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    OneSpan (OSPN)

    Q2 2024 Earnings Summary

    Reported on Apr 11, 2025 (After Market Close)
    Pre-Earnings Price$14.51Last close (Aug 1, 2024)
    Post-Earnings Price$15.53Open (Aug 2, 2024)
    Price Change
    $1.02(+7.03%)
    • Robust Sales Momentum: Management highlighted strong sales execution in Q&A, noting that the team closed significant deals—including a low-7-figure cross-sell deal—which helped drive net new ARR and outpaced the prior three quarters’ combined ARR growth.
    • Efficient Cost Management: Executives confirmed in Q&A that nearly all annualized cost savings targets have been met, with ongoing fine-tuning to further improve operating margins.
    • Improved Customer Retention: Discussions in Q&A underscored solid performance in net retention, driven by lower churn and effective expansion among existing customers, supporting recurring revenue stability.
    • Declining and Unpredictable Hardware Revenue: Q&A discussions highlighted that the hardware segment, which is a significant part of the business, is expected to decline in the second half and can be quite volatile due to seasonality and delivery timing.
    • Limited Room for Additional Cost Savings: Executives noted that nearly all targeted cost reductions have been achieved, leaving only incremental fine-tuning opportunities. This may limit the company’s ability to offset any future revenue challenges.
    • Uncertainty in Underlying Demand Versus Execution: The inability to clearly separate improvements from underlying demand signals raises concerns that current growth could be more a result of execution factors rather than sustainable market momentum.
    1. ARR Growth
      Q: Explain net new ARR and ARR jump?
      A: Management highlighted a low-7-figure cross-sell along with strong expansion and reduced churn that drove 15% ARR growth and effective sales performance.

    2. EBITDA & Guidance
      Q: Explain EBITDA and hardware guidance?
      A: They explained that while hardware revenues are lumpy due to scheduled deliveries, stronger margins and raised adjusted EBITDA guidance reflect efficient cost management.

    3. Cost Savings
      Q: Update on cost savings target?
      A: Management noted they nearly reached the $75M annualized cost savings target, expecting only minor refinements moving forward.

    4. Macro Environment
      Q: How is the macro environment?
      A: They described the economic landscape as modest—Europe isn’t booming but not in a deep recession—so execution remains the priority.

    5. Demand vs Execution
      Q: Demand versus execution tailwind?
      A: The team’s improved execution was key, though management couldn’t precisely separate its impact from underlying demand.

    6. Investment Costs
      Q: Any significant cost increases expected?
      A: They expect only small incremental investments in new products, keeping overall expenses well controlled.

    7. Future Investments
      Q: Plans for additional investments?
      A: The strategy remains focused on growing profitable software revenues with selective investments, especially for hardware product refreshes.

    Research analysts covering OneSpan.