OSPN - Earnings call 3 2023

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Operator

Good day, and thank you for standing by. Welcome to the Q3 2023 OneSpan Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please hand over President to would Investor now speaker, conference to like Vice I your the Joe Relations. of Maxa, Please go ahead.

Joe Maxa

OneSpan thank operator. call This at Relations webcast accessed for everyone, section you, be being XXXX and can the Thank joining Conference Hello, is the investors.onespan.com. on Third and Call. of Quarter Earnings website you Investor OneSpan's

afternoon, call Executive Chief third the a on results today market This Officer; Financial please release press Jorge me Moynahan, announcing Chief of other is copy issued Joining our quarter OneSpan investor visit our and Martell, Officer. release access a information, after close, website. Matt our the and XXXX. press To our for

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

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

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

Matt Moynahan

you I'm pleased X quarter efficient objectives Good Thank towards activities appointments made important last execution enhanced of quarter, us everyone, you, the cost the joining drive to model changes and you us. growth, announced managers help operating our shareholder for to tell to units. our reduction we for increased good business these profitability operating progress including more Joe. in We of revenue and significant third the general value. and afternoon, thank

of under we time XX of hard We our commitment Rule toward a level exit XX attaining are XXXX. working the the driving of achieving our framework by toward of XX% goal Rule and aspirational are of the

adjusted or rigor $XXX XX% adjusted margin and quarter our Third by XX% $XX million. EBITDA operational driven year-over-year X% XX% and primarily grew revenue initiatives. to I ARR reduction EBITDA revenue. pleased we our focus was am million $X.X of million on grew to cost by the reported

we was of details end This cost savings by our to to year approximately additional XX%. at rightsizing During the this have year. our on execute savings achieve our plan our approximately X% QX of positioned planning least the more are on financial of and achieve $XX margin expectation addition head XX%, will in reduced in savings, $XX I results our including Based targeted million during adjusted full EBITDA savings OneSpan further XXXX XXXX. count resulting provide Jorge annualized review, believe before of end the his cost cumulative million. we to QX, quarter, than completed annualized and cost we by the to headcount more in of we reduction approximate on

plan we address with along including closely and go-to-market If our our our are sales productivity efficiency, necessary, model marketing to our further monitoring revenue to commitments. profitability cost achieve metrics, We growth.

Ibrahim we from to agreements segments: named Samy driving agreements Sameer and relevant quarter, and manager. they respective security strategies X the In our to cash operating Sameer with General third Security operational Security of operating focused been domain seasoned are for Digital General executives reporting of Turning Mamode unit. a execute each expertise appointed Manager their and Harjanis growth formally solutions segment agreements has and Manager business Samy efficient for business Solutions digital creating driving flow. Digital general units, Solutions. transitioned with our X as are on and of distinct excellence

service and customer our also a by high-quality e-signature begin margin trialing the and major sequential with from cloud-based signed quarter OneSpan ACV items. SaaS replacing X-figure OneSpans is the sizes factor pipeline primarily using expansion the expected, growth part reprioritization we expenses, over will with lower customer notary large which it moved along The logos. bank at in deal increased specifically quarter, and have in solution. performed a upper macroeconomic last QX, also a of QX of investments and and e-signature a our deal rates on-premises revenue in scrutiny by one business, our highlight line that QX. like our low technology in both The transition we leading competitors opportunities customer we on separate as benefiting one an in virtual issued continue deal In customers that a competitors X-year begins the I X-year among agreements, in their of played million valued spin conversion This to operating that had solid would cloud digital form $X our cycles, generally of This ACV be the closed included from existing driven customer growth deal to revenue to driven X-figure putting profitability and QX. our that sequentially ACV important to cloud sales customer expansion RFP and see one decision. pressure that noted to During chose early segments key additional That They gross solution out said, a beginning and of discussed of for contract final XX% higher U.S. in both upgraded new uncertainties. customer, in as other QX. their role QX. in

logo increased prior As new are sales calls, attainment core productivity digital mentioned and strategy. in to growth our agreements

close to to recognition enablement as well them and We on aggressively improve continue business enterprise sellers to focus generate training new brand as the of opportunities. enable and our productivity more and sales

secure and Our gain it value interest other and from to strategy authentication, the verification, is evolting including of e-signature companies solution us in continues X-pillar set market, different high proposition, collaboration, virtual identity and transaction very apart. our assurance e-signature

recognized assurance In our the the to heavily named click for high "whitelove customers signature. regulated from Worldwide industries, eSignature out the without provides constantly to trail capabilities differentiator, to stating, their to document EASI, a authentication all necessary key is X customization verification. IDC expertise verification calling we agreement while audit software service" the entire robust single in a recently a fact, sacrificing signed security and were labeling OneSpan perform assessment report process and success making easy OneSpan's leader highlighted while within a we're vendor and interactions. is The audit embedded trail identity XXXX, white for audit ensure trail in it The for MarketScape of

demand the long-term and to that emerging of cyber based external we value can the believe I'm our We digital against entire that allows We only risks technology. such through on our last new document. fault immutable and about partner. direction. keep and focused of partnership on throughout agency capabilities company their the this which continue security And strategy, the with are data use generation our Trust to lifetime breaches documents agreements of we believe technologies the digital like week. We're than packing, market pose proposition organizations guarantee blockchain capabilities the protected quantum computing cycle, viability our environment for in new working previous the is of new in a industry states, by excited end we the than are capability, are is states an demonstrating XXXX. this by stronger XX It by addressable next-generation targeting infrastructure and securing first put competitor, demand engine innovation life broaden XX availability to understanding for market, We're solution. we to the largest helps notary has transaction of the to and and market our more threat our OneSpan quarter also improve bringing available integrity use in for the is in U.S. which OneSpan currently moving place go-to-market excited Trustful storage launched position as the business our approximately agency.

concept. of handful on done Currently, with states proofs XX has end certification, basis. As a about paying notary a is most one require customers reminder, market of a customers spin state-by-state and which

Lastly, product shipments authentication, orders remain compared continue our of the our year-over-year DIGIPASS the subscription first most subscription a solutions and we for declined as from commercial macroeconomic of the strong to few existing Security mitigate affecting to mix and In timing expansion availability security we Visibility target half X%, app Security though to in see self-service see mobile orders year XXXX banking on driven token minutes the now license our we shielding and DIGIPASS segment. and revenue in large attacks. to primarily our revenue potential on quarter, Security general environment continue order at importantly, signing spend solutions. I'll solution opportunities to market some XX% to Solutions Try prior due customers, into and SMB Buy customers, to sector. extent demand focused perhaps Solutions, the for e-signature grew by transaction period. banking segments. primarily and hacking continue the mid-market for of authentication

strategic the the and market. sector Solutions Top are our deepening very relevant new solutions reengaging to market our closely. bringing mid-market the in We watching relationships effect financial accounts, priorities segment with Security on include ripple channel

regulation a solutions, DIGIPASS European in support which forthcoming security new history have so to and customers our with new regulation opportunity of X PSD solutions. software of in we forthcoming do another to have including mobile our supporting plan the the Union, with We times and

continue our also we're whether and And grow using focus DIGIPASS excited discussions coming coming future and the with to top plan mobile tokens. our new to our helping and to sell we all authentication plan channel or launching strategies, to expanding our weeks.We the us line. their around We in new mobile to our a mobile-only solutions, years in which network enable of be partner it grow hybrid program, a customers channel announce approach mobile-first, market

plan including information more with near workforce on also new program, DIGIPASS-FXXBiO. solutions bring the to to an named new provide support this future. our channel authentication offering in you to targeting We to We market plan device

We plans. $X.X cash to allocation Next, on million quarter. during I used an to third want capital stock provide update our the repurchase common in

expect consistent the the our focus to financials. We commitment to are value create right I cost announce capital Jorge? to of will capital million a tender to week revenue call to structure, OneSpan Jorge offer actions will common turn With to and approximately for decisions to shareholders. to and balance to our believe taking return review and growth and and in on over return our our operational with the as next our efficient our help of seek us to stock, shareholders we strategic Dutch return to that, growth repurchase to we rightsize I plan the shareholders achieve $XX profitability. auction modified

Jorge Martell

good and Matt, Thank afternoon, everybody. you,

I results, update Before top structure the are to rebalance we efficient quarter actions our reviewing cost line drive our to provide more to third want taking on an growth.

Phase combined restructuring plan of For announced savings simplicity, are actions XXXX. annualized X the we reduction cost we total last cost announced in our of May and quarter from providing

vendor of annualized the annualized as the third were Cumulative headcount of in resulted quarter, quarter and mentioned, $XX last and of the we As cost Matt approximately cost in cost $XX million. announced consolidation savings quarter XX% mostly end achieved were in approximately other including count the approximately related cost actions by savings million. third million. reduction the annualized savings reduced strategies was approximately reductions, optimization and $XX we head to third Total quarter

to to the million quarter, current $XX mostly execute expect by cost $XX XXXX. savings We savings on of million additional the labor approximately related end cost bringing approximately in annualized of total

of $XX expect Over and million now total vendor-related last of increase XX% million $XX the of $XX we is of had into adjusted to incorporated sight few cost end range to up to XX%. strategies the EBITDA more we stronger than savings $XX other months, targets, incremental $XX included and which target already last firmed margin annualized The our which course of have XXXX approximately million due million optimization a range or into million of a achieve been line cost the discussed savings $XX XXXX to savings our quarter, level to the by million conservatism. cost

Turning to results. third quarter our

Third for ARR were sunset approximately and longer to ARR with million. quarter Net year-over-year and grew certain last subscription deal moderate increased XX% accounted screen by total sales also year. business million to These XX% contracts metrics specific impacted resulting by the our or and to ARR. XX% and environment expansion NRR retention XXX%. rate, to more NRR, quarters, macroeconomic $XXX was be in grew ARR prior rates. decision offerings portfolio to cycles, new to continue $XXX impacted Similar of

led million, growth expected, sell several contracts signature our in X% revenue by token licenses of and million. strategic our increased as declined by $XX.X driven new and recurring security Perpetual revenue support revenue. XX% growth revenue XX% and declined maintenance to XX% quarter X-year Subscription revenue Third SaaS X%. revenue as decision $XX.X in DIGIPASS grew plan. part software only to to

few increases gross minutes. in expenses, primarily margin. by margin comments improved $X.X and third other provide product items year. adjustments operating charges, excludes [ driven quarter on net quarter the revenue last long-term $X.XX Increases quarter. $X.XX $X.XX compared to year. the earnings gross favorable prior non-GAAP GAAP quarter XXXX margin third and last margin of in $X.X operating by million QX were a compares I'll year. in Non-GAAP to per in impervtax quarter to increases from the year $X.XX compared by share, of XX% of Operating per in expenses. was costs in headcount loss of XX% offset T&E gross to restructuring was in profit in share resulting the mostly ] in additional share of incentive the was compared loss amortization, higher per segment and nonrecurring which This and earnings compensation, third in million quarter, Third the hardware related mix third last was

same million Third compared quarter $X.X adjusted $X.X was in million of year. to period last as EBITDA the

to from were grew XX% approximately million million. in for revenue accruals accounted EBITDA agreement XX% which Subscription in lesser and ARR agreement. an million. increased items, segment now our prior Third to benefited quarter. SaaS $XX to $X.X $XX an adjustment revenue results. XX% multiyear third quarter Digital quarter of I'll X% to adjusted agreements to from ARR onetime nearly $XX.X $XX grew the catch-up and grew period million. year-over-year subscription discuss bonus most by a to driven adjustment extent, million of XXX% subscription the immaterial revenue our digital

January solution we XXXX selling are at our of on-premise previously, licenses discussed sunsetting As end of the our EC and nature version stop effective new X.

XXXX. We full expect year for subscription minimal the on-premise revenue

for of including the $X.X million $X.X subscription purposes, digital the comparison quarter in For is revenue, last year on-premise full fourth year. total million in subscription contributed our included agreement revenue which XXXX,

service gross approximately to in XX% year year credit quarter. in was quarter. from million last loss as $X.X an to last an Operating QX a $X.X cloud of $X.X provider. loss operating million compared prior compared XX% points margin onetime due profit period prior quarter X to benefited million the as operating in margin the Gross by profit a year was Third and of

from and and gross the with Security in agreements, reminder, of marketing, quarter. in increase in a expenses our reallocated increased year-over-year in accounted QX for the segment the change. to this the to entertainment sales change of margin, an sales we and year, travel expenses operating which combined digital contributed majority Lower headcount As Solutions profitability

app the Turning year-over-year XX% $XX Solutions XX% in profit to mix. Subscription to increase on ARR, X-point a product offset as is to subscription grew as $XX.X margins revenue to a noncore the our segment a quarter to continue reallocation margin compared over subscription delivers want the in million quarter offset return for The by increase $X.X maintenance ARR the $XX.X in partially in increase. Revenue maintenance year can of XX% gross gross shifted normalized and and $X.X our expect operating charge DIGIPASS to and to increased second volumes of from for remind and was increase was quarter. million revenue last the period perpetual the sunsetting I $XX last half revenue QX was in in legacy million margin, and sold. to to margin X% in customers. million. by software million. certain contracts margin of attributable and compared assets signing Subscription third agreements accounted in customer a subscription token levels and last X% same hardware The in any hardware Operating year. ARR in transaction an based subscription the majority be revenue in year's An increased to and we to lower was in results. solutions, expenses XX% income driven fluctuate QX, given QX beginning and of year-to-date third primarily year. XX% to and increase our to grew last quarter profit you contracts strong quarterly partially Strength and Security that margin. digital following million, highest quarter hardware $XX.X XX% perpetual trend demand related time. to impairment was the the result to first decline shielding primarily revenue million existing by expected authentication in of declines growth a perpetual-based continue

million in quarter cash uses $XX and year-to-date million end third the equivalents short-term investments of capitalized the ended We to in cash, changes capitalized XXXX. sheet. primarily $X million include capital. at working to million $XX.X million stock in balance common to $X of XXXX of expenditures, Key costs, $X cash our million net in software restructuring to approximately $X repurchase costs, payments, acquisition-related million compared Turning and $X.X with from

year, operating now We XXXX. changes This XXXX region from cash third EMEA, XX% generate and XX% respectively. from quarter have Asia positive from in to to the our I operations Consistent by XX% outlook. in and will of the of XX% the XX% long-term financial with Americas the regions QX our same expect the update third in mix Pacific. flows XX%, we to and last from debt. Geographically, revenue the compares no model, was provide an in quarter from XXXX

For the the the full to our be from million, the adjusted previous $X $X in million of to million $XXX of range to guidance previous as million our guidance $XXX compared year in million to of million. and to ARR XXXX, we EBITDA range expect million to $X $XXX revenue to be million $XXX to to range range of $XXX of million. up $XXX be in range $X million

our QX on-premise that flow can a last few affected at contracts contraction previously, due from customers an impact we ARR on sensor and of our We're expecting year, pressure and to are of which expecting XXXX also the capitalized discussed agreements hardware digital some expected and business began to Solutions As plan XXXX. and We've customers by amortization deal mix margins we security increase of software also solution product this of NRR favorable our which, in less costs, discussed a QX, QX end year. capitalizing the mix. be products. e-signature with due decrease along margin legacy to In in in timing gross a

as customers cloud sunsetting the These our solution e-signature our some quarters e-signature example, cloud. planned due the customers to running in For they migrate of are both to versions prior solution. on-premise purchased

as these on-premise from contraction in expect QX. expire customers contracts We their

from also from customers deal on-premise flow some We in expect contraction other migrating estate and to QX solutions.

XXXX Turning outlook. year to our full

course. this Your Board approval hard will year which of need budget, work on will completed be our by in the by end the due and

million to restructuring-related generate adjusted my in mid-single activities shareholders. to payments, turn range we return full XX% to low of capital M&A expect EBITDA are the operations cash from by of call the in range back and Accordingly, remarks. XXXX margin of revenue XXXX, XXXX year targeting excluding to the the of to Matt. in end full growth $XX $XX year digits We That concludes XX%. the I'll million and to now range

Matt Moynahan

transform a Thank the is you, of enterprise culture. our company very proud into with OneSpan Jorge. work an I'm to class performance-based team doing

committed happy our by We and questions. to shareholders your I profitably. creating are to value efficiently and to growing take and Jorge be returning revenue now will

Operator

will BTIG. first [Operator be Gray of Instructions] coming Powell from Our question

Gray Powell

I what quarter. clean But looks have on a congratulations it, into on before end. like get I my few a just fairly

about saw So seeing October. you yes, other of linearity provide in to throughout about you've just macro and days in start level confidence what on talking wondering overall last terms the you are visibility and or a they're get worse color that how the QX companies demand? was seen off, if XX number just just headwinds could XX tech like on any I talk just then your of your

Matt Moynahan

most it material I The of continue strategic challenges. in change X a lengthening seen area more us. some and increasing volume typical would to have and is next partners for visibility, be program me this and than slight sector. been But which sales sector, of say one after believe new there's would cyber this online only deal financial any not, We've be quarter, the would of tokens. sure, for side the prioritization visibility more at the that X Greg, that I'm there's give past to the consistent as release we with cycles, somewhat we banking. the us particularly is or we it relates it's is new hard don't the macroeconomic say, the tied a us of mark particular visibility should I more Matt. a which over We're having launching I some particularly course that in control work in question that worsened quarters, is the one into that DA, channel do channel who program mentioned of to would more the program, Obviously, should mid-market of year. that has over we'll those deal purchase get it house, see, effect the which hardware or think

Gray Powell

helpful. but want have the prepared kind make on really just I That's remarks, answered it I think I correct. And of Okay. to sort one may sure you of have this

So ARR pretty net QX. new additions nicely bounced in back

You $X added of new there implies I in were over net deals that QX. ARR. the probably QX only slipped just to helped that number. million But know million QX guidance that $X from some you high add end of

just is So to know setting any not conservative talked there reason I that's the you think a about number? issues. fund

So correctly. thinking want lines ARR sort to I the about that sure trend I'm just of make

Matt Moynahan

now to in Yes, no, of as side SaaS. from couple here, as migrating both sort security of of that's right have to a we mean, going think of mitigating have on we mentioned, we've side Jorge at perpetual a fair e-signature impacts do so -- the double been bump the say. I I subscriptions have that, on the and migrating obviously the house e-signature we

on-premise a installation. we during So the from cloud-based migration an oftentimes to

parallel. You run in both

of So at the there's contracts same double in of time. a getting tail where the place we're sort both benefit

of do a that maintenance customers a the and with as of there's dampening application say, headwind with roll that. bit on-prem little I should associated we And or that effect, off anticipate so to the a associated cloud

for acquisition, obviously the and we've really getting the which one customers then have associated a really ARR of with importance And off selling our downsizing planned engine area drive banking so new the cycles. sales some of just seen And uncontrollable. us, And we assets, biggest a thing, that is the again, is so international big also acquisition given Greg, right? size going, NRR have couple index for logo example, logo to new is We some in is our lumping right? of

all this where comments think that are that of we think continue on we I I suggest warranted right your at the midpoint way effects prudent don't range. perform But the we we're are we think those So we and to dampening will now the if given quarter. being

Gray Powell

one on last couple side, Then Perfect. I right. I've a here. know asked All my

actions. just at of of -- year really if summary look extra reduction cost maybe to Slide like the that is and it so to kind XX, that 'XX, envelope looks you're like an Just looks directionally Back at you're the correct? generate gets cost it looking $XX going I on you pretty full 'XX helpful Is or savings your versus like much EBITDA going that to full year million target. get like map, in

Jorge Martell

under is this Gray, Jorge. weather. Yes. I'm because a Apologies little the

I maybe take step back. So to just think a

of the that and this deck. in arrangement $XX are sum that to million on see on planning we that by gets million. year entering We end XX that million. investor had to mentioned, plan of $XX the to the 'XX the at and to at And we I So be QX, execute, as the an $XX Slide XX% we're incremental executed million, That XX%. that's million of to looking you we $XX gets you that QX, $XX you

laid we going back Now how to this sort of out.

come is identification the we So this to sources had of that clear out. going

done we've these work and the months, of vendors, makeup of past the quarter, firmed up numbers last specific terms over of mix some the of et the of couple that Some between cetera. headcount in

so And guided we number. to that

to already in been to So the million the included XXXmillion XX%. XX% $XX has

Gray Powell

it. Got

sort long might been be just it the here Okay. enough. in, take I've Yes, the trying factor of to after Yes, but for me to when of call. like they on it easier timing in I was layered

Jorge Martell

that different some vendor after call. is the spend, a it impact tail and community walk takes sources There's to, it obviously place. a detail with you relates the just in to as happy We'd the associated particularly little dynamics with the of happy be as when as those the Gray. far with to bit We'll longer through savings some in of layering

Operator

Anja [Operator Instructions] of will Our Soderstrom come next Sidoti. from question

Anja Soderstrom

And backdrop. congrats against on challenging performance your good here

terms In do is see it of same? of the or become you projects Or the has scrutinizing that and is worse sales improving? longer it cycle,

Matt Moynahan

it's in last we is if going seeing IT some e-signature moving. macroeconomic by some challenges, they're material which incumbent ability that of there's migration benefits them But model, is a particular And invest their it to and calories, in incentive an IT every been than and material term, X an Again, don't largely environment. right? it to a this are the business strategic top it's long the in to say incumbent I'd these think this savings say is for was important. Anja, new resources in role plays where from the question we've that. already, nonetheless, calling think out some top I the digital XX our So top would now think pricing in area I to unseat apply a about, they and with when I But provides transformation, really hopefully same worse budget challenge businesses is year being certain X, cycles, chopped Obviously, an the it's there's talked we year. started there's year. change the No, any it us, sort the meets place have that do whether to e-signature particularly it and from just for going to but enterprises Certainly, see through happen. to the macroeconomic of I make

first we half so expect to happening. degree. year next see to would And And the for that I that some continue of

Anja Soderstrom

your of you how from? then come did think I organization count XX% the most in cut sales about of head quarter. cuts And is ramping Where Okay. the up? And said you

Matt Moynahan

Sure.

Jorge, just feel free math the and dive walk to please through in. So high-level

of details security the expenses G&A. XX% but on agreement just through walk total let half And from came came let can high-level and merit. of the from side some Jorge through, of house, me the that of you came So the that. them the But from give we digital about XX% them

of agreement Digital we've obviously, side growth. On we're And digital the obviously, of since given X be primary consistently market. growth the cash day run engine going to the the to flow. to house, for size e-signature that going was committed security, profitable always agreements

side new sale, to okay, centers the essentially On be the DA the there influencers the a that of the the into we the operating side that clear our or the buying installed may base house. thought macroeconomic of the things, security on given signature completely between house us is distance and turn side cross-selling of from addition leverage for into in

those base one XXX to XXXX, installed really, customers we on capacity, top and really base spoke make for which which sales direct these engineering the digital also but sales growth. attached we was much installed top with reps to driving And agreements in customers the been not we our the which to X,XXX community new rebalanced sellers that just digital sales we have division before, on these agreements, sure focus our so sellers, as created really really development so the about less

focused to opportunity reduce the would effort way So on on where the evolve making of sure we're installed product law of focused share continue other to weren't which countries in the more us agreement different, provided the get the those spend market common is X seeing growth the increased we'll countries focus market buy slightly model more there's of ANZ, sell which get year. the that next to attention. are with cost-effective self-serve a America, really having exceptional fit, of as our countries that digital with the lion's the sales with we and lot a the where really and product more of try force the But and a We'll approach material and the size on Tier I Canada, our say, globally. serving coming common North and execution, we continue community, coupled base focused go-to-market associated marketing QX

just to the ensure some the that allow in DA that do sales would we capacity it communities growth and the business sales OneSpan. town beachhead of law us common inside refocusing was on to countries of get rebalancing across So of that I executive and engineering say STR

Jorge Martell

And Anja, Matt -- first your and add your question. to first just to to to

vendors S&M, is is the combined. above that as sales in said, about sections, then there's about across these to marketing of G&A of terms disagreements of then Matt and So XX% then X And savings. and about the that's the about close was go XX% XX%. R&D split, XX%, total And XX% savings

Anja Soderstrom

implying quarter for because the Okay. for that And onetime the you're items to remarks it lower. you the be or? I that full guidance Is it. adjusted of year in fourth with the third think your quarter, as EBITDA on will those alluded But in

Matt Moynahan

question, Anja. for Thanks the Yes.

X into visibility or think have important hardware there's is dependent mentioned. the I I margins, that to One the particularly dynamics on X as I we is think So explain. very that is which customer the mix,

went QX, APAC, to That have higher have So from which portion margin. stability. this to particularly a In the this mix a shift. larger quarter, we is going because that, benefited we orders of

that's an hardware so And have the unfavorable to on impact going margins.

amortization mentioned, that to software, DA. is component be impact cap to going also but DA, to the increased our a is is larger second going of study security as The I

mix the revenue profitability. of so impact And does

continue will number think taking down, this to in to restructuring QX. impact hold see on these I that taking so but place other you're dynamics side OpEx and profitability coming And going the

Anja Soderstrom

And on lastly offer, in other Proven there you DB, the are about And and how you and tender for is what acquisitions other actions auction decide Dutch Okay. what would thinking Or capital then one the that? you that? allocation are pipeline? some acquired

Matt Moynahan

to the capital That that's with we look to that to in strategy. this is in pivot to will, model been that we've consistent. and you believe the mean committed the offer. tender addition at and our have prudent, continue are we're they balance materially sales thing we on simply to hard given proven from particularly returning Dutch we changed one comfortable not acquisitions we for model do feel sure. the $XX the more and that tuck-in And We marketing tuck-in cost, this want at operating work new very, at continuously pivot do overall having for that flexibility sheet cash the control So million-ish, allocation looking going to since we've you to operating if from ability our does model very We're not that and investing have acquisitions.

you for In favorable be out acquisition the to that and those. quite But hold want proven environment this that DB we're going to obviously, fit was, becomes fact, case. is truly the until strategic like

Operator

Thank I turn like to remarks. to the back now you. for And closing would Matt conference

Matt Moynahan

joining. appreciate and quarter. and and you your forward have I you attention. you, look for a big quarter. to over progress as past to day Thank the with you next time really the everyone. all sharing team everyone, for OneSpan a well all, you, And the today nice thank Thank I thank work hard

Operator

conference today's concludes you participating. for call. this And Thank

disconnect. You may now

OneSpan (OSPN) 8 Nov 232023 Q3 Earnings call transcript