Earnings call transcript: OneSpan beats Q2 2025 earnings expectations

OneSpan Inc. reported better-than-expected results for the second quarter of 2025, with earnings per share (EPS) reaching $0.34, surpassing the forecasted $0.29. Revenue also exceeded expectations, coming in at $59.8 million against a forecast of $59.03 million. Despite an initial dip in regular trading hours, the stock rose 1.37% in aftermarket trading to $14.8, reflecting investor optimism. According to InvestingPro analysis, the company maintains excellent financial health with a comprehensive score of 3.1 out of 5, rated as GREAT. This robust performance is particularly noteworthy given the company’s attractive valuation metrics.

Key Takeaways

• OneSpan’s EPS and revenue both beat analyst expectations.
• The company reported a record adjusted EBITDA for the first half of 2025.
• Despite a 2% year-over-year revenue decline, subscription revenue is expected to grow double digits.
• The stock showed a positive aftermarket reaction, rising 1.37%.

Company Performance

OneSpan demonstrated resilience in Q2 2025, outperforming analyst expectations despite a slight year-over-year revenue decline. The company continues to leverage its leadership in multifactor authentication, expanding its product offerings and market presence, particularly in North America. InvestingPro data reveals the company holds more cash than debt on its balance sheet, with a remarkably low debt-to-equity ratio of 0.04, positioning it well for continued growth. For deeper insights into OneSpan’s financial strength and growth potential, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.

Financial Highlights

• Revenue: $59.8 million, down 2% year-over-year.
• Earnings per share: $0.34, above the forecast of $0.29.
• Adjusted EBITDA: $18 million, representing 29.5% of revenue.
• Annual Recurring Revenue (ARR): $178 million, up 8% year-over-year.

Earnings vs. Forecast

OneSpan’s Q2 2025 results surpassed forecasts, with a 17.24% EPS surprise and a 1.3% revenue surprise. This marks a positive deviation from previous quarters, highlighting the company’s strong operational performance.

Market Reaction

Following the earnings announcement, OneSpan’s stock increased by 1.37% in aftermarket trading, indicating a favorable investor response. The stock remains within its 52-week range of $12.78 to $20.36, suggesting potential for further growth. InvestingPro analysis indicates the stock is currently undervalued, trading at an attractive P/E ratio of 9.52x and EV/EBITDA of 7.37x. Discover more undervalued opportunities at Most Undervalued Stocks.

Outlook & Guidance

For the full year 2025, OneSpan projects revenue between $245 million and $251 million, with ARR expected to reach $186 million to $192 million. The company anticipates continued growth in subscription revenue and aims to achieve Rule of 40 performance metrics.

Executive Commentary

"Our goal is to grow the business while delivering strong profitability," stated CEO Victor Villandoli. He emphasized the company’s focus on customer value and effective execution, noting the potential for cross-selling opportunities following the acquisition of Knock Knock Labs.

Risks and Challenges

• The ongoing decline in hardware revenue within financial services could impact future earnings.
• Transitioning to FIDO authentication protocols may present operational challenges.
• Macro-economic factors, such as tariffs and budget cuts, pose potential risks.

Q&A

Analysts inquired about the strategic rationale behind the Knock Knock acquisition, which is aimed at enhancing cross-selling opportunities. Questions also addressed the impact of tariffs and the expansion of the North American sales team.

Full transcript - OneSpan Inc (OSPN) Q2 2025:

Conference Operator: Welcome to the Q2 twenty twenty five OneSpan Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Joe Maxa, Vice President of Investor Relations.

Please go ahead.

Joe Maxa, Vice President of Investor Relations, OneSpan: Thank you, operator. Hello, everyone, and thank you for joining the OneSpan Second Quarter twenty twenty five Earnings Conference Call. This call is being webcast and can be accessed on the Investor Relations section of OneSpan’s website @investors.onespan.com. Joining me on the call today is Victor Villandoli, our Chief Executive Officer and Jorge Martel, our Chief Financial Officer. This afternoon, after market closed, OneState issued a press release announcing results for our second quarter twenty twenty five.

To access a copy of the press release and other investor information, please visit our website. Following our prepared comments today, we will open the call for questions. Please note that statements made during this conference call that relate to future plans, events or performance, including the outlook for full year 2025 and other long term financial targets, are forward looking statements. These statements involve risks and uncertainties and are based on current assumptions. Consequently, actual results could differ materially from expectations expressed in these forward looking statements.

I direct your attention to today’s press release and the company’s filings with The U. S. Securities And Exchange Commission for a discussion of such risks and uncertainties. Also note that certain financial measures that may be discussed on this call are expressed on a non GAAP basis and have been adjusted from a related GAAP financial measure. We have provided an explanation for and reconciliations of these non GAAP financial measures to the most directly comparable GAAP financial measures in the earnings press release and in the investor presentation available on our website.

In addition, please note that all growth rates discussed on this call refer to a year over year basis unless otherwise indicated. The date of this conference call is 08/05/2025. Any forward looking statements and related assumptions are made as of this date. Except as required by law, we undertake no obligation to update these statements as a result of new information or future events or for any other reason. I will now turn the call over to Victor.

Thank you, Joe. Hello, everyone, and thank you for joining us on the call today. Before turning to our results, as we are halfway through my second year as a company, I thought I’d take a moment to review our trajectory and the overall position of our business. Last year, as you know, we focused on restructuring OneSpan to enhance its profitability so that it remains by law as a business and continue to be a long term reliable partner for our customers. With that accomplished, our focus in 2025 has been on building the foundation necessary for OneSpan to not only be profitable, but also to grow the business and strengthen our product offerings for our customers.

Right before the year started, we hired a new CTO, Ashish Jain, to lead our R and D team. And part of our strategy is to augment our increased internal development efforts with targeted M and A so that we can move faster in delivering great products to our customers. You saw that in the second quarter, both with our acquisition of Knock Knock Blast and with the establishment of a new line of credit to facilitate that kind of targeted M and A. As we move through the second half of the year, we will continue to enhance our go to market capabilities so that we can deliver our great products to more customers. As we have said previously, our goal is to grow the business while delivering strong profitability and to do both of those things while also returning cash to shareholders.

Halfway through my second year, I’m happy to say that our transformation of OneSpan is on track. Looking ahead, our goal is that by the beginning of next year, we will have made significant progress in evolving our go to market capabilities as well as our product suite under Ashish’s leadership, such that we are well positioned to accelerate top line growth in 2026 as we continue to drive to a Rule of 40 performance. Turning to our results, I’m pleased to report another strong quarter and a solid 2025, reflecting our team’s disciplined execution. This focus by our team is driving our strong performance and positions us well to deliver sustained long term value for our shareholders. As I mentioned a moment ago, I’m also pleased and excited by our acquisition of Knock Knock Labs during the quarter, which brings to us five zero two password less authentication software to add to our five zero two hardware security keys.

We’ve long been an industry leader in multifactor authentication and transaction science technologies, with our solutions widely trusted by many of the world’s largest financial institutions for their strong security, flexibility, and innovation. The addition of KnockNox five zero two software combined with our recently launched five zero two secondurity keys hardware enables the company to provide customers worldwide with the industry’s most innovative, comprehensive, and future ready authentication portfolio. Whether on prem or in the cloud, OTP or Fido, software or hardware, including DigiPass and five zero two protocols and Kronos solutions for transaction signing, OneSpan now offers customers maximum flexibility to meet their authentication needs. As you can see, Knock Knock was exactly the kind of targeted acquisition that enhances our product portfolio and delivers value to our customers. With respect to the second quarter, we were solidly profitable in the quarter with adjusted EBITDA of $18,000,000 or 29.5% of revenue.

Also, for the first half of the year, we achieved record adjusted EBITDA of $41,000,000 representing 33% of revenue, our highest first half performance to date. We ended the quarter with annual recurring revenue of $178,000,000 up eight percent year over year, including $8,000,000 from the Knock Knock acquisition. Excluding Knock Knock, ARR grew 3%, in line with the low to mid single digit growth rate that we expected and discussed last quarter. As a reminder, we had a few very large contracts in last year’s second quarter, which made for a challenging year over year ARR comparison this quarter. By the 2025, we anticipate our ARR to grow at a mid single digit percentage rate from the June 30 ARR level.

Subscription revenue grew 22% in the second quarter of twenty twenty five, led by 39% growth in security and 5% growth in digital agreements. Security growth was primarily driven by on prem authentication and app shielding software. As expected, total revenue declined modestly in the quarter. Strong subscription revenue growth was primarily offset by the three trends we’ve discussed on prior calls. First, banks in EMEA and to a lesser extent in APAC have been adopting mobile first authentication strategies with respect to consumer banking.

This has reduced security hardware revenue over time. Second, our 2024 transition of certain legacy perpetual maintenance contracts to term based subscriptions lowered maintenance revenue compared to the prior year. Third, revenue was impacted by $1,200,000 from sunfetted products. However, this was partially offset by $300,000 of acquired revenue during the quarter. Looking at geographies, in July 2024, we started a dedicated sales effort in North America focused on our security business.

I’m pleased to report that that team had a great first half, and we expect continued high performance in that region in the second half of the year. As you know, historically, North America has represented only 10 to 12% of our overall security revenue. So we see that as a growth opportunity heading into 2026. In the 2025, we also saw strong bookings performance in our Latin American region. In terms of the overall outlook, Jorge will provide additional details on the second half in a few minutes.

Both business units remain solidly profitable at the segment level, and we believe we are well positioned to achieve our stated goals of delivering growth and strong profitability across both segments. We also continued to generate significant cash from operations. In the first half of the year, we generated $36,000,000 and ended the second quarter with $93,000,000 in cash on hand. As we’ve discussed previously, our Board remains committed to a balanced capital allocation strategy, bringing shareholder returns, organic investments and targeted M and A. In the first half of the year, we returned cash to shareholders through two quarterly dividend payments of 12¢ per share, which totaled close to $10,000,000 of cash returned to shareholders.

The Board has also approved another 12¢ per share dividend to be paid in the current quarter. In addition, we used cash to make the strategic acquisition of Knock Knock, consistent with our plan to pursue targeted technology driven acquisitions with proven market fit, enabling us to bring additional value added products to our customers and prospects. We have a strong global customer base and a leading position in the authentication market. With AI increasingly being used to amplify the scale and sophistication of account takeover attacks, we remain focused on innovating to stay ahead of emerging threats and to enable customers to adopt a wide range of flexible, future proof authentication solutions. As a result, we will continue to invest in internal r and d and explore targeted m and a opportunities to enhance our product portfolio.

And we plan to help our clients succeed by continuing to provide them with seamless and secure user solutions to meet their authentication needs and address related security challenges. As we look to the future, we are committed to operational excellence and to driving efficient, sustainable revenue growth while maintaining strong profitability. With that, I’ll turn the call over to Jorge. Thank you, Victor, and good afternoon, everyone. I am pleased to report another strong quarter, and I’m excited about our acquisition of DocUp Labs, which enhances our authentication portfolio and allows us to bring a broader fleet of authentication solutions to our customer.

We acquired Knock Knock on June 4. As such, our second quarter results include Knock Knock Financial from the acquisition date or for about a month. ARR grew 8% to 178,000,000, including 8,000,000 from the Knock Knock acquisition. Our net retention rate or NRR was 101%. As previously discussed, we anticipated a tough year over year ARR and NRR comparison this quarter, primarily due to large expansion contracts that benefited last year’s q two.

In addition, this quarter, there was contraction at a few customers that reduced our overall ARR. Second quarter revenue was 59,800,000.0, down 2% compared to last year’s q two, primarily due to the anticipated decline in security hardware as a result of the long term trend of banks moving to a mobile first authentication approach. Digital agreements revenue grew 1%, while security solutions revenue declined 3%, both in line with expectations. Second quarter gross margin was 73%, up from 66% in q two of last year. The improvement was driven by stable product and customer mix, including increased software and reduced hardware revenues as well as the absence of approximately 1 and a half million in asset write off charges recorded in the second quarter of last year.

GAAP operating income was 10 and a half million compared to 7,600,000.0 in q two last year. The increase reflects higher gross profit and lower restructuring costs, partially offset by increased operating expenses related to share based compensation, commission expenses, legal and consulting costs associated with the Knott’s acquisition, and incremental offering expenses from Knock Knock. GAAP net income per share was 21¢, up from 17¢ in the same period last year. As a reminder, we made changes to our non GAAP net income and non GAAP net income per share reporting framework last quarter to better reflect our profitability trajectory and to ensure consistency across interim periods in 2025 and in future years. Please refer to our q two earnings release and investor presentation for additional detail.

Non GAAP earnings per share was 34¢ compared to 31¢ in 2024. This metric excludes long term incentive compensation and related payroll taxes, amortization, restructuring charges, and nonrecurring items, and the impact of tax adjustments. Adjusted EBITDA and adjusted EBITDA margin was 17,600,000.0 and 29 and a half percent compared to sixteen point two million and twenty six and a half percent in the same period of last year. Turning to our security solutions business, ARR was 114,500,000.0, up 9% year over year. Excluding knock knock, ARR grew 2%.

Security revenue declined 3% to 44,200,000.0. Strong subscription revenue growth of 39%, including any material amount of revenue from Knock Knock was offset by expected declines in hardware and maintenance revenues and headwinds from some set of products. The strong growth in subscription revenue was primarily driven by the timing of multiyear renewal and conversion to multiyear customer contracts in the quarter, expansion of licenses, and to a lesser extent, new logos. This growth was partially offset by the sunsetting of our legacy deal flow solution. Gross margin for security was 74%, up from 67% in the second quarter of last year, reflecting favorable products and customer mix.

Segment operating income was 19,800,000.0 or 45% of revenue compared to 20,700,000.0 or 46% of revenue in the prior year quarter. The slight decline was primarily due to higher commission expense and increased operating expenses related to the Knuckle acquisition. Turning to our digital agreement business. ARR grew four and a half percent to 63,000,000. Revenue grew 1% to 15,600,000.0.

New staff contracts and expansion of renewal contracts were partially offset by reduced maintenance revenue from the sunsetting of our on premise e signature product. Headwinds related to sunsetting product impacted revenue growth by about three percentage points. Subscription revenue grew 5% to 15,600,000.0. As mentioned earlier, we faced a tough year over year comparison due to a few large contracts that benefited q two of last year. Maintenance and support revenue was negligible this quarter compared to half a million in q two of last year.

The year over year decline is attributed to the sunsetting of our on premise eSignature solution. Gross margin for digital agreements was 71%, up from 53% in the prior year quarter. The increase was primarily due to the absence of 1 and a half million in asset write off charges per quarter last year. Segment operating income was 2,900,000.0 or 18% of revenue compared to a loss of 200,000.0 or negative 1% in q two of last year. The improvement was driven by higher gross profit and lower operating expenses, primarily due to lower headcount and variable expenses.

Now turning to our balance sheet. We ended the quarter with 92,900,000.0 in cash and cash equivalents compared to 105,200,000.0 at the end of q one and 83,200,000.0 at the 2024. We generated 6,200,000.0 in operating cash flow during the quarter, up from 2,300,000.0 in the second quarter of last year. We used 4,600,000.0 to pay our quarterly cash dividend and 12,100,000.0 net of cash acquired as part of a consideration for the Knock Knock acquisition. We expect to pay an additional 1,900,000.0 in q three and the remaining balance in late twenty twenty six.

As you are already aware, during the quarter, we entered into a five year syndicated revolving credit facility in the amount of 100,000,000, which may be used for general corporate purposes, including to support our strategic growth priorities, including targeted m and a. Except for a small letter of credit supporting an office lease, we currently have no borrowings under the credit agreement and have no long term debt. Geographically, our revenue mix was 39 from EMEA, 40% from The Americas, and 21% from APAC. This compares to 41%, 35%, and 24%, respectively, in the second quarter of last year. Moving to our model notes and financial outlook.

We’re very pleased with our second quarter and third half performance and expect a return to positive revenue growth in the second half of the year. We expect double digit subscription revenue growth for the full year 2025 along with a modest revenue contribution from the acquisition of Knock Knock. We expect to see continued hardware headwinds primarily in q three with gradual improvement in q four. Also, in the second half of the year as compared to the first half, we expect reduced year over year maintenance revenue headwinds from the transition of perpetual contracts to term based licenses and from the impact of self centered products. Regarding hardware, due to the increased visibility into order and shipping schedules as compared to earlier in the year, including the delay to 2026 of the shipment of current already booked hardware deal, we now expect total second half twenty twenty five hardware revenue to be similar to the first half with the majority of the second half revenue recognized in the fourth quarter.

On a sequential basis, in the 2025, we expect an increase in year over year ARR growth and an increase in NRR results, the third and fourth quarter. For the full year 2025, we are maintaining a revenue guidance in the range of 245 to $251,000,000. We expect incremental revenue from the Knockoff acquisition to be offset by a similar reduction in hardware revenue. We are increasing our ARR guidance to be in the range of 186 to 192,000,000 as compared to our previous guidance range of 180 to 186,000,000. The increase in guidance is attributed to our acquisition of Knock Knock, partially offset by a few reductions by the customers that I discussed earlier.

And we are maintaining our adjusted EBITDA guidance in the range of 72 to 76,000,000. We expect the acquisition of Knock Knock to be slightly accretive to adjusted EBITDA in the 2025. That concludes my remarks. I will now turn the call over to Victor. Thanks, Oreo.

To recap, we had another strong quarter, and I’m very proud of the OneSpan team’s disciplined execution and commitment to operational excellence. I’m also excited about our strategic acquisition of KnobKnock, which expands our authentication offering to include software based five zero two capabilities and provides us with an additional proven value added solution that we can bring to our customers and prospects. Looking ahead, we remain focused on delivering value for our customers and executing well as a business in the second half, which we believe will position OneSpan for profitable growth. To that end, we remain committed to maintaining our strong profitability as we drive towards our goal of achieving a Rule of 40 performance as a business. Jorge and I will now be happy to take your questions.

Conference Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one Our first question comes from Kathryn Pudnick of Rosenblatt. On this acquisition, that’s interesting that you’re headed in this direction. Can you give us some more detail on how competitive you feel you’ll be with this the by buying knock knock knock and adding this to your capability?

Thanks.

Joe Maxa, Vice President of Investor Relations, OneSpan: Vic, do you wanna take this one? I’ll jump in, Catherine. Maybe they can chime in. So so thanks for the question, Catherine. So I think this is one of the areas that we have been talking about in terms of complementing our solutions in the security software space.

You know, it fits really well when it comes to it’s a tuck in acquisition where we like the technology and we can also plug it in into an existing technology profile. As you remember, we launched Fido security, our hardware, a few of those keys last year. And so when you think about where this where this is headed in terms of security for user seamless authentication within 05/2002, it’s also gonna be an important part of the mix that our banking and financial services customers will have and will move towards in the future. And so we think that this is gonna be a very, very good acquisition in the long term for us as we provide, again, the maximum flexibility as they’ve alluded in terms of offering and becoming the authentication company for for for particularly for banks and financial institutions. So happy to answer any any additional questions you have on that.

Conference Operator: Well, is this more like of a if it’s already installed customers more, are you looking at this as maybe new landing because it’s the newer tech, but also an upsell into your existing banking customers?

Joe Maxa, Vice President of Investor Relations, OneSpan: Yeah. So that’s a very good question, Kevin. So when you think about, you know, one of the biggest assets, the big customer mentioned this in the past, one of the biggest assets this company has long span, it’s a long tenured customer base. So we service over a thousand bands, you know, globally. And so when you think when you think about that, so we really the purpose of this acquisition was not for the revenue.

Let’s just be clear. The purpose of this acquisition was because of the technology and the cross sell opportunity that we can have from from this technology to our existing customer. Right? Okay? And so we see that as a as a as a opportunity, Obviously, more in 2026 than than 2025 in terms of the cross sale.

We’re getting, obviously, the teams aligned. You know, the product needs to be, you know, put in the same server so we can be it could be a seamless product for our for our customer base. And there’s and there’s obviously the team financial sales team getting aligned as well. And so we feel pretty pretty good about not only the the product. We are part of the team that we acquired as well.

Catherine is a very, you know, experienced team and that has been a pioneer in this in this area, in the five zero two space. You know, they they also have a board a board seat in terms of the five zero alliance, and now we we we we have a board seat as well. And so we feel good about where we are. Again, this is Can hear We can hear you now. But yeah.

This is more about the cross sell opportunity into our existing customer base, Kevin. But, please, feel free to chime in.

Conference Operator: Thank you.

Joe Maxa, Vice President of Investor Relations, OneSpan: Thanks for the questions, Catherine. Welcome to the conference replay.

Conference Operator: One moment for your next question. Our next question comes from Anja Soderstrom of Sidoti. Your line is now open. Hi, and thank you for taking my question. So I have a question about the AR guidance and the increase there about 6,000,000, but knock knock, you said added about 8,000,000 for the second quarter.

How should we think about that?

Joe Maxa, Vice President of Investor Relations, OneSpan: Yeah. I can answer that. Thanks for the question, Adia. So, yeah, we mentioned not so added about $8,000,000 into IRR pool. Part of the and when we when we sort of, like, give you guidance, we increased it by 6,000,000 on both, the low end and the high end.

So the the remaining 2,000,000, Andrew, is primarily related to a couple of contractions that one that we have mentioning in the in the past calls, really, about a band that was selling operations, particularly in The Middle East. And so that accelerated a little bit more than we expected in in the first half of the year. And then the second component of that was we also had another, I would say, 7 figure customer, the inputted ARR, that is moving slower than anticipated in implementing our solutions because of their internal delay. And so, conservatively, we decided to move that out of the ARR for the remaining of the year, and so that’s where the puts and takes for for getting the fixed increase on both low and high end. Okay.

Conference Operator: Thank you. And then just in in general regarding the pipeline, how is that shaping up for you?

Joe Maxa, Vice President of Investor Relations, OneSpan: Sorry. Say that one more time. I need to sort of look it up for me a little

Conference Operator: The pipeline, how how is that shipping up for you just in general?

Joe Maxa, Vice President of Investor Relations, OneSpan: Did you wanna take that one? Hello? Yep. We can hear you now.

: Okay. Great. I’m sorry.

Joe Maxa, Vice President of Investor Relations, OneSpan: Could you repeat the question? I had a little Internet trouble there.

Conference Operator: Yes. No problem. Yeah. I’m just curious about the pipeline just in general. How is that shaping up for you?

Joe Maxa, Vice President of Investor Relations, OneSpan: Well, we had a great first half of the year in terms of bookings. And then in the second half of the year, of course, the way our business works, the third quarter and the fourth quarter are much bigger tend to be much bigger quarters in terms of closing business. We’ve been very happy with the progress overall on our go to market. And, you know, the the as I mentioned on the on the prepared remarks, the hardware business, we think, will be a little bit tougher in the back half of the year, but we’re excited about, you know, having something new to to offer to customers as well with respect to the the knock knock five zero two capability. So the second half of the year, I think, is shaping up pretty well for us.

Conference Operator: Okay. Thank you. That was all for me. Thank you. One moment for our next question.

The next question comes from Trevor Rambeau of BTIG. This

: is Trevor on for Gray Powell. So a lot was happening in the quarter from a macro perspective with the tariff announced that we had in April, then a ninety day pause, and then an extension of that pause. And you mentioned in the prepared remarks that a few customers contracted in the quarter. But maybe from a higher level, can you give some more color on what you saw in the quarter? And then if the uncertainty in the macro had an impact on general customer buying behavior?

And then has any of that spilled over into the first month of Q3 so far? Yes.

Joe Maxa, Vice President of Investor Relations, OneSpan: Thanks, Trevor. So we had a good first half in terms of bookings. So what we report, of course, is revenue. It’s not exactly analogous to our bookings. But we had a good first quarter.

The tariff situation for us was very minimal. I think we talked about it last year when I think the the tariffs, the initial tariffs proposed were much higher. It it was still not gonna be that big of an impact. And the way things have shaken out, it’s a few $100,000 impact for us. So that’s a very minor thing.

And then the other aspect that a lot of people talked about in the second quarter was the the federal cuts, the doge cuts, and we have, I think, 2% of our revenue is from the federal government. So that had relatively small impact as well. So overall, things have been have been going pretty well in terms of our our performance. I mean, I would say geographically, Europe and I mentioned this last quarter. Europe has been a little weaker for us, and we’ve done a little bit better in The Americas, in in North And South America.

And EMEA is typically a strong market for us. So, you know, we’d love to see that turnaround, but overall, it it has been solid so far.

: Great. That’s some that’s some great color. And then maybe for my second, we talked on the prepared remarks and a bit earlier about evolving the go to market program, by the start of next year. Can you dive a bit deeper into what that’s gonna look like and maybe provide some more color on the process and maybe what the outcome is? Thanks.

Joe Maxa, Vice President of Investor Relations, OneSpan: Yeah. I mean, so part of it is we’re just putting additional resources where things are going well. So I we talked about this on the call we started up in North America. Before we had a combined team in North America, we had a a sales team. If you go back, you know, a year plus ago, a sales team that was supposed to sell both product lines.

Very different buyers, very different competitive set. So what we what we started last July, so a year ago, is we split the North American sales team to a dedicated security team and a dedicated digital agreements team. And what we’re doing is continuing to invest as that’s continue as that’s starting to pay off. So we’ve increased the size of the North American security self team. We added additional resources when we did the Knock Knock acquisition as well.

So that’s part of it. And then part of it is us refining our approach on the DA side and really trying to without giving too many competitive details, trying to do better in the new logo acquisition. That business, as we’ve talked about in the past, it’s just it’s a land and expand business. So we’re really focused on trying to land more because we know the expansion happens.

: Great. That’s it for me. Thanks for taking the questions, guys.

Joe Maxa, Vice President of Investor Relations, OneSpan: Thank you. As

Conference Operator: a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. Our next question comes from Rudy Kessinger of D. A. Davidson. Your line is now open.

Joe Maxa, Vice President of Investor Relations, OneSpan: Thanks for taking my questions, guys. Jorge, could you maybe expand or or just quantify maybe the traction with those two large customers? Understanding you’re saying second half bookings are stronger historically, but your first half net new ARR of $2,000,000 relative to past years. I know last year, Q2 is a tough compare even relative to several years prior to that. Still down quite a bit.

So could you quantify maybe what the impact there was from those two customers? Yeah. Rudy, thanks for the question. It was about $3,000,000, Rudy, between those two customers of the year over year contraction. Okay.

And and with that one customer, you know, selling off assets in The Middle East, is there risk that they sell off more assets in other geographies or any further, you know, contraction risk from that one? So, obviously, we don’t have the stability, you know, of of the quantification, Rudy, specifically for that particular client. I think my my sense is that, you know, as I mentioned, this accelerated in the first half. I think there’s still gonna be some of it, but it may be a little more, you know, muted, but it’s which will have the opportunity. You know?

Okay. Got it. And then with Knock Knock, could you maybe just quantify or try to size up for us just the upsell cross sell opportunity that they bring? You know, what percent of your installed base do you believe, you know, can really use this capability or that you could sell to over the next couple of years? Yeah.

So this is this is an interesting interesting topic because I think it’s fair to say that the FIDO authentication protocol is something that is has grown over the past past few years and will grow even more over the next three to five years. So part of this strategy is for us to be able to offer a complete solution to our customers. And and we saw this if you go back ten plus years ago when banks in EMEA and APAC were doing largely they were their consumer authentication was largely through hardware. And over time, we’ve talked about this before, it shifted to mobile first, so we needed to have a mobile offering, and we and we did. We did.

So with respect to the file authentication protocol, we wanted to make sure that we had an offering both in hardware, which we introduced those recently, and software. So it gives us the opportunity to grow with those banks, to grow with our customers into the Fido ecosystem without losing them to competitors and offering them a solution where they don’t have to rush all at once into Fido, like flipping a light switch. They can start using Fido, and they can still use our DigiPass approach. So I think, ultimately, all of our customers, you know, if you if you fast forward five to ten years out, will be using Fido. Exactly how fast that goes, hard to say right now, but, you know, past keys are here, and, we see banks rolling it out in in some markets, and, other markets will probably take a little bit longer.

Conference Operator: Thank you. This concludes the question and answer session. I would now like to turn it over to Joe Maxa for closing

Joe Maxa, Vice President of Investor Relations, OneSpan: remarks. Thanks, everyone. I’m glad you could join us. Have a nice day.

Conference Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.

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