Summary
OneSpan started fiscal 2024 with a much stronger profit profile. Total revenue was $64.8 million in the first quarter. Gross profit was $47.4 million, up $8.1 million or 20.6% from the prior-year quarter. Gross margin came in at 73.1%. Operating income was $14.1 million, compared with an operating loss in the prior-year quarter. Net income was $13.5 million, up from a net loss a year earlier. Diluted EPS was $0.35, up from a loss per share in the prior-year quarter. Operating margin was 21.8%. The sharp swing to profitability came as total operating costs fell, helped by lower sales and marketing, research and development, and general and administrative spending after headcount reductions.
Cash generation also improved. Operating cash flow was $27.0 million, up $13.7 million or 103.7% from the prior-year quarter. Capital expenditures were $3.0 million, down 0.8% from the prior-year quarter. Deferred revenue was $59.5 million, flat versus the prior-year quarter. Remaining performance obligations were $87.7 million, up $21.5 million or 32.5% from the prior-year quarter. The RPO increase points to a larger contracted backlog even as deferred revenue stayed steady, which can reflect the timing of renewals and billings. The company also noted that changes in foreign exchange rates favorably affected revenue by approximately $0.4 million and Adjusted EBITDA by approximately $0.3 million.
Operational metrics showed growth in recurring revenue. Annual recurring revenue increased 9% year-over-year to $154.6 million. Net retention rate was 107%. Digital Agreements revenue rose 25% year-over-year, and Security Solutions revenue rose 9%. On a non-GAAP basis, Adjusted EBITDA was $19.8 million, compared with $(1.6) million in the prior-year quarter. Non-GAAP net income was $16.7 million, or $0.43 per diluted share, compared with a non-GAAP net loss of $3.7 million, or $0.09 per diluted share, a year earlier. Management said the Adjusted EBITDA improvement came from higher revenue and gross profit plus lower operating expenses from restructuring actions. The company said ARR growth was driven by an increase in subscription contracts, though deal scrutiny and longer sales cycles continued to weigh on results.
The company continued its cost reduction and restructuring work. Management identified incremental savings of approximately $10 million on an annualized basis. OneSpan expects future restructuring charges of approximately $2.5 million to $4.5 million tied to the 2023 Actions, mostly for employee transition and severance. The restructuring plan has included eliminating approximately 290 redundant positions and vacating office space in Chicago and Brussels. The plan runs through December 31, 2025. Victor Limongelli became interim CEO on January 4, 2024, replacing Matthew Moynahan. The leadership change and the restructuring plan add execution risk, but the company said the actions are designed to support efficient revenue growth and higher profitability. Most remaining workforce reductions are expected over the course of 2024.
For the full year 2024, OneSpan guided revenue to a range of $238 million to $246 million. The company guided ARR to finish the year between $160 million and $168 million. Adjusted EBITDA guidance for the full year was raised to a range of $51 million to $55 million, compared with a previous range of $47 million to $52 million. Risks include macroeconomic uncertainty in banking and financial services, longer sales cycles, greater price sensitivity, competition in e-signature, limited brand awareness, the loss of one or more large customers, cyber-attacks, and disruption from restructuring actions. The company also operates with significant international exposure, which management said can affect revenue and operating expenses when currency rates move. OneSpan also faces risks tied to security breaches, product malfunctions, reliance on third parties, supply chain delays, inflation, and political instability. The quarter showed sharp margin improvement and solid cash flow, while the guidance implies the company expects the cost actions to keep supporting earnings through the rest of fiscal 2024.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q1 FY2024 | Q4 FY2023 | QoQ | Q1 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $64.8M | $62.9M | +3.0% | $57.6M | +12.6% |
| Gross profit | $47.4M | $43.5M | +9.0% | $39.3M | +20.6% |
| Gross margin | 73.1% | 69.1% | +4.0 pp | 68.2% | +4.9 pp |
| Research & development | $8.3M | $8.7M | -5.4% | $9.5M | -12.7% |
| Sales & marketing | $12.9M | $13.8M | -6.6% | $20.0M | -35.4% |
| General & administrative | $10.0M | $14.2M | -29.7% | $16.7M | -39.9% |
| Total operating expenses | $33.3M | $41.6M | -20.1% | $47.4M | -29.8% |
| Operating income (loss) | $14.1M | $1.8M | +676.6% | -$8.1M | +273.6% |
| Operating margin | 21.8% | 2.9% | +18.9 pp | -14.1% | +35.9 pp |
| Net income (loss) | $13.5M | $441.0K | +2954.0% | -$8.4M | +261.2% |
| Net margin | 20.8% | 0.7% | +20.1 pp | -14.5% | +35.3 pp |
| Diluted EPS | $0.35 | $0.01 | +$0.34 | -$0.21 | +$0.56 |
| Net retention rate | 107.0% | 110.0% | -3.0 pp | 108.0% | -1.0 pp |
Risks
MD&A states macroeconomic uncertainties in the banking and financial services segments have resulted in longer sales cycles and greater price sensitivity, particularly for Digital Agreements, and contributed to the company missing its original 2022 strategic plan growth targets.
The e-signature market is increasingly mature and competitive, with limited brand awareness for OneSpan and higher pricing aggressiveness from competitors, making it harder to build the Digital Agreements sales pipeline and improve sales force productivity.
The 2023 Actions and broader restructuring plan involve risks of higher than anticipated restructuring charges, operational disruption, reduced employee morale, attrition, loss of institutional know-how, slower customer service, and reduced product development; the company expects $2.5 million to $4.5 million of future restructuring charges related to the 2023 Actions.
ARR growth was impacted by increased deal scrutiny and longer sales cycles, timing related to contract renewals, and the decision to discontinue certain product portfolio offerings; ARR was $154.6 million at March 31, 2024, up 9% from $141.3 million at March 31, 2023.
The Board appointed Victor Limongelli as Interim Chief Executive Officer on January 4, 2024, after terminating Matthew Moynahan without cause, creating execution risk for the ongoing strategic transformation and cost reduction actions.
Restructuring-driven headcount reductions were significant, with average sales, marketing, support, and operating headcount down 48%, research and development headcount down 21%, and general and administrative headcount down 24% for the three months ended March 31, 2024 compared to the prior-year period, increasing risk of losing valued employees and institutional knowledge.
Approximately 84% of revenue and 61% of operating expenses were generated outside the U.S. in the three months ended March 31, 2024, and translation adjustments generated a comprehensive loss of $1.7 million in that quarter compared to a comprehensive gain of $1.7 million in the prior-year quarter.
SaaS KPIs
All quarters →Annual Recurring Revenue (ARR)
Adjusted EBITDA
Net Retention Rate (NRR)
Summary, forecast, risks and KPIs are extracted from OneSpan Inc.'s SEC filings for Q1 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.