Summary
OneSpan closed fiscal 2022 with a mixed print. Full year revenue was $219.0 million. Fourth quarter gross profit was $38.0 million, up 1.3% year over year. Fourth quarter operating loss narrowed to $4.0 million, a 32.7% improvement. Fourth quarter net loss narrowed to $3.1 million, a 77.5% improvement, and diluted EPS was -$0.08, a 77.8% improvement. For the full year, gross profit was $148.6 million, up 3.9% year over year. Full year operating loss widened 3.8% to $27.1 million. Full year net loss narrowed 52.8% to $14.4 million, and full year diluted EPS was -$0.36, a 53.2% improvement.
Cash generation improved sharply in the fourth quarter. Operating cash flow was $7.9 million, up 368.7% year over year. Capital expenditures were $2.4 million, up 282.7%. For the full year, operating cash flow was -$5.8 million, down 110.8% year over year. Full year capital expenditures were $5.0 million, up 130.3%. At quarter end, deferred revenue was $70.9 million, up 11.2% year over year, and remaining performance obligations were $77.2 million, up 34.8%. Those balance sheet metrics point to billed but unrecognized revenue and contracted backlog, even as full year cash flow slipped.
Non-GAAP metrics point to better underlying profitability. Annual recurring revenue rose 12% year over year to $138.7 million. Net retention rate was 107%. Non-GAAP net income was $1.2 million, or $0.03 per diluted share, compared with a non-GAAP loss in the prior-year quarter. Adjusted EBITDA was $3.2 million, compared with negative $0.6 million. For the full year, non-GAAP net loss was $1.8 million, or $0.05 per diluted share, and Adjusted EBITDA was $6.4 million. Foreign exchange movements were a drag during the quarter, negatively impacting fourth quarter revenue by approximately $2.9 million, ARR by approximately $3.9 million, and Adjusted EBITDA by approximately $1.1 million. For the full year, foreign exchange movements negatively impacted revenue by approximately $12.2 million.
Management's full year 2023 guidance, which covers the full fiscal year, calls for revenue growth of 6% to 11%. Full year 2023 ARR is expected to be $157 million to $164 million, representing growth of 13% to 18%. Full year 2023 Adjusted EBITDA is expected to be $3 million to $6 million. The company also revised long-term targets through 2025, including revenue CAGR of 12% to 14%, ARR CAGR of 20% or higher, net retention rate above 120% exiting 2025, gross profit margin above 70% in 2025, and Adjusted EBITDA of 10% to 12% in 2025. The CEO cited new enterprise logo acquisition and market share gains as priorities alongside profitability and margin expansion. Recent moves include the acquisition of ProvenDB, which closed on February 22, 2023, a new enterprise pricing model for secure digital agreements, and the launch of OneSpan Notary.
Risks remain familiar and material. The company operates under uncertain market conditions tied to the Russia-Ukraine conflict, the COVID-19 pandemic, supply chain disruption, and an inflationary cost environment. Its supply chain for Digipass devices has faced semiconductor shortages, higher freight costs, and longer lead times. A strong U.S. dollar has weighed on revenue, operating cash flow, and net income, and management expects those pressures to continue into 2023. The transformation plan carries execution risk, and the restructuring plan eliminated approximately 100 positions. Other named risks include customer concentration, lengthy sales cycles, competition, and the ability to hire and retain sales talent. OneSpan's fourth quarter showed progress on cost discipline, but the full year still ended with an operating loss and negative operating cash flow, so the turnaround is not complete.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2022 | Q3 FY2022 | QoQ | Q4 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $56.6M | $57.1M | -0.9% | $59.2M | -4.3% |
| Gross profit | $38.0M | $38.4M | -1.2% | $34.3M | +10.8% |
| Gross margin | 67.0% | 67.3% | -0.2 pp | 57.9% | +9.1 pp |
| Research & development | $8.1M | $9.5M | -14.7% | $11.7M | -30.5% |
| Sales & marketing | $15.8M | $15.3M | +3.2% | $12.9M | +22.3% |
| General & administrative | $16.0M | $11.8M | +35.5% | $14.2M | +12.4% |
| Total operating expenses | $42.0M | $44.1M | -4.7% | $40.2M | +4.4% |
| Operating income (loss) | -$4.0M | -$5.6M | +28.7% | -$6.0M | +32.7% |
| Operating margin | -7.1% | -9.8% | +2.8 pp | -10.1% | +3.0 pp |
| Net income (loss) | -$3.1M | -$7.2M | +57.0% | -$13.8M | +77.5% |
| Net margin | -5.5% | -12.6% | +7.1 pp | -23.3% | +17.8 pp |
| Diluted EPS | -$0.08 | -$0.18 | +$0.10 | -$0.35 | +$0.27 |
| Customers | 10 | — | — | — | — |
| Net retention rate | 107.0% | — | — | — | — |
Risks
In May 2022 OneSpan announced a three-year strategic transformation plan beginning January 1, 2023, and the 10-K states it may not achieve expected results due to assumptions about customer acquisition, retention, market needs, and salesforce buildout. MD&A says the company is in the midst of a business transition and transformation after revenue decreased in 2020 and 2021 and several senior executives left.
Failure to develop and expand sales and marketing, particularly hiring, training, and retaining sales personnel, may materially affect growth. MD&A notes average sales and marketing headcount was 344 in FY2022, 7% lower than FY2021, while the transformation plan requires expanding the direct sales force and enterprise go-to-market approach.
Digipass authenticator business depends on limited suppliers and manufacturing in China and Romania; 2022 supply chain was disrupted by China's Zero COVID policy and semiconductor shortages. MD&A expects increased material and supply chain costs to continue in 2023 and is considering moving manufacturing from China to Romania or other locations.
MD&A states changes in foreign exchange rates negatively impacted total revenue by approximately $12.2 million in FY2022 and ARR by approximately $3.9 million, driven by U.S. dollar strength versus the Euro, and expects these impacts to continue into 2023. The 10-K also cites inflation, interest rates, Russia-Ukraine conflict, and recession risk.
FY2022 net loss narrowed to $14.43M from $30.58M in FY2021, but operating loss widened to $27.12M from $26.13M year to date, and operating cash flow was -$5.79M year to date versus -$2.74M in the prior-year period. The 10-K states OneSpan operated at a loss for each of the past three fiscal years and may not be profitable in the future.
Top 10 customers contributed 23% of total worldwide revenue in 2022, up from 22% in 2021 and 21% in 2020. Loss of substantial sales to any one of them could adversely affect revenues and profits.
Sales cycle in the financial services market is often nine to 18 months, and timing of enterprise sales and revenue recognition is difficult to predict. MD&A attributes lower NRR of 107% at December 31, 2022 versus 115% at December 31, 2021 partly to longer sales cycles in certain international regions and timing of contract renewals.
Market for identity, authentication, and secure digital agreements is highly competitive; primary e-signature competitors DocuSign and Adobe Systems are significantly larger, and identity competitors include Gemalto/Thales and RSA Security. Some competitors have greater financial, technical, marketing, and purchasing resources.
As a cybersecurity company serving banks and financial institutions, OneSpan may be an attractive target; it has experienced several security incidents in the past, none material to date, but a material event in the future could cause liability, reputational harm, and customer loss.
OneSpan outsources portions of cloud infrastructure principally to AWS and other technology vendors; interruptions, delays, or terminations could impair platform availability and customer service. The 10-K notes past interruptions and capacity constraints.
At December 31, 2022, goodwill and intangible assets had a net book value of $103.0 million; adverse market conditions or assumption changes could result in impairment. In FY2022, OneSpan recorded a $3.8 million impairment charge on Dealflo customer relationships after deciding to sunset the Dealflo solution by December 31, 2023.
Approximately 41% of total revenue for FY2022 was attributable to subscription license contracts recognized over contract terms, so shortfalls in demand or renewals may not immediately reduce revenue but could affect future quarters. Deferred revenue was $70.91M at FY2022 Q4, up 11.2% versus the prior-year quarter, and RPO was $77.19M, up 34.8%.
Stockholders have in the past and may in the future engage in proxy solicitations or attempt to effect changes; responding can be costly and divert board and management attention. The 10-K notes prior proxy contest costs in 2021 and concentrated ownership including Blackrock at approximately 16.3% and Legion Partners at approximately 8.8%.
OneSpan is subject to global privacy, data protection, anti-corruption, export control, government contracting, RoHS/WEEE, and conflict minerals rules; failure could result in fines, debarment, and operational costs. The 10-K notes operations and sales to governmental customers in countries with corruption histories.
SaaS KPIs
All quarters →Adjusted EBITDA
Net Retention Rate (NRR)
Annual Recurring Revenue
Summary, forecast, risks and KPIs are extracted from OneSpan Inc.'s SEC filings for Q4 FY2022 (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.