Slide 1: Investor Presentation Q1 2021
Investor Presentation Q1 2021 May 4, 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: Important Additional Information and Where to Find It
Important Additional Information and Where to Find It OneSpan Inc. (the “Company”) has filed a definitive proxy statement on Schedule 14A and accompanying BLUE proxy card and other relevant documents with the SEC in connection with the solicitation of proxies from the Company’s stockholders in conne
Slide 4: Company Overview
Company Overview
Slide 5: 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 5
Slide 6: 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 6
Slide 7: Global Blue Chip Customer Base
Global Blue Chip Customer Base FINANCIAL SERVICES GOVERNMENT HEALTHCARE ENTERPRISE PROPRIETARY AND CONFIDENTIAL. ALL RIGHTS RESERVED 7
Slide 8: Long-Term Growth Drivers
Long-Term Growth Drivers FINANCIAL SERVICES MARKET Multibillion-dollar Total Addressable MarketI • Dynamic threat environment demands more Market growth1 sophisticated security tech Identity Verification / Agreement >30% yr • Competition in finserv requires more secure, more Automation transparent,
Slide 9: 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 10: 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 11: OneSpan's Strategic Evolution
OneSpan’s Strategic Evolution ADJACENCY EXPANSION FOCUS ON INNOVATION PLATFORM DEVELOPMENT RECURRING REVENUE TRANSTION TID LAUNCH; REBRAND; BIZ TRANSFORM 2018 2019 2020 2021 2022 2023 2024 2025 TID FIRST 29% ARR GROWTH RECURRING LAUNCH SOFTWARE REVENUE PROFITABLE TRANSITION MOSTLY GROWTH COMPLETE PR
Slide 12: 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 13: Q1 2021 Highlights and Full Year 2021 Outlook
Q1 2021 Highlights and Full Year 2021 Outlook
Slide 14: Q1 2021 Financial Highlights
Q1 2021 Financial Highlights $108M 29 % >50 % Annual Recurring ARR Growth Subscription and Revenue (ARR)1 Term ARR growth 119 % 47 % 87 % Dollar-Based Net Subscription of Software and Services Expansion (DBNE)2 revenue growth revenues are recurring 1 & 2 –AND PROPRIETARY SeeCONFIDENTIAL. Definitions
Slide 15: Recent Business Highlights and Announcements
Recent Business Highlights and Announcements OneSpan Sign Virtual Room Signed the largest e-signature Garry Capers appointed to Board of Launched – Enables FI’s to safely and contract in our history – Displaced Directors – Joins other highly qualified securely collaborate with customers to a major c
Slide 16: Q1 2021 – ARR Growth
Q1 2021 – ARR Growth Annual Recurring Revenue $108M $84M ARR Category Q1’21 Y/Y Growth $66M Total ARR 29% Subscription > 50% and Term ARR Q1'19 Q1'20 Q1'21 1OneSpan PROPRIETARY targets AND CONFIDENTIAL. ALL RIGHTS RESERVED 16
Slide 17: Q1 2021 – Record First Quarter Recurring Revenue
Q1 2021 – Record First Quarter Recurring Revenue Y/Y Recurring Revenue Comparison $29M $29M 12% $26M record first quarter growth in recurring recurring revenue revenue Recurring Revenue Q1’21 Y/Y Growth Comments Subscription 47% Strong demand Term -13% Record Q1 20201 Maintenance 14% Met Q1 expectat
Slide 18: Q1 2021 – Transition to Recurring S&S Revenue
Q1 2021 – Transition to Recurring S&S Revenue1 Y/Y S&S Revenue Comparison $37M $33M $11M $4M $33M 87 % Software & Services of Software & Services $29M revenue revenue is recurring – $26M record high Q1 2020 Q1 2021 Non-Recurring Software and Services Recurring Software & Services 1Expected to be mat
Slide 19: Q1 2021 – Total Revenue
Q1 2021 – Total Revenue Y/Y Revenue Comparison $56M 35% $51M $51M 65% 35% Total revenue of Total revenue is Software & Services 19% 8% 46% 57% 57% 10% of Total revenue is decline in recurring Hardware revenue Q1 2020 Q1 2021 Hardware Non-Recurring Software and Services Recurring Software & Services
Slide 20: FY 2021 Outlook
FY 2021 Outlook1 GUIDANCE METRICS FY21 GUIDANCE COMMENTS Total Revenue $215M – $225M 2H 2021 > 1H 2021 Recurring Revenue $120M – $125M 18% – 23% growth Strong growth in ARR Growth 22% - 26% Subscription and Term Gross margin impacted by transition Adjusted EBITDA Approximately break-even to recurrin
Slide 21: FY 2021E – ARR Growth
FY 2021E – ARR Growth Annual Recurring Revenue 22% – 26% Y/Y Growth1 2020 Y/Y 2021E Y/Y $104M ARR Category Growth Growth1 $80M Total ARR 29% 22% – 26% Subscription Continued > 50% and Term ARR strong growth 2019 2020 2021E 1OneSpan guidance and expected performance PROPRIETARY AND CONFIDENTIAL. ALL
Slide 22: FY 2021E – Recurring Revenue Growth
FY 2021E – Recurring Revenue Growth Y/Y Recurring Revenue $120M – $125M1 $102M Recurring 2020 Y/Y 2021E Y/Y Revenue Growth Growth1 $81M ~18% – 23% Total 26% growth Subscription 37% +40% growth and Term2 2019 2020 2021E 1OneSpan guidance and expected performance 2Combined subscription and term-based
Slide 23: FY 2021E – Transition to Recurring Revenue
FY 2021E – Transition to Recurring Revenue Software & Services Revenue <15%1 24% S&S Revenue 2020 2021E % Recurring 76% >85%1 >85%1 2021E Recurring revenue transition headwind 76% expected to be ~$15 - $20 million2 2020 2021E Non-Recurring Software and Services Recurring Software & Services 1OneSpan
Slide 24: FY 2021E – Total Revenue – Growth Driven by Recurring Revenue
FY 2021E – Total Revenue – Growth Driven by Recurring Revenue Total Revenue $216M $215M – $225M1 Revenue 2020 2021E1 $120M – Recurring S&S $102M $125M Perpetual to Non-recurring $32M term-license S&S transition Mid single-digit Hardware $82M y/y decline 2020 2021E 2021E Recurring revenue transition
Slide 25: OneSpan
O Onespan
Slide 26: Appendix
Appendix
Slide 27: 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 March 31 2019 2019 2019 2019 2020 2020 2020 2020 2021 Subscription $5.3 $5.3 $5.6 $6.1 $5.7 $6.1 $7.4 $8.5 $8.4 Term-based software licenses
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Reconciliation of Net Income to Adjusted EBITDA (in thousands, unaudited) Three months ended March 31, 2020 1 2021 Net income (loss) $ 4 $ (9,151) Interest income, net (207) (4) Provision (benefit) for income taxes 690 (501) Depreciation and amortization of intangible assets
Slide 29: 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 30: 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 financial measures, namely Adjusted EBITDA. Our management believes that this measure provides useful supplemental information regarding the performance of our bus
Slide 31: 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