revenue, and related amortization expense will recur in future periods until expired or written down. We also exclude certain non-recurring items (including one-time strategic action costs and non-recurring shareholder matters) and one-time tax benefit adjustments, as these items are unrelated to the operations of our core business. By excluding these items, we are better able to compare the operating results of our underlying core business from one reporting period to the next. We make a tax adjustment based on the above adjustments resulting in an effective tax rate on a Non-GAAP basis, which may differ from the GAAP tax rate. We believe the effective tax rates we use in the adjustment are reasonable estimates of the overall tax rates for the Company under its global operating structure. Reconciliation of Net Income (Loss) to Non-GAAP Net Income (in thousands, except per share data) (unaudited) Three Months Ended December 31, Years Ended December 31, 2024 2023 2024 2023 Net income (loss) $ 28,788 $ 441 $ 57,082 $ (29,799 ) Amortization of intangible assets (1) 625 725 2,592 2,755 Long-term incentive compensation (2) 2,814 4,136 9,172 14,562 Restructuring and other related charges (3) 609 4,235 6,063 17,311 Other non-recurring items (4) 1,163 (112 ) 4,223 3,048 One-time tax benefit adjustments (5) (23,217 ) — (23,217 ) — Tax impact of adjustments (6) (1,042 ) (1,797 ) (4,410 ) (7,535 ) Non-GAAP net income $ 9,740 $ 7,628 $ 51,505 $ 342 Non-GAAP net income per share $ 0.24 $ 0.19 $ 1.32 $ 0.01 Shares 39,887 40,095 39,085 40,833 (1) Includes cost of sales amortization expense directly related to delivering cloud subscription revenue of less than $0.1 million and $0.2 million for the three months and year ended December 31, 2024, respectively, and $0.1 million and $0.4 million for the three months and year ended December 31, 2023, respectively. Costs are recorded in "Services and other cost of goods sold" on the consolidated statements of operations. (2) Long-term incentive compensation includes share-based compensation and cash incentive grants awarded to employees located in jurisdictions where we do not issue share-based compensation due to tax, regulatory or similar reasons. The immaterial expense associated with these cash incentive grants was less than $0.1 million for both the three months ended December 31, 2024 and 2023, and $0.2 million and $0.3 million for the years ended December 31, 2024 and 2023, respectively. (3) Includes write-offs of intangible assets and property and equipment, net, of $0.8 million and $1.0 million, respectively, for the year ended December 31, 2024 and $0 for both the three months and year ended December 31, 2023. Costs are recorded in "Services and other cost of goods sold" and "Restructuring and other related charges," respectively, on the consolidated statements of operations. Includes restructuring and other related charges of less than $0.1 million and $0.1 million, for the three months and year ended December 31, 2024, respectively, and $0 for both the three months and year ended December 31, 2023. These charges are recorded in "Services and other cost of goods sold" on the consolidated statements of operations. (4) See the footnotes to the Reconciliation of Net Income (Loss) to Adjusted EBITDA for a description of the components of other non-recurring items for each period presented. (5) Includes a one-time tax benefit for a change in the valuation allowance, a worthless stock deduction and an intra-entity asset transfer of certain intellectual property. (6) The tax impact of adjustments is calculated as 20% of the adjustments in all periods. Copyright© 2025 OneSpan North America Inc., all rights reserved. OneSpan™ is a registered or unregistered trademark of OneSpan North America Inc. or its affiliates in the U.S. and other countries. View source version on Contacts Investor Contact: Joe MaxaVice President of Investor Relations+
