OneSpan Inc. (NASDAQ: OSPN) reported Q3 EPS of $0.033, $0.017 worse than the analyst estimate of $0.05. Revenue for the quarter came in at $51.4 million versus the consensus estimate of $58.64 million.

Third Quarter 2020 Financial Highlights5

• Revenue for the third quarter of 2020 was $51.4 million, a decrease of 35% from $79.7 million for the third quarter of 2019. Revenue for the first nine months of 2020 was $162.8 million, a decrease of 11% from $183.0 million for the first nine months of 2019. Year-over-year revenue comparisons were affected by the one-time positive impact on third quarter 2019 revenue from Payment Services Directive 2 (PSD2).
• Gross Profit for the third quarter of 2020 was $36.0 million and $113.0 million for the first nine months of 2020. Gross profit for the third quarter of 2019 was $53.0 million and $122.4 million for the first nine months of 2019. Gross margin for the third quarter of 2020 was 70% and for the first nine months of 2020 was 69%. Gross margin for the third quarter of 2019 was 67% and for the first nine months of 2019 was 67%.
• GAAP operating loss for the third quarter of 2020 was $2.4 million, and for the first nine months of 2020 was $3.2 million. GAAP operating income for the third quarter of 2019 was $17.1 million, and for the first nine months of 2019 was $8.8 million.
• Adjusted EBITDA for the third quarter of 2020 was $2.7 million, or 5% of revenue, and for the first nine months of 2020 was $11.0 million, or 7% of revenue. Adjusted EBITDA for the third quarter of 2019 was $19.1 million, or 24% of revenue, and for the first nine months of 2019 was $19.0 million or 10% of revenue.
• GAAP net loss for the third quarter of 2020 was $1.7 million, or $0.04 per share, and $3.7 million, or $0.09 per share for the first nine months of 2020. GAAP net income for the third quarter of 2019 was $11.8 million, or $0.30 per share. GAAP net income for the first nine months of 2019 was $3.3 million, or $0.08 per share.
• Non-GAAP net income for the third quarter of 2020 was $1.2 million or $0.03 per diluted share, and for the first nine months of 2020 was $5.3 million, or $0.13 per diluted share. Non-GAAP net income for the third quarter of 2019 was $14.4 million or $0.36 per diluted share, and for the first nine months of 2019 was $11.6 million or $0.29 per diluted share.
• Cash, cash equivalents and short-term investments at September 30, 2020 totaled $112.7 million compared to $110.8 million and $109.8 million at June 30, 2020 and December 31, 2019, respectively

“In the third quarter, we continued to make progress transitioning to a recurring revenue model, with annual recurring revenue growth of 27%, dollar-based net expansion rate4 of 120%, and sequential improvement in Software and Services bookings. Rapidly deployable digitization projects such as e-signature continued to see strong demand” stated OneSpan CEO, Scott Clements. “The pandemic delayed a range of IT and security projects as financial institutions shifted their focus to supporting remote work and other immediate digitization needs. In addition, branch closures around the world limited banks’ new customer account growth reducing near-term demand for certain authentication products. We are optimistic about the mid-term outlook for the company as the core drivers of demand for our solutions remain intact and our pipeline of software and services sales opportunities grew in excess of 40% year on year with strength in e-signature, identity verification and mobile security.”

GUIDANCE:

OneSpan Inc. sees Q4 2020 revenue of $203-207 million, versus the consensus of $233.68 million.

For the Full Year 2020, OneSpan currently expects:

• Total revenue in the range of $203 million to $207 million.
• Software and services revenue6 in the range of $126 million to $128 million.
• Hardware revenue in the range of $77 million to $79 million.

For earnings history and earnings-related data on OneSpan Inc. (OSPN) click here.