Earnings release
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OneSpan Reports Third Quarter 2026 Financial Results • Revenue increased 12% year-over-year to $63.9 million • Subscription revenue increased 16% year-over-year to $51.5 million • Operating income increased 12% year-over-year to $9.2 million • Adjusted EBITDA increased 10% year-over-year to $19.3 million1 • Annual Recurring Revenue (ARR) increased 9% year-over-year to $195.5 million2 • Net Retention Rate (NRR) of 105%3 BOSTON, October 29, 2026 – OneSpan Inc. (NASDAQ: OSPN) today reported financial results for the third quarter ended September 30, 2026. “We delivered an excellent third quarter, highlighted by 16% subscription revenue growth and a 12% increase in operating income,” stated OneSpan CEO Victor Limongelli. “We have continued to improve our execution in both our Cybersecurity business and our Digital Agreements business; we are doing so while also investing to strengthen our competitive position and support longer-term growth.” Third Quarter 2026 Financial Highlights • Total revenue was $63.9 million, an increase of 12% compared to $57.1 million for the same quarter of 2025. Cybersecurity revenue was $44.9 million, an increase of 11% year-over-year. Digital Agreements revenue was $19.0 million, an increase of 14% year-over-year. • ARR increased 9% year-over-year to $195.5 million. • Gross profit was $48.7 million, or 76% gross margin, compared to $42.0 million, or 74% gross margin, in the same period last year. • Operating income was $9.2 million, compared to operating income of $8.2 million in the same period last year. • Net income was $7.8 million, or $0.20 per diluted share, compared to net income of $6.5 million, or $0.17 per diluted share, in the same period last year. Non -GAAP net income was $13.6 million, or $0.35 per diluted share, compared to non-GAAP net income of $12.9 million, or $0.33 per diluted share in the same period last year.1 • Adjusted EBITDA was $19.3 million, compared to $17.5 million in the same period last year. • Cash and cash equivalents were $51.4 million at September 30, 2026 compared to $70.5 million at December 31, 2025. Recent Business Highlights • OneSpan announced advances in DigipassONE, the unified platform it introduced in July, including an upcoming DigipassONE Authenticate Free Trial planned for November 2026, giving organizations that are evaluating where passkeys fit within their authentication strategy a practical way to experiment with them firsthand; and progress on DigipassONE V erify following its early access introduction, with general availability expected in early 2027. • The Company announced new and planned Digital Agreements innovations, including AI -assisted capabilities, automated document validation, advanced identity verification, and expanded integrated capabilities. • OneSpan’s Board of Directors has declared a quarterly cash dividend of $0.13 per share as part of the Company’s recurring quarterly dividend program. The dividend is payable on December 4, 2026 to shareholders of record as of the close of business on November 13, 2026. Financial Outlook OneSpan is updating its previously issued financial guidance to reflect increases in its software and services revenue, ARR, and Adjusted EBITDA expectations. For the Full Y ear 2026, the Company expects:
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• Total revenue to be in the range of $254 million to $258 million, as compared to its previous guidance range of $248 million to $252 million. • Software and services revenue to be in the range of $208 million to $210 million, as compared to its previous guidance range of $202 million to $204 million. • Hardware revenue to be in the range of $46 million to $48 million, unchanged from its previous guidance. • ARR to be in the range of $197 million to $201 million, as compared to its previous guidance range of $194 million to $198 million. • Adjusted EBITDA to be in the range of $72 million to $76 million, as compared to its previous guidance range of $67 million to $71 million. Conference Call Details In conjunction with this announcement, OneSpan Inc. will host a conference call today, October 29, 2026, 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 2026. A live webcast of the conference call will be accessible from the OneSpan investor relations website at investors.onespan.com. Shortly after the conclusion of the call, a replay of the webcast will be available on the same website. Participants can pre-register for the webcast by clicking on this registration link. ____________________________________________ 1 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. 2 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, 2026 for additional information describing how we define ARR, including how ARR differs from GAAP revenue. 3 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. About OneSpan OneSpan helps organizations build secure, seamless, and trusted digital experiences through two solution portfolios: Cybersecurity and Digital Agreements. Our cybersecurity solutions protect identities, secure mobile apps, and safeguard access through advanced high -assurance authentication, threat intelligence, fraud prevention, and robust mobile app protection, defending users, devices, and applications against sophisticated attacks. Our digital agreement solutions streamline agreement workflows with secur e e-signatures, identity verification, and smart digital forms, built to enable speed, compliance and exceptional customer experiences. Trusted by leading global enterprises, including more than 60% of the world’s 100 largest banks, OneSpan processes over 100 million digital agreements and billions of secure authentication transactions across more than 120 countries each year. For more information, visit our website, explore our blog, or follow us on LinkedIn or YouTube.
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Forward-Looking Statements This press release contains forward -looking statements within the meaning of applicable U.S. securities laws, including statements regarding our 2026 financial guidance; our planned availability dates for the DigipassONE Authenticate Free Trial and the general availability of DigipassONE V erify; expectations regarding our products and product innovations, including with respect to DigipassONE and our Digital Agreements business ; 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; difficultie s 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; interrupt ions 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 dispu tes, 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). O ur 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 pres s 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.
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OneSpan Inc. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2026 2025 2026 2025 Revenue Product and license $ 31,505 $ 27,712 $ 95,187 $ 97,189 Services and other 32,380 29,344 95,111 83,076 Total revenue 63,885 57,056 190,298 180,265 Cost of goods sold Product and license 6,114 7,030 21,505 24,044 Services and other 9,036 8,023 27,061 23,160 Total cost of goods sold 15,150 15,053 48,566 47,204 Gross profit 48,735 42,003 141,732 133,061 Operating costs Sales and marketing 13,999 11,391 39,752 34,353 Research and development 9,907 8,796 28,891 26,168 General and administrative 14,811 12,152 37,725 33,478 Amortization of intangible assets 775 741 2,248 1,982 Write-off of assets — — 314 — Restructuring and other related charges — 696 — 1,165 Total operating costs 39,492 33,776 108,930 97,146 — Operating income 9,243 8,227 32,802 35,915 Interest (expense) income, net (80) 388 (253) 1,812 Other income (expense), net 292 (208) (47) (886) Income before income taxes 9,455 8,407 32,502 36,841 Provision for income taxes 1,657 1,893 6,358 7,480 Net income $ 7,798 $ 6,514 $ 26,144 $ 29,361 Net income per share Basic $ 0.21 $ 0.17 $ 0.70 $ 0.77 Diluted $ 0.20 $ 0.17 $ 0.68 $ 0.76 Weighted average common shares outstanding Basic 37,121 38,136 37,313 38,149 Diluted 39,039 38,768 38,399 38,845
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OneSpan Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, unaudited) September 30, December 31, 2026 2025 ASSETS Current assets Cash and cash equivalents $ 51,393 $ 70,499 Accounts receivable, net of allowances of $990 at September 30, 2026 and $1,227 at December 31, 2025 41,842 55,999 Inventories, net 11,102 10,466 Prepaid expenses 7,176 7,044 Contract assets 15,636 18,269 Other current assets 11,446 9,936 Total current assets 138,595 172,213 Property and equipment, net 24,911 22,234 Operating lease right-of-use assets 7,641 7,356 Goodwill 127,687 103,840 Intangible assets, net of accumulated amortization 14,131 9,741 Deferred income taxes 58,902 54,733 Equity investment 11,834 11,834 Other assets 15,535 15,751 Total assets $ 399,236 $ 397,702 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 11,556 $ 13,726 Deferred revenue 57,439 71,641 Accrued wages and payroll taxes 16,489 13,553 Short-term income taxes payable 2,008 3,079 Dividend payable 1,402 671 Other accrued expenses 14,036 11,859 Deferred compensation 26 42 Total current liabilities 102,956 114,571 Long-term deferred revenue 1,802 2,539 Long-term lease liabilities 6,162 6,139 Deferred income taxes 898 988 Revolving credit facility 5,000 — Other long-term liabilities 1,618 1,622 Total liabilities 118,436 125,859 Commitments and contingencies Stockholders' equity Preferred stock: 500 shares authorized, none issued and outstanding at September 30, 2026 and December 31, 2025 — — Common stock: $0.001 par value per share; 75,000 shares authorized; 42,288 and 42,091 shares issued; 36,819 and 37,361 shares outstanding at September 30, 2026 and December 31, 2025, respectively 37 37 Additional paid-in capital 137,844 128,651 Treasury stock, at cost: 5,469 and 4,730 shares at September 30, 2026 and December 31, 2025, respectively (68,884) (60,521) Retained earnings 220,578 209,821 Accumulated other comprehensive loss (8,775) (6,145) Total stockholders' equity 280,800 271,843 Total liabilities and stockholders' equity $ 399,236 $ 397,702
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OneSpan Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands, unaudited) Nine Months Ended September 30, 2026 2025 Cash flows from operating activities: Net income $ 26,144 $ 29,361 Adjustments to reconcile net income from operations to net cash provided by operations: Depreciation and amortization of intangible assets 9,937 7,152 Write-off of assets and restructuring related charges 314 709 Loss on disposal of asset 8 27 Deferred tax benefit (32) (2,716) Stock-based compensation 10,802 9,601 Provision for (recovery of) credit losses 19 (303) Changes in operating assets and liabilities, net of the effects from acquisition: Accounts receivable, net 15,126 32,702 Inventories, net (953) 909 Contract assets 2,546 (7,758) Accounts payable (2,318) (3,935) Income taxes payable (1,114) 4,763 Accrued expenses 1,077 (2,198) Deferred compensation (16) (166) Deferred revenue (16,092) (22,030) Other assets and liabilities (886) 767 Net cash provided by operating activities 44,562 46,885 Cash flows from investing activities: Additions to property and equipment (9,526) (6,018) Additions to intangible assets (177) (54) Cash paid for acquisition of business, net of cash acquired (34,553) (13,943) Net cash used in investing activities (44,256) (20,015) Cash flows from financing activities: Dividends paid (14,680) (13,878) Payment of debt issuance costs — (1,739) Borrowings from credit facility 5,000 — Tax payments for restricted stock issuances (1,608) (4,409) Repurchase of common stock (8,297) (6,297) Net cash used in financing activities (19,585) (26,323) Effect of exchange rate changes on cash 173 1,676 Net (decrease) increase in cash (19,106) 2,223 Cash, cash equivalents, and restricted cash, beginning of period 70,499 83,331 Cash, cash equivalents, and restricted cash, end of period $ 51,393 $ 85,554
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Operating Segments We report our financial results under the following two lines of business, which are our reportable operating segments: Cybersecurity and Digital Agreements. • Cybersecurity. Cybersecurity, formerly 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 Cybersecurity segment are delivered through on-premises and cloud-based deployment models and include standards-based authentication technologies such as Fast Identity Online ("FIDO") authentication and passkeys, multi-factor authentication, transaction signing solutions and mobile application security. • 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 cloud -based, include OneSpan Sign e -signature, OneSpan Notary, and Identity V erification. 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, 2026 (In thousands, except percentages) Cybersecurity Digital Agreements Corporate and Other Total Revenue $ 44,886 $ 18,999 $ — $ 63,885 Cost of goods sold 10,291 4,859 — 15,150 Gross profit 34,595 14,140 — 48,735 Gross margin 77 % 74 % * 76 % Sales and marketing 9,117 3,375 1,507 13,999 Research and development 6,174 2,815 918 9,907 Other segment items (1)(3) 768 1,015 13,803 15,586 Operating income (loss) (2)(4) 18,536 6,935 (16,228) 9,243 Interest (expense) income, net (80) Other income (expense), net 292 Income before income taxes $ 9,455
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Three Months Ended September 30, 2025 (In thousands, except percentages) Cybersecurity 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 (expense) income, net 388 Other income (expense), net (208) Income before income taxes $ 8,407 Nine Months Ended September 30, 2026 (In thousands, except percentages) Cybersecurity Digital Agreements Corporate and Other Total Revenue $ 134,362 $ 55,936 $ — $ 190,298 Cost of goods sold 33,969 14,597 — 48,566 Gross profit 100,393 41,339 — 141,732 Gross margin 75 % 74 % * 74 % Sales and marketing 26,503 10,125 3,124 39,752 Research and development 18,429 8,699 1,763 28,891 Other segment items (1)(3) 2,320 3,326 34,641 40,287 Operating income (loss) (2)(4) 53,141 19,189 (39,528) 32,802 Interest (expense) income, net (253) Other income (expense), net (47) Income before income taxes $ 32,502
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Nine Months Ended September 30, 2025 (In thousands, except percentages) Cybersecurity 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 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 (expense) income, net 1,812 Other income (expense), net (886) Income before income taxes $ 36,841 *Percentage not meaningful. (1) Cybersecurity other segment items includes general and administrative expense and amortization of intangibles for the three months ended September 30, 2026, and general and administrative expense, write-off of assets, and amortization of intangibles for the nine months ended September 30, 2026. Cybersecurity other segment items includes general and administrative expense and restructuring and other related charges for the three and nine months ended September 30, 2025. (2) Cybersecurity operating income includes $1.1 million and $2.8 million of total amortization and depreciation expense for the three and nine months ended September 30, 2026 , respectively. Cybersecurity operating income includes $0.4 million and $0.7 million of total amortization and depreciation expense for the three and nine months ended September 30, 2025, respectively. Cybersecurity operating income does not include any restructuring and other related charges for the three and nine months ended September 30, 2026. Cybersecurity 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. (3) Digital Agreements other segment items includes general and administrative expense and amortization of intangibles for the three and nine months ended September 30, 2026. Digital Agreements other segment items includes general and administrative expense and restructuring and other related charges for the three and nine months ended September 30, 2025. (4) Digital Agreements operating income includes $2.1 million and $6.4 million of total amortization and depreciation expense for the three and nine months ended September 30, 2026, respectively. 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 does not include any restructuring and other related charges for the three and nine months ended September 30, 2026. Digital Agreements operating income includes less than $0.1 million and $0.2 million of restructuring and other related charges for the three and nine months ended September 30, 2025, respectively.
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Revenue by major products and services (unaudited): Effective January 1, 2026, we have revised our presentation of revenue by major products and services to better align with how we manage the business and our strategic focus on growing recurring revenues. Accordingly, term maintenance revenue is now included within subscription revenue. As a result, subscription revenue now consists primarily of subscription licenses sold for on -premises software, the related maintenance and support revenue, and SaaS revenue. Additionally, maintenance revenue associated with perpetual licenses and professional services is now presented together, which reflects the steady decline in perpetual license arrangements. These changes are presentation -only and have no impact on total revenue, operating income, or cash flows, and prior-period results have been updated for comparability. Three Months Ended September 30, 2026 2025 (In thousands) Cybersecurity Digital Agreements Cybersecurity Digital Agreements Subscription (1) $ 32,515 $ 18,978 $ 27,691 $ 16,705 Perpetual maintenance and services 1,920 21 2,901 29 Hardware products 10,451 — 9,730 — Total Revenue $ 44,886 $ 18,999 $ 40,322 $ 16,734 Nine Months Ended September 30, 2026 2025 (In thousands) Cybersecurity Digital Agreements Cybersecurity Digital Agreements Subscription (1) $ 95,026 $ 55,855 $ 87,345 $ 47,874 Perpetual maintenance and services 6,859 81 10,116 121 Hardware products 32,477 — 34,809 — Total Revenue $ 134,362 $ 55,936 $ 132,270 $ 47,995 (1) Cybersecurity subscription revenue during the three and nine ended months September 30, 2025 includes $6.6 million and $17.6 million, respectively, of term maintenance that has been reclassified from maintenance and services to align with the revised presentation of revenue described above. Digital Agreements subscription revenue during the three and nine months ended September 30, 2025 includes less than $0.1 million for all periods related to the reclassification from maintenance and services to align with the revised presentation of revenue. 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 measur es 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
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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 reflec t 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) 2026 2025 2026 2025 Net income $ 7,798 $ 6,514 $ 26,144 $ 29,361 Interest expense (income), net 80 (388) 253 (1,812) Provision for income taxes 1,657 1,893 6,358 7,480 Depreciation and amortization of intangible assets (1) 3,371 2,566 9,937 7,152 Long-term incentive compensation and related payroll tax expense (2) 5,519 3,627 11,122 10,553 Restructuring and other related charges (3) — 1,001 — 1,535 Other non-recurring items (4) 830 2,322 3,345 3,939 Adjusted EBITDA $ 19,255 $ 17,535 $ 57,159 $ 58,208 (1) Includes cost of sales depreciation and amortization expense directly related to delivering cloud subscription revenue of $2.1 million and $6.2 million for the three and nine months ended September 30, 2026, respectively, and $1.3 million and $3.7 million for the three and nine months ended September 30, 2025, 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 for the three and nine months ended September 30, 2026 and 2025. (3) 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 $0.4 million for the three and nine months ended September 30, 2025, respectively, that 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, 2026 and 2025, other non-recurring items consist of $0.8 million and $2.3 million, respectively, of fees related to non-recurring acquisition projects. For the nine months ended September 30, 2026 and 2025, other non -recurring items consist of $3.3 million and $3.9 million, respectively, of fees related to non-recurring acquisition projects.
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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 performan ce 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 cor related 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, we note that 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, 2026 2025 2026 2025 Net income $ 7,798 $ 6,514 $ 26,144 $ 29,361 Provision for income taxes 1,657 1,893 6,358 7,480 Income before income taxes 9,455 8,407 $ 32,502 $ 36,841 Long-term incentive compensation and related payroll tax expense (1) 5,519 3,627 11,122 10,553 Amortization of intangible assets (2) 1,176 741 3,283 1,982 Restructuring and other related charges (3) — 1,001 — 1,535 Other non-recurring items (4) 830 2,322 3,345 3,939 Non-GAAP net income before income taxes 16,980 16,098 50,252 54,850 Non-GAAP provision for income taxes (5) (3,396) (3,220) (10,050) (10,970) Non-GAAP net income $ 13,584 $ 12,878 $ 40,202 $ 43,880 Non-GAAP net income per share, diluted $ 0.35 $ 0.33 $ 1.05 $ 1.13 Weighted-average shares used to compute non-GAAP net income per share, diluted 39,039 38,768 38,399 38,845 (1) Long-term incentive compensation and related payroll tax expense includes stock -based compensation and related employer 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 for the three and nine months ended September 30, 2026 and 2025.
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(2) Includes cost of sales amortization expense directly related to delivering cloud subscription revenue of $0.4 million and $1.0 million for the three and nine months ended September 30, 2026, respectively. There was no amortization expense included in cost of sales for the three and nine months ended September 30, 2025. Costs are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations. (3) 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 $0.4 million for the three and nine months ended September 30, 2025, respectively. 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, 2026 and 2025, other non -recurring items consist of $0.8 million and $2.3 million, respectively, of fees related to non -recurring acquisition projects. For the nine months ended September 30, 2026 and 2025, other non-recurring items consist of $3.3 million and $3.9 million, respectively, of fees related to non- recurring acquisition projects. (5) 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. Copyright© 2026 OneSpan North America Inc., all rights reserved. OneSpan ®, the “O” logo, Digipass ®, and DigipassONETM are registered or unregistered trademarks of OneSpan North America Inc. or its affiliates in the U.S. and other countries. Investor Contact: Joe Maxa Vice President of Investor Relations +1-312-766-4009 joe.maxa@onespan.com