OneSpan Inc. (NASDAQ: OSPN) reported Q1 EPS of $0.16, $0.24 better than the analyst estimate of ($0.08). Revenue for the quarter came in at $50.8 million versus the consensus estimate of $49.09 million.

First Quarter 2021 Financial Highlights

• Revenue for the first quarter of 2021 was $50.8 million, a decrease of 10% from $56.4 million for the first quarter of 2020.
• Gross profit was $35.5 million for the first quarter of 2021, compared to $40.3 million for the first quarter of 2020. Gross margin for the first quarter of 2021 was 70%, compared to 71% for the first quarter of 2020.
• GAAP operating loss for the first quarter of 2021 was $9.3 million, compared to GAAP operating income of $0.8 million for the first quarter of 2020.
• GAAP net loss for the first quarter of 2021 was $9.2 million, or $0.23 per diluted share. GAAP net income was less than $0.1 million, or $0.00 per diluted share, for the first quarter of 2020.
• Adjusted EBITDA for the first quarter of 2021 was $(5.3) million compared to $5.2 million for the first quarter of 2020.
• Non-GAAP net loss for the first quarter of 2021 was $6.2 million, or $0.16 per diluted share, compared to Non-GAAP net income of $3.3 million, or $0.08 per diluted share, for the first quarter of 2020.
• Cash, cash equivalents and short-term investments at March 31, 2021 totaled $115.2 million compared to $115.3 million and $105.3 million at December 31, 2020 and March 31, 2020, respectively.

“ARR continued to grow rapidly at 29% as we shift to a recurring revenue-led business model. ARR specific to subscription and term-based contracts grew in excess of 50%, and a record 87% of our software and services bookings and revenues were recurring,” stated OneSpan CEO, Scott Clements. “We have made tremendous progress in our shift to recurring software revenue, and we expect to be materially complete with this transition by the end of 2021. We expect profitability to improve in the second quarter on higher revenues with increasing contributions from software and services.”

GUIDANCE:

OneSpan Inc. sees FY2021 revenue of $215-225 million, versus the consensus of $220.72 million.

• For the Full Year 2021, OneSpan currently expects:
• Total revenue in the range of $215 million to $225 million
• Recurring revenue in the range of $120 million to $125 million
• ARR growth of 22% to 26%
• Adjusted EBITDA approximately break-even

In the second quarter of 2021, we expect ARR growth of 25% - 30%, and for recurring revenue to increase sequentially and year-over-year, while perpetual license and hardware revenues decline as we continue our shift to a recurring model. We expect profitability to improve in the second quarter on higher revenue with an increased contribution from software and services.

Second half 2021 revenue is expected to exceed first half revenue led by continued growth in recurring software and services. Hardware revenue is expected to decline in the mid-single digit range for the full year.

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