Earnings release
Page 1
OneSpan Reports Third Quarter 2025 Financial Results October 30, 2025 Revenue increased 1% year-over-year to $57.1 million Subscription revenue increased 12% year-over-year to $37.8 million Operating income decreased 27% year-over-year to $8.2 million Adjusted EBITDA increased 3% year-over-year to $17.5 million Annual Recurring Revenue (ARR) increased 10% year-over-year to $180.2 million1 Net Retention Rate (NRR) of 103%2 BOSTON--(BUSINESS WIRE)--Oct. 30, 2025-- OneSpan Inc. (NASDAQ: OSPN) today reported financial results for the third quarter ended September 30, 2025. “We reported another solid quarter of profitability and continue to make progress in building our foundation for growth,” stated OneSpan CEO, Victor Limongelli. “Our software business – now over 80% of the overall business – delivered double-digit subscription revenue growth and ARR growth, and is positioned for additional growth in 2026. We remain committed to driving efficient revenue growth while maintaining strong profitability and cash generation, and returning capital to shareholders.” Third Quarter 2025 Financial Highlights Financial results for the third quarter of 2025 include the financial contributions from the acquisition of Nok Nok Labs, which closed on June 4, 2025. Total revenue was $57.1 million, an increase of 1% compared to $56.2 million for the same quarter of 2024. Security Solutions revenue was $40.3 million, a decrease of 1% year-over-year. Digital Agreements revenue was $16.7 million, an increase of 9% year-over-year. ARR increased 10% year-over-year to $180.2 million. Gross profit was $42.0 million, or 74% gross margin, compared to $41.5 million, or 74% in the same period last year. Operating income was $8.2 million, compared to operating income of $11.3 million in the same period last year. Net income was $6.5 million, or $0.17 per diluted share, compared to net income of $8.3 million, or $0.21 per diluted share, in the same period last year. Non-GAAP net income was $12.9 million, or $0.33 per diluted share, compared to non-GAAP net income of $13.0 million, or $0.33 per diluted share in the same period last year.3 Adjusted EBITDA was $17.5 million, compared to $17.0 million in the same period last year.3 Cash and cash equivalents were $85.6 million at September 30, 2025 compared to $83.2 million at December 31, 2024. OneSpan repurchased approximately 450,000 shares of its common stock for $6.3 million. Recent Business Highlights OneSpan made a strategic investment in and partnered with ThreatFabric to expand its cyber fraud prevention capabilities, including mobile threat intelligence, malware risk detection, and behavioral analytics. OneSpan’s Board of Directors has declared a quarterly cash dividend of $0.12 per share as part of the Company’s recurring quarterly dividend program. The dividend is payable on December 5, 2025 to shareholders of record as of the close of business on November 14, 2025. Changes in Presentation of Non-GAAP Measures
Page 2
Effective January 1, 2025, the beginning of our fiscal year ending December 31, 2025, we began including employer payroll taxes related to employee stock-based award transactions in the GAAP to non-GAAP reconciliation for our Non-GAAP Financial Measures discussed below, which include Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Net Income Per Diluted Share. We are excluding these payroll taxes from our non-GAAP results since they are tied to the timing and size of the vesting of the underlying stock-based awards and the price of our common stock at the time of vesting, which may vary from period to period independent of the operating performance of the Company. Employer payroll taxes related to employee stock-based award transactions amounted to $0.2 million in the third quarter of 2025 and $0.9 million for the full year 2024. Also effective January 1, 2025, we began using a long-term projected non-GAAP tax rate of 20% for the purpose of determining our Non-GAAP Net Income and Non-GAAP Net Income Per Diluted Share to provide better consistency across interim reporting periods in fiscal 2025 and beyond. Given the significant growth of our Non-GAAP Net Income before income taxes in 2024, we believe this change is necessary to better reflect the performance of our business. We will continue to assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations. Prior period amounts have been adjusted to reflect these changes. Financial Outlook OneSpan is updating its previously issued financial guidance. For the Full Year 2025, the Company expects: Revenue to be in the range of $239 million to $241 million, as compared to the previous guidance range of $245 million to $251 million, with software and services in the range of $190 million to $192 million, and hardware in the range of $49 million to $50 million. ARR to be in the range of $183 million to $187 million, as compared to the previous guidance range of $186 million to $192 million. Adjusted EBITDA to be in the range of $72 million to $76 million. Conference Call Details In conjunction with this announcement, OneSpan Inc. will host a conference call today, October 30, 2025, at 4:30 p.m. ET. During the conference call, Mr. Victor Limongelli, CEO, and Mr. Jorge Martell, CFO, will discuss OneSpan’s results for the third quarter 2025. For investors and analysts accessing the conference call by phone, please refer to the press release dated October 9, 2025, announcing the date of OneSpan’s third quarter 2025 earnings release. It can be found on the OneSpan investor relations website at investors.onespan.com. The conference call is also available in listen-only mode at investors.onespan.com. Shortly after the conclusion of the call, a replay of the webcast will be available on the same website for approximately one year. ____________________________________________ ARR is calculated as the approximate annualized value of our customer recurring contracts as of the measurement date. These include subscription, term-based license, and maintenance and support contracts and exclude one-time fees. To the extent that we are negotiating a renewal with a customer within 90 days after the expiration of a recurring contract, we continue to include that revenue in ARR if we are actively in discussion with the customer for a new recurring contract or renewal and the customer has not notified us of an intention to not renew. See our Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 for additional information describing how we define ARR, including how ARR differs from GAAP revenue. 1. NRR is defined as the approximate year-over-year growth in ARR from the same set of customers at the end of the prior year period. 2. An explanation of the use of Non-GAAP financial measures is included below under the heading “Non-GAAP Financial Measures.” A reconciliation of each Non-GAAP financial measure to the most directly comparable GAAP financial measure has also been provided in the tables below. We are not providing a reconciliation of Adjusted EBITDA guidance to GAAP net income, the most directly comparable GAAP measure, because we are unable to predict certain items included in GAAP net income without unreasonable efforts. 3. About OneSpan OneSpan provides security authentication, identity, electronic signature and digital workflow solutions that protect and facilitate digital transactions and agreements. The Company delivers products and services that automate and secure customer-facing and revenue-generating business processes for use cases ranging from simple transactions to workflows that are complex or require higher levels of security. Trusted by global blue-chip enterprises, including more than 60% of the world’s largest 100 banks, OneSpan processes millions of digital agreements and billions of multi-factor authentication transactions in 100+ countries annually.
Page 3
For more information, visit our website, explore our blog, or follow us on LinkedIn or YouTube. Forward-Looking Statements This press release contains forward-looking statements within the meaning of applicable U.S. securities laws, including statements regarding our 2025 financial guidance, our plans to drive profitable, efficient revenue growth, and our general goals and expectations regarding our operational or financial performance in the future. Forward-looking statements may be identified by words such as "seek," "believe," "plan," "estimate," "anticipate," “expect," "intend," "continue," "outlook," "may," "will," "should," "could," or "might," and other similar expressions. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could materially affect our business and financial results include, but are not limited to: our ability to attract new customers and retain and expand sales to existing customers; our ability to successfully develop and market new product offerings and product enhancements; changes in customer requirements; the potential effects of technological changes; the loss of one or more large customers; difficulties enhancing and maintaining our brand recognition; competition; lengthy sales cycles; unintended costs and consequences of our cost reduction and restructuring actions, including higher than anticipated restructuring charges, disruption to our operations, litigation or regulatory actions, or employee turnover; challenges retaining key employees and successfully hiring and training qualified new employees; security breaches or cyber-attacks; real or perceived malfunctions or errors in our products; interruptions or delays in the performance of our products and solutions; reliance on third parties for certain products and data center services; our ability to effectively manage third party partnerships, acquisitions, divestitures, alliances, or joint ventures; economic recession, inflation, tariffs or trade disputes, and political instability; claims that we have infringed the intellectual property rights of others; changing laws, government regulations or policies; pressures on price levels; component shortages; delays and disruption in global transportation and supply chains; impairment of goodwill or amortizable intangible assets causing a significant charge to earnings; actions of activist stockholders; and exposure to increased economic and operational uncertainties from operating a global business, as well as other factors described in the “Risk Factors” section of our most recent Annual Report on Form 10-K, as updated by the “Risk Factors” section of our subsequent Quarterly Reports on Form 10-Q (if any). Our filings with the Securities and Exchange Commission and other important information can be found in the Investor Relations section of our website at investors.onespan.com. We do not have any intent, and disclaim any obligation, to update the forward-looking information to reflect events that occur, circumstances that exist or changes in our expectations after the date of this press release, except as required by law. Unless otherwise noted, references in this press release to “OneSpan,” “Company,” “we,” “our,” and “us” refer to OneSpan Inc. and its subsidiaries. OneSpan Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Revenue Product and license $ 27,712 $ 28,640 $ 97,189 $ 98,875 Services and other 29,344 27,602 83,076 83,133 Total revenue 57,056 56,242 180,265 182,008 Cost of goods sold Product and license 7,030 7,394 24,044 28,347 Services and other 8,023 7,300 23,160 24,377 Total cost of goods sold 15,053 14,694 47,204 52,724 Gross profit 42,003 41,548 133,061 129,284 Operating costs Sales and marketing 11,391 10,138 34,353 33,574 Research and development 8,796 7,533 26,168 24,133 General and administrative 12,152 11,343 33,478 32,907 Restructuring and other related charges 696 697 1,165 3,905 Amortization of intangible assets 741 585 1,982 1,766 Total operating costs 33,776 30,296 97,146 96,285 — Operating income 8,227 11,252 35,915 32,999 Interest income, net 388 624 1,812 1,246 Other (expense) income, net (208) (1,915) (886) (1,293) Income before income taxes 8,407 9,961 36,841 32,952 Provision for income taxes 1,893 1,688 7,480 4,658 Net income $ 6,514 $ 8,273 $ 29,361 $ 28,294 Net income per share
Page 4
Basic $ 0.17 $ 0.21 $ 0.77 $ 0.74 Diluted $ 0.17 $ 0.21 $ 0.76 $ 0.73 Weighted average common shares outstanding Basic 38,136 38,695 38,149 38,323 Diluted 38,768 39,458 38,845 38,864 OneSpan Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) September 30, December 31, 2025 2024 ASSETS Current assets Cash and cash equivalents $ 85,554 $ 83,160 Accounts receivable, net of allowances of $704 at September 30, 2025 and $1,600 at December 31, 2024 27,480 56,229 Inventories, net 11,236 10,792 Prepaid expenses 6,877 6,547 Contract assets 16,718 8,687 Other current assets 9,665 9,479 Total current assets 157,530 174,894 Property and equipment, net 21,368 20,966 Operating lease right-of-use assets 7,697 7,725 Goodwill 102,291 92,365 Intangible assets, net of accumulated amortization 9,983 7,481 Deferred income taxes 28,993 20,516 Other assets 15,661 14,787 Total assets $ 343,523 $ 338,734 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 10,378 $ 13,310 Deferred revenue 50,535 67,465 Accrued wages and payroll taxes 11,289 13,793 Short-term income taxes payable 9,343 4,403 Dividend payable 564 4,765 Other accrued expenses 7,888 6,339 Deferred compensation 34 200 Total current liabilities 90,031 110,275 Long-term deferred revenue 2,817 3,390 Long-term lease liabilities 6,451 6,932 Deferred income taxes 1,008 3,680 Other long-term liabilities 4,893 1,927 Total liabilities 105,200 126,204 Commitments and contingencies Stockholders' equity Preferred stock: 500 shares authorized, none issued and outstanding at September 30, 2025 and December 31, 2024 — — Common stock: $0.001 par value per share, 75,000 shares authorized; 42,125 and 41,782 shares issued; 37,953 and 38,058 shares outstanding at September 30, 2025 and December 31, 2024, respectively. 38 38 Additional paid-in capital 127,726 122,534 Treasury stock, at cost: 4,172 and 3,724 shares outstanding at September 30, 2025 and December 31, 2024, respectively. (53,677) (47,380) Retained earnings 170,940 151,256 Accumulated other comprehensive loss (6,704) (13,918) Total stockholders' equity 238,323 212,530 Total liabilities and stockholders' equity $ 343,523 $ 338,734
Page 5
OneSpan Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Nine Months Ended September 30, 2025 2024 Cash flows from operating activities: Net income $ 29,361 $ 28,294 Adjustments to reconcile net income from operations to net cash provided by operations: Depreciation and amortization of intangible assets 7,152 6,086 Loss on disposal of asset 27 — Write-off of intangible assets — 804 Write-off of property and equipment, net 709 1,053 Deferred tax expense (benefit) (2,716) (14) Stock-based compensation 9,601 6,110 Recovery of credit losses (303) (124) Changes in operating assets and liabilities, net of the effects from acquisition: Accounts receivable, net 32,702 35,552 Inventories, net 909 2,639 Contract assets (7,758) (2,080) Accounts payable (3,935) (4,197) Income taxes payable 4,763 519 Accrued expenses (2,198) (9,491) Deferred compensation (166) (150) Deferred revenue (22,030) (22,165) Other assets and liabilities 767 405 Net cash provided by operating activities 46,885 43,241 Cash flows from investing activities: Additions to property and equipment (6,018) (7,273) Additions to intangible assets (54) (53) Cash paid for acquisition of business, net of cash acquired (13,943) — Net cash used in investing activities (20,015) (7,326) Cash flows from financing activities: Dividends paid (13,878) — Contingent payment related to acquisition — (200) Payment of debt issuance costs (1,739) — Tax payments for restricted stock issuances (4,409) (2,632) Repurchase of common stock (6,297) — Net cash used in financing activities (26,323) (2,832) Effect of exchange rate changes on cash 1,676 1,215 Net increase in cash 2,223 34,298 Cash, cash equivalents, and restricted cash, beginning of period 83,331 43,530 Cash, cash equivalents, and restricted cash, end of period $ 85,554 $ 77,828 Operating Segments We report our financial results under the following two lines of business, which are our reportable operating segments: Security Solutions and Digital Agreements. Security Solutions. Security Solutions consists of our broad portfolio of software products, software development kits (SDKs), and Digipass authenticator devices that are used to build applications designed to defend against attacks on digital transactions across online environments, devices, and applications. The software products and SDKs included in the Security Solutions segment are on-premises and, to a lesser extent, cloud software products, and include multi-factor authentication, transaction signing, and mobile application security solutions.
Page 6
Digital Agreements. Digital Agreements consists of solutions that enable our clients to secure and automate business processes associated with their digital agreement and customer transaction lifecycles that require consent, non-repudiation and compliance. These solutions, which are largely cloud-based, include OneSpan Sign e-signature, OneSpan Notary, and Identity Verification. Segment operating income (loss) consists of the revenues generated by a segment, less the direct costs of revenue, sales and marketing, research and development expenses, general and administrative expenses, restructuring and other related charges, and amortization of intangible assets expense that are incurred directly by a segment. Sales and marketing and research and development expenses were determined to be significant segment expenses. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not directly attributable to a particular segment. Segment and consolidated operating results (unaudited): Three Months Ended September 30, 2025 (In thousands, except percentages) Security Solutions Digital Agreements Corporate and Other Total Revenue $ 40,322 $ 16,734 $ — $ 57,056 Cost of goods sold 10,325 4,728 — 15,053 Gross profit 29,997 12,006 — 42,003 Gross margin 74% 72% * 74% Sales and marketing 7,202 3,443 746 11,391 Research and development 5,689 2,917 190 8,796 Other segment items (1)(3) 431 1,487 11,671 13,589 Operating income (loss) (2)(4) 16,675 4,159 (12,607) 8,227 Interest income, net 388 Other income (expense), net (208) Income before income taxes $ 8,407 Three Months Ended September 30, 2024 (In thousands, except percentages) Security Solutions Digital Agreements Corporate and Other Total Revenue $ 40,837 $ 15,405 $ — $ 56,242 Cost of goods sold 10,320 4,374 — 14,694 Gross profit 30,517 11,031 — 41,548 Gross margin 75% 72% * 74% Sales and marketing 6,303 2,819 1,016 10,138 Research and development 3,843 3,671 19 7,533 Other segment items (1)(3) 171 1,122 11,332 12,625 Operating income (loss) (2)(4) 20,200 3,419 (12,367) 11,252 Interest income, net 624 Other income (expense), net (1,915) Income before income taxes $ 9,961 Nine Months Ended September 30, 2025 (In thousands, except percentages) Security Solutions Digital Agreements Corporate and Other Total Revenue $ 132,270 $ 47,995 $ — $ 180,265 Cost of goods sold 33,365 13,839 — 47,204 Gross profit 98,905 34,156 — 133,061 Gross margin 75% 71% * 74% Sales and marketing 21,402 10,313 2,638 34,353
Page 7
Research and development 15,966 9,510 692 26,168 Other segment items (1)(3) 902 3,930 31,793 36,625 Operating income (loss) (2)(4) 60,635 10,403 (35,123) 35,915 Interest income, net 1,812 Other income (expense), net (886) Income before income taxes $ 36,841 Nine Months Ended September 30, 2024 (In thousands, except percentages) Security Solutions Digital Agreements Corporate and Other Total Revenue $ 136,728 $ 45,280 $ — $ 182,008 Cost of goods sold 38,108 14,616 — 52,724 Gross profit 98,620 30,664 — 129,284 Gross margin 72% 68% * 71% Sales and marketing 18,380 11,940 3,254 33,574 Research and development 11,941 12,118 74 24,133 Other segment items (1)(3) 1,529 3,606 33,443 38,578 Operating income (loss) (2)(4) 66,770 3,000 (36,771) 32,999 Interest income, net 1,246 Other income (expense), net (1,293) Income before income taxes $ 32,952 *Percentage not meaningful. (1) Security Solutions other segment items includes general and administrative expense and restructuring and other related charges for the three and nine months ended September 30, 2025 and 2024. (2) Security Solutions operating income includes $0.4 million and $0.7 million of total amortization and depreciation expense for both the three and nine months ended September 30, 2025 and $0.2 million and $0.6 million for the three and nine months ended September 30, 2024, respectively. Security Solutions operating income includes less than $0.1 million and $0.3 million of restructuring and other related charges for the three and nine months ended September 30, 2025, respectively. Security Solutions operating income includes $0.2 million and $1.6 million of restructuring and other related charges for the three and nine months ended September 30, 2024, respectively. (3) Digital Agreements other segment items includes general and administrative expense, restructuring and other related charges, and amortization of intangibles for the three and nine months ended September 30, 2025 and 2024. (4) Digital Agreements operating income includes $1.9 million and $5.5 million of total amortization and depreciation expense for the three and nine months ended September 30, 2025, respectively. Digital Agreements operating income includes $1.5 million and $4.6 million of total amortization and depreciation expense for the three and nine months ended September 30, 2024, respectively. Digital Agreements operating income includes $0.0 million and $0.2 million of restructuring and other related charges for the three and nine months ended September 30, 2025, respectively. Digital Agreements operating loss includes $0.4 million and $1.4 million of restructuring and other related charges for the three and nine months ended September 30, 2024, respectively. Three Months Ended September 30, 2025 2024 (In thousands) Security Solutions Digital Agreements Security Solutions Digital Agreements Subscription $ 21,106 $ 16,674 $ 18,603 $ 15,045 Maintenance and support 8,860 26 9,317 327 Professional services and other (1) 626 34 820 33 Hardware products 9,730 — 12,097 — Total Revenue $ 40,322 $ 16,734 $ 40,837 $ 15,405 Nine Months Ended September 30, 2025 2024
Page 8
(In thousands) Security Solutions Digital Agreements Security Solutions Digital Agreements Subscription $ 69,780 $ 47,793 $ 59,642 $ 43,641 Maintenance and support 25,510 75 29,125 1,321 Professional services and other (1) 2,171 127 3,548 318 Hardware products 34,809 — 44,413 — Total Revenue $ 132,270 $ 47,995 $ 136,728 $ 45,280 (1) Professional services and other includes perpetual software licenses revenue, which was immaterial for the three and nine months ended September 30, 2025 and 2024. Non-GAAP Financial Measures We report financial results in accordance with GAAP. We also evaluate our performance using certain non-GAAP financial metrics, namely Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Net Income Per Diluted Share. Our management believes that these measures, when taken together with the corresponding GAAP financial metrics, provide useful supplemental information regarding the performance of our business, as further discussed in the descriptions of each of these non-GAAP metrics below. These non-GAAP financial measures are not measures of performance under GAAP and should not be considered in isolation or as alternatives or substitutes for the most directly comparable financial measures calculated in accordance with GAAP. While we believe that these non-GAAP financial measures are useful for the purposes described below, they have limitations associated with their use, since they exclude items that may have a material impact on our reported results and may be different from similar measures used by other companies. Additional information about the non-GAAP financial measures and reconciliations to their most directly comparable GAAP financial measures appear below. Adjusted EBITDA We define Adjusted EBITDA as net income before interest, taxes, depreciation, amortization, long-term incentive compensation and related payroll tax expense, restructuring and other related charges, and certain non-recurring items, including acquisition related costs, rebranding costs, and non-routine shareholder matters. We use Adjusted EBITDA as a simplified measure of performance for use in communicating our performance to investors and analysts and for comparisons to other companies within our industry. As a performance measure, we believe that Adjusted EBITDA presents a view of our operating results that is most closely related to serving our customers. By excluding interest, taxes, depreciation, amortization, long-term incentive compensation and related payroll tax expense, restructuring costs, and certain other non-recurring items, we are able to evaluate performance without considering decisions that, in most cases, are not directly related to meeting our customers’ requirements and were either made in prior periods (e.g., depreciation, amortization, long-term incentive compensation and related payroll tax expense, non-routine shareholder matters), deal with the structure or financing of the business (e.g., interest, one-time strategic action costs, restructuring costs, impairment charges) or reflect the application of regulations that are outside of the control of our management team (e.g., taxes). In addition, removing the impact of these items helps us compare our core business performance with that of our competitors. Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2025 2024 2025 2024 Net income $ 6,514 $ 8,273 $ 29,361 $ 28,294 Interest income, net (388) (624) (1,812) (1,246) Provision for income taxes 1,893 1,688 7,480 4,658 Depreciation and amortization of intangible assets (1) 2,566 1,941 7,152 6,086 Long-term incentive compensation and related payroll tax expense (2) 3,627 3,020 10,553 7,082 Restructuring and other related charges (3) 1,001 720 1,535 5,454 Other non-recurring items (4) 2,322 1,983 3,939 3,060 Adjusted EBITDA $ 17,535 $ 17,001 $ 58,208 $ 53,388 (1) Includes cost of sales depreciation and amortization expense directly related to delivering cloud subscription revenue of $1.3 million and $3.7 million for the three and nine months ended September 30, 2025, respectively, and $0.7 million and $2.4 million for the three and nine months ended September 30, 2024, respectively. Costs are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations. (2) Long-term incentive compensation and related payroll tax expense includes stock-based compensation and related payroll tax expense, and cash incentive grants awarded to employees located in jurisdictions where we do not issue stock-based compensation due to tax, regulatory or similar reasons. The immaterial expense associated with these cash incentive grants was less than $0.1 million and $0.1 million for the three months ended September 30, 2025 and 2024, respectively, and less than $0.1 million and $0.2 million for the nine months ended September 30, 2025 and 2024, respectively. Starting January 1, 2025, employer payroll taxes related to employee stock-based award transactions are included in long-term incentive compensation and related payroll tax expense. Prior period amounts have been adjusted to reflect these changes. We are excluding these payroll taxes from Adjusted EBITDA results since they are tied to the timing and size of the vesting of the underlying stock-based awards and the price of our common stock at the time of vesting, which may vary from period to period independent of our operating performance. Employer payroll taxes related to employee stock-based award transactions amounted to $0.2 million and less than $0.3 million for the three months ended September 30, 2025 and 2024, respectively, and $0.9 million and $0.7 million for the nine months ended September 30, 2025 and 2024, respectively.
Page 9
(3) Includes write-offs of property and equipment, net, of $0.7 million for the three and nine months ended September 30, 2025. Includes write-offs of intangible assets and property and equipment, net, of $0.8 million and $1.0 million, respectively, for the nine months ended September 30, 2024. Costs are recorded in "Services and other cost of goods sold" and "Restructuring and other related charges," respectively, on the condensed consolidated statements of operations. Includes restructuring and other related charges of than $0.4 million and $0.4 million for the three and nine months ended September 30, 2025, respectively, and less than $0.1 million and $0.1 million for the three and nine months ended September 30, 2024. These charges are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations. (4) For the three months ended September 30, 2025 and 2024, other non-recurring items consist of $2.3 million and $2.0 million, respectively, of fees related to non-recurring projects. For the nine months ended September 30, 2025 and 2024, other non-recurring items consist of $3.9 million and $3.1 million, respectively, of fees related to non-recurring projects. Non-GAAP Net Income and Non-GAAP Net Income Per Diluted Share We define Non-GAAP Net Income and Non-GAAP Net Income Per Diluted Share as net income or net income per diluted share, as applicable, before the consideration of long-term incentive compensation expenses, the amortization of intangible assets, restructuring costs, and certain other non-recurring items. We use these measures to assess the impact of our performance excluding items that can significantly impact the comparison of our results between periods and the comparison to competitor results. We exclude long-term incentive compensation and related payroll tax expense because our long-term incentives generally reflect the use of restricted stock unit grants or cash incentive grants, including incentives directly tied to the performance of the business, while other companies may use different forms of incentives that have different cost impacts, which makes comparison difficult. We exclude amortization of intangible assets as we believe the amount of such expense in any given period may not be correlated directly to the performance of the business operations and that such expenses can vary significantly between periods as a result of new acquisitions, the full amortization of previously acquired intangible assets, or the write down of such assets due to an impairment event. However, intangible assets contribute to current and future revenue, and related amortization expense will recur in future periods until expired or written down. We also exclude certain non-recurring items including one-time strategic action costs and non-recurring shareholder matters, as these items are unrelated to the operations of our core business. By excluding these items, we are better able to compare the operating results of our underlying core business from one reporting period to the next. We use a long-term projected non-GAAP tax rate of 20% for the purpose of determining our Non-GAAP Net Income and Non-GAAP Net Income Per Diluted Share to provide better consistency across interim reporting periods. We will assess the appropriate non-GAAP tax rate on a regular basis, which could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in our geographic earnings mix, or other changes to our strategy or business operations. Reconciliation of Net Income to Non-GAAP Net Income (in thousands, except per share data) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Net income $ 6,514 $ 8,273 $ 29,361 $ 28,294 Provision for income taxes 1,893 1,688 7,480 4,658 Income before income taxes 8,407 9,961 36,841 32,952 Long-term incentive compensation and related payroll tax expense (1) 3,627 3,020 10,553 7,082 Amortization of intangible assets (2) 741 585 1,982 1,967 Restructuring and other related charges (3) 1,001 720 1,535 5,454 Other non-recurring items (4) 2,322 1,983 3,939 3,060 Non-GAAP net income before income taxes 16,098 16,269 54,850 50,515 Non-GAAP provision for income taxes (5) (3,220) (3,254) (10,970) (10,103) Non-GAAP net income $ 12,878 $ 13,015 $ 43,880 $ 40,412 Non-GAAP net income per share, diluted $ 0.33 $ 0.33 $ 1.13 $ 1.04 Weighted-average shares used to compute non-GAAP net income per share, diluted 38,768 39,458 38,845 38,864 (1) Long-term incentive compensation and related payroll tax expense includes stock-based compensation and related payroll tax expense, and cash incentive grants awarded to employees located in jurisdictions where we do not issue stock-based compensation due to tax, regulatory or similar reasons. The immaterial expense associated with these cash incentive grants was less than $0.1 million and $0.1 million for the three months ended September 30, 2025 and 2024, respectively, and less than $0.1 million and $0.2 million for the nine months ended September 30, 2025 and 2024, respectively. Starting January 1, 2025, employer payroll taxes related to employee stock-based award transactions are included in long-term incentive compensation and related payroll tax expense. Prior period amounts have been adjusted to reflect these changes. We are excluding these payroll taxes from Adjusted EBITDA results since they are tied to the timing and size of the vesting of the underlying stock-based awards and the price of our common stock at the time of vesting, which may vary from period to period independent of our operating performance. Employer payroll taxes
Page 10
related to employee stock-based award transactions amounted to $0.2 million and less than $0.3 million for the three months ended September 30, 2025 and 2024, respectively, and $0.9 million and $0.7 million for the nine months ended September 30, 2025 and 2024, respectively. (2) Includes cost of sales amortization expense directly related to delivering cloud subscription revenue of $0.0 million and $0.2 million for the nine months ended September 30, 2025, and 2024, respectively. There was no cost of sales amortization expense directly related to delivering cloud subscription revenue for the three months ended September 30, 2025 and 2024, respectively. Costs are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations. (3) Includes write-offs of property and equipment, net, of $0.7 million for the three and nin months ended September 30, 2025. Includes write-offs of intangible assets and property and equipment, net, of $0.8 million and $1.0 million, respectively, for the nine months ended September 30, 2024. Costs are recorded in "Services and other cost of goods sold" and "Restructuring and other related charges," respectively, on the condensed consolidated statements of operations. Includes restructuring and other related charges of less than $0.4 million and $0.4 million for the three and nine months ended September 30, 2025, respectively, and less than $0.1 million and $0.1 million for the three and nine months ended September 30, 2024. These charges are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations. (4) For the three months ended September 30, 2025 and 2024, other non-recurring items consist of $2.3 million and $2.0 million, respectively, of fees related to non-recurring projects. For the nine months ended September 30, 2025 and 2024, other non-recurring items consist of $3.9 million and $3.1 million, respectively, of fees related to non-recurring projects. (5) Starting January 1, 2025, we began using a long-term projected non-GAAP tax rate of 20% for the purpose of determining our Non-GAAP Net Income and Non-GAAP Net Income Per Diluted Share to provide better consistency across interim reporting periods in fiscal 2025 and beyond. Prior period amounts have been adjusted to reflect this change. Copyright© 2025 OneSpan North America Inc., all rights reserved. OneSpan™ is a registered or unregistered trademark of OneSpan North America Inc. or its affiliates in the U.S. and other countries. View source version on businesswire.com: https://www.businesswire.com/news/home/20251030669468/en/ Investor Contact: Joe Maxa Vice President of Investor Relations +1-312-766-4009 joe.maxa@onespan.com Source: OneSpan Inc.