Summary
OneSpan reported third-quarter revenue of $52.3 million, up 1.6% from a year earlier. Recurring revenue grew 38% to $30.5 million, annual recurring revenue rose 24% to $119.0 million, and dollar-based net expansion was 115%. The company pointed to robust growth in e-signature subscription and mobile security term license revenue while it worked to mitigate hardware-related supply chain challenges. That mix shift helped gross profit rise 4.1% to $37.4 million, and gross margin reached 71.6%, up 1.7 percentage points. The quarter still produced a GAAP operating loss of $2.0 million and a GAAP net loss of $1.0 million, or $0.02 per diluted share. Those losses narrowed from a year earlier, with the operating loss narrowing 14.4% and the net loss narrowing 41.9%. Adjusted EBITDA was $1.7 million, and non-GAAP income per diluted share was $0.03.
For the first nine months of 2021, revenue fell 4.6% to $155.3 million. Gross profit declined 3.8% to $108.7 million, while gross margin was 70.0%, up 0.5 percentage points. The operating loss widened to $20.2 million, and the net loss widened to $16.8 million, or $0.42 per diluted share. Operating margin for the nine months was negative 13.0%, down 11.0 percentage points. Operating cash flow was negative $4.4 million for the nine months, down 159.6% from the prior-year period. Capital expenditures were $1.5 million for the nine months, down 43.6%. The year-to-date decline reflects lower hardware and perpetual software license revenue, partially offset by recurring revenue growth.
Deferred revenue rose 6.4% year over year to $52.4 million. Remaining performance obligations jumped 39.6% to $51.3 million, a sign of future revenue under contract. In the quarter, operating cash flow was negative $5.6 million, down 284.2% from a year earlier, and capital expenditures were $0.3 million, down 40.9%. Operating margin for the quarter was negative 3.9%, up 0.7 percentage points. The company ended the quarter with a larger backlog and higher deferred revenue, but the cash flow swing shows the cost of the revenue mix transition.
OneSpan raised the midpoints of its full-year 2021 guidance. The outlook covers total revenue, recurring revenue, ARR growth, and Adjusted EBITDA. Management now expects ARR growth of 18% to 20%, compared with prior guidance of 17% to 20%. Adjusted EBITDA guidance is negative $6 million to negative $8 million, compared with prior guidance of negative $12 million to negative $15 million. That guidance is for the full fiscal year, not the next quarter.
The quarter came with clear operational friction. OneSpan cited hardware-related supply chain challenges and shipping delays. MD&A notes lengthened sales cycles and reduced demand for some security solutions tied to COVID-19, with the biggest hit to hardware authentication products. Foreign exchange remains a swing factor: most revenue is generated outside the United States, and currency moves increased revenue by about $0.3 million in the quarter and $4.8 million in the first nine months. The filing also lists risks around cyber attacks, reliance on third parties, market acceptance of products, and activist stockholders. Those risks sit alongside the company's stated plan to accelerate recurring revenue growth and cut costs, with a range of expected savings to be provided before year-end. OneSpan also faces a potential mismatch between revenue and expenses in different currencies, which could pressure margins if exchange rates move unfavorably.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $52.3M | $52.3M | -0.0% | $51.4M | +1.6% |
| Gross profit | $37.4M | $35.8M | +4.5% | $36.0M | +4.1% |
| Gross margin | 71.6% | 68.5% | +3.1 pp | 69.9% | +1.7 pp |
| Research & development | $11.4M | $12.1M | -6.1% | $10.6M | +6.7% |
| Sales & marketing | $15.5M | $16.0M | -3.3% | $14.6M | +6.2% |
| General & administrative | $11.2M | $15.0M | -25.5% | $10.7M | +4.4% |
| Total operating expenses | $39.4M | $44.7M | -11.7% | $38.3M | +2.9% |
| Operating income (loss) | -$2.0M | -$8.9M | +77.2% | -$2.4M | +14.4% |
| Operating margin | -3.9% | -16.9% | +13.1 pp | -4.6% | +0.7 pp |
| Net income (loss) | -$975.0K | -$6.7M | +85.4% | -$1.7M | +41.9% |
| Net margin | -1.9% | -12.8% | +10.9 pp | -3.3% | +1.4 pp |
| Diluted EPS | -$0.02 | -$0.17 | +$0.15 | -$0.04 | +$0.02 |
Risks
The filing states the COVID-19 pandemic and its variants have materially affected how OneSpan and its customers operate, and the duration and extent of the impact on future results remains uncertain. It also notes uneven progress from reopenings, travel restrictions, remote work, and inconsistent guidance from public health agencies.
MD&A says OneSpan has experienced lengthened sales cycles and reduced demand for some security solutions due to economic uncertainty connected to COVID-19, continuing from Summer 2020 through the present. The most significant pandemic impact cited is a drop in demand for hardware authentication products and delays in implementing certain software solutions.
The hardware business faces manufacturing, supply chain, shipping, and distribution risks. The filing says OneSpan experienced delays and increased costs fulfilling hardware orders, and continuing global transportation disruptions may prevent it from satisfying customer orders if orders increase or further supply chain problems emerge.
The software business saw increased 2020 sales for remote employee access and electronic signature products that the company attributes in part to COVID-19, but it says this increase may have been temporary and it cannot predict whether it will continue or decline. COVID-19 conditions can also affect IT spending, project timing, and customer priorities, which may help some software solutions and hurt others.
The filing warns that COVID-19 could delay prospective customers' purchasing decisions, lengthen payment terms, reduce the value or duration of contracts, or affect attrition rates. These factors could adversely affect future sales, operating results, and overall financial performance.
MD&A notes OneSpan has current concentration of revenue in Europe and specifically in the banking and finance vertical market, so significant changes in the European banking market may materially affect revenue. EMEA revenue was 18% lower in the three months ended September 30, 2021 and 17% lower in the nine months ended September 30, 2021, driven primarily by lower hardware sales and lower software license and hardware revenue, respectively.
SaaS KPIs
All quarters →Annual Recurring Revenue (ARR)
Adjusted EBITDA
Dollar-based net expansion (DBNE)
Recurring Revenue
Summary, forecast, risks and KPIs are extracted from OneSpan Inc.'s SEC filings for Q3 FY2021 (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 1, 2026.