0001628280-23-015809 | 10-Q | XBRL Viewer

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets
Cash and cash equivalents	$ 106,519	$ 96,167
Restricted cash	1,017	1,208
Short-term investments	0	2,328
Accounts receivable, net of allowances of $1,676 in 2023 and $1,600 in 2022	32,285	65,132
Inventories, net	15,640	12,054
Prepaid expenses	7,938	6,222
Contract assets	4,256	4,520
Other current assets	8,603	10,757
Total current assets	176,259	198,387
Property and equipment, net	15,095	12,681
Operating lease right-of-use assets	7,635	8,022
Goodwill	92,243	90,514
Intangible assets, net of accumulated amortization	13,323	12,482
Deferred income taxes	1,919	1,901
Other assets	10,832	11,095
Total assets	317,306	335,082
Current liabilities
Accounts payable	17,255	17,357
Deferred revenue	54,072	64,637
Accrued wages and payroll taxes	14,163	18,345
Short-term income taxes payable	1,932	2,438
Other accrued expenses	9,309	7,664
Deferred compensation	222	373
Total current liabilities	96,953	110,814
Long-term deferred revenue	5,715	6,269
Long-term lease liabilities	8,093	8,442
Long-term income taxes payable	2,565	2,565
Deferred income taxes	1,210	1,197
Other long-term liabilities	3,439	2,484
Total liabilities	117,975	131,771
Stockholders' equity
Preferred stock: 500 shares authorized, none issued and outstanding at March 31, 2023 and December 31, 2022	0	0
Common stock: $.001 par value per share, 75,000 shares authorized; 40,987 and 40,764 shares issued; 39,949 and 39,726 shares outstanding at March 31, 2023 and December 31, 2022, respectively	40	40
Additional paid-in capital	110,019	107,305
Treasury stock, at cost, 1,038 shares outstanding at March 31, 2023 and December 31, 2022	(18,222)	(18,222)
Retained earnings	120,382	128,738
Accumulated other comprehensive loss	(12,888)	(14,550)
Total stockholders' equity	199,331	203,311
Total liabilities and stockholders' equity	$ 317,306	$ 335,082

Inventories, net (Tables)

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Summary of inventories, net

Inventories, net consist of the following:


	March 31, 2023		December 31, 2022
(In thousands)
Component parts	$	8,760	$	6,762
Work-in-process and finished goods	6,880		5,292
Total	$	15,640	$	12,054

Earnings per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Details of earnings per share calculations

The details of the earnings per share calculations for the three months ended March 31, 2023 and 2022 are as follows:


	Three Months Ended March 31,
(In thousands, except per share data)	2023		2022
Net loss	$	(8,356)	$	5,214
Weighted average common shares outstanding:
Basic	40,057		39,577
Incremental shares with dilutive effect:
Restricted stock awards	—		110
Diluted	40,057		39,687

Net loss per share:
Basic	$	(0.21)	$	0.13
Diluted	$	(0.21)	$	0.13

Segment Information - Reconciliation of the disaggregated revenues to revenues from our two operating segments (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($) segment
Segment Information
Number of operating segments \| segment		2
Revenue	$ 57,607	$ 52,447
Subscription
Segment Information
Revenue	29,956	23,269
Professional services and other
Segment Information
Revenue	$ 1,624	$ 1,881
Percent of total	2.00%	2.00%
Digital Agreements
Segment Information
Revenue	$ 11,552	$ 13,301
Digital Agreements \| Subscription
Segment Information
Revenue	10,348	11,671
Digital Agreements \| Maintenance and support
Segment Information
Revenue	996	1,352
Digital Agreements \| Professional services and other
Segment Information
Revenue	208	278
Digital Agreements \| Hardware products
Segment Information
Revenue	0	0
Security Solutions
Segment Information
Revenue	46,055	39,146
Security Solutions \| Subscription
Segment Information
Revenue	19,608	11,598
Security Solutions \| Maintenance and support
Segment Information
Revenue	10,165	10,594
Security Solutions \| Professional services and other
Segment Information
Revenue	1,416	1,603
Security Solutions \| Hardware products
Segment Information
Revenue	$ 14,866	$ 15,351

Segment Information - Reconciliation of segment information to the totals reported in the accompanying consolidated financial statements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Segment Information
Revenue	$ 57,607	$ 52,447
Gross profit	$ 39,286	$ 36,678
Gross margin	68.00%	70.00%
Operating income (loss)	$ (8,130)	$ (9,243)
Corporate operating expenses not allocated at the segment level	(47,416)	(45,921)
Operating loss	(8,130)	(9,243)
Interest income (expense), net	503	(17)
Other (expense) income, net	(40)	15,647
Income (loss) before income taxes	(7,667)	6,387
Digital Agreements
Segment Information
Revenue	11,552	13,301
Gross profit	$ 8,448	$ 10,286
Gross margin	73.00%	77.00%
Operating income (loss)	$ (6,033)	$ 1,125
Operating loss	(6,033)	1,125
Security Solutions
Segment Information
Revenue	46,055	39,146
Gross profit	$ 30,838	$ 26,392
Gross margin	67.00%	67.00%
Operating income (loss)	$ 15,631	$ 7,689
Operating loss	15,631	7,689
Operating Segments
Segment Information
Operating income (loss)	9,598	8,814
Corporate operating expenses not allocated at the segment level	(17,728)	(18,057)
Operating loss	$ 9,598	$ 8,814

Cover Page - shares	3 Months Ended
Cover Page - shares	Mar. 31, 2023	Apr. 28, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	000-24389
Entity Registrant Name	OneSpan Inc.
Entity Tax Identification Number	36-4169320
Entity Address, Address Line One	121 West Wacker Drive, Suite 2050
Entity Address, City or Town	Chicago
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	60601
City Area Code	312
Local Phone Number	766-4001
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	OSPN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		39,949,527
Entity Central Index Key	0001044777
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Incorporation, State or Country Code	DE

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue
Total revenue	$ 57,607	$ 52,447
Cost of goods sold
Total cost of goods sold	18,321	15,769
Gross profit	39,286	36,678
Operating costs
Sales and marketing	20,011	15,000
Research and development	9,463	12,096
General and administrative	16,653	14,784
Restructuring and other related charges	706	2,659
Amortization of intangible assets	583	1,382
Total operating costs	47,416	45,921
Operating loss	(8,130)	(9,243)
Interest income (expense), net	503	(17)
Other (expense) income, net	(40)	15,647
Income (loss) before income taxes	(7,667)	6,387
Provision for income taxes	689	1,173
Net income (loss)	$ (8,356)	$ 5,214
Net loss per share
Basic (in dollars per share)	$ (0.21)	$ 0.13
Diluted (in dollars per share)	$ (0.21)	$ 0.13
Weighted average common shares outstanding
Basic (in shares)	40,057	39,577
Diluted (in shares)	40,057	39,687
Product and license
Revenue
Total revenue	$ 33,146	$ 29,485
Cost of goods sold
Total cost of goods sold	11,288	9,079
Services and other
Revenue
Total revenue	24,461	22,962
Cost of goods sold
Total cost of goods sold	$ 7,033	$ 6,690

Fair Value Measurements - Dealflo (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Fair Value Disclosures [Abstract]
Impairment of intangible assets	$ 0	$ 0

Business Acquisitions - Narrative (Details) - ProvenDB $ in Thousands	Feb. 22, 2023 USD ($)
Asset Acquisition [Line Items]
Total consideration	$ 2,000
Cash payments for acquisition	1,800
Aggregate amount held for net working capital adjustments	200
Digital Agreements
Asset Acquisition [Line Items]
Total consideration	$ 2,000

Goodwill (Tables)

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill activity

The following table presents the changes in goodwill during the three months ended March 31, 2023:


	Digital Agreements		Security Solutions		Total
(In thousands)
Net balance at December 31, 2022	$	19,732	$	70,782	$	90,514
Foreign currency exchange rate effect	247		882		1,129
Acquisition during the period (1)	$	600	$	—	$	600
Net balance at March 31, 2023	$	20,579	$	71,664	$	92,243

(1) Represents goodwill recorded in conjunction with the acquisition of substantially all the assets of Southbank Software Pty Ltd. during the three months ended March 31, 2023. See Note 17, Business Acquisitions, for additional information.

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=121556970&loc=d3e13816-109267

+ Details

Property and Equipment, net (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Total	$ 35,803		$ 32,645
Accumulated depreciation	(20,708)		(19,964)
Property and equipment, net	15,095		12,681
Depreciation expense	700	$ 700
Office equipment and software
Property, Plant and Equipment [Line Items]
Total	14,765		14,451
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total	9,970		9,927
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total	4,285		4,260
Capitalized software
Property, Plant and Equipment [Line Items]
Total	$ 6,783		$ 4,007

Description of the Company and Basis of Presentation (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Loss from foreign currency transactions	$ 0.2	$ 0.4

Restructuring Plan and Other Related Charges (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) employee	Mar. 31, 2022 USD ($)
Restructuring Plan
Restructuring and other related charges	$ 706	$ 2,659
Number of employees \| employee	100
Restructuring liability, current	$ 2,800
Restructuring liability, noncurrent	1,000
Digital Agreements
Restructuring Plan
Restructuring and other related charges	300	200
Security Solutions
Restructuring Plan
Restructuring and other related charges	$ 300	$ 1,000

Property and Equipment, net

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Property and Equipment, net

The following table presents the major classes of property and equipment, net, as of March 31, 2023 and December 31, 2022:


(In thousands)	March 31, 2023		December 31, 2022
Office equipment and software	$	14,765	$	14,451
Leasehold improvements	9,970		9,927
Furniture and fixtures	4,285		4,260
Capitalized software	6,783		4,007
Total	35,803		32,645
Accumulated depreciation	(20,708)		(19,964)
Property and equipment, net	$	15,095	$	12,681

Depreciation expense was $0.7 million for both the three months ended March 31, 2023 and 2022.

Long-Term Compensation Plan and Stock Based Compensation (Details) - 2019 Omnibus Incentive Plan $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) shares
Restricted Stock, subject to time-based criteria
Plan information
Stock based compensation awards issued shares (in shares) \| shares	1,000,000
Restricted stock awards \| $	$ 12.9
Restricted Stock, subject to time-based criteria \| Minimum
Plan information
Vesting period (in years)	1 year
Restricted Stock, subject to time-based criteria \| Maximum
Plan information
Vesting period (in years)	3 years
Restricted Stock, subject to future performance criteria
Plan information
Stock based compensation awards issued shares (in shares) \| shares	900,000
Restricted stock awards \| $	$ 12.8
Vesting period (in years)	3 years

Restructuring Plan and Other Related Charges - Operating costs (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Restructuring Reserve [Roll Forward]
Beginning Balance	$ 3,596
Additions	706
Payments	(477)
Ending Balance	$ 3,825

Business Acquisitions

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Business Acquisitions

On February 22, 2023, the Company acquired substantially all of the assets of the ProvenDB business of Southbank Software Pty Ltd. ("ProvenDB") under the terms of an asset purchase agreement. Pursuant to the terms of the asset purchase agreement, the total consideration for the acquisition was $2.0 million, of which $1.8 million was paid in cash at closing. The remaining $0.2 million was held back as security for any indemnity claims made by the Company, and to the extent not used to satisfy such claims, will be paid to the seller 12 months after the acquisition date.

ProvenDB is a developer of secure storage that leverages blockchain technology in order to prevent data tampering or alteration of documents. The technology acquired in the acquisition is expected to provide a foundational architecture for future blockhain-based digital solutions, including secure storage.

As of March 31, 2023, the Company is still determining the purchase price allocation. A preliminary purchase price allocation of the fair value of the assets acquired and liabilities assumed is included in the table below. These estimates are subject to change and may result in an increase in goodwill with regard to our estimates of the acquired assets and assumed liabilities during the measurement period, which may extend up to one year from the acquisition date.

ProvenDB is allocated entirely to our Digital Agreements reportable operating segment.


(In thousands)	As of Date of Opening Balance Sheet
Net assets acquired:
Acquired technology	$	1,447
Accrued wages and payroll taxes	(47)
Goodwill	600
Total net assets acquired	$	2,000

Consideration	$	2,000

The financial impact of this acquisition was not material to our condensed consolidated financial statements, and therefore, we have not presented pro forma results of operations for the acquisition.

Restructuring Plan and Other Related Charges

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Restructuring Plan and Other Related Charges

Restructuring and Other Related Charges

In December 2021, the Company's Board of Directors (the "Board") approved a restructuring plan (“Plan”) designed to advance the Company’s operating model, streamline its business, improve efficiency, and enhance its capital resources. As part of the first phase of the Plan, the Company reduced headcount by eliminating positions in certain areas of its organization. The first phase of the Plan began and was substantially completed during the three months ended March 31, 2022.

In May 2022, the Board approved additional actions related to the Plan through the year ending December 31, 2025. This second phase of the Plan consists primarily of headcount-related actions and is designed to continue to advance the same objectives as the first phase of the Plan.

In connection with the Plan, the Company incurred severance, retention pay, and related benefit costs. The Company recorded $0.7 million and $2.7 million in “Restructuring and other related charges” in the condensed consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, expense of $0.3 million and $0.3 million was recognized in Digital Agreements operating income and Security Solutions operating income, respectively. Expense of $0.2 million and $1.0 million was recognized in Digital Agreements operating income and Security Solutions operating income, respectively during the three months ended March 31, 2022.

In total, there were approximately 100 employees, across multiple functions, whose positions were made redundant.

The table below sets forth the changes in the carrying amount of the restructuring charge liability for the three months ended March 31, 2023.


	Restructuring Charge Liability
(In thousands)
Balance as of December 31, 2022	$	3,596
Additions	706
Payments	(477)
Balance as of March 31, 2023	$	3,825

The $2.8 million current portion of the restructuring charge liability at March 31, 2023 is included in “Accrued wages and payroll taxes” in the condensed consolidated balance sheet and is expected to be paid within the next 12 months. The $1.0 non-current portion is included in "Other long-term liabilities" in the condensed consolidated balance sheet and is expected to be paid within the next 24 months.

Segment Information - Narrative (Details) $ in Thousands	3 Months Ended
Segment Information - Narrative (Details) $ in Thousands	Mar. 31, 2023 USD ($)	Mar. 31, 2022 USD ($) segment
Segment Information
Amortization of intangible assets	$ 583	$ 1,382
Number of operating segments \| segment		2
Digital Agreements
Segment Information
Amortization of intangible assets	600	$ 600
Security Solutions
Segment Information
Amortization of intangible assets	$ 0	$ 800

Leases (Details) - USD ($) $ in Thousands	3 Months Ended
Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Mar. 31, 2022
Lessee, Lease, Description [Line Items]
Total net operating lease costs	$ 773	$ 795
Other information related to operating leases
Weighted average remaining lease term	5 years 7 months 6 days
Weighted-average discount rate	5.00%
Cash payments to settle a lease liability reported in cash flows	$ 700
Right-of-use assets obtained in exchange for new lease liabilities	100
Building rent
Lessee, Lease, Description [Line Items]
Total net operating lease costs	523	575
Automobile rentals
Lessee, Lease, Description [Line Items]
Total net operating lease costs	$ 250	$ 220

Allowance for Credit Losses

3 Months Ended

Mar. 31, 2023

Credit Loss [Abstract]

Allowance for Credit Losses

The changes in the allowance for credit losses during the three months ended March 31, 2023 were as follows:


(In thousands)
Balance at December 31, 2022	$	1,600
Provision	212
Write-offs	(136)

Balance at March 31, 2023	$	1,676

- Definition

The entire disclosure for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security.

+ References + Details

Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

The following tables summarize the Company’s financial assets by level in the fair value hierarchy, which are measured at fair value on a recurring basis, as of March 31, 2023 and December 31, 2022:


	Fair Value Measurement at Reporting Date Using
(In thousands)	March 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Treasury Bills	$	17,577	—	$	17,577	—
Commercial Paper	$	14,479	—	$	14,479	—
U.S. Treasury Notes	$	3,991	—	$	3,991	—
Money Market Funds	$	1,855	—	$	1,855	—


	Fair Value Measurement at Reporting Date Using
(In thousands)	December 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money Market Funds	$	28,388	—	$	28,388	—
Commercial Paper	$	6,743	—	$	6,743	—
Corporate Notes / Bonds	$	2,328	—	$	2,328	—

The Company classifies its investments in debt securities as available-for-sale. The Company reviews available-for-sale debt securities for impairments related to losses and other factors each quarter. The unrealized gains and losses on the available-for-sale debt securities were not material as of March 31, 2023 and December 31, 2022.

The Company did not have any transfers of assets between Level 1 and Level 2 or Level 3 of the fair value hierarchy during three months ended March 31, 2023. Also, the Company did not have any financial liabilities that are measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.

The Company’s non-financial assets and liabilities, which include goodwill and long-lived assets held and used, are not required to be measured at fair value on a recurring basis. However, if certain triggering events occur, or if an annual impairment test is required, the Company would evaluate the non-financial assets and liabilities for impairment. If an impairment was to occur, the asset or liability would be recorded at its estimated fair value. No impairment was recorded during the three months ended March 31, 2023 and 2022.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities:
Net loss	$ (8,356)	$ 5,214
Adjustments to reconcile net loss from operations to net cash used in operations:
Depreciation and amortization of intangible assets	1,319	2,097
Gain on sale of equity-method investment	0	(14,810)
Deferred tax benefit	8	794
Stock-based compensation	3,812	1,360
Changes in operating assets and liabilities:
Accounts receivable	33,134	20,559
Inventories, net	(3,361)	(260)
Contract assets	278	(904)
Accounts payable	(273)	(941)
Income taxes payable	(512)	(332)
Accrued expenses	(1,963)	(2,723)
Deferred compensation	(151)	(797)
Deferred revenue	(11,390)	(5,156)
Other assets and liabilities	692	(441)
Net cash provided by (used in) operating activities	13,237	3,660
Cash flows from investing activities:
Purchase of short-term investments	0	(15,812)
Maturities of short-term investments	2,330	14,500
Additions to property and equipment	(3,069)	(272)
Additions to intangible assets	(7)	(7)
Cash paid for acquisition of business	(1,800)	0
Sale of equity-method investment	0	18,874
Net cash (used in) provided by investing activities	(2,546)	17,283
Cash flows from financing activities:
Tax payments for restricted stock issuances	(1,098)	(635)
Net cash used in financing activities	(1,098)	(635)
Effect of exchange rate changes on cash	569	(45)
Net increase in cash	10,162	20,263
Cash, cash equivalents, and restricted cash, beginning of period	97,374	64,228
Cash, cash equivalents, and restricted cash, end of period	$ 107,536	$ 84,491

Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2023

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Schedule of intangible asset activity

Intangible assets as of March 31, 2023 and December 31, 2022 consist of the following:


		As of March 31, 2023				As of December 31, 2022
(In thousands)	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Acquired technology	3 to 7	$	43,590	$	42,057	$	42,022	$	41,894
Customer relationships	5 to 12	34,551		24,051		34,386		23,323
Patents, trademarks, and other	10 to 20	13,538		12,248		13,518		12,227
Total		$	91,679	$	78,356	$	89,926	$	77,444

Long-Term Compensation Plan and Stock Based Compensation - Allocation of Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Compensation expense
Stock-based compensation	$ 3,812	$ 1,360
Other long-term incentive plan compensation	111	(136)
Total compensation	$ 3,923	$ 1,224

Allowance for Credit Losses (Tables)

3 Months Ended

Mar. 31, 2023

Credit Loss [Abstract]

Schedule change in the allowance for credit losses

The changes in the allowance for credit losses during the three months ended March 31, 2023 were as follows:


(In thousands)
Balance at December 31, 2022	$	1,600
Provision	212
Write-offs	(136)

Balance at March 31, 2023	$	1,676

Business Acquisitions - Allocation (Details) - USD ($) $ in Thousands	Feb. 22, 2023	Mar. 31, 2023	Dec. 31, 2022
Asset Acquisition [Line Items]
Goodwill		$ 92,243	$ 90,514
Digital Agreements
Asset Acquisition [Line Items]
Goodwill		$ 20,579	$ 19,732
ProvenDB
Asset Acquisition [Line Items]
Consideration	$ 2,000
ProvenDB \| Digital Agreements
Asset Acquisition [Line Items]
Acquired technology	1,447
Accrued wages and payroll taxes	(47)
Goodwill	600
Total net assets acquired	2,000
Consideration	$ 2,000

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Long-Term Compensation Plan and Stock Based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Summary of compensation expense

The following table presents stock-based compensation expense and other long-term incentive plan compensation expense for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,
	2023		2022
(In thousands)
Stock-based compensation	$	3,812	$	1,360
Other long-term incentive plan compensation	111		(136)
Total compensation	$	3,923	$	1,224

Segment Information

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Segment Information

Segments are defined as components of a company that engage in business activities from which they may earn revenues and incur expenses, and for which separate financial information is available and is evaluated regularly by the chief operating decision maker (CODM), in deciding how to allocate resources and in assessing performance. The Company’s CODM is its Chief Executive Officer.

•Digital Agreements. Digital Agreements consists of solutions that enable our clients to secure and automate business processes associated with their digital agreement and customer transaction lifecycles that require consent, non-repudiation and compliance. These solutions, which are largely cloud-based, include our OneSpan Sign e-signature solution and our OneSpan Notary and Virtual Room solutions. As our transformation plan progresses, we expect to include other cloud-based security modules associated with the secure transaction lifecycle of identity verification, authentication, virtual interactions and transactions, and secure digital storage in the Digital Agreements segment. This segment also includes costs attributable to our transaction cloud platform.

•Security Solutions. Security Solutions consists of our broad portfolio of software products and/or software development kits (SDKs) that are used to build applications designed to defend against attacks on digital transactions across online environments, devices and applications. These solutions, which are largely on-premises software products, include identity verification, multi-factor authentication and transaction signing,

such as mobile application security, mobile software tokens, and Digipass authenticators that are not cloud-connected devices.

Segment operating income consists of the revenues generated by a segment, less the direct costs of revenue, sales and marketing, research and development expenses, amortization expense, and restructuring and other related charges that are incurred directly by a segment. The Company recorded $0.6 million of amortization expense in Digital Agreements operating income during the three months ended March 31, 2023 and 2022. The Company recorded $0 and $0.8 million of amortization expense in Security Solutions operating income during the three months ended March 31, 2023 and 2022, respectively. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment.

Prior to 2023, the company allocated certain cost of goods sold and operating expenses to its two reportable segments using a direct cost allocation and an allocation based on revenue split between the segments. Beginning in the first quarter of 2023, and as a result of the ongoing strategic transformation, the Company refined its allocation methodology to better align internal and external costs more directly to where the employee efforts are being spent on each segment moving forward. As a result of this change, there was an increase in cost of goods sold and operating expenses being allocated to the Digital Agreements segment, which better aligns with the investments the Company is making to grow that segment as compared to its Security Solutions segment.

The tables below set forth information about the Company’s reportable operating segments for the three months ended March 31, 2023 and 2022, along with the items necessary to reconcile the segment information to the totals reported in the accompanying condensed consolidated financial statements.


	Three Months Ended March 31,
(In thousands, except percentages)	2023			2022
Digital Agreements
Revenue	$	11,552		$	13,301
Gross profit	$	8,448		$	10,286
Gross margin	73		%	77		%
Operating income (loss)	$	(6,033)		$	1,125

Security Solutions
Revenue	$	46,055		$	39,146
Gross profit	$	30,838		$	26,392
Gross margin	67		%	67		%
Operating income	$	15,631		$	7,689

Total Company:
Revenue	$	57,607		$	52,447
Gross profit	$	39,286		$	36,678
Gross margin	68		%	70		%

Statements of Operations reconciliation:
Segment operating income	$	9,598		$	8,814
Corporate operating expenses not allocated at the segment level	(17,728)			(18,057)
Operating loss	$	(8,130)		$	(9,243)
Interest income (expense), net	503			(17)
Other (expense) income, net	(40)			15,647
Income (loss) before income taxes	$	(7,667)		$	6,387

The following tables illustrate the disaggregation of revenues by category and services, including a reconciliation of the disaggregated revenues to revenues from the Company’s two reportable operating segments for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,
	2023				2022
	Digital Agreements		Security Solutions		Digital Agreements		Security Solutions
(In thousands)
Subscription	$	10,348	$	19,608	$	11,671	$	11,598
Maintenance and support	996		10,165		1,352		10,594
Professional services and other (1)	208		1,416		278		1,603
Hardware products	—		14,866		—		15,351
Total Revenue	$	11,552	$	46,055	$	13,301	$	39,146

(1) Professional services and other includes perpetual software licenses revenue, which was less than 2% of total
revenue for the three months ended March 31, 2023 and 2022.

The Company allocates goodwill by reporting unit, in accordance with Accounting Standards Codification (ASC) 350 – Goodwill and Other. Asset information by segment is not reported to or reviewed by the CODM to allocate resources, and therefore, the Company has not disclosed asset information for the segments.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details

Goodwill - Goodwill Activity (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Goodwill [Roll Forward]
Net balance at beginning of period	$ 90,514
Foreign currency exchange rate effect	1,129
Additions during the period	600
Net balance at end of period	92,243
Goodwill impairment	0	$ 0
Digital Agreements
Goodwill [Roll Forward]
Net balance at beginning of period	19,732
Foreign currency exchange rate effect	247
Additions during the period	600
Net balance at end of period	20,579
Security Solutions
Goodwill [Roll Forward]
Net balance at beginning of period	70,782
Foreign currency exchange rate effect	882
Additions during the period	0
Net balance at end of period	$ 71,664

- Definition

+ References + Details

Allowance for Credit Losses (Details) $ in Thousands	3 Months Ended
Allowance for Credit Losses (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Changes in the allowance for credit losses
Beginning Balance	$ 1,600
Provision	212
Write-offs	(136)
Ending Balance	$ 1,676

- Definition

Amount of allowance for credit loss on financing receivable. Excludes allowance for financing receivable covered under loss sharing agreement.

+ References + Details

Revenue from Contracts with Customers - Performance Obligations (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Revenue
Future revenue related to current unsatisfied performance obligations	$ 66,156
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01
Revenue
Future revenue related to current unsatisfied performance obligations	$ 28,964
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01
Revenue
Future revenue related to current unsatisfied performance obligations	$ 21,958
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01
Revenue
Future revenue related to current unsatisfied performance obligations	$ 9,470
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period	12 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-01-01
Revenue
Future revenue related to current unsatisfied performance obligations	$ 5,764
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Period

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (8,356)	$ 5,214
Other comprehensive loss
Cumulative translation adjustment, net of tax	1,715	(2,020)
Pension adjustment, net of tax	(60)	(25)
Unrealized gains (loss) on available-for-sale securities	7	(79)
Comprehensive loss	$ (6,694)	$ 3,090

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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-Subparagraph (SX 210.13-01(a)(5))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442526-122756

Reference 32: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(B))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(A))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 34: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 35: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

+ Details

Earnings per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share Basic earnings per share is based on the weighted average number of shares outstanding and excludes the dilutive effect of common stock equivalents. Diluted earnings per share is based on the weighted average number of shares outstanding and includes the dilutive effect of common stock equivalents to the extent they are not anti-dilutive. Because the Company was in a net loss position for the three months ended March 31, 2023, diluted net loss per share for the period excludes the effects of common stock equivalents, which are anti-dilutive.

The details of the earnings per share calculations for the three months ended March 31, 2023 and 2022 are as follows:


	Three Months Ended March 31,
(In thousands, except per share data)	2023		2022
Net loss	$	(8,356)	$	5,214
Weighted average common shares outstanding:
Basic	40,057		39,577
Incremental shares with dilutive effect:
Restricted stock awards	—		110
Diluted	40,057		39,687

Net loss per share:
Basic	$	(0.21)	$	0.13
Diluted	$	(0.21)	$	0.13

Goodwill

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table presents the changes in goodwill during the three months ended March 31, 2023:


	Digital Agreements		Security Solutions		Total
(In thousands)
Net balance at December 31, 2022	$	19,732	$	70,782	$	90,514
Foreign currency exchange rate effect	247		882		1,129
Acquisition during the period (1)	$	600	$	—	$	600
Net balance at March 31, 2023	$	20,579	$	71,664	$	92,243

No impairment of goodwill was recorded during the three months ended March 31, 2023 and 2022.

Summary of Significant Accounting Policies (Policies)	3 Months Ended
Summary of Significant Accounting Policies (Policies)	Mar. 31, 2023
Accounting Policies [Abstract]
Description of the Company	Description of the Company OneSpan helps organizations accelerate digital transformations by enabling secure, compliant, and easy customer agreements and transaction experiences. The Company is a global leader in providing high-assurance identity and authentication security as well as enterprise-grade electronic signature (e-signature) solutions for use cases ranging from simple transactions to workflows that are complex or require higher levels of security. The Company’s solutions help its clients ensure the integrity of the people and records associated with digital agreements, transactions, and interactions in industries including banking, financial services, healthcare, and professional services. The Company offers a portfolio of products and services across identity verification, authentication, virtual interactions and transactions, and secure digital storage. OneSpan has operations in Austria, Australia, Belgium, Canada, China, France, Japan, The Netherlands, Singapore, Switzerland, the United Arab Emirates, the United Kingdom (U.K), and the United States (U.S.).
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of OneSpan and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results of the interim periods presented. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Business Transformation In May 2022, the Company announced a three-year strategic transformation plan that began on January 1, 2023. The Company expects this transformation plan will enable it to build on its strong solution portfolio and market position, enhance its enterprise go-to-market strategy, accelerate revenue growth, and drive efficiencies to support margin expansion and increased profitability. In conjunction with the strategic transformation plan and to enable a more efficient capital deployment model, effective with the quarter ended June 30, 2022, the Company began reporting under the following two lines of business, which are its reportable operating segments: Digital Agreements and Security Solutions. The Company plans to manage Digital Agreements for accelerated growth and market share gains and Security Solutions for cash flow given its more modest growth profile. For further information regarding the Company’s reportable segments, see Note 3, Segment Information. While the Company’s consolidated results will not be impacted, the Company has recast its segment information for the three months ended March 31, 2022 for comparable presentation.
Estimates and Assumptions	Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Foreign Currency Translation and Transactions	Foreign Currency Translation and TransactionsThe financial position and results of the operations of the majority of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Accordingly, assets and liabilities are translated into U.S. Dollars using current exchange rates as of the balance sheet date. Revenue and expenses are translated at average exchange rates prevailing during the year. Translation adjustments arising from differences in exchange rates are charged or credited to other comprehensive income (loss). Losses resulting from foreign currency transactions were $0.2 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively, and are included in "Other income (expense), net" in the condensed consolidated statements of operations.
Restricted Cash	Restricted Cash We are party to lease agreements that require letters of credit to secure the obligations which totaled $0.9 million and $1.1 million at March 31, 2023 and December 31, 2022, respectively. Additionally, we maintained a cash guarantee with a payroll vendor in the amount of $0.1 million at both March 31, 2023 and December 31, 2022. The restricted cash related to the letters of credit and the payroll vendor cash guarantee is recorded in "restricted cash" on the condensed consolidated balance sheets.
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, the Company believes that the issued standards that are not yet effective will not have a material impact on its consolidated financial statements and disclosures upon adoption.

Revenue from Contracts with Customers - Capitalized Costs and Amortization (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Amortization period	7 years
Capitalized costs to obtain contracts, current	$ 3,011		$ 2,929
Capitalized costs to obtain contracts, non-current	10,295		$ 10,571
Amortization of capitalized costs to obtain contracts	731	$ 541
Impairments of capitalized costs to obtain contracts	$ 0	$ 0

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock	Treasury - Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2021		40,001,000
Beginning balance at Dec. 31, 2021	$ 219,780	$ 40	$ (12,501)	$ 100,250	$ 143,173	$ (11,182)
Beginning balance, treasury stock, at cost (in shares) at Dec. 31, 2021			592,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	5,214				5,214
Foreign currency translation adjustment, net of tax	(2,020)					(2,020)
Share-based compensation	1,360			1,360
Vesting of restricted stock awards (in shares)		34,000
Tax payments for stock issuances (in shares)		(14,000)
Tax payments for stock issuances	(635)			(635)
Unrealized gain (loss) on available-for-sale securities	(79)					(79)
Pension adjustment, net of tax	(25)					(25)
Ending balance (in shares) at Mar. 31, 2022		40,021,000
Ending balance at Mar. 31, 2022	223,595	$ 40	$ (12,501)	100,975	148,387	(13,306)
Ending balance, treasury stock, at cost (in shares) at Mar. 31, 2022			592,000
Beginning balance (in shares) at Dec. 31, 2022		39,726,000
Beginning balance at Dec. 31, 2022	$ 203,311	$ 40	$ (18,222)	107,305	128,738	(14,550)
Beginning balance, treasury stock, at cost (in shares) at Dec. 31, 2022	1,038		1,038,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ (8,356)				(8,356)
Foreign currency translation adjustment, net of tax	1,715					1,715
Share-based compensation	3,812			3,812
Vesting of restricted stock awards (in shares)		329,000
Tax payments for stock issuances (in shares)		(105,000)
Tax payments for stock issuances	(1,098)			(1,098)
Unrealized gain (loss) on available-for-sale securities	7					7
Pension adjustment, net of tax	(60)					(60)
Ending balance (in shares) at Mar. 31, 2023		39,950,000
Ending balance at Mar. 31, 2023	$ 199,331	$ 40	$ (18,222)	$ 110,019	$ 120,382	$ (12,888)
Ending balance, treasury stock, at cost (in shares) at Mar. 31, 2023	1,038		1,038,000

Inventories, net - Summary of Inventories, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Inventory Disclosure [Abstract]
Component parts	$ 8,760	$ 6,762
Work-in-process and finished goods	6,880	5,292
Total	$ 15,640	$ 12,054

Description of the Company and Basis of Presentation	3 Months Ended
Description of the Company and Basis of Presentation	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Description of the Company and Basis of Presentation	Description of the Company and Basis of Presentation Description of the Company OneSpan helps organizations accelerate digital transformations by enabling secure, compliant, and easy customer agreements and transaction experiences. The Company is a global leader in providing high-assurance identity and authentication security as well as enterprise-grade electronic signature (e-signature) solutions for use cases ranging from simple transactions to workflows that are complex or require higher levels of security. The Company’s solutions help its clients ensure the integrity of the people and records associated with digital agreements, transactions, and interactions in industries including banking, financial services, healthcare, and professional services. The Company offers a portfolio of products and services across identity verification, authentication, virtual interactions and transactions, and secure digital storage. OneSpan has operations in Austria, Australia, Belgium, Canada, China, France, Japan, The Netherlands, Singapore, Switzerland, the United Arab Emirates, the United Kingdom (U.K), and the United States (U.S.). Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of OneSpan and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. In the opinion of management, the accompanying unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements, and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results of the interim periods presented. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for any future period or the entire fiscal year. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. Business Transformation In May 2022, the Company announced a three-year strategic transformation plan that began on January 1, 2023. The Company expects this transformation plan will enable it to build on its strong solution portfolio and market position, enhance its enterprise go-to-market strategy, accelerate revenue growth, and drive efficiencies to support margin expansion and increased profitability. In conjunction with the strategic transformation plan and to enable a more efficient capital deployment model, effective with the quarter ended June 30, 2022, the Company began reporting under the following two lines of business, which are its reportable operating segments: Digital Agreements and Security Solutions. The Company plans to manage Digital Agreements for accelerated growth and market share gains and Security Solutions for cash flow given its more modest growth profile. For further information regarding the Company’s reportable segments, see Note 3, Segment Information. While the Company’s consolidated results will not be impacted, the Company has recast its segment information for the three months ended March 31, 2022 for comparable presentation. Estimates and Assumptions The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Foreign Currency Translation and Transactions The financial position and results of the operations of the majority of the Company’s foreign subsidiaries are measured using the local currency as the functional currency. Accordingly, assets and liabilities are translated into U.S. Dollars using current exchange rates as of the balance sheet date. Revenue and expenses are translated at average exchange rates prevailing during the year. Translation adjustments arising from differences in exchange rates are charged or credited to other comprehensive income (loss). Losses resulting from foreign currency transactions were $0.2 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively, and are included in "Other income (expense), net" in the condensed consolidated statements of operations.

Intangible Assets

3 Months Ended

Mar. 31, 2023

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

Intangible assets as of March 31, 2023 and December 31, 2022 consist of the following:


		As of March 31, 2023				As of December 31, 2022
(In thousands)	Useful Life (in years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Acquired technology	3 to 7	$	43,590	$	42,057	$	42,022	$	41,894
Customer relationships	5 to 12	34,551		24,051		34,386		23,323
Patents, trademarks, and other	10 to 20	13,538		12,248		13,518		12,227
Total		$	91,679	$	78,356	$	89,926	$	77,444

Amortization expense was $0.6 million and $1.4 million for the three months ended March 31, 2023 and 2022, respectively.

Certain intangible assets are denominated in functional currencies besides the U.S. dollar and are subject to currency fluctuations.

There was no impairment of intangible assets recorded during the three months ended March 31, 2023 and 2022.

Legal Proceedings and Contingencies - Rent expense and purchase obligations (Details) $ in Millions	Mar. 31, 2023 USD ($)
Legal Proceedings and Contingencies
Liabilities accrued	$ 1.6
Minimum
Legal Proceedings and Contingencies
Range of potential loss contingencies	1.6
Maximum
Legal Proceedings and Contingencies
Range of potential loss contingencies	$ 2.0

Leases

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Leases

Operating lease cost details for the three months ended March 31, 2023 and 2022 are as follows:


	Three Months Ended March 31,
	2023		2022
(In thousands)
Building rent	$	523	$	575
Automobile rentals	250		220
Total net operating lease costs	$	773	$	795

At March 31, 2023, the Company’s weighted average remaining lease term for its operating leases is 5.6 years, and the weighted average discount rate for its operating leases is 5%.

During the three months ended March 31, 2023, there were $0.7 million of operating cash payments for lease liabilities, and $0.1 million of right-of use assets obtained in exchange for new lease liabilities.

Maturities of the Company’s operating leases as of March 31, 2023 are as follows:


	As of March 31, 2023
(In thousands)
2023	$	2,040
2024	2,111
2025	1,805
2026	1,724
2027	1,552
Later years	2,717
Less imputed interest	(1,730)
Total lease liabilities	$	10,219

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 1,676	$ 1,600
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	75,000,000	75,000,000
Common stock, shares issued (in shares)	40,987,000	40,764,000
Common stock, shares outstanding (in shares)	39,949,000	39,726,000
Treasury stock, at cost (in shares)	1,038	1,038

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Disclosures [Abstract]

Schedule of assets that are measured at fair value on a recurring basis


	Fair Value Measurement at Reporting Date Using
(In thousands)	March 31, 2023		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
U.S. Treasury Bills	$	17,577	—	$	17,577	—
Commercial Paper	$	14,479	—	$	14,479	—
U.S. Treasury Notes	$	3,991	—	$	3,991	—
Money Market Funds	$	1,855	—	$	1,855	—


	Fair Value Measurement at Reporting Date Using
(In thousands)	December 31, 2022		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Money Market Funds	$	28,388	—	$	28,388	—
Commercial Paper	$	6,743	—	$	6,743	—
Corporate Notes / Bonds	$	2,328	—	$	2,328	—

Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Accounting Policies [Line Items]
Restricted cash	$ 1,017	$ 1,208
Letter of Credit
Accounting Policies [Line Items]
Restricted cash	900	1,100
Guarantees
Accounting Policies [Line Items]
Restricted cash	$ 100	$ 100

Revenue from Contracts with Customers - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenue
Revenue	$ 57,607	$ 52,447
Products and Licenses transferred at a point in time
Revenue
Revenue	33,146	29,485
Services transferred over time
Revenue
Revenue	24,461	22,962
EMEA
Revenue
Revenue	$ 27,820	$ 24,876
Percent of total	48.00%	47.00%
Americas
Revenue
Revenue	$ 20,498	$ 17,249
Percent of total	36.00%	33.00%
APAC
Revenue
Revenue	$ 9,289	$ 10,322
Percent of total	16.00%	20.00%
Subscription
Revenue
Revenue	$ 29,956	$ 23,269
Maintenance and support
Revenue
Revenue	11,161	11,946
Professional services and other
Revenue
Revenue	$ 1,624	$ 1,881
Percent of total	2.00%	2.00%
Hardware products
Revenue
Revenue	$ 14,866	$ 15,351

Segment Information (Tables)

3 Months Ended

Mar. 31, 2023

Segment Reporting [Abstract]

Reconciliation of segment information to the totals reported in the accompanying consolidated financial statements


	Three Months Ended March 31,
(In thousands, except percentages)	2023			2022
Digital Agreements
Revenue	$	11,552		$	13,301
Gross profit	$	8,448		$	10,286
Gross margin	73		%	77		%
Operating income (loss)	$	(6,033)		$	1,125

Security Solutions
Revenue	$	46,055		$	39,146
Gross profit	$	30,838		$	26,392
Gross margin	67		%	67		%
Operating income	$	15,631		$	7,689

Total Company:
Revenue	$	57,607		$	52,447
Gross profit	$	39,286		$	36,678
Gross margin	68		%	70		%

Statements of Operations reconciliation:
Segment operating income	$	9,598		$	8,814
Corporate operating expenses not allocated at the segment level	(17,728)			(18,057)
Operating loss	$	(8,130)		$	(9,243)
Interest income (expense), net	503			(17)
Other (expense) income, net	(40)			15,647
Income (loss) before income taxes	$	(7,667)		$	6,387

Reconciliation of the disaggregated revenues to revenues from our two operating segments


	Three Months Ended March 31,
	2023				2022
	Digital Agreements		Security Solutions		Digital Agreements		Security Solutions
(In thousands)
Subscription	$	10,348	$	19,608	$	11,671	$	11,598
Maintenance and support	996		10,165		1,352		10,594
Professional services and other (1)	208		1,416		278		1,603
Hardware products	—		14,866		—		15,351
Total Revenue	$	11,552	$	46,055	$	13,301	$	39,146

(1) Professional services and other includes perpetual software licenses revenue, which was less than 2% of total
revenue for the three months ended March 31, 2023 and 2022.

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended
Income Taxes (Details) - USD ($) $ in Millions	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Effective tax rate	26.00%
Statutory tax rate	21.00%
Income taxes paid (refunded)	$ 1.1	$ (0.3)
Deferred tax assets, foreign and state NOL carryforwards			$ 46.8
Foreign and state, net operating loss (NOL) carryforwards			125.7
Other foreign deductible carryforwards			124.2
Deferred tax assets, valuation allowance			$ 37.7

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company’s estimated annual effective tax rate for 2023 before discrete items and excluding entities with a valuation allowance is expected to be approximately 26%. The Company’s global effective tax rate is higher than the U.S. statutory tax rate of 21% primarily due to nondeductible expenses. The ultimate tax expense will depend on the mix of earnings in various jurisdictions. Income tax refunds, net of taxes paid, of $0.3 million were received during the three months ended March 31, 2022. Income taxes, net of refunds, of $1.1 million were paid during the three months ended March 31, 2023. Management assesses the need for a valuation allowance on a regular basis, weighing all positive and negative evidence to determine whether a deferred tax asset will be fully or partially realized. In evaluating the realizability of deferred tax assets, significant pieces of negative evidence such as 3-year cumulative losses are considered. Management also reviews reversal patterns of temporary differences to determine if the Company would have sufficient taxable income due to the reversal of temporary differences to support the realization of deferred tax assets. Certain operations have incurred net operating losses (NOLs), which are currently subject to a valuation allowance. These NOLs may become deductible to the extent these operations become profitable. For each of its operations, the Company evaluates whether it is more likely than not that the tax benefits related to NOLs will be realized. As part of this evaluation, the Company considers evidence such as tax planning strategies, historical operating results, forecasted taxable income, and recent financial performance. In the year that certain operations record a loss, the Company does not recognize a corresponding tax benefit, thus increasing its effective tax rate, or decreasing its effective tax rate when reporting income in a jurisdiction that has a valuation allowance. Upon determining that it is more likely than not that the NOLs will be realized, the Company will reduce the tax valuation allowances related to these NOLs, which will result in a reduction of its income tax expense and its effective tax rate in the period.At December 31, 2022, the Company had deferred tax assets of $46.8 million resulting from U.S., foreign and state NOL carryforwards of $125.7 million and other foreign deductible carryforwards of $124.2 million. At December 31, 2022, the Company had a valuation allowance of $37.7 million against deferred tax assets related to certain carryforwards.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Revenue from Contracts with Customers

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

Disaggregation of Revenues

The following tables present the Company’s revenues disaggregated by major products and services, geographical region and timing of revenue recognition:

Revenue by major products and services


	Three Months Ended March 31,
	2023		2022
(In thousands)
Subscription	$	29,956	$	23,269
Maintenance and support	11,161		11,946
Professional services and other (1)	1,624		1,881
Hardware products	14,866		15,351
Total Revenue	$	57,607	$	52,447

(1)Professional services & other includes perpetual software licenses revenue, which was less than 2% of total revenue for the three months ended March 31, 2023 and 2022.

Revenue by location of customer for the Three Months Ended March 31, 2023 and 2022

We classify our sales by customer location in three geographic regions: 1) EMEA, which includes Europe, Middle East and Africa; 2) the Americas, which includes North, Central, and South America; and 3) Asia Pacific (APAC), which includes Australia, New Zealand, and India. The breakdown of revenue in each of our major geographic areas was as follows:


	Three Months Ended March 31,
	2023			2022
(In thousands, except percentages)
Revenue
EMEA	$	27,820		$	24,876
Americas	20,498			17,249
APAC	9,289			10,322
Total revenue	$	57,607		$	52,447

% of Total Revenue
EMEA	48		%	47		%
Americas	36		%	33		%
APAC	16		%	20		%

Timing of revenue recognition


	Three Months Ended March 31,
(In thousands)	2023		2022
Products and Licenses transferred at a point in time	$	33,146	$	29,485
Services transferred over time	24,461		22,962
Total Revenue	$	57,607	$	52,447

Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers as of March 31, 2023 and December 31, 2022:


	March 31,		December 31,
(In thousands)	2023		2022
Receivables, inclusive of trade and unbilled	$	32,285	$	65,132
Contract Assets (current and non-current)	$	4,410	$	4,642
Contract Liabilities (Deferred Revenue current and non-current)	$	59,787	$	70,906

Contract assets relate primarily to multi-year term license arrangements and the remaining contractual billings. These contract assets are transferred to receivables when the right to bill occurs over a 2 to 5 year period. The contract liabilities primarily relate to the advance consideration received from customers for subscription and maintenance services. Revenue is recognized for these services over time.

As a practical expedient, the Company does not adjust the promised amount of consideration for the effects of a significant financing component when it is expected, at contract inception, that the period between the Company's transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less. Extended payment terms are not typically included in contracts with customers.

Revenue recognized during the three months ended March 31, 2023 included $28.3 million that was included on the December 31, 2022 consolidated balance sheet in contract liabilities. Deferred revenue decreased in the same period due to timing of annual renewals.

Transaction price allocated to the remaining performance obligations

Remaining performance obligations represent the revenue that is expected to be recognized in future periods related to performance obligations that are unsatisfied, or partially unsatisfied, as of the end of the period. The following

table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023:


(In thousands)	2023		2024		2025		Beyond 2025		Total
Future revenue related to current unsatisfied performance obligations	$	28,964	$	21,958	$	9,470	$	5,764	$	66,156

The Company applies practical expedients and does not disclose information about remaining performance obligations (a) that have original expected durations of one year or less, or (b) where revenue is recognized as invoiced.

Costs of obtaining a contract

The Company incurs incremental costs related to commissions, which can be directly tied to obtaining a contract. The Company capitalizes commissions associated with certain new contracts and amortizes the costs over a period of up to seven years, which is the determined benefit period based on the transfer of goods or services. The Company determined the period of benefit by taking into consideration the customer contracts, its technology and other factors, including customer attrition. Commissions are earned upon invoicing to the customer. For contracts with multiple year payment terms, because the commissions that are payable after year 1 are payable based on continued employment, they are expensed when incurred. Commissions and amortization expense are included in “Sales and Marketing” expense in the condensed consolidated statements of operations.

Applying the practical expedient, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period for the assets that the Company otherwise would have recognized is one year or less. These costs are included in “Sales and Marketing” expense in the condensed consolidated statements of operations.

The following tables provide information related to the capitalized costs and amortization recognized in the current and prior period:


(In thousands)	March 31, 2023		December 31, 2022
Capitalized costs to obtain contracts, current	$	3,011	$	2,929
Capitalized costs to obtain contracts, non-current	$	10,295	$	10,571


	Three Months Ended March 31,
(In thousands)	2023		2022
Amortization of capitalized costs to obtain contracts	$	731	$	541
Impairments of capitalized costs to obtain contracts	$	—	$	—

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

+ Details

Leases - Maturities of our operating leases (Details) $ in Thousands	Mar. 31, 2023 USD ($)
Maturities of operating leases
2023	$ 2,040
2024	2,111
2025	1,805
2026	1,724
2027	1,552
Later years	2,717
Less imputed interest	(1,730)
Total lease liabilities	$ 10,219

Legal Proceedings and Contingencies	3 Months Ended
Legal Proceedings and Contingencies	Mar. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Legal Proceedings and Contingencies	Legal Proceedings and Contingencies The Company is subject to certain legal proceedings and claims incidental to the operations of its business. The Company is also subject to certain other legal proceedings and claims that have arisen in the ordinary course of business and that have not been fully adjudicated. The Company currently does not anticipate that these matters, if resolved against the Company, will have a material adverse impact on its financial results or financial condition. The Company accrues loss contingencies when losses become probable and are reasonably estimable. If the reasonable estimate of the loss is a range and no amount within the range is a better estimate, the minimum amount of the range is recorded as a liability. As of March 31, 2023, the Company has recorded an accrual of $1.6 million for loss contingencies, which represents the better estimate within the probable range of $1.6 million and $2.0 million, related to all probable losses where a reasonable estimate could be made. The Company does not accrue for contingent losses that, in the judgment of the Company, are considered to be reasonably possible, but not probable. As of March 31, 2023, the Company does not have any reasonably possible losses for which an estimate can be made. Although the Company intends to defend its legal matters vigorously, the ultimate outcome of these matters is uncertain. However, the Company does not expect the potential losses, if any, to have a material adverse impact on its operating results, cash flows, or financial condition.

Property and Equipment, net (Tables)

3 Months Ended

Mar. 31, 2023

Property, Plant and Equipment [Abstract]

Schedule of major classes of property and equipment

The following table presents the major classes of property and equipment, net, as of March 31, 2023 and December 31, 2022:


(In thousands)	March 31, 2023		December 31, 2022
Office equipment and software	$	14,765	$	14,451
Leasehold improvements	9,970		9,927
Furniture and fixtures	4,285		4,260
Capitalized software	6,783		4,007
Total	35,803		32,645
Accumulated depreciation	(20,708)		(19,964)
Property and equipment, net	$	15,095	$	12,681

Leases (Tables)

3 Months Ended

Mar. 31, 2023

Leases [Abstract]

Schedule of supplemental consolidated balance sheet information related to our operating leases

Operating lease cost details for the three months ended March 31, 2023 and 2022 are as follows:


	Three Months Ended March 31,
	2023		2022
(In thousands)
Building rent	$	523	$	575
Automobile rentals	250		220
Total net operating lease costs	$	773	$	795

Schedule of maturities of operating leases

Maturities of the Company’s operating leases as of March 31, 2023 are as follows:


	As of March 31, 2023
(In thousands)
2023	$	2,040
2024	2,111
2025	1,805
2026	1,724
2027	1,552
Later years	2,717
Less imputed interest	(1,730)
Total lease liabilities	$	10,219

Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Jun. 30, 2022	Dec. 31, 2022
Finite-Lived Intangible Assets
Amortization of intangible assets	$ 583	$ 1,382
Intangible assets, net
Gross Carrying Amount	91,679			$ 89,926
Accumulated Amortization	78,356			77,444
Impairment of intangible assets	0	$ 0
Acquired technology
Intangible assets, net
Gross Carrying Amount	43,590			42,022
Accumulated Amortization	$ 42,057			41,894
Acquired technology \| Minimum
Intangible assets, net
Useful Life (in years)	3 years		3 years
Acquired technology \| Maximum
Intangible assets, net
Useful Life (in years)	7 years		7 years
Customer relationships
Intangible assets, net
Gross Carrying Amount	$ 34,551			34,386
Accumulated Amortization	$ 24,051			23,323
Customer relationships \| Minimum
Intangible assets, net
Useful Life (in years)	5 years		5 years
Customer relationships \| Maximum
Intangible assets, net
Useful Life (in years)	12 years		12 years
Patents, trademarks, and other
Intangible assets, net
Gross Carrying Amount	$ 13,538			13,518
Accumulated Amortization	$ 12,248			$ 12,227
Patents, trademarks, and other \| Minimum
Intangible assets, net
Useful Life (in years)	10 years		10 years
Patents, trademarks, and other \| Maximum
Intangible assets, net
Useful Life (in years)	20 years		20 years

Restructuring Plan and Other Related Charges (Tables)

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

Schedule of changes in the carrying amount of the restructuring charge liability

The table below sets forth the changes in the carrying amount of the restructuring charge liability for the three months ended March 31, 2023.


	Restructuring Charge Liability
(In thousands)
Balance as of December 31, 2022	$	3,596
Additions	706
Payments	(477)
Balance as of March 31, 2023	$	3,825

Inventories, net

3 Months Ended

Mar. 31, 2023

Inventory Disclosure [Abstract]

Inventories, net

Inventories, net, consisting principally of hardware and component parts, are stated at the lower of cost or net realizable value. Cost is determined using the first-in, first-out (FIFO) method.

Inventories, net consist of the following:


	March 31, 2023		December 31, 2022
(In thousands)
Component parts	$	8,760	$	6,762
Work-in-process and finished goods	6,880		5,292
Total	$	15,640	$	12,054

Business Combinations and Asset Acquisitions (Tables)

3 Months Ended

Mar. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Summary of business acquisition

ProvenDB is allocated entirely to our Digital Agreements reportable operating segment.


(In thousands)	As of Date of Opening Balance Sheet
Net assets acquired:
Acquired technology	$	1,447
Accrued wages and payroll taxes	(47)
Goodwill	600
Total net assets acquired	$	2,000

Consideration	$	2,000

Summary of Significant Accounting Policies	3 Months Ended
Summary of Significant Accounting Policies	Mar. 31, 2023
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies There have been no changes to the significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 28, 2023 that have had a material impact on the Company’s condensed consolidated financial statements and related notes. Restricted Cash We are party to lease agreements that require letters of credit to secure the obligations which totaled $0.9 million and $1.1 million at March 31, 2023 and December 31, 2022, respectively. Additionally, we maintained a cash guarantee with a payroll vendor in the amount of $0.1 million at both March 31, 2023 and December 31, 2022. The restricted cash related to the letters of credit and the payroll vendor cash guarantee is recorded in "restricted cash" on the condensed consolidated balance sheets. Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, the Company believes that the issued standards that are not yet effective will not have a material impact on its consolidated financial statements and disclosures upon adoption.

Revenue from Contracts with Customers (Tables)

3 Months Ended

Mar. 31, 2023

Revenue from Contract with Customer [Abstract]

Revenues disaggregated by geography, major product line and timing of revenue recognition

The following tables present the Company’s revenues disaggregated by major products and services, geographical region and timing of revenue recognition:

Revenue by major products and services


	Three Months Ended March 31,
	2023		2022
(In thousands)
Subscription	$	29,956	$	23,269
Maintenance and support	11,161		11,946
Professional services and other (1)	1,624		1,881
Hardware products	14,866		15,351
Total Revenue	$	57,607	$	52,447

(1)Professional services & other includes perpetual software licenses revenue, which was less than 2% of total revenue for the three months ended March 31, 2023 and 2022.

Revenue by location of customer for the Three Months Ended March 31, 2023 and 2022


	Three Months Ended March 31,
	2023			2022
(In thousands, except percentages)
Revenue
EMEA	$	27,820		$	24,876
Americas	20,498			17,249
APAC	9,289			10,322
Total revenue	$	57,607		$	52,447

% of Total Revenue
EMEA	48		%	47		%
Americas	36		%	33		%
APAC	16		%	20		%

Timing of revenue recognition


	Three Months Ended March 31,
(In thousands)	2023		2022
Products and Licenses transferred at a point in time	$	33,146	$	29,485
Services transferred over time	24,461		22,962
Total Revenue	$	57,607	$	52,447

Schedule of changes in contract assets and contract liabilities

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers as of March 31, 2023 and December 31, 2022:


	March 31,		December 31,
(In thousands)	2023		2022
Receivables, inclusive of trade and unbilled	$	32,285	$	65,132
Contract Assets (current and non-current)	$	4,410	$	4,642
Contract Liabilities (Deferred Revenue current and non-current)	$	59,787	$	70,906

Schedule of estimated revenue expected to be recognized in the future

The following

table includes estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) as of March 31, 2023:


(In thousands)	2023		2024		2025		Beyond 2025		Total
Future revenue related to current unsatisfied performance obligations	$	28,964	$	21,958	$	9,470	$	5,764	$	66,156

Schedule of information related to the capitalized costs and amortization recognized in the current and prior period

The following tables provide information related to the capitalized costs and amortization recognized in the current and prior period:


(In thousands)	March 31, 2023		December 31, 2022
Capitalized costs to obtain contracts, current	$	3,011	$	2,929
Capitalized costs to obtain contracts, non-current	$	10,295	$	10,571


	Three Months Ended March 31,
(In thousands)	2023		2022
Amortization of capitalized costs to obtain contracts	$	731	$	541
Impairments of capitalized costs to obtain contracts	$	—	$	—

Revenue from Contracts with Customers - Contract balances (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Dec. 31, 2022
Contract balances
Receivables, inclusive of trade and unbilled	$ 32,285	$ 65,132
Contract Assets (current and non-current)	4,410	4,642
Contract Liabilities (Deferred Revenue current and non-current)	59,787	$ 70,906
Revenue recognized that was included in the balance sheet	$ 28,300
Minimum
Contract balances
The amount of time contract assets are transferred to receivables	2 years
Maximum
Contract balances
The amount of time contract assets are transferred to receivables	5 years

Long-Term Compensation Plan and Stock Based Compensation

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

Long-Term Compensation Plan and Stock Based Compensation

Long-Term Compensation Plan and Stock Based Compensation (share counts in thousands)

Under the OneSpan Inc. 2019 Omnibus Incentive Plan, the Company awards restricted stock units subject to time-based vesting, restricted stock units which are subject to the achievement of future performance criteria and restricted stock units that are subject to the achievement of market conditions. Other long-term incentive plan compensation expense includes cash incentives.

The Company awarded 1.0 million restricted stock units during the three months ended March 31, 2023, subject to time-based vesting. The fair value of the unissued time-based restricted stock unit grants was $12.9 million at the dates of grant and the grants are being amortized over the vesting periods of one to three years.

The Company awarded restricted stock units subject to the achievement of service and future performance criteria during the three months ended March 31, 2023, which allow for up to 0.9 million shares to be earned if the performance criteria are achieved at the target level. The fair value of these awards was $12.8 million at the dates of grant and the awards are being amortized over the vesting period of one to three years. The Company currently believes that all of these shares are expected to be earned.

During the three months ended March 31, 2022, stock-based compensation and other long-term incentive plan compensation accruals were reversed for employees who were terminated. The reversal of the accrued long-term incentive plan compensation for the terminated employees largely offset the expense for the period.

The following table presents stock-based compensation expense and other long-term incentive plan compensation expense for the three months ended March 31, 2023 and 2022:


	Three Months Ended March 31,
	2023		2022
(In thousands)
Stock-based compensation	$	3,812	$	1,360
Other long-term incentive plan compensation	111		(136)
Total compensation	$	3,923	$	1,224

Earnings per Share - Details of Earnings Per Share Calculations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share [Abstract]
Net loss	$ (8,356)	$ 5,214
Weighted average common shares outstanding:
Basic (in shares)	40,057	39,577
Incremental shares with dilutive effect:
Restricted stock awards	0	110
Diluted (in shares)	40,057	39,687
Basic (in dollars per share)	$ (0.21)	$ 0.13
Diluted (in dollars per share)	$ (0.21)	$ 0.13

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 1
-Subparagraph (e)(4)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL123482106-238011

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 3
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22583-107794

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
-SubTopic 10
-Section 50
-Paragraph 11
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22694-107794

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 260
-SubTopic 10
-Section 45
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=126958026&loc=d3e1448-109256

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 250
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-Paragraph 4
-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22595-107794

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=124431687&loc=d3e22694-107794

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=126958026&loc=d3e1337-109256

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 65
-Paragraph 1
-Subparagraph (f)
-URI https://asc.fasb.org/extlink&oid=126732423&loc=SL123482106-238011

Reference 9: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=128363288&loc=d3e4984-109258

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.7-04(23))
-URI https://asc.fasb.org/extlink&oid=120400993&loc=SL114874131-224263

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=124432515&loc=d3e3550-109257

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Subparagraph (SX 210.5-03(25))
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Reference 15: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Fair Value Measurements (Details) - Fair Value, Recurring - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
U.S. Treasury Bills
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 17,577
U.S. Treasury Bills \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0
U.S. Treasury Bills \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	17,577
U.S. Treasury Bills \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0
Commercial Paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	14,479	$ 6,743
Commercial Paper \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Commercial Paper \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	14,479	6,743
Commercial Paper \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
U.S. Treasury Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	3,991
U.S. Treasury Notes \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0
U.S. Treasury Notes \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	3,991
U.S. Treasury Notes \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0
Money Market Funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	1,855	28,388
Money Market Funds \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	0	0
Money Market Funds \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	1,855	28,388
Money Market Funds \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 0	0
Corporate Notes / Bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		2,328
Corporate Notes / Bonds \| Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		0
Corporate Notes / Bonds \| Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		2,328
Corporate Notes / Bonds \| Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets		$ 0