Summary
OneSpan reported second quarter revenue of $60.9 million, up 9.3% from $55.7 million in the prior-year quarter. Growth came from both segments. Digital Agreements revenue rose 30% year over year, helped by existing customer expansions and new logos. Security Solutions revenue rose 4%, on stronger demand for authentication products, partly offset by declines in maintenance revenue as legacy perpetual contracts shift to subscriptions. Subscription revenue grew 29%. By region, EMEA revenue fell 5%, while the Americas rose 15% and APAC rose 35%. For the first six months of the year, revenue was $125.8 million, up 11.0% from $113.3 million. The company processes millions of digital agreements and billions of transactions in more than 100 countries annually.
Profitability improved sharply. Gross profit was $40.3 million, up 17.6%, and gross margin reached 66.2% compared with 61.5% a year earlier, a gain of 4.7 percentage points. Operating income was $7.6 million against an operating loss of $17.8 million in the prior-year quarter, and operating margin was 12.5% versus -31.9%. Net income was $6.6 million compared with a net loss of $17.8 million, and diluted earnings per share were $0.17 versus a loss of $0.44. Year to date, net income was $20.0 million against a net loss of $26.1 million, and diluted EPS was $0.52. Non-GAAP net income was $12.0 million, or $0.31 per diluted share, and Adjusted EBITDA was $16.1 million compared with negative $3.8 million a year ago.
Segment profitability diverged. Digital Agreements narrowed its operating loss sharply from a year earlier, though its gross margin compressed on higher cloud platform costs and software depreciation. Security Solutions operating income rose sharply, and its gross margin expanded. The company wrote off acquired blockchain technology and related capitalized software in June 2024 after deciding to stop incremental development investment. Headcount cuts continued to reshape the cost base, with average sales, marketing, support and operating headcount down 56% and research and development headcount down 25%. The 2022 strategic plan, which began January 1, 2023, manages Digital Agreements for growth and Security Solutions for cash flow.
Cash generation also turned around. Operating cash flow was $2.3 million in the quarter, compared with an outflow of $19.6 million in the prior-year quarter, and $29.3 million for the first six months versus an outflow of $6.4 million a year earlier. Capital expenditures were $2.3 million, down 33.5%. Deferred revenue was $59.3 million, up 3.5%, and remaining performance obligations were $98.1 million, up 51.7%. Annual recurring revenue rose 15% to $165.3 million, and the net retention rate was 112%.
Management raised its full-year 2024 outlook. The company now expects revenue of $238 million to $246 million, ARR of $166 million to $170 million versus the prior range of $160 million to $168 million, and Adjusted EBITDA of $55 million to $59 million versus the prior range of $51 million to $55 million. The cost base reflects a restructuring plan that runs through December 31, 2025. OneSpan expects roughly $1.0 million to $2.0 million of additional restructuring charges in future periods, mostly for employee transition and severance. The 2023 Actions were approved in August 2023 to drive higher Adjusted EBITDA while maintaining long-term growth potential, and the company completed a majority of the planned workforce reductions by the end of 2023, with most of the remaining reductions expected during 2024. Risks remain. The company cites longer sales cycles and greater price sensitivity in banking and financial services, rising competition in e-signature, the potential loss of a large customer, and currency swings, with about 85% of revenue and 60% of operating expenses generated outside the U.S. in the quarter.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $60.9M | $64.8M | -6.0% | $55.7M | +9.3% |
| Gross profit | $40.3M | $47.4M | -14.9% | $34.3M | +17.6% |
| Gross margin | 66.2% | 73.1% | -6.9 pp | 61.5% | +4.7 pp |
| Research & development | $8.3M | $8.3M | +1.0% | $10.1M | -17.3% |
| Sales & marketing | $10.5M | $12.9M | -18.7% | $19.7M | -46.7% |
| General & administrative | $11.6M | $10.0M | +15.5% | $15.8M | -27.0% |
| Total operating expenses | $32.7M | $33.3M | -1.7% | $52.1M | -37.2% |
| Operating income (loss) | $7.6M | $14.1M | -45.9% | -$17.8M | +143.0% |
| Operating margin | 12.5% | 21.8% | -9.2 pp | -31.9% | +44.4 pp |
| Net income (loss) | $6.6M | $13.5M | -51.3% | -$17.8M | +136.9% |
| Net margin | 10.8% | 20.8% | -10.0 pp | -31.9% | +42.6 pp |
| Diluted EPS | $0.17 | $0.35 | -$0.18 | -$0.44 | +$0.61 |
| Net retention rate | 112.0% | 107.0% | +5.0 pp | 106.0% | +6.0 pp |
Risks
Macroeconomic uncertainties in the banking and financial services segments have resulted in longer sales cycles and greater price sensitivity, and ARR growth at June 30, 2024 was impacted by increased deal scrutiny requiring additional approvals, continued longer sales cycles, and timing of contract renewals.
The e-signature market is increasingly mature and competitive, with higher pricing aggressiveness from competitors and limited brand awareness among buyers, which contributed to the company falling short of its original 2022 strategic plan revenue growth targets for Digital Agreements.
The company's transformation depends on cost reduction actions including the 2023 Actions and restructuring plan through December 31, 2025, and involves risks of higher than anticipated restructuring charges, employee attrition, loss of institutional know-how, and operational disruption that could impair product development and customer service.
The modified strategy focuses more heavily on improving Adjusted EBITDA margin rather than the original accelerated Digital Agreements growth plan, which may limit long-term growth potential and depends on efficiently growing Digital Agreements while managing Security Solutions for modest growth and cash flow.
Digital Agreements gross margin fell to 63% in Q2 2024 from 72% in Q2 2023 due to higher cloud platform costs and depreciation, including write-offs, even as the segment narrowed its operating loss to $0.2 million in Q2 2024 from $7.1 million in Q2 2023.
SaaS KPIs
All quarters →Annual Recurring Revenue (ARR)
Net Retention Rate (NRR)
Summary, forecast, risks and KPIs are extracted from OneSpan Inc.'s SEC filings for Q2 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.