OneSpan’s Financial Performance: Driving Profitable Growth in Cybersecurity and Digital Agreements

OneSpan is a leading provider of advanced secure authentication and digital agreement solutions. The company has two main business segments: Security Solutions and Digital Agreements.

Financial Highlights

• In 2024, OneSpan reported total revenue of $243.2 million, a 3% increase from 2023.
• Gross profit increased 11% to $174.6 million, with a gross margin of 72%.
• Operating expenses decreased 30% to $129.8 million, driven by cost-saving initiatives.
• Net income was $57.1 million, compared to a net loss of $29.8 million in 2023.
• The company generated $55.7 million in cash from operations, a significant improvement from the $10.7 million used in 2023.
• OneSpan initiated a quarterly dividend program, paying $0.12 per share in February 2025.

Segment Performance The Security Solutions segment, which includes authentication software and hardware, saw revenue decrease 1% to $182.2 million. However, gross profit increased 11% to $132.9 million, with a strong 73% gross margin. This was driven by higher subscription revenue and lower hardware sales, which have lower margins.

The Digital Agreements segment, which provides e-signature, identity verification, and digital workflow solutions, grew revenue by 20% to $61.0 million. Gross profit increased 11% to $41.7 million, though the gross margin declined to 68% due to higher cloud platform costs and software write-offs.

Driving Profitable Growth In 2023, OneSpan shifted its strategy to focus more on improving profitability across the business, while maintaining long-term growth potential. This involved a restructuring plan that reduced headcount by 330 positions and generated $56.8 million in lower operating expenses in 2024.

The company saw strong subscription revenue growth of 33% in Security Solutions and 28% in Digital Agreements, as it transitioned customers to higher-margin recurring revenue models. This offset declines in hardware sales and on-premises software, as the market shifts towards mobile-first and cloud-based solutions.

Outlook and Key Metrics Looking ahead, OneSpan is well-positioned to drive profitable, efficient growth in both operating segments. The company reported Annual Recurring Revenue (ARR) of $167.7 million at the end of 2024, an 8% increase from 2023. Net Retention Rate, which measures the company’s ability to grow revenue from existing customers, was a healthy 106%.

OneSpan’s focus on subscription revenue, cost management, and strategic initiatives has enabled it to become profitable in both business segments. The company’s strong cash flow and balance sheet provide flexibility to invest in product innovation and pursue strategic opportunities.

Strengths and Challenges OneSpan’s key strengths include its leading position in secure authentication and digital agreements, diversified customer base, and transition to a subscription-based revenue model. The company’s solutions are trusted by over 60% of the world’s 100 largest banks, processing millions of digital transactions annually.

Challenges include increasing competition in the e-signature market, limited brand awareness among some buyers, and the need to continue adapting to evolving customer preferences towards mobile and cloud-based technologies. However, OneSpan’s strategic focus on profitability and efficient growth has positioned the company well to navigate these industry dynamics.

Conclusion OneSpan’s 2024 financial results demonstrate the success of its strategic shift towards profitable growth. By optimizing its cost structure, driving subscription revenue, and investing in high-margin software solutions, the company has become more financially resilient and well-positioned for the future. As OneSpan continues to innovate and meet the evolving needs of its global customer base, investors can look forward to the company’s continued progress in the cybersecurity and digital agreements markets.