OSPN - Earnings call transcript Q1 2022

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Operator

Hello, and welcome to today’s OneSpan First Quarter 2022 Earnings Conference Call. My name is Bailey, and I’ll be your moderator for today’s call [Operator Instructions]. I would now like to pass the conference over to Joe Maxa, Vice President of Investor Relations. Please go ahead.

Joe Maxa

Thank you, operator. you Call. the thank XXXX First and Conference Earnings everyone, for OneSpan joining Quarter Hello is webcast site call Relations This being section the accessed of Investor on OneSpan’s Web at span.com. and investors.one can be

of our on site. access issued Officer; Jan press Financial a please announcing Executive the Officer. press me OneSpan's Interim after a afternoon for Gaalen, and the Matt our release Kees is, visit Joining other Moynahan, first today and market To Chief investor This our copy van quarter XXXX. Chief call release close, results OneSpan information, Web

forward-looking been Commission such expectations from may that of call have XX-K financial I filings in risks the Following non-GAAP statements. XX-Q and on such outlook we risks made these and a for and this during certain uncertainties. prepared full actual statements assumptions. for company's these related today's Also or that discussed adjusted to statements. and open be anticipates, statements questions. statements call as conference a measure. the words, events that and and discussion note the basis on financial measures relate based forward-looking year involve XXXX, results projects our from to call differ These Form words direct your are Form comments are believes, Securities today, US current with this similar future that and on the Please GAAP for press release use expects, including a plans, expressed materially note and Exchange plans, could attention will Consequently, and uncertainties are expressed performance, the

to non-GAAP directly for of these the GAAP earnings measures press an and financial provided financial explanation have the in most We release. comparable reconciliations measures

date no to or by assumptions except statements the we for any update call of as undertake a Any reason. statements XXXX. forward-looking made new note May this obligation information are law, date, other as events and addition, please required future related result is of X, that as of In this these or

call the also Investor contact York Investor Day to I webcast want XXth. event site. Relations will everyone, on be turning New Before Matt, Web City our me at we over on hosting The will be to May an in remind joe.maxa@onestand.com. Please

you in now I the over the Matt. interested If are attending live will event. to turn call

Matt Moynahan

a by I building and Joe you at joining first months, afternoon, you, I've from the extra the for are direction displayed And us I Thank over our lot is minutes. which in today. been their employees in as we today. very internally talented several few Day last good will plan, for accomplished and months, over with developed level professionalism call efforts we'll all process. Thank thoroughly a and begin explored, strategic focused tell quarter and of and enthusiasm in remaining we throughout detail several you taking. our two the the with both thanking you, teamwork impressed dedication, everyone. results, last would Investor the thoughtfully while on like discuss finalized with can I driving the customers our to discuss about the which We weeks our long-term

into glimpse me let our First, Investor at a will Day. provide what you hear

tenants. forward go We include It our you strategy. three on will update will the following

will in one shared we one a strategy globe the behind and mission. team united spanning as go-to-market First, operate vision

virtual which operational improved we solutions. clear and two solution security focus agreements includes Second, room team digital will solutions, the broader other our third, structures, And and roadmaps, will our accelerate execution. agreements and growth digital category, portfolios, e-signature, have in

our efficient way three also software year growth a profitability over to and total and more hardware deliver return operate In in our addition, plan. both capital we increasing will security, to

Digital As even very before, only the of we cybersecurity both drive in for in to enterprises the next I OneSpan. blocks core more generation and important to place, in growth years will to markets come. position mentioned become that the with agreements good building are are important

a account largest that base customer includes their We acquisition, mitigate processes, transfers. experiences many regulations including trust customer such and fraud, that world, new in and have the deliver cases companies security in to us comply most the use business with critical mission business-to-business openings, of and to new risk as of their bank companies wire user-friendly them conscious help

our key our excited plan As on There integrate details agreement opportunity penetrate core we result, a us outlook a technologies is solutions to share in and segment into digital as of our I'm strategy tightly market. significant differentiator with and in security and you a to and more aggressively enterprise front the soon. broader the

and to competitive and increased with to growing adjusted decided explain first core multi-year meet several as and The component of the secure in year. contracts strong important to and solution that for company. new closed lifecycle its global led win We line It a of In compared a their of within by live company agreements our operating their was e-signature e-signature revenue as needs. platforms a saw why? logos I of and enabled in ACV QX, resulting customer won first seven-figure replace recurring contract we solutions. an E-signature SaaS in value to Turning internal quarter, transaction enterprise a we the XX% security execution sales both cloud ARR I'd solutions. quarter us, particular, with many reported modest to quarter proposition. order in requirements top growth highlight first our improved growth, management want efficiencies, to the revenue XX% digital in Year-over-year, growth EBITDA business last expanded like e-signature

our set, class the such selling providing and near-term, this white willingness We go-to-market realignment capital customers, in progress Kees solutions ability you as tuned plans win. and key discussing enterprise not soon. look were with new efforts exist to Jan Stay our the our will market In core focus you matures. solutions factors more to and Jan use Our our with for feature I believe our we Kees? on as strategy will as our our of With take through label existing and that, integration ease forward to in journey. more cases financials. innovation, continue

Jan Kees van Gaalen

approximately of for you, consistent XX% grew multi-year Total the subscription, on the in than e-signature higher year-over-year revenue to decline partially rate. expansion and non-recurring ARR subscription of product $XX attributed ARR. services decline subscription as X% was models. on for and was grew in was grew deal recent Matt. quarter growth revenue, more with the contracts $XX to mobile more software the term-based to maintenance subscription renewal. the grew in quarter license as quarter. XXXX XXXX year-over-year of Thank and increased in to primarily e-signature DBNE, and to revenue mix. million. in in the million the offset typical Annual increased in to SaaS including revenue security to first Maintenance the by in licenses, term-based to premises revenue a quarters. dollar SaaS accounted software to quarter from ARR growth recurring revenue with be migrated first or a XX% Total E-signature, quarter. revenue. in recurring software based and ARR we $XXX recurring Term-based and margin SaaS total quarter. and we rate, compared The year-over-year Server year-over-year recurring first revenue by along hardware. subscription million a declined difference XXX% SaaS upset gross subscription million margin quarter accounted XX% and of quarter XX% XX the of flow million which first million software, XXXX. perpetual in term-base versus company in contributed revenue. to define to $XX for X% and customers, Gross XX% in revenue first XX% net XX% benefited growth XX% and the continued legacy software XX% to year-over-year is QX XX% existing XX% $XX in services also increased first Growth specific

restructuring the XX% woods to compared the experience our in transportation quarter notice included XXXX. shortages announced revenue plan severance we're disruptions, impact results. XX% to GAAP global electronic could a and services million global we contributed late Software $X.X XXXX. related included That future as in to operating compared and continue as related financial record reduced first last to expenses strategic we expenses cost action reporting. chain of related to GAAP expenses Though of supply of services along other in said, our freight of changes and to operating our I along quarter outside want $X.X quarter QX the the air of of our these quarter. total to with risks also million out yet. on reliance And with component plan not

As in of of XXst, we plan ’XX. items cost completed March contained all our the action in substantially announced had QX reduction

the reductions ago achieved negative compares XXXX, target the the of Adjusted EBITDA total the quarter of and was in EBITDA quarter of the quarter. in margin in first of in to million X.X% cost the $X.X than $X.X $X.X was above negative cost for the severance, quarter, versus year XXXX. we for This Adjusted midpoint of $XX million quarter in plan. four XXXX. own more million Excluding first reductions our first year the XX.X% million

first with tax $X.XX last in million. first was First to compared short-term sale in operations on loss in share at XXXX. which quarter $XX our incentive of the the loss GAAP of quarter in non-operating We first in compensation, Non-GAAP share, and XX% earnings $X.XX term to impact XXXX. XXXX a were of end investments cash year. amortization, per quarter quarter of compared to the the long million per of quarter compared in of and interest was during million $X $XXX $XX non-recurring excludes generated from quarter the income share first first XXXX equivalents included of to per the $X.XX other the items AS. the gain ended cash, Cash million adjustments, $X.XX Promon quarter the

Americas the quarter in We This XX% quarter have long-term by compares EMEA, Geographically, to first AsiaPac. from of of no from XX%, the first from XX% respectively. in year debt. from the revenue XX% XX% and the region regions XX% same last and was mix XXXX our

hand COVID I over on want facilities second manufacturing these million. by deliveries $X driven the our facilities supply electronic quarter our chain. along at China, could Before contract Recent to in comment in closures up components impact hardware to to Matt, revenue delays to further hardware call with I of temporary

working this Matt? best possible. to monitoring are plans situation contingency and as We closely as this mitigate

Matt Moynahan

Kees. Jan you, Thank

implementing begin our can to see, plan keep with you started momentum year this as we quarter. As strategic look the we and that we momentum going solid

market strong will I more talented along strong than solution our Our to ever that now provide we upon. to position us establish we still employees, a have Though with foundation with do, and portfolio, disruptive and build clear a position ability to security work our the And operational leadership leveraging our as markets by leverage unlock serve our we advantages shareholder in strengths performance we one I'm increase and team. and focus, compliance. in in competitive as enhance identity, confident our believe value

XXXX our outlook. to turning Now

Kees We of are future XXXX in will for XXth. the weeks two about year our an EBITDA finalizing strategic be our look year Day meet discussing our to outlook and to and XXXX this ahead. we Investor your our full we'll closing, forward take metrics time, Day context excited at adjusted exceed long May questions. at year in year and update our remain plan, details on and and plan With our outlook expect of review XXXX In revenue. at time. full Investor And OneSpan the opportunity Jan At I our I provide to or happy full our that, term our Operator? revenue the with full

Operator

[Operator today first Schwarz from BTIG. comes from question Instructions] Our Stefan

Stefan Schwarz

general given the has commentary Just to on by Russia, I Europe? of any, wanted tensions? the start broadly, to been more in macro I business, to I guess environment Ukraine off, just exposure ask, your your if guess, any And impacted much EMEA. how

Matthew Moynahan

standpoint, fortunately. foremost, exposed we not and employee are an from First

so We exposed the employees from in thankfully, have in are several Ukraine, are Ukrainians US but safe. either living Russia we or not in people over

minimis Russia, I describe exposure our de would a business as Second, to perspective, immaterial. from

for we now in American companies stopped selling that. several ahead actual into Russia -- the of months on We are early cycle other have

of scheme And it the so consider just immaterial larger in things.

a refugees password. refugees always something in We highest to our you tokens they more banks some supporting this Europe from use you have are for been than hardware Ukrainian are giving protection. hardware is assurance higher sure for of on make secure is have forward that with seeing the And influx who and this seen use looking who nations them will those have a cases, an cases Hardware theme in be the case particular going level and have company. of customers

I a the in use of see more it's we'll think good case future. that

Stefan Schwarz

And I you or of maybe breakeven higher. Could Is think Kees. provide any just said quarter? a any Just higher? follow-up EBITDA are on it for your directional there. Jan commentary last given had lower the adjusted you color kind

Jan Kees van Gaalen

We will investor two conference are communicate numbers, reviewing the now EBITDA EBITDA still weeks. the we adjusted in those the and during and

Operator

you. Craig-Hallum. The from Thank today comes question from next Nick Mattiacci

Nick Mattiacci

I'm and already to in to weeks. that hear Investor a will it been curious like couple communicated plan we underway internally. sounds is So strategic Day know more get But I a has the the if at has of hear plan employee long-term also on recently? the past couple fared retention And are changed and has buying how how could speak the quarters that topic, culture in into to employees strategy? about the about how you

Matt Moynahan

uptake at change to work management I've vision, a make So plan have sure very mission the very of pleased communication been new been internally. crisp and We've the and strategy. hard we with

have And the bi-monthly since company, a everybody to you bringing this over so, my past arrival. months with we give process four just if the sense, a in monthly, along meetings, not

a I has there so direction really do reception population, that because And were employee the lacking from the believe before. they been strong

people people then get let work. clarity, jobs and do you with their good think I to so And can

And I are that. seeing you a swell ground of think so

out building intrigued But time to beginning We process from see employee from new will externally good people going have we’ll to December a voluntary attrition, and excitement the over say And at have industry company. in for to the obviously what's pleased believe I'd from that management OneSpan I'm weeks. as moves, to weeks do actually part of population. there future that made coming the are over of quite this senior two level as of be New averages. a in also message say as I performance we well far resonating that you recruits internally. is a But in coming continue the additions the are course rolled existing have has below new that And by the team the York. executive in been

Nick Mattiacci

hit build the out still of to the is I other CMO. are wanted then plan the you're on team. executive know -- leadership call, the You and about next kind a add? to I positions question. of any look believe I new permanent my last ask there planning CFO, since the for in team it's there a

Matt Moynahan

new. go executive executives. R&D Yes. bringing we're this this Head balance a scale to leads opportunity story our smaller right is company. Outside time of This in be understand same Development, where role and the of executives the the a company exciting at great but of of but chemistry Corporate me the for team who will an at to the for It's Head a look

very And that been pleased great. so has reception I'm the

as and now the of three Product progress as Revenue we those should to joining. near You General top also of are for over the the mind for and new making There's me the announcements over see expect there. you'll Chief Officer, a term But and an the Officer, open term. are right near a position Head CRO, good executive very Chief Council Compliance see well

Operator

Davidson. The comes [Operator Rudy next question from from D.A. today Instructions] Kessinger

Unidentified Analyst

I just [Neal] on one is Rudy. question. had This for

revenue the much the in a puts declining you of deal what QX much quarter. and up guys in PPP like wondering there. you But in how if missed revenue at? of year. still there could XX% and last walk that from just last -- through guys And revenue and was in the apologies of much if you revenue did from flow what versus was of hair some this how XXXk above did year, little, of subscription I below bounced the just QX How loans QX looks it guys is takes year that XX% So beginning. last a back quarter I last

Jan Kees van Gaalen

regards With strategy, will new to operationalize has small. to work revenue The is COVID. with the slowed we've as are with you we and this And on and we flow of small. start -- We relatively two the discussed deal be e-signature further subscription first some the seen quarter Day is year. me rest it Let revenue, during changes going somewhat to the the and in the flow. weeks. post deal Investor our decline decline contribution expect during It's really really, during do

Matt Moynahan

to Just security agreements how e-signature bring crystal digital going look to the our what of the a forward as objectives both this side sense, is house. business, well I mentioned, at one for the Day as we're give Investor side, as you at clarity to of to or calling

And the it's very to so subscription growth. difficult unpack

If we from, Jan our we term on-premise subscriptions, other that in of equipment subscription. an of from is do based. the as still his different cloud mentioned It's essentially Kees based opening remarks, at really our much sell a very no e-signature is than benefited the from location just you look what time-to-time version on-premises which

looks a in that currently into we versus sense. on-premise clarity to we of Day term bring lower if several total get sales because you'll that Investor pure as where subscription will makes growth. good we So had report based visibility our It subscription, subscription

Operator

waiting [Operator Instructions] at additional this There questions time. no are

Please the So ahead. for remarks. conference Moynahan to I'd go pass like Matthew closing over to

Matt Moynahan

Day in you you thank today. you. to time City XXth, where and on attention, And Investor your for see Definitely New York and Thank person hope appreciate at one to company find your us of joining in the seeing time. May everyone I forward look particularly our many much time. forward to you with for in of exciting future you short and sharing clarity and weeks two look the that very Thank I we

Operator

call. today’s concludes That

now lines. You disconnect your may

OneSpan (OSPN) 3 May 222022 Q1 Earnings call transcript