OneSpan Inc. (NASDAQ:OSPN), a global leader in software for trusted
identities, e-signatures and transactions, today reported financial
results for the second quarter and six months ended June 30, 2018.
“The second quarter marked a significant turning point for
OneSpan™, with a global rebrand, the launch of our Trusted Identity
platform and the acquisition of identity verification innovator,
Dealflo. Each of these initiatives was executed in support of our
software focused growth strategy,” stated OneSpan CEO, Scott
Clements. “During the quarter, we benefitted from strong growth in
e-signature subscriptions, increased software licenses and improved
sequential results from our hardware product line. We remain on
track to meet our full year guidance.”
Second Quarter and First Six Months 2018 Financial
Highlights
- Revenue for the second quarter of 2018 was $49.6 million,
an increase of 8% from $45.7 million for the second quarter of
2017. Revenue for the first six months of 2018 was
$95.0 million, an increase of 8% from $87.7 million for
the first six months of 2017.
- Gross margin for the second quarter of 2018 was 73% and for the
first six months of 2018 was 74%. Gross margin for the second
quarter of 2017 was 70% and for the first six months of 2017 was
71%.
- GAAP operating loss for the second quarter of 2018 was $2.6
million, or 5% of revenue, and for the first six months of 2018 was
$1.0 million, or 1% of revenue. GAAP operating loss for the second
quarter of 2017 was $0.4 million, or 1% of revenue, and for the
first six months of 2017 was $0.1 million.
- Adjusted EBITDA for the second quarter of 2018 was $5.3
million, or 11% of revenue, and for the first six months of 2018
was $11.5 million, or 12% of revenue. Adjusted EBITDA for the
second quarter of 2017 was $3.4 million, or 8% of revenue, and for
the first six months of 2017 was $7.7 million, or 9% of
revenue.1
- GAAP net loss for the second quarter of 2018 was $1.0 million,
or $0.03 per share. GAAP net income for the first six months of
2018 was $0.8 million, or $0.02 per share. This compares to GAAP
net income of $0.1 million, or $0.00 per share for the second
quarter of 2017, and $0.7 million, or $0.02 per share for the first
six months of 2017.
- Non-GAAP net income for the second quarter of 2018 was $3.8
million, or $0.09 per share, and for the first six months of 2018
was $8.5 million, or $0.21 per share. Non-GAAP net income for the
second quarter of 2017 was $2.5 million, or $0.06 per share, and
for the first six months of 2017 was $5.7 million, or $0.15 per
share.1
- Cash, cash equivalents and short-term investments at June 30,
2018 totaled $101.4 million compared to $166.4 million and $158.4
million at March 31, 2018 and December 31, 2017, respectively.
________________________
1 |
An
explanation of the use of non-GAAP measures is included below under
the heading “Non-GAAP Financial Measures.” A reconciliation of GAAP
to non-GAAP financial measures has also been provided in tables
below. |
Second Quarter 2018 Business
Highlights
- On May 30, 2018, OneSpan announced the launch of its Trusted
Identity (TID) platform along with its Intelligent Adaptive
Authentication offering. TID enables companies to reduce onboarding
and transaction-related fraud while securing and enhancing the
end-user experience. OneSpan also changed its name from VASCO Data
Security International to reflect its significant shift in strategy
and solution offering.
- Also on May 30, 2018, OneSpan announced it acquired
privately-held Dealflo for £41 million in cash. Dealflo is an
innovative provider of identity verification and end-to-end
financial agreement automation solutions. This acquisition will
accelerate the launch of OneSpan’s TID platform-based onboarding
solutions, provide identity verification technology for its
e-signature solutions, and increase the company’s recurring revenue
stream.
- OneSpan announced a partnership with Nok Nok Labs to bring
FIDO-compliant solutions to the world’s largest banks. The
partnership complements OneSpan’s existing support of the FIDO U2F
standard and enables OneSpan to offer end-to-end FIDO-compliant
solutions that meet both UAF and U2F standards.
Guidance for Full Year
2018
OneSpan is reaffirming guidance for the full-year 2018 as
follows:
- Revenue is expected to be in the range of $201 million to $211
million; and
- Adjusted EBITDA is expected to be in the range of $15 million
to $19 million.
Conference Call Details
In conjunction with this announcement, OneSpan Inc. will host a
conference call today, July 26, 2018, at 4:30 p.m. EDT/22:30 CEST.
During the conference call, Mr. Scott Clements, CEO, and Mr. Mark
Hoyt, CFO, will discuss OneSpan’s results for the second quarter
and first six months of 2018.
To participate in this conference call, please dial one of the
following numbers:
USA/Canada: 877‑256‑8245International:
+1-303-223-4384
The conference call is also available in listen-only mode at
investors.onespan.com. The recorded version of the conference call
will be available on the OneSpan website as soon as possible
following the call and will be available for replay for at least
60 days.
About OneSpan
OneSpan enables financial institutions and other organizations
to succeed by making bold advances in their digital transformation.
We do this by establishing trust in people’s identities, the
devices they use, and the transactions that shape their lives. We
believe that this is the foundation of enhanced business enablement
and growth. More than 10,000 customers, including over half of the
top 100 global banks, rely on OneSpan solutions to protect their
most important relationships and business processes. From digital
onboarding to fraud mitigation to workflow management, OneSpan’s
unified, open platform reduces costs, accelerates customer
acquisition, and increases customer satisfaction. Learn more about
OneSpan at OneSpan.com and
on Twitter, LinkedIn and Facebook.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of applicable U.S. Securities laws,
including statements regarding the potential benefits, performance,
and functionality of our products and solutions, including future
offerings; our expectations, beliefs, plans, operations and
strategies relating to our business and the future of our business;
our acquisitions to date and our strategy related to future
acquisitions; and our expectations regarding our financial
performance in the future. Forward-looking statements may be
identified by words such as "seek", "believe", "plan", "estimate",
"anticipate", expect", "intend", and statements that an event or
result "may", "will", "should", "could", or "might" occur or be
achieved and any other similar expressions. The forward-looking
statements include, but are not limited to, our financial outlook
for 2018, and the information included under the caption “Guidance
for Full Year 2018”. These forward-looking statements involve risks
and uncertainties, as well as assumptions which, 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:
market acceptance of our products and solutions and competitors’
offerings; the potential effects of technological changes; our
ability to effectively identify, purchase and integrate
acquisitions; the execution of our transformative strategy on a
global scale; the increasing frequency and sophistication of
hacking attacks; claims that we have infringed the intellectual
property rights of others; changes in customer requirements; price
competitive bidding; changing laws, government regulations or
policies; pressures on price levels; investments in new products or
businesses that may not achieve expected returns; impairment of
goodwill or amortizable intangible assets causing a significant
charge to earnings; exposure to increased economic and operational
uncertainties from operating a global business as well as those
factors set forth in our Form 10-K (and other forms) filed with the
Securities and Exchange Commission. In particular, we direct you to
the risk factors contained under the captions "Risk Factors" and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Form 10-K. Our SEC filings and other
important information can be found on 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.
OneSpan Inc.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(in
thousands, except per share
data)(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
|
June 30, |
|
June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
and license |
|
$ |
34,986 |
|
|
$ |
34,472 |
|
|
$ |
68,480 |
|
|
$ |
66,032 |
|
|
Services
and other |
|
|
14,568 |
|
|
|
11,222 |
|
|
|
26,506 |
|
|
|
21,626 |
|
|
Total
revenue |
|
|
49,554 |
|
|
|
45,694 |
|
|
|
94,986 |
|
|
|
87,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
and license |
|
|
10,391 |
|
|
|
11,045 |
|
|
|
18,576 |
|
|
|
20,585 |
|
|
Services
and other |
|
|
3,182 |
|
|
|
2,601 |
|
|
|
5,732 |
|
|
|
5,113 |
|
|
Total
cost of goods sold |
|
|
13,573 |
|
|
|
13,646 |
|
|
|
24,308 |
|
|
|
25,698 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
35,981 |
|
|
|
32,048 |
|
|
|
70,678 |
|
|
|
61,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
16,622 |
|
|
|
15,339 |
|
|
|
30,899 |
|
|
|
29,043 |
|
|
Research
and development |
|
|
8,016 |
|
|
|
6,320 |
|
|
|
13,813 |
|
|
|
12,176 |
|
|
General
and administrative |
|
|
11,210 |
|
|
|
8,588 |
|
|
|
21,984 |
|
|
|
16,441 |
|
|
Amortization / impairment of intangible assets |
|
|
2,744 |
|
|
|
2,201 |
|
|
|
4,945 |
|
|
|
4,399 |
|
|
Total
operating costs |
|
|
38,592 |
|
|
|
32,448 |
|
|
|
71,641 |
|
|
|
62,059 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(2,611 |
) |
|
|
(400 |
) |
|
|
(963 |
) |
|
|
(99 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income,
net |
|
|
340 |
|
|
|
340 |
|
|
|
733 |
|
|
|
630 |
|
|
Other income, net |
|
|
1,399 |
|
|
|
373 |
|
|
|
1,779 |
|
|
|
588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
|
(872 |
) |
|
|
313 |
|
|
|
1,549 |
|
|
|
1,119 |
|
|
Provision for income
taxes |
|
|
130 |
|
|
|
203 |
|
|
|
759 |
|
|
|
436 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,002 |
) |
|
$ |
110 |
|
|
$ |
790 |
|
|
$ |
683 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
Diluted |
|
$ |
(0.03 |
) |
|
$ |
0.00 |
|
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
39,908 |
|
|
|
39,797 |
|
|
|
39,902 |
|
|
|
39,783 |
|
|
Diluted |
|
|
39,908 |
|
|
|
39,842 |
|
|
|
40,015 |
|
|
|
39,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OneSpan Inc.CONDENSED
CONSOLIDATED BALANCE SHEETS(in thousands,
unaudited)
|
|
|
|
|
|
|
|
|
June 30, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and
equivalents |
|
$ |
101,432 |
|
|
$ |
78,661 |
|
Short
term investments |
|
|
— |
|
|
|
79,733 |
|
Accounts
receivable, net of allowances of $696 in 2018 and $520 in 2017 |
|
|
41,704 |
|
|
|
48,126 |
|
Inventories, net |
|
|
14,454 |
|
|
|
12,040 |
|
Prepaid
expenses |
|
|
6,329 |
|
|
|
3,876 |
|
Contract
assets |
|
|
4,915 |
|
|
|
— |
|
Other
current assets |
|
|
7,978 |
|
|
|
5,501 |
|
Total
current assets |
|
|
176,812 |
|
|
|
227,937 |
|
Property
and equipment: |
|
|
|
|
|
|
Furniture
and fixtures |
|
|
7,730 |
|
|
|
5,655 |
|
Office
equipment |
|
|
10,384 |
|
|
|
13,084 |
|
Total
Property and equipment: |
|
|
18,114 |
|
|
|
18,739 |
|
Accumulated depreciation |
|
|
(11,533 |
) |
|
|
(13,963 |
) |
Property
and equipment, net |
|
|
6,581 |
|
|
|
4,776 |
|
Goodwill |
|
|
95,456 |
|
|
|
56,332 |
|
Intangible assets, net of accumulated amortization |
|
|
49,138 |
|
|
|
37,888 |
|
Deferred
income taxes |
|
|
4,922 |
|
|
|
5,460 |
|
Contract
assets - non-current |
|
|
7,534 |
|
|
|
— |
|
Other
assets |
|
|
6,649 |
|
|
|
5,229 |
|
Total assets |
|
$ |
347,092 |
|
|
$ |
337,622 |
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts
payable |
|
$ |
6,520 |
|
|
$ |
8,144 |
|
Deferred
revenue |
|
|
30,675 |
|
|
|
33,295 |
|
Accrued
wages and payroll taxes |
|
|
10,837 |
|
|
|
11,643 |
|
Short-term income taxes payable |
|
|
1,599 |
|
|
|
3,673 |
|
Other
accrued expenses |
|
|
10,680 |
|
|
|
7,746 |
|
Deferred
compensation |
|
|
583 |
|
|
|
1,652 |
|
Total
current liabilities |
|
|
60,894 |
|
|
|
66,153 |
|
Long-term
deferred revenue |
|
|
6,947 |
|
|
|
7,019 |
|
Other
long-term liabilities |
|
|
7,556 |
|
|
|
5,919 |
|
Long-term
income taxes payable |
|
|
11,648 |
|
|
|
12,848 |
|
Deferred
income taxes |
|
|
9,131 |
|
|
|
7,753 |
|
Total
liabilities |
|
|
96,176 |
|
|
|
99,692 |
|
Stockholders' equity |
|
|
|
|
|
|
Common
stock: $.001 par value per share, 75,000 shares authorized; 40,223
and 40,086 issued and outstanding at June 30, 2018 and
December 31, 2017, respectively |
|
|
40 |
|
|
|
40 |
|
Additional paid-in capital |
|
|
92,115 |
|
|
|
90,307 |
|
Accumulated income |
|
|
169,317 |
|
|
|
156,151 |
|
Accumulated other comprehensive loss |
|
|
(10,556 |
) |
|
|
(8,568 |
) |
Total
stockholders' equity |
|
|
250,916 |
|
|
|
237,930 |
|
Total liabilities and stockholders' equity |
|
$ |
347,092 |
|
|
$ |
337,622 |
|
|
|
|
|
|
|
|
|
|
OneSpan Inc.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(in
thousands, unaudited)
|
|
|
|
|
|
|
|
|
|
Six months ended
June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
Cash flows from
operating activities: |
|
|
|
|
|
|
|
Net
income |
|
$ |
790 |
|
|
$ |
683 |
|
|
Adjustments to reconcile net income to net cash provided: |
|
|
|
|
|
|
|
Depreciation, amortization, and impairment of intangible
assets |
|
|
6,020 |
|
|
|
5,258 |
|
|
Gain on
disposal of assets |
|
|
(49 |
) |
|
|
— |
|
|
Deferred
tax benefit |
|
|
(13 |
) |
|
|
(1,134 |
) |
|
Stock-based compensation |
|
|
1,809 |
|
|
|
1,076 |
|
|
Changes
in assets and liabilities |
|
|
|
|
|
|
|
Accounts
receivable, net |
|
|
7,181 |
|
|
|
9,560 |
|
|
Inventories, net |
|
|
(2,414 |
) |
|
|
(255 |
) |
|
Contract
assets |
|
|
(4,282 |
) |
|
|
— |
|
|
Accounts
payable |
|
|
(2,195 |
) |
|
|
(748 |
) |
|
Income
taxes payable |
|
|
(5,946 |
) |
|
|
(2,740 |
) |
|
Accrued
expenses |
|
|
(347 |
) |
|
|
(435 |
) |
|
Deferred
compensation |
|
|
(1,069 |
) |
|
|
(906 |
) |
|
Deferred
revenue |
|
|
3,468 |
|
|
|
1,682 |
|
|
Other
assets and liabilities |
|
|
(3,599 |
) |
|
|
(75 |
) |
|
Net cash provided by
(used in) operating activities |
|
|
(646 |
) |
|
|
11,966 |
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
|
|
|
|
Purchase
of short term investments |
|
|
— |
|
|
|
(99,459 |
) |
|
Maturities of short term investments |
|
|
80,000 |
|
|
|
95,000 |
|
|
Purchase
of Dealflo, net of cash acquired |
|
|
(53,065 |
) |
|
|
— |
|
|
Additions
to property and equipment |
|
|
(3,016 |
) |
|
|
(716 |
) |
|
Other |
|
|
— |
|
|
|
(40 |
) |
|
Net cash provided by
(used in) investing activities |
|
|
23,919 |
|
|
|
(5,215 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities: |
|
|
|
|
|
|
|
Tax
payments for restricted stock issuances |
|
|
(233 |
) |
|
|
(199 |
) |
|
Net cash used in
financing activities |
|
|
(233 |
) |
|
|
(199 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash |
|
|
(269 |
) |
|
|
505 |
|
|
|
|
|
|
|
|
|
|
Net increase in
cash |
|
|
22,771 |
|
|
|
7,057 |
|
|
Cash and equivalents,
beginning of period |
|
|
78,661 |
|
|
|
49,345 |
|
|
Cash and equivalents,
end of period |
|
$ |
101,432 |
|
|
$ |
56,402 |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by major products and services
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30, |
|
Six months ended
June 30, |
|
|
2018 |
|
2017* |
|
2018 |
|
2017* |
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardware products |
|
$ |
24,576 |
|
$ |
25,256 |
|
$ |
42,067 |
|
$ |
47,000 |
Software licenses |
|
|
10,410 |
|
|
9,216 |
|
|
26,413 |
|
|
19,032 |
Subscription |
|
|
3,818 |
|
|
2,496 |
|
|
6,788 |
|
|
4,611 |
Professional
services |
|
|
1,157 |
|
|
1,070 |
|
|
2,121 |
|
|
2,031 |
Maintenance, support
and other |
|
|
9,593 |
|
|
7,656 |
|
|
17,597 |
|
|
14,984 |
Total
Revenue |
|
$ |
49,554 |
|
$ |
45,694 |
|
$ |
94,986 |
|
$ |
87,658 |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Prior period amounts are presented under ASC 605 and ASC
985-605
Impact of ASC 606 Adoption
(unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2018 |
|
Six months ended June 30, 2018 |
|
|
As Reported |
|
Adjustments |
|
Balanceswithout theadoption ofTopic
606 |
|
As Reported |
|
Adjustments |
|
Balanceswithout theadoption ofTopic
606 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
and license |
|
$ |
34,986 |
|
|
$ |
2,372 |
|
|
$ |
37,358 |
|
|
$ |
68,480 |
|
|
$ |
(75 |
) |
|
$ |
68,405 |
|
Services
and other |
|
|
14,568 |
|
|
|
(1,693 |
) |
|
|
12,875 |
|
|
|
26,506 |
|
|
|
(2,391 |
) |
|
|
24,115 |
|
Total
revenue |
|
|
49,554 |
|
|
|
679 |
|
|
|
50,233 |
|
|
|
94,986 |
|
|
|
(2,466 |
) |
|
|
92,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
and license |
|
|
10,391 |
|
|
|
141 |
|
|
|
10,532 |
|
|
|
18,576 |
|
|
|
534 |
|
|
|
19,110 |
|
Services
and other |
|
|
3,182 |
|
|
|
— |
|
|
|
3,182 |
|
|
|
5,732 |
|
|
|
— |
|
|
|
5,732 |
|
Total
Cost of goods sold |
|
|
13,573 |
|
|
|
141 |
|
|
|
13,714 |
|
|
|
24,308 |
|
|
|
534 |
|
|
|
24,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
35,981 |
|
|
|
538 |
|
|
|
36,519 |
|
|
|
70,678 |
|
|
|
(3,000 |
) |
|
|
67,678 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and
marketing |
|
|
16,622 |
|
|
|
225 |
|
|
|
16,847 |
|
|
|
30,899 |
|
|
|
607 |
|
|
|
31,506 |
|
Total
operating costs |
|
|
38,592 |
|
|
|
225 |
|
|
|
38,817 |
|
|
|
71,641 |
|
|
|
607 |
|
|
|
72,248 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss) |
|
|
(2,611 |
) |
|
|
313 |
|
|
|
(2,298 |
) |
|
|
(963 |
) |
|
|
(3,607 |
) |
|
|
(4,570 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
taxes |
|
|
(872 |
) |
|
|
313 |
|
|
|
(559 |
) |
|
|
1,549 |
|
|
|
(3,607 |
) |
|
|
(2,058 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
tax |
|
|
130 |
|
|
|
(748 |
) |
|
|
(618 |
) |
|
|
759 |
|
|
|
(1,767 |
) |
|
|
(1,008 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,002 |
) |
|
$ |
1,061 |
|
|
$ |
59 |
|
|
$ |
790 |
|
|
$ |
(1,840 |
) |
|
$ |
(1,050 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic EPS |
|
$ |
(0.03 |
) |
|
|
|
|
$ |
0.00 |
|
|
$ |
0.02 |
|
|
|
|
|
$ |
(0.03 |
) |
Diluted EPS |
|
$ |
(0.03 |
) |
|
|
|
|
$ |
0.00 |
|
|
$ |
0.02 |
|
|
|
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures We
report financial results in accordance with GAAP. We also evaluate
our performance using certain non-GAAP operating metrics, namely
Adjusted EBITDA, non-GAAP Net Income and non-GAAP diluted EPS. Our
management believes that these measures provide useful supplemental
information regarding the performance of our business and
facilitates comparisons to our historical operating results. We
believe these non-GAAP operating metrics provide additional tools
for investors to use to compare our business with other companies
in the industry.
These non-GAAP measures are not measures of performance under
GAAP and should not be considered in isolation, as alternatives or
substitutes for the most directly comparable financial measures
calculated in accordance with GAAP. While we believe that these
non-GAAP measures are useful within the context described below,
they are in fact incomplete and are not a measure that should be
used to evaluate our full performance or our prospects. Such an
evaluation needs to consider all of the complexities associated
with our business including, but not limited to, how past actions
are affecting current results and how they may affect future
results, how we have chosen to finance the business, and how taxes
affect the final amounts that are or will be available to
shareholders as a return on their investment. Reconciliations of
the non-GAAP measures to the most directly comparable GAAP
financial measures are found below.
Adjusted EBITDA
We define Adjusted EBITDA as net income (loss) before interest,
taxes, depreciation, amortization, long-term incentive
compensation, and certain other non-recurring items, including
acquisition related costs, lease exit costs, and rebranding costs.
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 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 and long-term
incentive compensation, lease exit costs), or deal with the
structure or financing of the business (e.g., interest, acquisition
related costs, rebranding costs) or reflect the application of
regulations that are outside of the control of our management team
(e.g., taxes). Similarly, we find the comparison of our results to
those of our competitors is facilitated when we do not consider the
impact of these items.
Reconciliation of Net Income to
Adjusted EBITDA(in thousands,
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net income |
|
$ |
(1,002 |
) |
|
$ |
110 |
|
|
$ |
790 |
|
|
$ |
683 |
|
Interest
income, net |
|
|
(340 |
) |
|
|
(340 |
) |
|
|
(733 |
) |
|
|
(630 |
) |
Provision
for income taxes |
|
|
130 |
|
|
|
203 |
|
|
|
759 |
|
|
|
436 |
|
Depreciation, amortization / impairment of intangible assets |
|
|
3,273 |
|
|
|
2,625 |
|
|
|
6,020 |
|
|
|
5,258 |
|
Long-term
incentive compensation |
|
|
1,398 |
|
|
|
832 |
|
|
|
2,750 |
|
|
|
1,932 |
|
Acquisition related costs |
|
|
1,087 |
|
|
|
— |
|
|
|
1,087 |
|
|
|
— |
|
Rebranding costs* |
|
|
462 |
|
|
|
— |
|
|
|
522 |
|
|
|
— |
|
Lease
exit costs |
|
|
315 |
|
|
|
— |
|
|
|
315 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
5,323 |
|
|
$ |
3,430 |
|
|
$ |
11,510 |
|
|
$ |
7,679 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*The Company began excluding rebranding costs from Adjusted
EBITDA in the second quarter of 2018. Rebranding costs for the six
months ended June 30, 2018 include $60 of costs incurred during the
first quarter of 2018.
Non-GAAP Net Income & Non-GAAP Diluted
EPS
We define non-GAAP net income and non-GAAP diluted EPS, as net
income or EPS before the consideration of long-term incentive
compensation expenses, the amortization of intangible assets, 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 competitors.
Long-term incentive compensation for management and others is
directly tied to performance and this measure allows management to
see the relationship of the cost of incentives to the performance
of the business operations directly if such incentives are based on
that period’s performance. To the extent that such incentives are
based on performance over a period of several years, there may
be periods which have significant adjustments to the accruals in
the period but which relate to a longer period of time, and which
can make it difficult to assess the results of the business
operations in the current period. In addition, the Company’s
long-term incentives generally reflect the use of restricted stock
grants or cash awards while other companies may use different forms
of incentives the cost of which is determined on a different basis,
which makes a 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 exclude certain other non-recurring items including
acquisition related costs, rebranding costs, and lease exit costs
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 make a tax adjustment based on the above adjustments
resulting in an effective tax rate on a non-GAAP basis, which may
differ from the GAAP tax rate. We believe the effective tax rates
we use in the adjustment are reasonable estimates of the overall
tax rates for the Company under its global operating structure.
Reconciliation of Net Income to
Non-GAAP Net Income(in thousands
except per share data, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Six months ended |
|
|
June 30, |
|
June 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net income |
|
$ |
(1,002 |
) |
|
$ |
110 |
|
|
$ |
790 |
|
|
$ |
683 |
|
Long-term
incentive compensation |
|
|
1,398 |
|
|
|
832 |
|
|
|
2,750 |
|
|
|
1,932 |
|
Amortization / impairment of intangible assets |
|
|
2,744 |
|
|
|
2,201 |
|
|
|
4,945 |
|
|
|
4,399 |
|
Acquisition related costs |
|
|
1,087 |
|
|
|
— |
|
|
|
1,087 |
|
|
|
— |
|
Rebranding costs* |
|
|
462 |
|
|
|
— |
|
|
|
522 |
|
|
|
— |
|
Lease
exit costs |
|
|
315 |
|
|
|
— |
|
|
|
315 |
|
|
|
— |
|
Tax
impact of adjustments** |
|
|
(1,201 |
) |
|
|
(606 |
) |
|
|
(1,924 |
) |
|
|
(1,266 |
) |
Non-GAAP net
income |
|
$ |
3,803 |
|
|
$ |
2,537 |
|
|
$ |
8,485 |
|
|
$ |
5,748 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted
EPS |
|
$ |
0.09 |
|
|
$ |
0.06 |
|
|
$ |
0.21 |
|
|
$ |
0.15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares used to compute Non-GAAP diluted net earnings per
share |
|
|
40,045 |
|
|
|
39,842 |
|
|
|
40,015 |
|
|
|
39,843 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*The Company began excluding rebranding costs from Non-GAAP Net
Income in the second quarter of 2018. Rebranding costs for the six
months ended June 30, 2018 include $60 of costs incurred during the
first quarter of 2018. **The tax impact of adjustments is
calculated as 20% of the adjustments in all periods
Copyright© 2018 OneSpan North America Inc., all rights reserved.
OneSpan™, DIGIPASS® and CRONTO® are registered or unregistered
trademarks of OneSpan North America Inc. and/or OneSpan
International GmbH in the U.S. and other countries.
For more information contact:Joe MaxaM: +1-612‑247‑8592O:
+1-312-766-4009 joe.maxa@onespan.com
Source: OneSpan Inc.
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