OneSpan (OSPN) 10-Q 2 May 24 2024 Q1 Quarterly report Financial data

Cover Page

Cover Page - shares	3 Months Ended
	Mar. 31, 2024	Apr. 26, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	000-24389
Entity Registrant Name	OneSpan Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	36-4169320
Entity Address, Address Line One	1 Marina Park Drive
Entity Address, Address Line Two	Unit 1410
Entity Address, City or Town	Boston
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	02210
City Area Code	312
Local Phone Number	766-4001
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	OSPN
Security Exchange Name	NASDAQ
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		37,845,509
Entity Central Index Key	0001044777
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets
Cash and cash equivalents	$ 63,859	$ 42,493
Restricted cash	1,022	1,037
Accounts receivable, net of allowances of $1,472 at March 31, 2024 and $1,536 at December 31, 2023	32,382	64,387
Inventories, net	14,594	15,553
Prepaid expenses	6,835	6,575
Contract assets	4,867	5,139
Other current assets	10,608	11,159
Total current assets	134,167	146,343
Property and equipment, net	20,346	18,722
Operating lease right-of-use assets	6,215	6,171
Goodwill	93,069	93,684
Intangible assets, net of accumulated amortization	10,146	10,832
Deferred income taxes	1,682	1,721
Other assets	11,517	11,718
Total assets	277,142	289,191
Current liabilities
Accounts payable	12,148	17,452
Deferred revenue	55,573	69,331
Accrued wages and payroll taxes	12,066	14,335
Short-term income taxes payable	4,544	2,646
Other accrued expenses	7,775	10,684
Deferred compensation	65	382
Total current liabilities	92,171	114,830
Long-term deferred revenue	3,916	4,152
Long-term lease liabilities	6,008	6,824
Deferred income taxes	1,001	1,067
Other long-term liabilities	3,177	3,177
Total liabilities	106,273	130,050
Commitments and contingencies
Stockholders' equity
Preferred stock: 500 shares authorized, none issued and outstanding at March 31, 2024 and December 31, 2023	0	0
Common stock: $0.001 par value per share, 75,000 shares authorized; 41,492 and 41,243 shares issued; 37,768 and 37,519 shares outstanding at March 31, 2024 and December 31, 2023, respectively	38	38
Additional paid-in capital	118,565	118,620
Treasury stock, at cost: $3,724 shares outstanding at March 31, 2024 and December 31, 2023	(47,377)	(47,377)
Retained earnings	112,407	98,939
Accumulated other comprehensive loss	(12,764)	(11,079)
Total stockholders' equity	170,869	159,141
Total liabilities and stockholders' equity	$ 277,142	$ 289,191

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets
Accounts receivable, allowance for doubtful accounts	$ 1,472	$ 1,536
Stockholders' equity
Preferred stock, shares authorized (in shares)	500	500
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	75,000	75,000
Common stock, shares issued (in shares)	41,492	41,243
Common stock, shares outstanding (in shares)	37,768	37,519
Treasury stock, common, shares (in shares)	3,724	3,724

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenue
Total revenue	$ 64,843	$ 57,607
Cost of goods sold
Total cost of goods sold	17,448	18,321
Gross profit	47,395	39,286
Operating costs
Sales and marketing	12,927	20,011
Research and development	8,259	9,463
General and administrative	10,007	16,653
Restructuring and other related charges	1,497	706
Amortization of intangible assets	595	583
Total operating costs	33,285	47,416
Operating income (loss)	14,110	(8,130)
Interest income, net	101	503
Other income (expense), net	291	(40)
Income (loss) before income taxes	14,502	(7,667)
Provision for income taxes	1,034	689
Net income (loss)	$ 13,468	$ (8,356)
Net income (loss) per share
Basic (in dollars per share)	$ 0.35	$ (0.21)
Diluted (in dollars per share)	$ 0.35	$ (0.21)
Weighted average common shares outstanding
Basic (in shares)	38,060	40,057
Diluted (in shares)	38,463	40,057
Product and license
Revenue
Total revenue	$ 37,798	$ 33,146
Cost of goods sold
Total cost of goods sold	9,706	11,288
Services and other
Revenue
Total revenue	27,045	24,461
Cost of goods sold
Total cost of goods sold	$ 7,742	$ 7,033

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 13,468	$ (8,356)
Other comprehensive income (loss)
Cumulative translation adjustment, net of tax	(1,655)	1,715
Pension adjustment, net of tax	(30)	(60)
Unrealized gains (loss) on available-for-sale securities	0	7
Comprehensive income (loss)	$ 11,783	$ (6,694)

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury - Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2022		39,726
Beginning balance at Dec. 31, 2022	$ 203,311	$ 40	$ (18,222)	$ 107,305	$ 128,738	$ (14,550)
Beginning balance, treasury stock (in shares) at Dec. 31, 2022			1,038
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(8,356)				(8,356)
Foreign currency translation adjustment, net of tax	1,715					1,715
Share-based compensation	3,812			3,812
Vesting of restricted stock awards (in shares)		329
Tax payments for stock issuances (in shares)		(105)
Tax payments for stock issuances	(1,098)			(1,098)
Unrealized gain (loss) on available-for-sale securities	7					7
Pension adjustment, net of tax	(60)					(60)
Ending balance (in shares) at Mar. 31, 2023		39,950
Ending balance at Mar. 31, 2023	$ 199,331	$ 40	$ (18,222)	110,019	120,382	(12,888)
Ending balance, treasury stock (in shares) at Mar. 31, 2023			1,038
Beginning balance (in shares) at Dec. 31, 2023	37,519	37,519
Beginning balance at Dec. 31, 2023	$ 159,141	$ 38	$ (47,377)	118,620	98,939	(11,079)
Beginning balance, treasury stock (in shares) at Dec. 31, 2023	3,724		3,724
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ 13,468				13,468
Foreign currency translation adjustment, net of tax	(1,655)					(1,655)
Share-based compensation	1,540			1,540
Vesting of restricted stock awards (in shares)		402
Tax payments for stock issuances (in shares)		(153)
Tax payments for stock issuances	(1,595)			(1,595)
Unrealized gain (loss) on available-for-sale securities	0
Pension adjustment, net of tax	$ (30)					(30)
Ending balance (in shares) at Mar. 31, 2024	37,768	37,768
Ending balance at Mar. 31, 2024	$ 170,869	$ 38	$ (47,377)	$ 118,565	$ 112,407	$ (12,764)
Ending balance, treasury stock (in shares) at Mar. 31, 2024	3,724		3,724

CONDENSED CONSOLIDATED STATEM_4

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net income (loss)	$ 13,468	$ (8,356)
Adjustments to reconcile net income (loss) from operations to net cash used in operations:
Depreciation and amortization of intangible assets	2,082	1,319
Deferred tax benefit	(80)	8
Stock-based compensation	1,540	3,812
Allowance for doubtful accounts	(63)	75
Changes in operating assets and liabilities:
Accounts receivable	31,468	33,059
Inventories, net	623	(3,361)
Contract assets	(376)	278
Accounts payable	(5,137)	(273)
Income taxes payable	1,915	(512)
Accrued expenses	(4,758)	(1,963)
Deferred compensation	(317)	(151)
Deferred revenue	(13,547)	(11,390)
Other assets and liabilities	142	692
Net cash provided by operating activities	26,960	13,237
Cash flows from investing activities:
Maturities of short-term investments	0	2,330
Additions to property and equipment	(3,045)	(3,069)
Additions to intangible assets	(35)	(7)
Cash paid for acquisition of business	0	(1,800)
Net cash used in investing activities	(3,080)	(2,546)
Cash flows from financing activities:
Contingent payment related to acquisition	(200)	0
Tax payments for restricted stock issuances	(1,595)	(1,098)
Net cash used in financing activities	(1,795)	(1,098)
Effect of exchange rate changes on cash	(734)	569
Net increase in cash	21,351	10,162
Cash, cash equivalents, and restricted cash, beginning of period	43,530	97,374
Cash, cash equivalents, and restricted cash, end of period	$ 64,881	$ 107,536

Description of the Company and

Description of the Company and Basis of Presentation	3 Months Ended
	Mar. 31, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of the Company and Basis of Presentation	Description of the Company and Basis of Presentation OneSpan provides security, identity, electronic signature (“e-signature”) and digital workflow solutions that protect and facilitate digital transactions and agreements. The Company delivers products and services that automate and secure customer-facing and revenue-generating business processes for use cases ranging from simple transactions to workflows that are complex or require higher levels of security. The Company’s solutions help its customers ensure the integrity of the people and records associated with digital agreements, transactions, and interactions in industries including banking, financial services, healthcare, and professional services. OneSpan has operations in Austria, Australia, Belgium, Canada, China, France, Japan, The Netherlands, Singapore, Switzerland, the United Arab Emirates, the United Kingdom (U.K.), and the United States (U.S.). Business Transformation In December 2021, the Company's Board of Directors approved a restructuring plan (the "restructuring plan") designed to advance the Company's operating model, streamline its business, improve efficiency, and enhance its capital resources. The first phase of this restructuring plan began and was substantially completed during the three months ended March 31, 2022. In May 2022, the Company's Board of Directors announced a three-year strategic transformation plan that began on January 1, 2023 (the "2022 strategic plan"). In conjunction with the 2022 strategic plan and to enable a more efficient capital deployment model, effective with the quarter ended June 30, 2022, the Company began reporting under the following two lines of business, which are its reportable operating segments: Digital Agreements and Security Solutions. For further information regarding the Company’s reportable segments, see Note 3, Segment Information. During the quarter ended June 30, 2023, the Company determined that it was unlikely to achieve the revenue growth levels set forth in its 2022 strategic plan within the contemplated three-year timeframe. A number of factors contributed to the challenges achieving the originally planned growth levels, particularly in Digital Agreements, on the timeframes set forth in the 2022 strategic plan. In response to these challenges, the Company modified its strategy to focus more heavily on improving profitability margins across the business. To this end, in August 2023, the Company’s Board approved cost reduction actions (the “2023 Actions”) to seek to drive higher levels of profitability while maintaining the Company’s long-term growth potential. Basis of Presentation and Principles of Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of OneSpan 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 of America (“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, 2023. 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. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Estimates and Assumptions The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP 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

Summary of Significant Accounti

Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2024
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies 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, 2023 filed with the SEC on March 6, 2024 that have had a material impact on the Company’s condensed consolidated financial statements and related notes. Restricted Cash The Company is party to lease agreements that require letters of credit to secure the obligations which totaled $0.9 million at both March 31, 2024 and December 31, 2023. Additionally, the Company maintained a cash guarantee with a payroll vendor in the amount of $0.1 million at both March 31, 2024 and December 31, 2023. The restricted cash related to the letters of credit and the payroll vendor cash guarantee is recorded in "Restricted cash" on the condensed consolidated balance sheets. Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures. Public business entities are required to adopt for annual fiscal periods beginning after December 31, 2024 and early adoption is permitted. The Company is evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements and related disclosures.

Segment Information

Segment Information	3 Months Ended
	Mar. 31, 2024
Segment Reporting [Abstract]
Segment Information	Segment Information Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker (CODM), in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer. • Digital Agreements. Digital Agreements consists of solutions that enable our clients to secure and automate business processes associated with their digital agreement and customer transaction lifecycles that require consent, non-repudiation and compliance. These solutions, which are largely cloud-based, include OneSpan Sign e-signature, OneSpan Notary, Identity Verification, and OneSpan Trust Vault. This segment also includes costs attributable to our transaction cloud platform. • Security Solutions . Security Solutions consists of our broad portfolio of software products, software development kits (SDKs) and Digipass authenticator devices that are used to build applications designed to defend against attacks on digital transactions across online environments, devices, and applications. The software products and SDKs included in the Security Solutions segment are largely on-premises software products and include multi-factor authentication and transaction signing solutions, such as mobile application security and mobile software tokens. Segment operating income consists of the revenues generated by a segment, less the direct costs of revenue, sales and marketing, research and development expenses, amortization expense, and restructuring and other related charges that are incurred directly by a segment. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. The tables below set forth information about the Company’s reportable operating segments for the three months ended March 31, 2024 and 2023, along with the items necessary to reconcile the segment information to the totals reported in the accompanying condensed consolidated financial statements. Three Months Ended (In thousands, except percentages) 2024 2023 Digital Agreements Revenue $ 14,414 $ 11,552 Gross profit $ 9,892 $ 8,448 Gross margin 69 % 73 % Operating loss (1) $ (265) $ (6,033) Security Solutions Revenue $ 50,429 $ 46,055 Gross profit $ 37,503 $ 30,838 Gross margin 74 % 67 % Operating income $ 25,878 $ 15,631 Total Company: Revenue $ 64,843 $ 57,607 Gross profit $ 47,395 $ 39,286 Gross margin 73 % 68 % Statements of Operations reconciliation: Segment operating income $ 25,613 $ 9,598 Corporate operating expenses not allocated at the segment level 11,503 17,728 Operating income (loss) $ 14,110 $ (8,130) Interest income, net 101 503 Other income (expense), net 291 (40) Income (loss) before income taxes $ 14,502 $ (7,667) (1) Digital Agreements operating loss includ es $0.6 million of amortization of intangible assets expense for both the three months ended March 31, 2024 and 2023. The following tables illustrate the disaggregation of revenues by category and services, including a reconciliation of the disaggregated revenues to revenues from the Company’s two reportable operating segments for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 2023 (In thousands) Digital Agreements Security Solutions Digital Agreements Security Solutions Subscription $ 13,812 $ 26,182 $ 10,348 $ 19,608 Maintenance and support 505 10,066 996 10,165 Professional services and other (1) 97 1,605 208 1,416 Hardware products — 12,576 — 14,866 Total Revenue $ 14,414 $ 50,429 $ 11,552 $ 46,055 (1) Professional services and other includes perpetual software licenses revenue, which was approximately 1% of total revenue for both the three months ended March 31, 2024 and 2023. The Company allocates goodwill by reporting unit, in accordance with Accounting Standards Codification (ASC) 350 – Goodwill and Other . Asset information by segment is not reported to or reviewed by the CODM to allocate resources, and therefore, the Company has not disclosed asset information for the segments.

Revenue from Contracts with Cus

Revenue from Contracts with Customers	3 Months Ended
	Mar. 31, 2024
Revenue from Contract with Customer [Abstract]
Revenue from Contracts with Customers	Revenue from Contracts with Customers The following tables present the Company’s revenues disaggregated by major products and services, geographical region and timing of revenue recognition. Revenue by major products and services Three Months Ended March 31, (In thousands) 2024 2023 Subscription $ 39,994 $ 29,956 Maintenance and support 10,571 11,161 Professional services and other (1) 1,702 1,624 Hardware products 12,576 14,866 Total Revenue $ 64,843 $ 57,607 (1) Professional services and other includes perpetual software licenses revenue, which was approximately 1% of total revenue for both the three months ended March 31, 2024 and 2023. Revenue by location of customer We classify our sales by customer location in three geographic regions: 1) EMEA, which includes Europe, Middle East and Africa; 2) the Americas, which includes North, Central, and South America; and 3) Asia Pacific (APAC), which includes Australia, New Zealand, and India. The breakdown of revenue in each of our major geographic areas was as follows: Three Months Ended March 31, (In thousands, except percentages) 2024 2023 Revenue EMEA $ 31,842 $ 27,820 Americas 21,344 20,498 APAC 11,657 9,289 Total revenue $ 64,843 $ 57,607 % of Total Revenue EMEA 49 % 48 % Americas 33 % 36 % APAC 18 % 16 % Timing of revenue recognition Three Months Ended March 31, (In thousands) 2024 2023 Products and licenses transferred at a point in time $ 37,798 $ 33,146 Services transferred over time 27,045 24,461 Total Revenue $ 64,843 $ 57,607 Contract balances The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers as of March 31, 2024 and December 31, 2023: March 31, December 31, (In thousands) 2024 2023 Receivables, inclusive of trade and unbilled $ 32,382 $ 64,387 Contract Assets (current and non-current) $ 5,607 $ 5,322 Contract Liabilities (Deferred Revenue current and non-current) $ 59,489 $ 73,483 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 bill occurs over a 2- to 5-year period. 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, the Company does not adjust the promised amount of consideration for the effects of a significant financing component when it is expected, at contract inception, that the period between the Company's 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. Extended payment terms are not typically included in contracts with customers. Revenue recognized during the three months ended March 31, 2024 included $30.4 million that was included on the December 31, 2023 consolidated balance sheet in contract liabilities. Deferred revenue decreased in the same period due to timing of annual renewals. Transaction price allocated to the remaining performance obligations Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of the period. The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2024: (In thousands) 2024 2025 2026 Beyond 2026 Total Future revenue related to current unsatisfied performance obligations $ 38,656 $ 28,253 $ 15,586 $ 5,162 $ 87,657 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 up to 7 years, which is the determined benefit period based on the transfer of goods or services. The Company determined the period of benefit by taking into consideration the customer contracts, its technology and other factors, including customer attrition. Commissions are earned upon invoicing to the customer. For contracts with multiple year payment terms, because 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” expense in the condensed consolidated statements of operations. As a 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 condensed consolidated statements of operations. The following tables provide information related to the capitalized costs and amortization recognized in the current and prior period: (In thousands) March 31, 2024 December 31, 2023 Capitalized costs to obtain contracts, current $ 3,644 $ 3,503 Capitalized costs to obtain contracts, non-current $ 10,740 $ 10,766 Three Months Ended March 31, (In thousands) 2024 2023 Amortization of capitalized costs to obtain contracts $ 884 $ 731

Inventories, net

Inventories, net	3 Months Ended
	Mar. 31, 2024
Inventory Disclosure [Abstract]
Inventories, net	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 first-in, first-out (FIFO) method. Inventories, net consist of the following: (In thousands) March 31, December 31, Component parts $ 6,667 $ 8,511 Work-in-process and finished goods 7,927 7,042 Total $ 14,594 $ 15,553

Goodwill

Goodwill	3 Months Ended
	Mar. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	Goodwill The following table presents the changes in goodwill during the three months ended March 31, 2024: (In thousands) Digital Agreements Security Solutions Total Net balance at December 31, 2023 $ 20,893 $ 72,791 $ 93,684 Foreign currency exchange rate effect (134) (481) (615) Net balance at March 31, 2024 $ 20,759 $ 72,310 $ 93,069 No impairment of goodwill was recorded during the three months ended March 31, 2024 and 2023.

Intangible Assets

Intangible Assets	3 Months Ended
	Mar. 31, 2024
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Intangible Assets	Intangible Assets Intangible assets as of March 31, 2024 and December 31, 2023 consist of the following: As of March 31, 2024 As of December 31, 2023 (In thousands) Useful Life (in years) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Acquired technology 3 to 7 $ 43,634 $ 42,584 $ 43,869 $ 42,712 Customer relationships 5 to 12 34,707 26,457 34,773 25,960 Patents, trademarks, and other 10 to 20 13,113 12,267 13,103 12,241 Total $ 91,454 $ 81,308 $ 91,745 $ 80,913 Amortization expense was $0.7 million and $0.6 million for the three months ended March 31, 2024 and 2023, respectively. Amortization expense includes cost of sales amortization expense directly related to delivering cloud subscription revenue of $0.1 million and less than $0.1 million for the three months ended March 31, 2024 and 2023, respectively. Costs are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations. Certain intangible assets are denominated in functional currencies besides the U.S. dollar and are subject to currency fluctuations. There was no impairment of intangible assets recorded during the three months ended March 31, 2024 and 2023.

Property and Equipment, net

Property and Equipment, net	3 Months Ended
	Mar. 31, 2024
Property, Plant and Equipment [Abstract]
Property and Equipment, net	Property and Equipment, net The following table presents the major classes of property and equipment, net, as of March 31, 2024 and December 31, 2023: (In thousands) March 31, 2024 December 31, 2023 Office equipment and software $ 8,699 $ 8,574 Leasehold improvements 7,586 7,459 Furniture and fixtures 3,638 3,658 Capitalized software 15,214 12,560 Total 35,137 32,251 Accumulated depreciation (14,791) (13,529) Property and equipment, net $ 20,346 $ 18,722 Depreciation expense was $1.4 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively. Depreciation expense includes cost of sales depreciation expense directly related to delivering cloud subscription revenue of $0.7 million and less than $0.1 million for the three months ended March 31, 2024 and 2023, respectively. Costs are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Mar. 31, 2024
Fair Value Disclosures [Abstract]
Fair Value Measurements	Fair Value Measurements The fair values of cash equivalents, accounts receivables, 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 estimated fair value of 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 the Company’s financial assets by level in the fair value hierarchy, which are measured at fair value on a recurring basis, as of March 31, 2024 and December 31, 2023: Fair Value Measurement at Reporting Date Using (In thousands) March 31, 2024 Quoted Prices in Active Markets for Significant Other Observable Inputs Significant Unobservable Inputs (Level 3) Assets: U.S. Treasury Bills $ 3,595 $ 3,595 $ — $ — Money Market Funds 38,439 38,439 — — Fair Value Measurement at Reporting Date Using (In thousands) December 31, 2023 Quoted Prices in Active Markets for Significant Other Observable Inputs Significant Unobservable Inputs (Level 3) Assets: Money Market Funds $ 8,496 $ 8,496 $ — $ — The Company classifies its investments in debt securities as available-for-sale. The Company reviews available-for-sale debt 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, 2024 and December 31, 2023. The Company did not have any financial liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023.

Allowance for Credit Losses

Allowance for Credit Losses	3 Months Ended
	Mar. 31, 2024
Credit Loss [Abstract]
Allowance for Credit Losses	Allowance for Credit Losses In accordance with accounting standards updates ("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. The changes in the allowance for credit losses during the three months ended March 31, 2024 were as follows: (In thousands) Balance at December 31, 2023 $ 1,536 Provision for (recovery of) (48) Write-offs (15) Net foreign currency translation (1) Balance at March 31, 2024 $ 1,472

Leases

Leases	3 Months Ended
	Mar. 31, 2024
Leases [Abstract]
Leases	Leases Operating lease cost details for the three months ended March 31, 2024 and 2023 are as follows: Three Months Ended (In thousands) 2024 2023 Building rent $ 312 $ 523 Automobile rentals 347 250 Total net operating lease costs $ 659 $ 773 At March 31, 2024, the Company’s weighted average remaining lease term for its operating leases is 5.2 years, and the weighted average discount rate for its operating leases is 5%. During the three months ended March 31, 2024, there were $0.7 million of operating cash payments for lease liabilities and $0.5 million of right-of use assets obtained in exchange for new lease liabilities. In October 2023, the Company signed a lease agreement to lease new office space in Brussels. The lease agreement consisted of a nine-year lease that is expected to commence in the second quarter of 2024. The Company will record a right of use asset and liability at the commencement date, which is expected to result in total lease term payments of $1.3 million. Maturities of the Company’s operating leases as of March 31, 2024 are as follows: (In thousands) As of 2024 $ 1,792 2025 1,687 2026 1,594 2027 1,411 2028 1,304 Later years 1,347 Less imputed interest (1,221) Accrued lease termination fees 714 Total lease liabilities $ 8,628

Income Taxes

Income Taxes	3 Months Ended
	Mar. 31, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company’s estimated annual effective tax rate for 2024 before discrete items and excluding entities with a valuation allowance is expected to be approximately 15%. The Company’s global effective tax rate is lower than the U.S. statutory tax rate of 21% primarily due to the release of valuation allowances for the current year earnings for companies with a valuation allowance, offset by nondeductible expenses. In addition, the Company received a favorable response in connection with its Mutual Agreement Procedure ("MAP") request related to a Belgium audit concluded in 2020. A tax benefit of $1.1 million was recorded for the three months ended March 31, 2024. The ultimate tax expense will depend on the mix of earnings in various jurisdictions. Income taxes, net of refunds, of $0.9 million and $1.1 million were paid during the three months ended March 31, 2024 and 2023, respectively. Management assesses the need for a valuation allowance on a regular basis, weighing all positive and negative evidence to determine whether a deferred tax asset will be fully or partially realized. In evaluating the realizability of deferred tax assets, significant pieces of negative evidence such as 3-year cumulative losses are considered. Management also reviews reversal patterns of temporary differences to determine if the Company would have sufficient taxable income due to the reversal of temporary differences to support the realization of deferred tax assets. Certain operations have incurred net operating losses (NOLs), which are currently subject to a valuation allowance. These NOLs may become deductible to the extent these operations become profitable. For each of its operations, the Company evaluates whether it is more likely than not that the tax benefits related to NOLs will be realized. As part of this evaluation, the Company considers evidence such as tax planning strategies, historical operating results, forecasted taxable income, and recent financial performance. In the year that certain operations record a loss, the Company does not recognize a corresponding tax benefit, thus increasing its effective tax rate, or decreasing its effective tax rate when reporting income in a jurisdiction that has a valuation allowance. Upon determining that it is more likely than not that the NOLs will be realized, the Company will reduce the tax valuation allowances related to these NOLs, which will result in a reduction of its income tax expense and its effective tax rate in the period.

Long-Term Compensation Plan and

Long-Term Compensation Plan and Stock Based Compensation	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
Long-Term Compensation Plan and Stock Based Compensation	Long-Term Compensation Plan and Stock Based Compensation Under the OneSpan Inc. 2019 Omnibus Incentive Plan, the Company awards restricted stock units subject to time-based vesting, restricted stock units which are subject to the achievement of future performance criteria and restricted stock units that are subject to the achievement of market conditions. The Company also awards a small amount of cash incentive awards under the 2019 Omnibus Incentive Plan, as shown in the table below. The Company awarded 0.1 million restricted stock units during the three months ended March 31, 2024, subject to time-based vesting. The fair value of the unissued time-based restricted stock unit grants was $0.9 million at the dates of grant and the grants are being amortized over the vesting periods of one year. The following table summarizes stock-based compensation expense and other long-term incentive plan compensation expense for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, (In thousands) 2024 2023 Stock-based compensation (1) $ 1,540 $ 3,812 Other long-term incentive plan compensation (2) 81 111 Total compensation $ 1,621 $ 3,923 (1) Stock-based compensation declined for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, and was primarily due to the departure of the former CEO and forfeitures reversed upon his termination and timing of annual grants.

Earnings per Share

Earnings per Share	3 Months Ended
	Mar. 31, 2024
Earnings Per Share [Abstract]
Earnings per Share	Earnings per Share 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. Because the Company was in a net loss position for the three months ended March 31, 2023, diluted net loss per share for the 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, 2024 and 2023 are as follows: Three Months Ended (In thousands, except per share data) 2024 2023 Net income (loss) $ 13,468 $ (8,356) Weighted average common shares outstanding: Basic 38,060 40,057 Incremental shares with dilutive effect: Restricted stock units 403 — Diluted 38,463 40,057 Net income (loss) per share: Basic $ 0.35 $ (0.21) Diluted $ 0.35 $ (0.21)

Legal Proceedings and Contingen

Legal Proceedings and Contingencies	3 Months Ended
	Mar. 31, 2024
Commitments and Contingencies Disclosure [Abstract]
Legal Proceedings and Contingencies	Legal Proceedings and Contingencies The Company is subject to certain legal proceedings and claims that have arisen in the ordinary course of business. The Company currently does not anticipate that these matters, if resolved against the Company, will have a material adverse impact on its financial results or financial condition. The Company accrues loss contingencies when losses become probable and are reasonably estimable. As of March 31, 2024, the Company has recorded an accrual of $1.2 million for loss contingencies associated with employment-related and supplier contract matters. The Company does not accrue for contingent losses that, in the judgment of the Company, are considered to be reasonably possible, but not probable. As of March 31, 2024, the Company does not have any reasonably possible losses for which an estimate can be made. Although the Company intends to defend its legal matters vigorously, the ultimate outcome of these matters is uncertain. However, the Company does not expect the potential losses, if any, to have a material adverse impact on its operating results, cash flows, or financial condition.

Restructuring and Other Related

Restructuring and Other Related Charges	3 Months Ended
	Mar. 31, 2024
Restructuring and Related Activities [Abstract]
Restructuring and Other Related Charges	Restructuring and Other Related Charges In December 2021, the Company's Board approved a restructuring plan (“Plan”) designed to advance the Company’s operating model, streamline its business, improve efficiency, and enhance its capital resources. As part of the first phase of the Plan, the Company reduced headcount by eliminating positions in certain areas of its organization. The first phase of the Plan began and was substantially completed during the three months ended March 31, 2022. In May 2022, the Board approved additional actions related to the Plan through the year ending December 31, 2025. This second phase of the Plan consisted primarily of headcount-related reductions and was designed to achieve the same objectives as the first phase of the Plan. On August 3, 2023, the Board approved additional cost reduction and restructuring actions (the "2023 Actions") to seek to drive higher levels of Adjusted EBITDA while maintaining the Company's long-term growth potential. The Company has incurred and expects to continue to incur restructuring charges in connection with the 2023 Actions, and anticipates that these charges will consist primarily of charges related to employee transition and severance payments, with a significantly smaller amount of charges relating to vendor contract termination and rationalization actions. In connection with the Plan (including the 2023 Actions), the Company recorded $1.5 million and $0.7 million in “Restructuring and other related charges” in the condensed consolidated statement of operations for the three months ended March 31, 2024 and 2023, respectively. The main categories of charges are in the following areas: • Employee costs – include severance and related benefits costs incurred as a result of eliminating positions in certain areas of the Company. For the three months ended March 31, 2024 and 2023, severance-related costs were $1.4 million and $0.7 million, respectively. In total, there were approximately 290 employees, across multiple functions, whose positions were made redundant. The $2.7 million current portion of the restructuring liability at March 31, 2024 is included in "Accrued wages and payroll taxes" in the consolidated balance sheet and is expected to be paid within the next 12 months. The $0.5 million non-current portion is included in "Other long-term liabilities" in the condensed consolidated balance sheet and is expected to be paid within the next 24 months. • Real estate rationalization costs – includes costs to align the real estate footprint with the Company’s needs. In 2023, the Company vacated its Chicago and Brussels office spaces, which resulted in the abandonment and termination of the underlying leases. The Company accrued contract termination fees of $1.4 million and $0.3 million for the Chicago office and Brussels office, respectively. The Company additionally terminated its Brussels warehouse lease, effective July 31, 2024, and accrued $0.3 million in settlement costs. The $0.3 million current portion of the restructuring liability at March 31, 2024 is included in "Other accrued expenses" in the condensed consolidated balance sheet and is expected to be paid within the next 12 months. The remaining $0.7 million portion is included in "Current lease liabilities" in the condensed consolidated balance sheet and is expected to be paid within the next 12 months. The table below sets forth the changes in the carrying amount of the restructuring charge liability for the three months ended March 31, 2024. (In thousands) Employee Costs Real Estate Rationalization Total Balance as of December 31, 2023 $ 3,130 $ 1,885 $ 5,015 Additions 1,423 — 1,423 Payments (1,491) (715) (2,206) Balance as of March 31, 2024 $ 3,062 $ 1,170 $ 4,232

Summary of Significant Accoun_2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2024
Accounting Policies [Abstract]
Description of the Company	OneSpan provides security, identity, electronic signature (“e-signature”) and digital workflow solutions that protect and facilitate digital transactions and agreements. The Company delivers products and services that automate and secure customer-facing and revenue-generating business processes for use cases ranging from simple transactions to workflows that are complex or require higher levels of security. The Company’s solutions help its customers ensure the integrity of the people and records associated with digital agreements, transactions, and interactions in industries including banking, financial services, healthcare, and professional services. OneSpan has operations in Austria, Australia, Belgium, Canada, China, France, Japan, The Netherlands, Singapore, Switzerland, the United Arab Emirates, the United Kingdom (U.K.), and the United States (U.S.).
Basis of Presentation	The accompanying unaudited condensed consolidated financial statements include the accounts of OneSpan 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 of America (“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, 2023.
Principles of Consolidation	The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Estimates and Assumptions	Estimates and Assumptions The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP 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
Restricted Cash	Restricted Cash The Company is party to lease agreements that require letters of credit to secure the obligations which totaled $0.9 million at both March 31, 2024 and December 31, 2023. Additionally, the Company maintained a cash guarantee with a payroll vendor in the amount of $0.1 million at both March 31, 2024 and December 31, 2023. The restricted cash related to the letters of credit and the payroll vendor cash guarantee is recorded in "Restricted cash" on the condensed consolidated balance sheets.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by the Company as of the specified effective date. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements and related disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) – Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures. Public business entities are required to adopt for annual fiscal periods beginning after December 31, 2024 and early adoption is permitted. The Company is evaluating the impact the adoption of this guidance will have on its condensed consolidated financial statements and related disclosures.

Segment Information (Tables)

Segment Information (Tables)	3 Months Ended
	Mar. 31, 2024
Segment Reporting [Abstract]
Reconciliation of segment information to the totals reported in the accompanying consolidated financial statements	The tables below set forth information about the Company’s reportable operating segments for the three months ended March 31, 2024 and 2023, along with the items necessary to reconcile the segment information to the totals reported in the accompanying condensed consolidated financial statements. Three Months Ended (In thousands, except percentages) 2024 2023 Digital Agreements Revenue $ 14,414 $ 11,552 Gross profit $ 9,892 $ 8,448 Gross margin 69 % 73 % Operating loss (1) $ (265) $ (6,033) Security Solutions Revenue $ 50,429 $ 46,055 Gross profit $ 37,503 $ 30,838 Gross margin 74 % 67 % Operating income $ 25,878 $ 15,631 Total Company: Revenue $ 64,843 $ 57,607 Gross profit $ 47,395 $ 39,286 Gross margin 73 % 68 % Statements of Operations reconciliation: Segment operating income $ 25,613 $ 9,598 Corporate operating expenses not allocated at the segment level 11,503 17,728 Operating income (loss) $ 14,110 $ (8,130) Interest income, net 101 503 Other income (expense), net 291 (40) Income (loss) before income taxes $ 14,502 $ (7,667) (1) Digital Agreements operating loss includ es $0.6 million of amortization of intangible assets expense for both the three months ended March 31, 2024 and 2023.
Reconciliation of the disaggregated revenues to revenues from our two operating segments	The following tables illustrate the disaggregation of revenues by category and services, including a reconciliation of the disaggregated revenues to revenues from the Company’s two reportable operating segments for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, 2024 2023 (In thousands) Digital Agreements Security Solutions Digital Agreements Security Solutions Subscription $ 13,812 $ 26,182 $ 10,348 $ 19,608 Maintenance and support 505 10,066 996 10,165 Professional services and other (1) 97 1,605 208 1,416 Hardware products — 12,576 — 14,866 Total Revenue $ 14,414 $ 50,429 $ 11,552 $ 46,055 (1) Professional services and other includes perpetual software licenses revenue, which was approximately 1% of total revenue for both the three months ended March 31, 2024 and 2023.

Revenue from Contracts with C_2

Revenue from Contracts with Customers (Tables)	3 Months Ended
	Mar. 31, 2024
Revenue from Contract with Customer [Abstract]
Revenues disaggregated by geography, major product line and timing of revenue recognition	The following tables present the Company’s revenues disaggregated by major products and services, geographical region and timing of revenue recognition. Revenue by major products and services Three Months Ended March 31, (In thousands) 2024 2023 Subscription $ 39,994 $ 29,956 Maintenance and support 10,571 11,161 Professional services and other (1) 1,702 1,624 Hardware products 12,576 14,866 Total Revenue $ 64,843 $ 57,607 (1) Professional services and other includes perpetual software licenses revenue, which was approximately 1% of total revenue for both the three months ended March 31, 2024 and 2023. Revenue by location of customer We classify our sales by customer location in three geographic regions: 1) EMEA, which includes Europe, Middle East and Africa; 2) the Americas, which includes North, Central, and South America; and 3) Asia Pacific (APAC), which includes Australia, New Zealand, and India. The breakdown of revenue in each of our major geographic areas was as follows: Three Months Ended March 31, (In thousands, except percentages) 2024 2023 Revenue EMEA $ 31,842 $ 27,820 Americas 21,344 20,498 APAC 11,657 9,289 Total revenue $ 64,843 $ 57,607 % of Total Revenue EMEA 49 % 48 % Americas 33 % 36 % APAC 18 % 16 % Timing of revenue recognition Three Months Ended March 31, (In thousands) 2024 2023 Products and licenses transferred at a point in time $ 37,798 $ 33,146 Services transferred over time 27,045 24,461 Total Revenue $ 64,843 $ 57,607
Schedule of changes in contract assets and contract liabilities	The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers as of March 31, 2024 and December 31, 2023: March 31, December 31, (In thousands) 2024 2023 Receivables, inclusive of trade and unbilled $ 32,382 $ 64,387 Contract Assets (current and non-current) $ 5,607 $ 5,322 Contract Liabilities (Deferred Revenue current and non-current) $ 59,489 $ 73,483
Schedule of estimated revenue expected to be recognized in the future	The following table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2024: (In thousands) 2024 2025 2026 Beyond 2026 Total Future revenue related to current unsatisfied performance obligations $ 38,656 $ 28,253 $ 15,586 $ 5,162 $ 87,657
Schedule of information related to the capitalized costs and amortization recognized in the current and prior period	The following tables provide information related to the capitalized costs and amortization recognized in the current and prior period: (In thousands) March 31, 2024 December 31, 2023 Capitalized costs to obtain contracts, current $ 3,644 $ 3,503 Capitalized costs to obtain contracts, non-current $ 10,740 $ 10,766 Three Months Ended March 31, (In thousands) 2024 2023 Amortization of capitalized costs to obtain contracts $ 884 $ 731

Inventories, net (Tables)

Inventories, net (Tables)	3 Months Ended
	Mar. 31, 2024
Inventory Disclosure [Abstract]
Summary of inventories, net	Inventories, net consist of the following: (In thousands) March 31, December 31, Component parts $ 6,667 $ 8,511 Work-in-process and finished goods 7,927 7,042 Total $ 14,594 $ 15,553

Goodwill (Tables)

Goodwill (Tables)	3 Months Ended
	Mar. 31, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of goodwill activity	The following table presents the changes in goodwill during the three months ended March 31, 2024: (In thousands) Digital Agreements Security Solutions Total Net balance at December 31, 2023 $ 20,893 $ 72,791 $ 93,684 Foreign currency exchange rate effect (134) (481) (615) Net balance at March 31, 2024 $ 20,759 $ 72,310 $ 93,069

Intangible Assets (Tables)

Intangible Assets (Tables)	3 Months Ended
	Mar. 31, 2024
Intangible Assets, Net (Excluding Goodwill) [Abstract]
Schedule of intangible asset activity	Intangible assets as of March 31, 2024 and December 31, 2023 consist of the following: As of March 31, 2024 As of December 31, 2023 (In thousands) Useful Life (in years) Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Acquired technology 3 to 7 $ 43,634 $ 42,584 $ 43,869 $ 42,712 Customer relationships 5 to 12 34,707 26,457 34,773 25,960 Patents, trademarks, and other 10 to 20 13,113 12,267 13,103 12,241 Total $ 91,454 $ 81,308 $ 91,745 $ 80,913

Property and Equipment, net (Ta

Property and Equipment, net (Tables)	3 Months Ended
	Mar. 31, 2024
Property, Plant and Equipment [Abstract]
Schedule of major classes of property and equipment	The following table presents the major classes of property and equipment, net, as of March 31, 2024 and December 31, 2023: (In thousands) March 31, 2024 December 31, 2023 Office equipment and software $ 8,699 $ 8,574 Leasehold improvements 7,586 7,459 Furniture and fixtures 3,638 3,658 Capitalized software 15,214 12,560 Total 35,137 32,251 Accumulated depreciation (14,791) (13,529) Property and equipment, net $ 20,346 $ 18,722

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Mar. 31, 2024
Fair Value Disclosures [Abstract]
Schedule of assets that are measured at fair value on a recurring basis	The following tables summarize the Company’s financial assets by level in the fair value hierarchy, which are measured at fair value on a recurring basis, as of March 31, 2024 and December 31, 2023: Fair Value Measurement at Reporting Date Using (In thousands) March 31, 2024 Quoted Prices in Active Markets for Significant Other Observable Inputs Significant Unobservable Inputs (Level 3) Assets: U.S. Treasury Bills $ 3,595 $ 3,595 $ — $ — Money Market Funds 38,439 38,439 — — Fair Value Measurement at Reporting Date Using (In thousands) December 31, 2023 Quoted Prices in Active Markets for Significant Other Observable Inputs Significant Unobservable Inputs (Level 3) Assets: Money Market Funds $ 8,496 $ 8,496 $ — $ —

Allowance for Credit Losses (Ta

Allowance for Credit Losses (Tables)	3 Months Ended
	Mar. 31, 2024
Credit Loss [Abstract]
Schedule change in the allowance for credit losses	The changes in the allowance for credit losses during the three months ended March 31, 2024 were as follows: (In thousands) Balance at December 31, 2023 $ 1,536 Provision for (recovery of) (48) Write-offs (15) Net foreign currency translation (1) Balance at March 31, 2024 $ 1,472

Leases (Tables)

Leases (Tables)	3 Months Ended
	Mar. 31, 2024
Leases [Abstract]
Schedule of supplemental consolidated balance sheet information related to our operating leases	Operating lease cost details for the three months ended March 31, 2024 and 2023 are as follows: Three Months Ended (In thousands) 2024 2023 Building rent $ 312 $ 523 Automobile rentals 347 250 Total net operating lease costs $ 659 $ 773
Schedule of maturities of operating leases	Maturities of the Company’s operating leases as of March 31, 2024 are as follows: (In thousands) As of 2024 $ 1,792 2025 1,687 2026 1,594 2027 1,411 2028 1,304 Later years 1,347 Less imputed interest (1,221) Accrued lease termination fees 714 Total lease liabilities $ 8,628

Long-Term Compensation Plan a_2

Long-Term Compensation Plan and Stock Based Compensation (Tables)	3 Months Ended
	Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]
Summary of compensation expense	The following table summarizes stock-based compensation expense and other long-term incentive plan compensation expense for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, (In thousands) 2024 2023 Stock-based compensation (1) $ 1,540 $ 3,812 Other long-term incentive plan compensation (2) 81 111 Total compensation $ 1,621 $ 3,923 (1) Stock-based compensation declined for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, and was primarily due to the departure of the former CEO and forfeitures reversed upon his termination and timing of annual grants.

Earnings per Share (Tables)

Earnings per Share (Tables)	3 Months Ended
	Mar. 31, 2024
Earnings Per Share [Abstract]
Details of earnings per share calculations	The details of the earnings per share calculations for the three months ended March 31, 2024 and 2023 are as follows: Three Months Ended (In thousands, except per share data) 2024 2023 Net income (loss) $ 13,468 $ (8,356) Weighted average common shares outstanding: Basic 38,060 40,057 Incremental shares with dilutive effect: Restricted stock units 403 — Diluted 38,463 40,057 Net income (loss) per share: Basic $ 0.35 $ (0.21) Diluted $ 0.35 $ (0.21)

Restructuring and Other Relat_2

Restructuring and Other Related Charges (Tables)	3 Months Ended
	Mar. 31, 2024
Restructuring and Related Activities [Abstract]
Schedule of changes in the carrying amount of the restructuring charge liability	The table below sets forth the changes in the carrying amount of the restructuring charge liability for the three months ended March 31, 2024. (In thousands) Employee Costs Real Estate Rationalization Total Balance as of December 31, 2023 $ 3,130 $ 1,885 $ 5,015 Additions 1,423 — 1,423 Payments (1,491) (715) (2,206) Balance as of March 31, 2024 $ 3,062 $ 1,170 $ 4,232

Description of the Company an_2

Description of the Company and Basis of Presentation (Details) $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($) segment	Mar. 31, 2023 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of reportable segments	2
Number of operating segments	2
Gain (losses) from foreign currency transactions | $	$ 0.1	$ (0.2)

Summary of Significant Accoun_3

Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Accounting Policies [Line Items]
Restricted cash	$ 1,022	$ 1,037
Letter of Credit
Accounting Policies [Line Items]
Restricted cash	900	900
Guarantees
Accounting Policies [Line Items]
Restricted cash	$ 100	$ 100

Segment Information - Reconcili

Segment Information - Reconciliation of segment information to the totals reported in the accompanying consolidated financial statements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Segment Information
Revenue	$ 64,843	$ 57,607
Gross profit	$ 47,395	$ 39,286
Gross margin	73%	68%
Operating income (loss)	$ 14,110	$ (8,130)
Corporate operating expenses not allocated at the segment level	33,285	47,416
Interest income, net	101	503
Other income (expense), net	291	(40)
Income (loss) before income taxes	14,502	(7,667)
Amortization of intangible assets	595	583
Digital Agreements
Segment Information
Revenue	14,414	11,552
Gross profit	$ 9,892	$ 8,448
Gross margin	69%	73%
Operating income (loss)	$ (265)	$ (6,033)
Amortization of intangible assets	600	600
Security Solutions
Segment Information
Revenue	50,429	46,055
Gross profit	$ 37,503	$ 30,838
Gross margin	74%	67%
Operating income (loss)	$ 25,878	$ 15,631
Operating Segments
Segment Information
Operating income (loss)	25,613	9,598
Corporate operating expenses not allocated at the segment level	$ 11,503	$ 17,728

Segment Information - Reconci_2

Segment Information - Reconciliation of the disaggregated revenues to revenues from our two operating segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($) segment	Mar. 31, 2023 USD ($)
Segment Information
Number of operating segments | segment	2
Number of reportable segments | segment	2
Revenue	$ 64,843	$ 57,607
Subscription
Segment Information
Revenue	39,994	29,956
Professional services and other
Segment Information
Revenue	$ 1,702	$ 1,624
License | Revenue from Contract with Customer, Product and Service Benchmark | Product Concentration Risk
Segment Information
Percent of total	1%	1%
Digital Agreements
Segment Information
Revenue	$ 14,414	$ 11,552
Digital Agreements | Subscription
Segment Information
Revenue	13,812	10,348
Digital Agreements | Maintenance and support
Segment Information
Revenue	505	996
Digital Agreements | Professional services and other
Segment Information
Revenue	97	208
Digital Agreements | Hardware products
Segment Information
Revenue	0	0
Security Solutions
Segment Information
Revenue	50,429	46,055
Security Solutions | Subscription
Segment Information
Revenue	26,182	19,608
Security Solutions | Maintenance and support
Segment Information
Revenue	10,066	10,165
Security Solutions | Professional services and other
Segment Information
Revenue	1,605	1,416
Security Solutions | Hardware products
Segment Information
Revenue	$ 12,576	$ 14,866

Revenue from Contracts with C_3

Revenue from Contracts with Customers - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Revenue
Revenue	$ 64,843	$ 57,607
Products and licenses transferred at a point in time
Revenue
Revenue	37,798	33,146
Services transferred over time
Revenue
Revenue	27,045	24,461
EMEA
Revenue
Revenue	$ 31,842	$ 27,820
EMEA | Revenue from Contract with Customer Benchmark | Geographic Concentration Risk
Revenue
Percent of total	49%	48%
Americas
Revenue
Revenue	$ 21,344	$ 20,498
Americas | Revenue from Contract with Customer Benchmark | Geographic Concentration Risk
Revenue
Percent of total	33%	36%
APAC
Revenue
Revenue	$ 11,657	$ 9,289
APAC | Revenue from Contract with Customer Benchmark | Geographic Concentration Risk
Revenue
Percent of total	18%	16%
Subscription
Revenue
Revenue	$ 39,994	$ 29,956
Maintenance and support
Revenue
Revenue	10,571	11,161
Professional services and other
Revenue
Revenue	$ 1,702	$ 1,624
License | Revenue from Contract with Customer, Product and Service Benchmark | Product Concentration Risk
Revenue
Percent of total	1%	1%
Hardware products
Revenue
Revenue	$ 12,576	$ 14,866

Revenue from Contracts with C_4

Revenue from Contracts with Customers - Contract balances (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Dec. 31, 2023
Contract balances
Receivables, inclusive of trade and unbilled	$ 32,382	$ 64,387
Contract Assets (current and non-current)	5,607	5,322
Contract Liabilities (Deferred Revenue current and non-current)	59,489	$ 73,483
Revenue recognized that was included in the balance sheet	$ 30,400
Minimum
Contract balances
The amount of time contract assets are transferred to receivables	2 years
Maximum
Contract balances
The amount of time contract assets are transferred to receivables	5 years

Revenue from Contracts with C_5

Revenue from Contracts with Customers - Performance Obligations (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Revenue
Future revenue related to current unsatisfied performance obligations	$ 87,657
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01
Revenue
Future revenue related to current unsatisfied performance obligations	$ 38,656
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue
Future revenue related to current unsatisfied performance obligations	$ 28,253
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue
Future revenue related to current unsatisfied performance obligations	$ 15,586
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2027-01-01
Revenue
Future revenue related to current unsatisfied performance obligations	$ 5,162
Revenue, remaining performance obligation, expected timing of satisfaction, period

Revenue from Contracts with C_6

Revenue from Contracts with Customers - Capitalized Costs and Amortization (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Revenue from Contract with Customer [Abstract]
Amortization period	7 years
Capitalized costs to obtain contracts, current	$ 3,644		$ 3,503
Capitalized costs to obtain contracts, non-current	10,740		$ 10,766
Amortization of capitalized costs to obtain contracts	$ 884	$ 731

Inventories, net - Summary of I

Inventories, net - Summary of Inventories, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Inventory Disclosure [Abstract]
Component parts	$ 6,667	$ 8,511
Work-in-process and finished goods	7,927	7,042
Total	$ 14,594	$ 15,553

Goodwill - Goodwill Activity (D

Goodwill - Goodwill Activity (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Goodwill [Roll Forward]
Net balance at December 31, 2023	$ 93,684,000
Foreign currency exchange rate effect	(615,000)
Net balance at March 31, 2024	93,069,000
Goodwill impairment	0	$ 0
Digital Agreements
Goodwill [Roll Forward]
Net balance at December 31, 2023	20,893,000
Foreign currency exchange rate effect	(134,000)
Net balance at March 31, 2024	20,759,000
Security Solutions
Goodwill [Roll Forward]
Net balance at December 31, 2023	72,791,000
Foreign currency exchange rate effect	(481,000)
Net balance at March 31, 2024	$ 72,310,000

Intangible Assets - Schedule of

Intangible Assets - Schedule of Intangible Assets (Details) - USD ($)	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Intangible assets, net
Gross Carrying Amount	$ 91,454,000		$ 91,745,000
Accumulated Amortization	81,308,000		80,913,000
Amortization	700,000	$ 600,000
Impairment of intangible assets	0	0
Acquired technology
Intangible assets, net
Gross Carrying Amount	43,634,000		43,869,000
Accumulated Amortization	$ 42,584,000		$ 42,712,000
Acquired technology | Minimum
Intangible assets, net
Useful Life (in years)	3 years		3 years
Acquired technology | Maximum
Intangible assets, net
Useful Life (in years)	7 years		7 years
Customer relationships
Intangible assets, net
Gross Carrying Amount	$ 34,707,000		$ 34,773,000
Accumulated Amortization	$ 26,457,000		$ 25,960,000
Customer relationships | Minimum
Intangible assets, net
Useful Life (in years)	5 years		5 years
Customer relationships | Maximum
Intangible assets, net
Useful Life (in years)	12 years		12 years
Patents, trademarks, and other
Intangible assets, net
Gross Carrying Amount	$ 13,113,000		$ 13,103,000
Accumulated Amortization	$ 12,267,000		$ 12,241,000
Patents, trademarks, and other | Minimum
Intangible assets, net
Useful Life (in years)	10 years		10 years
Patents, trademarks, and other | Maximum
Intangible assets, net
Useful Life (in years)	20 years		20 years
Cloud Subscription Agreements
Intangible assets, net
Amortization expense directly related to generating revenue	$ 100,000	$ 100,000

Property and Equipment, net (De

Property and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Total	$ 35,137		$ 32,251
Accumulated depreciation	(14,791)		(13,529)
Property and equipment, net	20,346		18,722
Depreciation expense	1,400	$ 700
Office equipment and software
Property, Plant and Equipment [Line Items]
Total	8,699		8,574
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total	7,586		7,459
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total	3,638		3,658
Capitalized software
Property, Plant and Equipment [Line Items]
Total	15,214		$ 12,560
Cloud Subscription Agreements
Property, Plant and Equipment [Line Items]
Depreciation expense directly related to generating revenue	$ 700	$ 100

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
U.S. Treasury Bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 3,595
U.S. Treasury Bills | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	3,595
U.S. Treasury Bills | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0
U.S. Treasury Bills | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	38,439	$ 8,496
Money Market Funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	38,439	8,496
Money Market Funds | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Money Market Funds | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 0	$ 0

Allowance for Credit Losses (De

Allowance for Credit Losses (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)
Changes in the allowance for credit losses
Beginning Balance	$ 1,536
Provision for (recovery of)	(48)
Write-offs	(15)
Net foreign currency translation	(1)
Ending Balance	$ 1,472

Leases - Schedule of supplement

Leases - Schedule of supplemental consolidated balance sheet information related to our operating leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Lessee, Lease, Description [Line Items]
Total net operating lease costs	$ 659	$ 773
Building rent
Lessee, Lease, Description [Line Items]
Total net operating lease costs	312	523
Automobile rentals
Lessee, Lease, Description [Line Items]
Total net operating lease costs	$ 347	$ 250

Leases - Narrative (Details)

Leases - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Oct. 31, 2023
Leases [Abstract]
Weighted average remaining lease term	5 years 2 months 12 days
Weighted-average discount rate	5%
Cash payments to settle a lease liability reported in cash flows	$ 700
Right-of-use assets obtained in exchange for new lease liabilities	500
Term of contract		9 years
Total lease payments	$ 8,628	$ 1,300

Leases - Maturities of our oper

Leases - Maturities of our operating leases (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Oct. 31, 2023
Maturities of operating leases
2024	$ 1,792
2025	1,687
2026	1,594
2027	1,411
2028	1,304
Later years	1,347
Less imputed interest	(1,221)
Accrued lease termination fees	714
Total lease liabilities	$ 8,628	$ 1,300

Income Taxes (Details)

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Tax Contingency [Line Items]
Effective tax rate	15%
Statutory tax rate	21%
Income tax benefit	$ (1,034)	$ (689)
Income taxes paid	900	$ 1,100
Administration of the Treasury, Belgium | Settlement with Taxing Authority | Foreign Tax Authority
Income Tax Contingency [Line Items]
Income tax benefit	$ 1,100

Long-Term Compensation Plan a_3

Long-Term Compensation Plan and Stock Based Compensation (Details) - 2019 Omnibus Incentive Plan - Restricted Stock, subject to time-based criteria $ in Millions	3 Months Ended
	Mar. 31, 2024 USD ($) shares
Plan information
Stock based compensation awards issued shares (in shares) | shares	100,000
Restricted stock awards | $	$ 0.9
Vesting period (in years)	1 year

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, 2024	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Stock-based compensation	$ 1,540	$ 3,812
Other long-term incentive plan compensation	81	111
Total compensation	$ 1,621	$ 3,923

Earnings per Share - Details of

Earnings per Share - Details of Earnings Per Share Calculations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Earnings Per Share [Abstract]
Net income (loss)	$ 13,468	$ (8,356)
Weighted average common shares outstanding:
Basic (in shares)	38,060	40,057
Incremental shares with dilutive effect:
Restricted stock units	403	0
Diluted (in shares)	38,463	40,057
Basic (in dollars per share)	$ 0.35	$ (0.21)
Diluted (in dollars per share)	$ 0.35	$ (0.21)

Legal Proceedings and Conting_2

Legal Proceedings and Contingencies - Rent expense and purchase obligations (Details) $ in Millions	Mar. 31, 2024 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Liabilities accrued	$ 1.2

Restructuring and Other Relat_3

Restructuring and Other Related Charges - Narrative (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($) employee	Mar. 31, 2023 USD ($)	Dec. 31, 2023 USD ($)
Restructuring Plan
Restructuring and other related charges	$ 1,497	$ 706
Contract termination fees	4,232		$ 5,015
Other Accrued Liabilities, Current
Restructuring Plan
Restructuring liability, current	300
Lease Liabilities, Current
Restructuring Plan
Restructuring liability, current	700
Employee Costs
Restructuring Plan
Severance-related costs	$ 1,400	700
Number of employees eliminated | employee	290
Restructuring liability, current	$ 2,700
Restructuring liability, noncurrent	500
Contract termination fees	3,062		3,130
Real Estate Rationalization
Restructuring Plan
Contract termination fees	1,170		1,885
Real Estate Rationalization | Chicago Office
Restructuring Plan
Contract termination fees			1,400
Real Estate Rationalization | Brussels Office
Restructuring Plan
Contract termination fees			$ 300
Settlement Costs | Brussels Office
Restructuring Plan
Restructuring liability, noncurrent	300
Plan
Restructuring Plan
Restructuring and other related charges	$ 1,500	$ 700

Restructuring and Other Relat_4

Restructuring and Other Related Charges - Operating costs (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)
Restructuring Reserve [Roll Forward]
Beginning balance	$ 5,015
Additions	1,423
Payments	(2,206)
Ending balance	4,232
Employee Costs
Restructuring Reserve [Roll Forward]
Beginning balance	3,130
Additions	1,423
Payments	(1,491)
Ending balance	3,062
Real Estate Rationalization
Restructuring Reserve [Roll Forward]
Beginning balance	1,885
Additions	0
Payments	(715)
Ending balance	$ 1,170