Slide 1: Investor Presentation Q4 2020
Investor Presentation Q4 2020 February 23, 2021
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation 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, strategies relating to our business and the futu
Slide 3: Company Overview
Company Overview
Slide 4: OneSpan Protects The World From Digital Fraud
OneSpan Protects The World From Digital Fraud +60% Of Largest 100 Global Banks1 Transactions Identities $15B+ Reduced Fraud Losses2 Devices 1Source: S&P Global Market Intelligence 2OneSpan internal estimate PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED 4
Slide 5: Industry Leader in Securing Digital Banking
Industry Leader in Securing Digital Banking Simple Secure Digital Transaction Mobile Application Digital Channel Login Security Protection Account Opening Evolution of OneSpan Solutions PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED 5
Slide 6: Global Blue Chip Customer Base
Global Blue Chip Customer Base FINANCIAL SERVICES GOVERNMENT HEALTHCARE ENTERPRISE PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED 6
Slide 7: Long-Term Growth Drivers
Long-Term Growth Drivers FINANCIAL SERVICES MARKET Multibillion-dollar TAMI • Dynamic threat environment demands more Market growth1 sophisticated security tech Identity Verification / Agreement >30% yr • Competition in finserv requires more secure, more Automation transparent, more engaging mobile
Slide 8: New Solutions Expand Revenue Per Customer Opportunity
New Solutions Expand Revenue Per Customer Opportunity Identity Verification Cloud Authentication Risk Analytics E-Signature E-Signature Mobile App Protection Mobile App Protection Mobile App Protection Mobile Security Software Mobile Security Software Mobile Security Software Two-factor Hardware Tok
Slide 9: Rapid Transition to Software & Services Led Growth
Rapid Transition to Software & Services Led Growth Strong Double-Digit ARR ~120% Dollar-Based Net Target >85% of S&S Growth Expansion Rate Revenue Recurring by 2022 2015 2018 2020 2022 Target <50% Recurring1 <60% Recurring1 76% Recurring >85% Recurring 22% 25% 38% 50% 50% 62% 75% 78% Software & Serv
Slide 10: OneSpan's Strategic Evolution
OneSpan’s Strategic Evolution ADJACENCY EXPANSION INNOVATION LEADERSHIP ONESPAN DIGITAL ENTERPRISE DIGITAL ECOSYSTEM DEVELOPMENT COMPETE / PLATFORM DEV. GROW – TID LAUNCH – BIZ TRANSFORM STABILIZE 2017 2018 2019 2020 2021 2022 2023 2024 2025 TID FIRST SOFTWARE LAUNCH REVS > 50% CLOUD --------- ONLY
Slide 11: Foundations for Sustained Long-Term Growth
Foundations for Sustained Long-Term Growth LEADERSHIP IN SECURING DIGITAL IDENTITIES BUSINESS MODEL TRANSFORMATION High-Value Global Trusted Identity Strong Balance Sheet Customer Base Cloud-Based Platform Recurring Operational Revenue Transformation Transition Unique Value Mobile Security Strong Do
Slide 12: Q4 and Full Year 2020 Highlights
Q4 and Full Year 2020 Highlights
Slide 13: FY 2020 Financial Highlights
FY 2020 Financial Highlights $104M 29 % >50 % Annual Recurring ARR Growth Subscription and Revenue (ARR)1 Term ARR growth 120 % >40 % 66 % Dollar-Based Net growth in bookings of software revenues Expansion (DBNE)2 of recurring are recurring revenue contracts 1 & 2 –AND PROPRIETARY SeeCONFIDENTIAL. D
Slide 14: Annual Recurring Revenue
Annual Recurring Revenue Annual Recurring Revenue (in millions) FY 21 Y/Y1 ARR Category FY20 Y/Y Growth 22% - 26% Total ARR 29% $104 $80 Subscription > 50% and Term ARR FY 19 FY20 FY 21 1OneSpan PROPRIETARY targets AND CONFIDENTIAL. ALL RIGHTS RESERVED 14
Slide 15: Q4 2020 – Record Recurring Revenue
Q4 2020 – Record Recurring Revenue Y/Y Recurring Revenue Comparison Q4 2020 FY 2020 Highlights $30.4M $24.5M $30M 24% record recurring growth in recurring revenue revenue Q4 2019 Q4 2020 PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED 15
Slide 16: Q4 2020 – Accelerated Transition to Recurring Revenue
Q4 2020 – Accelerated Transition to Recurring Revenue Y/Y S&S Revenue Comparison Q4 2020 FY 2020 Highlights $38.9M $36.7M $14.4M $6.3M $37M 83 % Software & Services of Software & Services revenue revenue is recurring $30.4M $24.5M 35 % decline in Q4 2019 Q4 2020 hardware revenue Non-Recurring Softwa
Slide 17: Q4 2020 – S&S Record % of Total Revenue
Q4 2020 – S&S Record % of Total Revenue Y/Y Revenue Comparison Q4 2020 Highlights $71M 45% $53M $53M 69 % 31% Total revenue of total revenue is Software & Services 20% 12% 57% 49% 57% 35% Q4 2019 Q4 2020 of total revenue is decline in recurring hardware revenue Hardware Non-Recurring Software and Se
Slide 18: FY 2020 – Record Recurring Revenue
FY 2020 – Record Recurring Revenue Y/Y Recurring Revenue Comparison FY 2020 FY Highlights 2020 $102M 26% $102M $81M record recurring growth in recurring revenue revenue 2019 2020 PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED 18
Slide 19: FY 2020 – Transition to Recurring Contracts Accelerated
FY 2020 – Transition to Recurring Contracts Accelerated Y/Y S&S Revenue Comparison FY 2020 FY Highlights 2020 $134M $126M $46M $32M $134M 76% Software & Services of Software & Services revenue revenue recurring $102M $81M 35 % decline in 2019 2020 hardware revenue Non-Recurring Software and Services
Slide 20: FY 2020 – S&S Record % of Total Revenue
FY 2020 – S&S Record % of Total Revenue Y/Y Revenue Comparison FY 2020 FY Highlights 2020 $253M 50% $216M 38% $216M 62 % total revenue of total revenue is Software & Services 15% 18% 32% 47% 47 % 35 % 2019 2020 of total revenue is decline in recurring hardware revenue Hardware Non-Recurring Software
Slide 21: Increasing Penetration of Cloud Solutions
Increasing Penetration of Cloud Solutions Product Penetration – December 31, 20201 100% 90% 80% 80% 72% 70% 63% 60% 50% 40% Cloud-based Security 30% penetration up 50% 24% Q/Q 20% 12% 10% 0% Authentication Two-Factor Mobile Security E-Signature Cloud-based Software Tokens Security 1OneSpan PROPRIETA
Slide 22: FY 2021 Outlook
FY 2021 Outlook GUIDANCE METRICS FY21 GUIDANCE COMMENTS Strong growth in ARR Growth 22% - 26% Subscription and Term Recurring Revenue $120M – $125M 18% – 23% growth Total Revenue $215M – $225M 2H 2021 > 1H 2021 GM impacted by transition to Adjusted EBITDA Approximately break-even recurring; investin
Slide 23: OneSpan
O Onespan
Slide 24: Appendix
Appendix
Slide 25: Revenue
Revenue Revenue by major products and services Three months ended, (in millions, unaudited) March 31 June 30 Sept. 30 Dec. 31 March 31 June 30 Sept. 30 Dec. 31 2019 2019 2019 2019 2020 2020 2020 2020 Subscription $5.3 $5.3 $5.6 $6.1 $5.7 $6.1 $7.4 $8.5 Term-based software licenses 0.6 2.0 7.1 6.4 9.
Slide 26: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Three months ended Twelve months ended December 31, December 31, 2019 2020 2019 2020 Net income (loss) $ 4,585 $ (1,756) $ 7,864 $ (5,455) Interest income, net (315) (15) (747) (404) Provision for incom
Slide 27: Definitions
Definitions 1 - ARR is calculated as the annualized value of our customer recurring contracts with a term of at least one-year, as of the measuring date. These include subscription, term-based license, and maintenance contracts and exclude one-time fees. To the extent that we are negotiating a renew
Slide 28: Non-GAAP Financial Measures
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 in
Slide 29: Copyright and Trademarks
Copyright and Trademarks Copyright© 2021 OneSpan North America Inc., all rights reserved. OneSpan™, the “O” logo, “BE BOLD. BE SECURE.”™, DIGIPASS® and CRONTO® are registered or unregistered trademarks of OneSpan North America Inc. or its affiliates in the U.S. and other countries. Any other tradema