OneSpan (OSPN) 10-Q 7 May 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 01, 2020
Document And Entity Information
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Entity Registrant Name	OneSpan Inc.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		40,313,630
Entity Central Index Key	0001044777
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019
Current assets
Cash and equivalents	$ 79,624	$ 84,282	$ 69,907
Short term investments	25,652	25,511
Accounts receivable, net of allowances of $3,165 in 2020 and $2,524 in 2019	62,971	62,405
Inventories, net	18,373	19,819
Prepaid expenses	6,334	6,198
Contract assets	7,389	7,058
Other current assets	7,626	6,346
Total current assets	207,969	211,619
Property and equipment, net	12,157	11,454
Operating lease right-of-use assets	11,538	10,580
Goodwill	91,556	94,612
Intangible assets, net of accumulated amortization	33,052	36,209
Deferred income taxes	7,966	7,863
Contract assets - non-current	3,792	3,565
Other assets	8,967	8,668
Total assets	376,997	384,570
Current liabilities
Accounts payable	9,113	10,835
Deferred revenue	33,349	30,338
Accrued wages and payroll taxes	10,706	15,415
Short-term income taxes payable	2,974	7,711
Other accrued expenses	11,081	8,786
Deferred compensation	1,446	1,028
Total current liabilities	68,669	74,113
Long-term deferred revenue	16,033	15,259
Long-term lease liability	12,600	11,299
Other long-term liabilities	7,711	8,297
Long-term income taxes payable	6,958	6,958
Deferred income taxes	4,387	4,623
Total liabilities	116,358	120,549
Stockholders' equity
Preferred stock: 500 shares authorized, none issued and outstanding at December 31, 2020 and 2019
Common stock: $.001 par value per share, 75,000 shares authorized; 40,314 and 40,207 issued and outstanding at March 31, 2020 and December 31, 2019, respectively	40	40
Additional paid-in capital	97,166	96,109
Accumulated income	181,012	181,167
Accumulated other comprehensive loss	(17,579)	(13,295)
Total stockholders' equity	260,639	264,021
Total liabilities and stockholders' equity	$ 376,997	$ 384,570

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
CONDENSED CONSOLIDATED BALANCE SHEETS
Accounts receivable, allowance for doubtful accounts	$ 3,165	$ 2,524
Preferred stock, shares authorized	500	500
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	75,000	75,000
Common stock, shares issued	40,314	40,207
Common stock, shares outstanding	40,314	40,207

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue
Total revenue	$ 56,492	$ 47,608
Cost of goods sold
Total cost of goods sold	16,070	16,039
Gross profit	40,422	31,569
Operating costs
Sales and marketing	14,859	14,383
Research and development	9,994	10,495
General and administrative	12,268	9,870
Amortization of intangible assets	2,354	2,348
Total operating costs	39,475	37,096
Operating income (loss)	947	(5,527)
Interest income, net	207	135
Other expense, net	(338)	(551)
Income before income taxes	816	(5,943)
Provision (benefit) for income taxes	718	(272)
Net income (loss)	$ 98	$ (5,671)
Net income (loss) per share
Basic (in dollars per share)	$ 0	$ (0.14)
Diluted (in dollars per share)	$ 0	$ (0.14)
Weighted average common shares outstanding
Basic (in shares)	40,127	40,036
Diluted (in shares)	40,338	40,036
Product and license
Revenue
Total revenue	$ 38,260	$ 31,861
Cost of goods sold
Total cost of goods sold	10,738	11,316
Services and other
Revenue
Total revenue	18,232	15,747
Cost of goods sold
Total cost of goods sold	$ 5,332	$ 4,723

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$ 98	$ (5,671)
Other comprehensive income (loss)
Cumulative translation adjustment, net of tax	(4,278)	870
Pension adjustment, net of tax	(6)	(16)
Comprehensive income (loss)	$ (4,186)	$ (4,817)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Income	Accumulated Other Comprehensive Income (Loss)	Total
Balance at Dec. 31, 2018	$ 40	$ 93,310	$ 172,378	$ (13,287)	$ 252,441
Balance (in shares) at Dec. 31, 2018	40,225
Change in Stockholders' Equity
Net income (loss)			(5,671)		(5,671)
Foreign currency translation adjustment, net of tax				870	870
Restricted stock awards		552			552
Restricted stock awards, Shares	(10)
Tax payments for stock issuances		(218)			(218)
Pension adjustment, net of tax				(16)	(16)
Balance at Mar. 31, 2019	$ 40	93,644	166,707	(12,433)	247,958
Balance (in shares) at Mar. 31, 2019	40,215
Balance at Dec. 31, 2019	$ 40	96,109	181,167	(13,295)	264,021
Balance (in shares) at Dec. 31, 2019	40,207
Change in Stockholders' Equity
Cumulative impact of change in accounting principles, net of tax			(253)		(253)
Net income (loss)			98		98
Foreign currency translation adjustment, net of tax				(4,278)	(4,278)
Restricted stock awards		1,350			1,350
Restricted stock awards, Shares	168
Tax payments for stock issuances		(293)			(293)
Tax payments for stock issuances, Shares	(61)
Pension adjustment, net of tax				(6)	(6)
Balance at Mar. 31, 2020	$ 40	$ 97,166	$ 181,012	$ (17,579)	$ 260,639
Balance (in shares) at Mar. 31, 2020	40,314

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Cash flows from operating activities:
Net income (loss)	$ 98	$ (5,671)
Adjustments to reconcile net income (loss) from operations to net cash provided by (used in) operations:
Depreciation and amortization of intangible assets	3,019	2,862
Loss (gain) on disposal of assets	88
Deferred tax benefit	(306)	(4)
Stock-based compensation	1,350	552
Changes in operating assets and liabilities:
Accounts receivable, net	(1,817)	79
Inventories, net	1,445	(813)
Contract assets	(564)	2,578
Accounts payable	(1,663)	7,797
Income taxes payable	(4,707)	(3,491)
Accrued expenses	(2,104)	(5,560)
Deferred compensation	418	(126)
Deferred revenue	4,166	(455)
Other assets and liabilities	(1,775)	(1,485)
Net cash used in operating activities	(2,352)	(3,737)
Cash flows from investing activities:
Purchase of short term investments	(6,642)	(4,475)
Maturities of short term investments	6,500	2,000
Additions to property and equipment	(1,516)	(176)
Other	(13)
Net cash provided by (used in) investing activities	(1,671)	(2,651)
Cash flows from financing activities:
Tax payments for restricted stock issuances	(293)	(218)
Net cash used in financing activities	(293)	(218)
Effect of exchange rate changes on cash	(342)	(195)
Net decrease in cash	(4,658)	(6,801)
Cash, cash equivalents, and restricted cash, beginning of period	85,129	77,555
Cash, cash equivalents, and restricted cash, end of period	$ 80,471	$ 70,754

Description of the Company and

Description of the Company and Basis of Presentation	3 Months Ended
	Mar. 31, 2020
Description of the Company and Basis of Presentation
Description of the Company and Basis of Presentation	Note 1 – Description of the Company and Basis of Presentation Description of the Company OneSpan Inc. and its wholly owned subsidiaries design, develop, market and support hardware and software security systems that manage and secure access to information assets. OneSpan has operations in Austria, Australia, Belgium, Brazil, Canada, China, France, Japan, The Netherlands, Singapore, Switzerland, the United Arab Emirates, the United Kingdom (U.K), and the United States (U.S.). In accordance with ASC 280, Segment Reporting, our operations are reported as a single operating segment. The chief operating decision maker is the Chief Executive Officer who reviews the statement of operations of the Company on a consolidated basis, makes decisions and manages the operations of the Company as a single operating segment. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of OneSpan and its subsidiaries and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2019. In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results of the interim periods presented. All significant intercompany accounts and transactions have been eliminated. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020, particularly in light of the novel coronavirus (COVID-19) pandemic and its effects on domestic and global economies. To limit the spread of COVID-19, governments have imposed, and may continue to impose, among other things, travel and business operation restrictions and stay-at-home orders and social distancing guidelines, causing some businesses to adjust, reduce or suspend operating activities. These disruptions and restrictions could adversely affect our operating results due to, among other things, reduced demand for our services and solutions as a result of our customers having to adjust, reduce or suspend operating activities . For additional information, see Part II, Item 1A – Risk Factors of this Form 10-Q for additional information regarding the potential impact of COVID-19 on the Company. Principles of Consolidation The consolidated financial statements include the accounts of OneSpan Inc. and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Foreign Currency Translation and Transactions The financial position and results of the operations of the majority of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Accordingly, assets and liabilities are translated into U.S. Dollars using current exchange rates as of the balance sheet date. Revenue and expenses are translated at average exchange rates prevailing during the year. Translation adjustments arising from differences in exchange rates are charged or credited to other comprehensive income (loss). Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations in other income (expense), net. Foreign exchange transaction losses aggregated $0.5 and $0.9 million for the three months ended March 31, 2020 and March 31, 2019, respectively. The financial position and results of our operations in Singapore, Switzerland, and Canada are measured in U.S. Dollars. For these subsidiaries, gains and losses that result from foreign currency transactions are included in the consolidated statements of operations in other income (expense), net.

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies	Note 2 – Summary of Significant Accounting Policies Except for certain changes which resulted from the adoption of ASU 2016-13, there have been no changes to the significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 16, 2020 that have had a material impact on the Company’s condensed consolidated financial statements and related notes. Cash, Cash Equivalents and Restricted Cash. We are in a lease agreement that required a letter of credit in the amount of $0.8 million to secure the obligation. The restricted cash related to this letter of credit is recorded in other non-current assets on the Condensed Consolidated Balance Sheet at March 31, 2020 and December 31, 2019. Short Term Investments The Company’s short term investments are in debt securities which consist of U.S treasury bills and notes, U.S. government agency notes, corporate notes, and high quality commercial paper with maturities at acquisition of more than three months and less than twelve months The Company classifies its investments in debt securities as available-for-sale. The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments , on January 1, 2020, which amended our accounting for available-for-sale debt securities. Credit impairments are recorded through an allowance rather than a direct write-down of the security and are recorded through a charge to the condensed consolidated statement of operations. Unrealized gains or losses not related to credit impairments are recorded in accumulated other comprehensive gain/(loss) in the condensed consolidated balance sheets. The Company reviews available-for-sale debt securities for impairments related to credit losses and other factors each quarter. As of March 31, 2020 and December 31, 2019, the unrealized gains and losses were not material. Accounts Receivable, net of Allowance for Credit Losses The Company adopted ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments , on January 1, 2020. As a result of the adoption, the Company amended its accounting policies for the allowance for credit losses. In accordance with ASU No. 2016-13, the Company evaluates its allowance based on expected losses rather than incurred losses, which is known as the current expected credit loss (“CECL”) model. The allowance is determined using the loss rate approach and is measured on a collective (pool) basis when similar risk characteristics exist. Where financial instruments do not share risk characteristics, they are evaluated on an individual basis. The allowance is based on relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Equity Method Investment We apply the equity method of accounting to our investment in Promon AS (Promon), because we exercise significant influence, but not controlling interest, in the investee. Promon is a technology company headquartered in Norway that specializes in mobile app security, whose solutions focus largely on Runtime Application Self-Protection (RASP). We exercise significant influence over Promon as a result of our 17% ownership interest in Promon, our representation on Promon’s Board of Directors, and the significance to Promon of our business activities with them. We integrate Promon’s RASP technology into our software solution, which are licensed to our customers. Under the equity method of accounting, the Company’s proportionate share of the net earnings (losses) of Promon is reported in other income (expense), net in our consolidated Statements of Operations. The impact of the proportionate share of net earnings (losses) were immaterial for the three months ended March 31, 2020 and 2019 as were the relative size of Promon’s assets and operations in relation to the Company’s. The carrying value of our equity method investment is reported in other noncurrent assets in the consolidated Balance Sheets and is reported originally at cost and adjusted each period for the Company’s share of the investee’s earnings (losses) and dividends paid, if any. The Company also assesses the investment for impairment whenever events or changes in circumstances indicate that the carrying value of the investment may not be recoverable. The Company did not record any impairment charges during the three month periods ended March 31, 2020 and 2019. The Company recorded $1.2 million and $0.6 million in costs of sales during the three months ended March 31, 2020 and March 31, 2019, respectively for license fees owed to Promon for use of their software and technology. The Company owed Promon $3.2 million as of March 31, 2020, which is included in accounts payable and accrued liabilities. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) , which amends the Board’s guidance on the impairment of financial instruments. The ASU adds an impairment model that is based on expected losses rather than incurred losses, which is known as the current expected credit loss (“CECL”) model. The CECL model applies to most debt instruments (other than those measured at fair value), trade and other receivables, financial guarantee contracts, and loan commitments. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted ASC 326 as of January 1, 2020, using the cumulative-effect transition method with the required prospective approach. The cumulative-effect transition method enables an entity to an record allowance for expected credit losses at the date of adoption without restating comparative periods. The cumulative effect adjustment for adoption of ASC 326 resulted in a decrease of $0.3 million in Accounts receivable, net of allowances and Accumulated Income as of January 1, 2020. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment . This standard eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (i.e. Step 2 of the current guidance), instead measuring the impairment charge as the excess of the reporting unit's carrying amount over its fair value (i.e. Step 1 of the current guidance). The guidance is effective for us beginning in the first quarter of 2020, and should be applied prospectively. Early adoption is permitted for impairment testing dates after January 1, 2017. We adopted this standard on January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”) , which amends ASC 820, Fair Value Measurement . ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019, with early adoption permitted for removed or modified disclosures, and delayed adoption of the additional disclosures until their effective date. We adopted this standard on January 1, 2020 on a retrospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, C ustomer's Accounting for Fees Paid in a Cloud Computing Arrangement , which helps entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (CCA) by providing guidance for determining when an arrangement includes a software license and when an arrangement is solely a hosted CCA service. Under ASU 2018-15, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. The new guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. We adopted this standard on January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14), which modifies the disclosure requirements for defined benefit pension plans and other postretirement plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020, and earlier adoption is permitted. We are currently evaluating the effect that the ASU will have on our consolidated financial statements and related disclosures. In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topics 321, 323 and 815. The new standard addresses accounting for the transition into and out of the equity method and measurement of certain purchased options and forward contracts to acquire investments. The standard is effective for the Company for annual and interim periods beginning after July 1, 2022, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. The Company is evaluating the impact of adoption of the new standard on its consolidated financial statements. From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, our management believes that the issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

Revenue

Revenue	3 Months Ended
	Mar. 31, 2020
Revenue
Revenue	Note 3 – Revenue We recognize revenue in accordance with ASC 606 “Revenue from Contracts with Customers” (“Topic 606”), as described below. Disaggregation of Revenues The following tables present our revenues disaggregated by major products and services, geographical region and timing of revenue recognition. Revenue by major products (in thousands) Three months ended March 31, 2020 2019 Hardware products $ 19,738 $ 24,290 Software licenses 18,522 7,571 Subscription 5,829 5,251 Professional services 1,421 809 Maintenance, support and other 10,982 9,686 Total Revenue $ 56,492 $ 47,608 Revenue by location of customer for the three months ended March 31, 2020 and 2019 (in thousands) EMEA Americas APAC Total Total Revenue: 2020 $ 33,726 $ 12,333 $ 10,433 $ 56,492 2019 $ 25,599 $ 12,731 $ 9,278 $ 47,608 Percent of Total: 2020 60 % 22 % 18 % 100 % 2019 54 % 27 % 19 % 100 % Timing of revenue recognition (in thousands) Three months ended March 31, 2020 2019 Products and Licenses transferred at a point in time $ 38,260 $ 31,861 Services transferred over time 18,232 15,747 Total Revenue $ 56,492 $ 47,608 Contract balances The following table provides information about receivables, contract assets and contract liabilities from contracts with customers. March 31, December 31, 2020 2019 Receivables, inclusive of trade and unbilled $ 62,971 $ 62,405 Contract Assets (current and non-current) $ 11,181 $ 10,623 Contract Liabilities (Deferred Revenue current and non-current) $ 49,382 $ 45,597 Contract assets relate primarily to multi-year term license arrangements and the remaining contractual billings. These contract assets are transferred to receivables when the right to billing occurs, which is normally over 3-5 years. The contract liabilities primarily relate to the advance consideration received from customers for subscription and maintenance services. Revenue is recognized for these services over time. As a practical expedient, we do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less. We do not typically include extended payment terms in our contracts with customers. Revenue recognized during the three months ended March 31, 2020 included $11.9 million that was included on the December 31, 2019 balance sheet in contract liabilities. Deferred revenue increased in the same period due to timing of annual renewals. Transaction price allocated to the remaining performance obligations The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. in thousands 2020 2021 2022 Beyond 2022 Total Future revenue related to current unsatisfied performance obligations $ 9,327 $ 9,164 $ 7,178 $ 11,654 $ 37,323 The Company applies practical expedients and does not disclose information about remaining performance obligations (a) that have original expected durations of one year or less, or (b) where revenue is recognized as invoiced. Costs of obtaining a contract The Company incurs incremental costs related to commissions, which can be directly tied to obtaining a contract. The Company capitalizes commissions associated with certain new contracts and amortizes the costs over a period of benefit based on the transfer of goods or services that we have determined to be up to seven years. The Amortization is reflected in Sales and Marketing in the Statements of Operations. We determined the period of benefit by taking into consideration our customer contracts, our technology and other factors, including customer attrition. Commissions are earned upon invoicing to the customer. For contracts with multiple year payment terms, as the commissions that are payable after year 1 are payable based on continued employment, they are expensed when incurred . Commissions and amortization expense are included in Sales and Marketing expenses on the consolidated statements of operations. Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period for the assets that the Company otherwise would have recognized is one year or less. These costs are included in Sales and Marketing expense in the consolidated statements of operations. The following tables provide information related to the capitalized costs and amortization recognized in the current and prior periods: in thousands March 31, 2020 December 31, 2019 Capitalized costs to obtain contracts, current $ 743 $ 676 Capitalized costs to obtain contracts, non-current $ 3,465 $ 3,222 Three months ended March 31, in thousands 2020 2019 Amortization of capitalized costs to obtain contracts $ $ Impairments of capitalized costs to obtain contracts $ - $ -

Inventories, net

Inventories, net	3 Months Ended
	Mar. 31, 2020
Inventories, net
Inventories, net	Note 4 – Inventories, net Inventories, net, consisting principally of hardware and component parts, are stated at the lower of cost or net realizable value. Cost is determined using the FIFO method. Inventories, net are comprised of the following: March 31, December 31, 2020 2019 (in thousands) Component parts $ 6,611 $ 7,429 Work-in-process and finished goods 11,762 12,390 Total $ 18,373 $ 19,819

Goodwill

Goodwill	3 Months Ended
	Mar. 31, 2020
Goodwill
Goodwill	Note 5 – Goodwill Goodwill activity for the three months ended March 31, 2020 consisted of the following: in thousands Net balance at December 31, 2019 $ 94,612 Net foreign currency translation (3,056) Net balance at March 31, 2020 $ 91,556 No impairment of goodwill was recorded during the three months ended March 31, 2020 or March 31, 2019.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2020
Intangible Assets
Intangible Assets	Note 6 – Intangible Assets Intangible asset activity for the three months ended March 31, 2020 is detailed in the following table. in thousands Acquired Technology Customer Relationships Other Total Intangible Assets Net balance at December 31, 2019 $ 5,454 $ 26,884 $ 3,871 $ 36,209 Additions — — 13 13 Net foreign currency translation (203) (607) (6) (816) Amortization expense (860) (906) (588) (2,354) Net balance at March 31, 2020 $ 4,391 $ 25,371 $ 3,290 $ 33,052 March 31, 2020 balance at cost $ 41,794 $ 38,736 $ 13,701 $ 94,231 Accumulated amortization (37,403) (13,365) (10,411) (61,179) Net balance at March 31, 2020 $ 4,391 $ 25,371 $ 3,290 $ 33,052 Certain intangible assets are denominated in local currencies and are subject to currency fluctuations. No impairment of intangible assets was recorded during the three months ended March 31, 2020 or March 31, 2019.

Property, Plant and Equipment

Property, Plant and Equipment	3 Months Ended
	Mar. 31, 2020
Property, Plant and Equipment
Property, Plant and Equipment	Note 7 – Property and Equipment The major classes of property and equipment are as follows: in thousands March 31, 2020 December 31, 2019 Office equipment and software $ 13,820 $ 14,595 Leasehold improvements 10,229 9,417 Furniture and fixtures 3,795 3,717 Total 27,844 27,729 Accumulated depreciation (15,687) (16,275) Property and equipment, net $ 12,157 $ 11,454 Depreciation expense was $0.7 million and $0.5 million for the three months ended March 31, 2020 and 2019, respectively.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2020
Fair Value Measurements
Fair Value Measurements	Note 8 – Fair Value Measurements The fair values of cash equivalents, receivables, net, and accounts payable approximate their carrying amounts due to their short duration. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing base upon its own market assumptions. The Company classifies its investments in debt securities as available-for-sale. As described in Note 2- Summary of Significant Accounting Policies, the January 1, 2020 adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments, amended our accounting for available-for-sale debt securities. We review available-for-sale det securities for impairments related to losses and other factors each quarter. The unrealized gains and losses on the available-for-sale debt securities were not material as of March 31, 2020 and December 31, 2019. The estimated fair value of our financial instruments has been determined by using available market information and appropriate valuation methodologies, as defined in ASC 820, Fair Value Measurements . The fair value hierarchy consists of the following three levels:  Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.  Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived primarily from or corroborated by observable market data.  Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The following tables summarize assets that are measured at fair value on a recurring basis as of March 31, 2020 and December 31, 2019: Fair Value Measurement at Reporting Date Using in thousands March 31, 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: U.S. Treasury Notes $ 8,337 - $ 8,337 - Corporate Notes / Bonds $ 9,167 - $ 9,167 - Commercial Paper $ 3,508 - $ 3,508 - U.S. Treasury Bills $ 2,390 - $ 2,390 - U.S. Government Agencies $ 2,250 - $ 2,250 - Fair Value Measurement at Reporting Date Using in thousands December 31, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: U.S. Treasury Notes $ 9,225 - $ 9,225 - Corporate Notes / Bonds $ 8,169 - $ 8,169 - Commercial Paper $ 3,482 - $ 3,482 - U.S. Treasury Bills $ 2,385 - $ 2,385 - U.S. Government Agencies $ 2,249 - $ 2,249 -

Allowance for credit losses

Allowance for credit losses	3 Months Ended
	Mar. 31, 2020
Allowance for credit losses
Allowance for credit losses	Note 9 – Allowance for credit losses As described in Note 2 - Summary of Significant Accounting Policies, the January 1, 2020 adoption of ASU 2016-13, Measurement of Credit Losses on Financial Instruments, amended our accounting policies for the allowance for credit losses. The changes in the allowance for credit losses during the three months ended March 31, 2020 were as follows: in thousands March 31, 2020 Balance at December 31, 2019 $ 2,524 Impact of ASU 2016-13 adoption 288 Balance at January 1, 2020 2,812 Provision 360 Net foreign currency translation (7) Balance at March 31, 2020 $ 3,165 A higher allowance for credit losses was recorded during the three months ended March 31, 2020 due to the likely adverse impact the COVID-19 pandemic has had and will have on factors that affect our estimate of future credit losses.

Leases

Leases	3 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Leases	Note 10 – Leases Operating lease cost details for the three months ended March 31, 2020 and 2019 are as follows: Three months ended March 31, 2020 2019 (in thousands) Building rent $ 691 $ 864 Automobile rentals 352 277 Total net operating lease costs $ 1,043 $ 1,141 At March 31, 2020, the weighted average remaining lease term for our operating leases is 7.0 years. The weighted average discount rate for our operating leases is 5%. During the three months ended March 31, 2020, there were $1.0 million of operating cash payments for lease liabilities, and $1.9 million of right-of use assets obtained in exchange for new lease liabilities. Maturities of our operating leases are as follows: As of March 31, 2020 (in $ thousands) 2020 (remaining 9 months) $ 3,241 2021 3,048 2022 2,597 2023 2,096 2024 1,369 Later years 6,423 Less imputed interest (3,234) Total lease liabilities $ 15,540

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2020
Income Taxes
Income Taxes	Note 11 – Income Taxes Our estimated annual tax rate for 2020 before discrete items is expected to be approximately 96%. Our global effective tax rate is higher than the U.S. statutory tax rate of 21% primarily due to forecasted losses in jurisdictions for which a valuation allowance will be required. Our ultimate tax expense will depend on the mix of earnings in various jurisdictions. Income taxes paid during the three months ended March 31, 2020 was $5.7 million. At December 31, 2019, we had deferred tax assets of $24.9 million resulting from foreign and state NOL carryforwards of $16.6 million and other foreign deductible carryforwards of $8.3 million. At December 31, 2019, we had a valuation allowance of $17.3 million against deferred tax assets related to certain carryforwards. Certain of our non-U.S. operations have incurred net operating losses (NOLs), which may become deductible to the extent these operations become profitable. For each of our operations, we evaluate whether it is more likely than not that the tax benefits related to NOLs will be realized. As part of this evaluation, we consider evidence such as tax planning strategies, historical operating results, forecasted taxable income, and recent financial performance. In the year that certain non-U.S. operations record a loss, we do not recognize a corresponding tax benefit, thus increasing our effective tax rate. Upon determining that it is more likely than not that the NOLs will be realized, we reduce the tax valuation allowances related to these NOLs, which results in a reduction to our income tax expense and our effective tax rate in the period. On March 27, 2020 President Trump signed into law the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Among other provision, the law provides relief to U.S. federal corporate taxpayers through temporary adjustments to net operating loss rules, changes to limitations on interest expense deductibility, the acceleration of available refunds for minimum tax credit carryforwards, and depreciation method changes. We do not expect the provisions of the legislation to have a significant impact on our effective tax rate nor the income tax payable and deferred income tax positions of the Company.

Long-Term Compensation Plan and

Long-Term Compensation Plan and Stock Based Compensation	3 Months Ended
	Mar. 31, 2020
Long-Term Compensation Plan and Stock Based Compensation
Stock Compensation Plans	Note 12 – Long-Term Compensation Plan and Stock Based Compensation (share counts in thousands) Under the OneSpan Inc. 2019 Omnibus Incentive Plan, we awarded 136 restricted stock units during the three months ended March 31, 2020, subject to time-based vesting. During the same period we awarded restricted stock units some of which are subject to the achievement of future performance criteria and others that are subject to the achievement of market conditions. For the restricted stock units for which performance criteria have been established, the Company currently believes it is probable that 32 unissued shares will be earned. The restricted stock units subject to market conditions allow for up to 64 shares to be earned if the market conditions are fully achieved. The fair value of the unissued 136 restricted stock units was $2.6 million at the date of grant, and is being amortized over the vesting period of one to four years. The fair value of the 96 unissued shares subject to performance criteria or market conditions was approximately $1 million at the date of grant, and is being amortized over the vesting period of three years. The following table details long-term compensation plan and stock-based compensation expense for the three months ended March 31, 2020 and 2019: March 31, 2020 2019 in thousands (in thousands) Restricted stock $ 1,350 $ 552 Long-term compensation plan 365 503 Total compensation $ 1,715 $ 1,055

Earnings per Common Share

Earnings per Common Share	3 Months Ended
	Mar. 31, 2020
Earnings per Common Share
Earnings per Common Share	Note 13 – Earnings per Share (share counts in thousands) Basic earnings per share is based on the weighted average number of shares outstanding and excludes the dilutive effect of common stock equivalents. Diluted earnings per share is based on the weighted average number of shares outstanding and includes the dilutive effect of common stock equivalents to the extent they are not anti-dilutive. For the three months ended March 31, 2020, the anti-dilutive effect of our securities is immaterial. Because the Company is in a net loss position for the three months ended March 31, 2019, diluted net loss per share for this period excludes the effects of common stock equivalents, which are anti-dilutive. The details of the earnings per share calculations for the three months ended March 31, 2020 and 2019 are as follows: March 31, in thousands, except per share data 2020 2019 Net income (loss) $ 98 $ (5,671) Weighted average common shares outstanding: Basic 40,127 40,036 Incremental shares with dilutive effect: Restricted stock awards 211 — Diluted 40,338 40,036 Net income (loss) per share: Basic $ 0.00 $ (0.14) Diluted $ 0.00 $ (0.14)

Legal Proceedings and Contingen

Legal Proceedings and Contingencies	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies
Legal Proceedings and Contingencies	Note 14 – Legal Proceedings and Contingencies We are a party to or have intellectual property subject to litigation and other proceedings that arise in the ordinary course of our business. These types of matters could result in fines, penalties, compensatory or treble damages or non-monetary sanctions or relief. We believe the probability is remote that the outcome of each of these matters, including the legal proceedings described below, will have a material adverse effect on the corporation as a whole, notwithstanding that the unfavorable resolution of any matter may have a material effect on our financial results in any particular interim reporting period. Among the factors that we consider in this assessment are the nature of existing legal proceedings and claims, the asserted or possible damages or loss contingency (if estimable), the progress of the case, existing law and precedent, the opinions or views of legal counsel and other advisers, our experience in similar cases and the experience of other companies, the facts available to us at the time of assessment and how we intend to respond to the proceeding or claim. Our assessment of these factors may change over time as individual proceedings or claims progress. Although we cannot predict the outcome of legal or other proceedings with certainty, where there is at least a reasonable possibility that a loss may have been incurred, U.S. GAAP requires us to disclose an estimate of the reasonably possible loss or range of loss or make a statement that such an estimate cannot be made. We follow a process in which we seek to estimate the reasonably possible loss or range of loss, and only if we are unable to make such an estimate do we conclude and disclose that an estimate cannot be made. Accordingly, unless otherwise indicated below in our discussion of legal proceedings, a reasonably possible loss or range of loss associated with any individual legal proceeding cannot be estimated. We include various types of indemnification clauses in our agreements. These indemnifications may include, but are not limited to, infringement claims related to our intellectual property, direct damages and consequential damages. The type and amount of such indemnifications vary substantially based on our assessment of risk and reward associated with each agreement. We believe the estimated fair value of these indemnification clauses is minimal, and we cannot determine the maximum amount of potential future payments, if any, related to such indemnification provisions. We have no liabilities recorded for these clauses as of March 31, 2020. We are involved in an ongoing dispute with a German company, Onespin solutions GmbH, regarding the co-existence of, or alleged infringement with, its trademark in certain jurisdictions for “ONESPIN” and our trademark in certain jurisdictions for “ONESPAN”. Onespin sells integrated circuit integrity verification solutions for use in the system on chip software development process flow. We believe that its products and services are sufficiently different from ours. Therefore, among other reasons, we are vigorously defending our intellectual property rights where necessary. In addition, we are the plaintiff in litigation against Onespin in Europe currently. While the outcome of any particular aspect of this current dispute cannot be predicted with certainty, including timing, we plan to continue to assert our rights and prosecute litigation wherever advisable. From time to time, we have been involved in litigation and claims incidental to the conduct of our business, such as compensation claims from current or former employees in Europe. We expect that to continue. Excluding matters specifically disclosed above, we are not a party to any lawsuit or proceeding that, in management’s opinion, is likely to have a material adverse effect on its business, financial condition or results of operations.

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Summary of Significant Accounting Policies
Description of the Company	Description of the Company OneSpan Inc. and its wholly owned subsidiaries design, develop, market and support hardware and software security systems that manage and secure access to information assets. OneSpan has operations in Austria, Australia, Belgium, Brazil, Canada, China, France, Japan, The Netherlands, Singapore, Switzerland, the United Arab Emirates, the United Kingdom (U.K), and the United States (U.S.). In accordance with ASC 280, Segment Reporting, our operations are reported as a single operating segment. The chief operating decision maker is the Chief Executive Officer who reviews the statement of operations of the Company on a consolidated basis, makes decisions and manages the operations of the Company as a single operating segment.
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of OneSpan and its subsidiaries and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2019. In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results of the interim periods presented. All significant intercompany accounts and transactions have been eliminated. Operating results for the three months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the year ended December 31, 2020, particularly in light of the novel coronavirus (COVID-19) pandemic and its effects on domestic and global economies. To limit the spread of COVID-19, governments have imposed, and may continue to impose, among other things, travel and business operation restrictions and stay-at-home orders and social distancing guidelines, causing some businesses to adjust, reduce or suspend operating activities. These disruptions and restrictions could adversely affect our operating results due to, among other things, reduced demand for our services and solutions as a result of our customers having to adjust, reduce or suspend operating activities . For additional information, see Part II, Item 1A – Risk Factors of this Form 10-Q for additional information regarding the potential impact of COVID-19 on the Company.
Principles of Consolidation	Principles of Consolidation The consolidated financial statements include the accounts of OneSpan Inc. and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.
Estimates and Assumptions	Estimates and Assumptions The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Foreign Currency Translation and Transactions	Foreign Currency Translation and Transactions The financial position and results of the operations of the majority of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Accordingly, assets and liabilities are translated into U.S. Dollars using current exchange rates as of the balance sheet date. Revenue and expenses are translated at average exchange rates prevailing during the year. Translation adjustments arising from differences in exchange rates are charged or credited to other comprehensive income (loss). Gains and losses resulting from foreign currency transactions are included in the consolidated statements of operations in other income (expense), net. Foreign exchange transaction losses aggregated $0.5 and $0.9 million for the three months ended March 31, 2020 and March 31, 2019, respectively. The financial position and results of our operations in Singapore, Switzerland, and Canada are measured in U.S. Dollars. For these subsidiaries, gains and losses that result from foreign currency transactions are included in the consolidated statements of operations in other income (expense), net.
Cash, Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted Cash. We are in a lease agreement that required a letter of credit in the amount of $0.8 million to secure the obligation. The restricted cash related to this letter of credit is recorded in other non-current assets on the Condensed Consolidated Balance Sheet at March 31, 2020 and December 31, 2019.
Short Term Investments	Short Term Investments The Company’s short term investments are in debt securities which consist of U.S treasury bills and notes, U.S. government agency notes, corporate notes, and high quality commercial paper with maturities at acquisition of more than three months and less than twelve months The Company classifies its investments in debt securities as available-for-sale. The Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments , on January 1, 2020, which amended our accounting for available-for-sale debt securities. Credit impairments are recorded through an allowance rather than a direct write-down of the security and are recorded through a charge to the condensed consolidated statement of operations. Unrealized gains or losses not related to credit impairments are recorded in accumulated other comprehensive gain/(loss) in the condensed consolidated balance sheets. The Company reviews available-for-sale debt securities for impairments related to credit losses and other factors each quarter. As of March 31, 2020 and December 31, 2019, the unrealized gains and losses were not material.
Accounts Receivable, net of Allowance for Credit Losses	Accounts Receivable, net of Allowance for Credit Losses The Company adopted ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments , on January 1, 2020. As a result of the adoption, the Company amended its accounting policies for the allowance for credit losses. In accordance with ASU No. 2016-13, the Company evaluates its allowance based on expected losses rather than incurred losses, which is known as the current expected credit loss (“CECL”) model. The allowance is determined using the loss rate approach and is measured on a collective (pool) basis when similar risk characteristics exist. Where financial instruments do not share risk characteristics, they are evaluated on an individual basis. The allowance is based on relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts
Equity Method Investment	Equity Method Investment We apply the equity method of accounting to our investment in Promon AS (Promon), because we exercise significant influence, but not controlling interest, in the investee. Promon is a technology company headquartered in Norway that specializes in mobile app security, whose solutions focus largely on Runtime Application Self-Protection (RASP). We exercise significant influence over Promon as a result of our 17% ownership interest in Promon, our representation on Promon’s Board of Directors, and the significance to Promon of our business activities with them. We integrate Promon’s RASP technology into our software solution, which are licensed to our customers. Under the equity method of accounting, the Company’s proportionate share of the net earnings (losses) of Promon is reported in other income (expense), net in our consolidated Statements of Operations. The impact of the proportionate share of net earnings (losses) were immaterial for the three months ended March 31, 2020 and 2019 as were the relative size of Promon’s assets and operations in relation to the Company’s. The carrying value of our equity method investment is reported in other noncurrent assets in the consolidated Balance Sheets and is reported originally at cost and adjusted each period for the Company’s share of the investee’s earnings (losses) and dividends paid, if any. The Company also assesses the investment for impairment whenever events or changes in circumstances indicate that the carrying value of the investment may not be recoverable. The Company did not record any impairment charges during the three month periods ended March 31, 2020 and 2019. The Company recorded $1.2 million and $0.6 million in costs of sales during the three months ended March 31, 2020 and March 31, 2019, respectively for license fees owed to Promon for use of their software and technology. The Company owed Promon $3.2 million as of March 31, 2020, which is included in accounts payable and accrued liabilities.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) , which amends the Board’s guidance on the impairment of financial instruments. The ASU adds an impairment model that is based on expected losses rather than incurred losses, which is known as the current expected credit loss (“CECL”) model. The CECL model applies to most debt instruments (other than those measured at fair value), trade and other receivables, financial guarantee contracts, and loan commitments. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted ASC 326 as of January 1, 2020, using the cumulative-effect transition method with the required prospective approach. The cumulative-effect transition method enables an entity to an record allowance for expected credit losses at the date of adoption without restating comparative periods. The cumulative effect adjustment for adoption of ASC 326 resulted in a decrease of $0.3 million in Accounts receivable, net of allowances and Accumulated Income as of January 1, 2020. In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment . This standard eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge (i.e. Step 2 of the current guidance), instead measuring the impairment charge as the excess of the reporting unit's carrying amount over its fair value (i.e. Step 1 of the current guidance). The guidance is effective for us beginning in the first quarter of 2020, and should be applied prospectively. Early adoption is permitted for impairment testing dates after January 1, 2017. We adopted this standard on January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”) , which amends ASC 820, Fair Value Measurement . ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying, or adding certain disclosures. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019, with early adoption permitted for removed or modified disclosures, and delayed adoption of the additional disclosures until their effective date. We adopted this standard on January 1, 2020 on a retrospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, C ustomer's Accounting for Fees Paid in a Cloud Computing Arrangement , which helps entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (CCA) by providing guidance for determining when an arrangement includes a software license and when an arrangement is solely a hosted CCA service. Under ASU 2018-15, customers will apply the same criteria for capitalizing implementation costs as they would for an arrangement that has a software license. The new guidance also prescribes the balance sheet, income statement, and cash flow classification of the capitalized implementation costs and related amortization expense, and requires additional quantitative and qualitative disclosures. We adopted this standard on January 1, 2020 on a prospective basis. The adoption of this standard did not have a material impact on our consolidated financial statements. In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Topic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans (ASU 2018-14), which modifies the disclosure requirements for defined benefit pension plans and other postretirement plans. ASU 2018-14 is effective for fiscal years ending after December 15, 2020, and earlier adoption is permitted. We are currently evaluating the effect that the ASU will have on our consolidated financial statements and related disclosures. In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topics 321, 323 and 815. The new standard addresses accounting for the transition into and out of the equity method and measurement of certain purchased options and forward contracts to acquire investments. The standard is effective for the Company for annual and interim periods beginning after July 1, 2022, with early adoption permitted. Adoption of the standard requires changes to be made prospectively. The Company is evaluating the impact of adoption of the new standard on its consolidated financial statements. From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, our management believes that the issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption.

Revenue (Tables)

Revenue (Tables)	3 Months Ended
	Mar. 31, 2020
Revenue
Revenues disaggregated by geography, major product line and timing of revenue recognition	The following tables present our revenues disaggregated by major products and services, geographical region and timing of revenue recognition. Revenue by major products (in thousands) Three months ended March 31, 2020 2019 Hardware products $ 19,738 $ 24,290 Software licenses 18,522 7,571 Subscription 5,829 5,251 Professional services 1,421 809 Maintenance, support and other 10,982 9,686 Total Revenue $ 56,492 $ 47,608 Revenue by location of customer for the three months ended March 31, 2020 and 2019 (in thousands) EMEA Americas APAC Total Total Revenue: 2020 $ 33,726 $ 12,333 $ 10,433 $ 56,492 2019 $ 25,599 $ 12,731 $ 9,278 $ 47,608 Percent of Total: 2020 60 % 22 % 18 % 100 % 2019 54 % 27 % 19 % 100 % Timing of revenue recognition (in thousands) Three months ended March 31, 2020 2019 Products and Licenses transferred at a point in time $ 38,260 $ 31,861 Services transferred over time 18,232 15,747 Total Revenue $ 56,492 $ 47,608
Schedule of changes in contract assets and contract liabilities	March 31, December 31, 2020 2019 Receivables, inclusive of trade and unbilled $ 62,971 $ 62,405 Contract Assets (current and non-current) $ 11,181 $ 10,623 Contract Liabilities (Deferred Revenue current and non-current) $ 49,382 $ 45,597
Schedule of estimated revenue expected to be recognized in the future	in thousands 2020 2021 2022 Beyond 2022 Total Future revenue related to current unsatisfied performance obligations $ 9,327 $ 9,164 $ 7,178 $ 11,654 $ 37,323
Schedule related to the capitalized costs and amortization	in thousands March 31, 2020 December 31, 2019 Capitalized costs to obtain contracts, current $ 743 $ 676 Capitalized costs to obtain contracts, non-current $ 3,465 $ 3,222 Three months ended March 31, in thousands 2020 2019 Amortization of capitalized costs to obtain contracts $ $ Impairments of capitalized costs to obtain contracts $ - $ -

Inventories, net (Tables)

Inventories, net (Tables)	3 Months Ended
	Mar. 31, 2020
Inventories, net
Summary of Inventories, net	March 31, December 31, 2020 2019 (in thousands) Component parts $ 6,611 $ 7,429 Work-in-process and finished goods 11,762 12,390 Total $ 18,373 $ 19,819

Goodwill (Tables)

Goodwill (Tables)	3 Months Ended
	Mar. 31, 2020
Goodwill
Schedule of Goodwill Activity	in thousands Net balance at December 31, 2019 $ 94,612 Net foreign currency translation (3,056) Net balance at March 31, 2020 $ 91,556

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2020
Intangible Assets
Schedule of intangible asset activity	in thousands Acquired Technology Customer Relationships Other Total Intangible Assets Net balance at December 31, 2019 $ 5,454 $ 26,884 $ 3,871 $ 36,209 Additions — — 13 13 Net foreign currency translation (203) (607) (6) (816) Amortization expense (860) (906) (588) (2,354) Net balance at March 31, 2020 $ 4,391 $ 25,371 $ 3,290 $ 33,052 March 31, 2020 balance at cost $ 41,794 $ 38,736 $ 13,701 $ 94,231 Accumulated amortization (37,403) (13,365) (10,411) (61,179) Net balance at March 31, 2020 $ 4,391 $ 25,371 $ 3,290 $ 33,052

Property, Plant and Equipment (

Property, Plant and Equipment (Tables)	3 Months Ended
	Mar. 31, 2020
Property, Plant and Equipment
Schedule of major classes of property and equipment	in thousands March 31, 2020 December 31, 2019 Office equipment and software $ 13,820 $ 14,595 Leasehold improvements 10,229 9,417 Furniture and fixtures 3,795 3,717 Total 27,844 27,729 Accumulated depreciation (15,687) (16,275) Property and equipment, net $ 12,157 $ 11,454

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2020
Fair Value Measurements
Schedule of assets that are measured at fair value on a recurring basis	Fair Value Measurement at Reporting Date Using in thousands March 31, 2020 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: U.S. Treasury Notes $ 8,337 - $ 8,337 - Corporate Notes / Bonds $ 9,167 - $ 9,167 - Commercial Paper $ 3,508 - $ 3,508 - U.S. Treasury Bills $ 2,390 - $ 2,390 - U.S. Government Agencies $ 2,250 - $ 2,250 - Fair Value Measurement at Reporting Date Using in thousands December 31, 2019 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: U.S. Treasury Notes $ 9,225 - $ 9,225 - Corporate Notes / Bonds $ 8,169 - $ 8,169 - Commercial Paper $ 3,482 - $ 3,482 - U.S. Treasury Bills $ 2,385 - $ 2,385 - U.S. Government Agencies $ 2,249 - $ 2,249 -

Allowance for credit losses (Ta

Allowance for credit losses (Tables)	3 Months Ended
	Mar. 31, 2020
Allowance for credit losses
Schedule of changes in the allowance for credit losses	in thousands March 31, 2020 Balance at December 31, 2019 $ 2,524 Impact of ASU 2016-13 adoption 288 Balance at January 1, 2020 2,812 Provision 360 Net foreign currency translation (7) Balance at March 31, 2020 $ 3,165

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Schedule of supplemental lease costs	Operating lease cost details for the three months ended March 31, 2020 and 2019 are as follows: Three months ended March 31, 2020 2019 (in thousands) Building rent $ 691 $ 864 Automobile rentals 352 277 Total net operating lease costs $ 1,043 $ 1,141 At March 31, 2020, the weighted average remaining lease term for our operating leases is 7.0 years. The weighted average discount rate for our operating leases is 5%. During the three months ended March 31, 2020, there were $1.0 million of operating cash payments for lease liabilities, and $1.9 million of right-of use assets obtained in exchange for new lease liabilities.
Schedule of maturities of operating leases	As of March 31, 2020 (in $ thousands) 2020 (remaining 9 months) $ 3,241 2021 3,048 2022 2,597 2023 2,096 2024 1,369 Later years 6,423 Less imputed interest (3,234) Total lease liabilities $ 15,540

Long-Term Compensation Plan a_2

Long-Term Compensation Plan and Stock Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2020
Long-Term Compensation Plan and Stock Based Compensation
Summary of compensation expense	March 31, 2020 2019 in thousands (in thousands) Restricted stock $ 1,350 $ 552 Long-term compensation plan 365 503 Total compensation $ 1,715 $ 1,055

Earnings per Common Share (Tabl

Earnings per Common Share (Tables)	3 Months Ended
	Mar. 31, 2020
Earnings per Common Share
Details of Earnings Per Share Calculations	March 31, in thousands, except per share data 2020 2019 Net income (loss) $ 98 $ (5,671) Weighted average common shares outstanding: Basic 40,127 40,036 Incremental shares with dilutive effect: Restricted stock awards 211 — Diluted 40,338 40,036 Net income (loss) per share: Basic $ 0.00 $ (0.14) Diluted $ 0.00 $ (0.14)

Description of the Company an_2

Description of the Company and Basis of Presentation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Description of the Company and Basis of Presentation
Gain (loss) from foreign currency transactions	$ 0.5	$ 0.9

Summary of Significant Accoun_3

Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Cash and Cash Equivalents
Restricted cash	$ 847	$ 847	$ 847
Equity Method Investment
Impairment charges	0	0
Cost of Goods and Services Sold	$ 16,070	$ 16,039
Cost, Product and Service [Extensible List]	us-gaap:LicenseAndServiceMember	us-gaap:LicenseAndServiceMember
Promon
Equity Method Investment
Ownership percentage	17.00%
Cost of Goods and Services Sold	$ 1,200	$ 600
Amount owed included in accounts payable and accrued liabilities	$ 3,200
Letter of Credit
Cash and Cash Equivalents
Restricted Cash, Asset, Statement of Financial Position [Extensible List]	Other Assets, Noncurrent		Other Assets, Noncurrent
Restricted cash	$ 800

Summary of Significant Accoun_4

Summary of Significant Accounting Policies - New Accounting Pronouncements (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019
Adoption of new accounting pronouncements
Accounts receivable, net of allowance	$ 62,971		$ 62,405
Accumulated other comprehensive loss	$ (17,579)		$ (13,295)
ASU 2016-01 | Adjustment
Adoption of new accounting pronouncements
Accounts receivable, net of allowance		$ (300)
Accumulated other comprehensive loss		$ (300)

Revenue - Disaggregation of rev

Revenue - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenue
Revenue	$ 56,492	$ 47,608
Percent of Total	100.00%	100.00%
Products and Licenses transferred at a point in time
Revenue
Revenue	$ 38,260	$ 31,861
Services transferred over time
Revenue
Revenue	18,232	15,747
EMEA
Revenue
Revenue	$ 33,726	$ 25,599
Percent of Total	60.00%	54.00%
Americas
Revenue
Revenue	$ 12,333	$ 12,731
Percent of Total	22.00%	27.00%
APAC
Revenue
Revenue	$ 10,433	$ 9,278
Percent of Total	18.00%	19.00%
Hardware products
Revenue
Revenue	$ 19,738	$ 24,290
Software licenses
Revenue
Revenue	18,522	7,571
Subscription
Revenue
Revenue	5,829	5,251
Professional services
Revenue
Revenue	1,421	809
Maintenance, support and other
Revenue
Revenue	$ 10,982	$ 9,686

Revenue - Contract balances (De

Revenue - Contract balances (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Contract balances
Revenue recognized that was included in the balance sheet	$ 11,900
Contract Assets (current and non-current)	11,181	$ 10,623
Contract Liabilities (Deferred Revenue current and non-current)	$ 49,382	$ 45,597
Revenue, Practical Expedient, Financing Component [true/false]	true
Minimum
Contract balances
The amount of time contract assets are transferred to receivables	3 years
Maximum
Contract balances
The amount of time contract assets are transferred to receivables	5 years

Revenue - Performance Obligatio

Revenue - Performance Obligations (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2020USD ($)
Revenue
Remaining performance obligations	true
Original expected durations	true
Revenue, Practical Expedient, Incremental Cost of Obtaining Contract [true/false]	true
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-01-01
Revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months
Future revenue related to current unsatisfied performance obligations	$ 9,327
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-01-01
Revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months
Future revenue related to current unsatisfied performance obligations	$ 9,164
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months
Future revenue related to current unsatisfied performance obligations	$ 7,178
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01
Revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	9 months
Future revenue related to current unsatisfied performance obligations	$ 11,654
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period
Future revenue related to current unsatisfied performance obligations	$ 37,323

Revenue - Capitalized Costs and

Revenue - Capitalized Costs and Amortization (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Revenue
Amortization period	7 years
Capitalized costs to obtain contracts, current	$ 743		$ 676
Capitalized costs to obtain contracts, non-current	3,465		$ 3,222
Amortization of capitalized costs to obtain contracts	$ 169	$ 109

Inventories, net - Summary of I

Inventories, net - Summary of Inventories, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Inventories, net
Component parts	$ 6,611	$ 7,429
Work-in-process and finished goods	11,762	12,390
Total	$ 18,373	$ 19,819

Goodwill - Schedule of Goodwill

Goodwill - Schedule of Goodwill Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Goodwill
Net balance at beginning of period	$ 94,612
Net foreign currency translation	(3,056)
Net balance at end of period	91,556
Goodwill impairment	$ 0	$ 0

Intangible Assets - Schedule of

Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020
Intangible asset activity
Net balance	$ 36,209
Additions	13
Net foreign currency translation	(816)
Amortization expense	(2,354)	$ (2,348)
Net balance	33,052
Intangible assets, net
Balance at cost			$ 94,231
Accumulated amortization			(61,179)
Ending Balance	33,052		33,052
Impairment charges	0	$ 0
Acquired Technology
Intangible asset activity
Net balance	5,454
Net foreign currency translation	(203)
Amortization expense	(860)
Net balance	4,391
Intangible assets, net
Balance at cost			41,794
Accumulated amortization			(37,403)
Ending Balance	4,391		4,391
Customer relationships
Intangible asset activity
Net balance	26,884
Net foreign currency translation	(607)
Amortization expense	(906)
Net balance	25,371
Intangible assets, net
Balance at cost			38,736
Accumulated amortization			(13,365)
Ending Balance	25,371		25,371
Other
Intangible asset activity
Net balance	3,871
Additions	13
Net foreign currency translation	(6)
Amortization expense	(588)
Net balance	3,290
Intangible assets, net
Balance at cost			13,701
Accumulated amortization			(10,411)
Ending Balance	$ 3,290		$ 3,290

Property and Equipment (Details

Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Total	$ 27,844		$ 27,729
Accumulated depreciation	(15,687)		(16,275)
Property and equipment, net	12,157		11,454
Depreciation expense	700	$ 500
Office equipment and software
Property, Plant and Equipment [Line Items]
Total	13,820		14,595
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Total	10,229		9,417
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total	$ 3,795		$ 3,717

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Recurring - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
U.S. Treasury Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	$ 8,337	$ 9,225
U.S. Treasury Notes | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	8,337	9,225
Corporate Notes / Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	9,167	8,169
Corporate Notes / Bonds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	9,167	8,169
Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	3,508	3,482
Commercial Paper | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	3,508	3,482
U.S. Treasury Bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	2,390	2,385
U.S. Treasury Bills | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	2,390	2,385
U.S. Government Agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	2,250	2,249
U.S. Government Agencies | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure	$ 2,250	$ 2,249

Allowance for credit losses (De

Allowance for credit losses (Details) - USD ($) $ in Thousands	Jan. 01, 2020	Mar. 31, 2020
Changes in the allowance for credit losses
Beginning Balance	$ 2,524	$ 2,524
Impact of ASU 2016-13 adoption
Changes in the allowance for credit losses
Provision	288	360
Net foreign currency translation		(7)
Ending Balance	$ 2,812	$ 3,165

Leases (Details)

Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating lease cost	$ 1,043	$ 1,141
Other information related to operating leases
Cash payments to settle a lease liability reported in cash flows	1,000
Right-of-use assets obtained in exchange for new lease liabilities	$ 1,900
Weighted-average discount rate	5.00%
Weighted average remaining lease term	7 years
Building
Operating lease cost	$ 691	864
Automobile
Operating lease cost	$ 352	$ 277

Leases - Supplemental unaudited

Leases - Supplemental unaudited consolidated balance sheet information (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Supplemental unaudited consolidated balance sheet information
Operating lease right-of-use assets	$ 11,538	$ 10,580
Operating lease liabilities noncurrent	12,600	$ 11,299
Total lease liabilities	$ 15,540

Leases - Maturities of our oper

Leases - Maturities of our operating leases (Details) $ in Thousands	Mar. 31, 2020USD ($)
Maturities of operating leases
2020 (remaining 9 months)	$ 3,241
2021	3,048
2022	2,597
2023	2,096
2024	1,369
Later years	6,423
Less imputed interest	(3,234)
Total lease liabilities	$ 15,540

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Deferred tax assets, operating loss, and other carryforwards
Statutory tax rate	96.00%
Income taxes paid	$ 5.7
Deferred tax assets, foreign and state NOL		$ 24.9
Net operating loss (NOL) carryforwards		16.6
Deferred tax assets, valuation allowance		17.3
US
Deferred tax assets, operating loss, and other carryforwards
Statutory tax rate	21.00%
Foreign tax credit carryforwards
Deferred tax assets, operating loss, and other carryforwards
Other deductible carryforwards		$ 8.3

Long-Term Compensation Plan a_3

Long-Term Compensation Plan and Stock Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Plan information
Restricted stock awards	$ 1,350	$ 552
Restricted Stock [Member]
Plan information
Stock based compensation awards issued shares	96
Restricted stock awards	$ 1,000
Vesting period (in years)	3 years
Restricted Stock [Member] | Minimum
Plan information
Vesting period (in years)	1 year
Restricted Stock [Member] | Maximum
Plan information
Vesting period (in years)	4 years
Restricted Stock, subject to future performance criteria
Plan information
Stock based compensation awards issued shares	32
Restricted Stock, subject to market conditions
Plan information
Stock based compensation awards issued shares	64
2019 Omnibus Incentive Plan | Restricted Stock [Member]
Plan information
Stock based compensation awards issued shares	136
Restricted stock awards	$ 2,600

Long-Term Compensation Plan a_4

Long-Term Compensation Plan and Stock Based Compensation - Allocation of Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Compensation expense
Restricted stock	$ 1,350	$ 552
Long-term compensation plan	365	503
Total Compensation	$ 1,715	$ 1,055

Earnings per Common Share - Det

Earnings per Common Share - Details of Earnings Per Share Calculations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Earnings per Common Share
Net income (loss)	$ 98	$ (5,671)
Weighted average common shares outstanding:
Basic (in shares)	40,127	40,036
Incremental shares with dilutive effect:
Restricted stock awards (in shares)	211
Diluted (in shares)	40,338	40,036
Basic (in dollars per share)	$ 0	$ (0.14)
Diluted (in dollars per share)	$ 0	$ (0.14)