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United States securities and exchange commission logo
May 26, 2023
Jorge Martell
Chief Financial Officer
OneSpan Inc.
121 West Wacker Drive, Suite 2050
Chicago, Illinois 60601
Re: OneSpan Inc.
Form 10-K for the
Fiscal Year Ended December 31, 2022
Filed February 28,
2023
File No. 000-24389
Dear Jorge Martell:
We have reviewed your filing and have the following comments. In
some of our
comments, we may ask you to provide us with information so we may better
understand your
disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for the Fiscal Year Ended December 31, 2022
Annual Recurring Revenue, page 45
1. You disclose that
annual recurring revenue ("ARR"), defined as approximate annualized
value of our customer
recurring contracts as of the measurement date, is an operating
metric used to measure
the health of your business. We also note that subscription revenue
appears to include
on-premises term-based license revenue, for which revenue is
recognized at a
point-in-time. Please expand your disclosure to address the following and
advise us.
Clarify how the
up-front revenue received from term licenses is factored into your
ARR calculation.
Address whether you annualize revenue recognized or invoiced
amounts.
Clarify whether ARR
reflects any actual or anticipated reductions of revenue due to
contract
non-renewals or cancellations, and discuss any limitations present as a result.
Disclose the
renewal rates for subscription arrangements for each period presented to
Jorge Martell
OneSpan Inc.
May 26, 2023
Page 2
support your assumptions.
Describe how ARR differs from GAAP revenue and specifically
address the timing
of revenue recognition related to the license performance
obligation.
Provide us with your proposed disclosure responsive to the
concerns noted above.
Refer to SEC Release 33-10751.
Key Business Metrics and Non-GAAP Financial Measures
Adjusted EBITDA, page 46
2. We note the adjustment for Long-term incentive compensation in the
table that reconciles
net loss as reported on your consolidated statements of operations to
non-GAAP Adjusted
EBITDA. We also note your disclosure on page 36 that "Long-term
incentive plan
compensation expense includes both cash and stock-based incentives."
Regarding the cash
compensation included in the adjustment, please revise or advise us
how you determined
it would be appropriate to exclude normal, recurring, cash operating
expenses necessary to
operate your business from a non-GAAP performance measure such as
Adjusted
EBITDA. Please refer to Q&A 100.01 of the C&DI on Non-GAAP Financial
Measures.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
You may contact Joseph Cascarano, Senior Staff Accountant, at (202)
551-3376
or Robert S. Littlepage, Accountant Branch Chief, at (202) 551-3361 with any
questions.
FirstName LastNameJorge Martell Sincerely,
Comapany NameOneSpan Inc.
Division of
Corporation Finance
May 26, 2023 Page 2 Office of
Technology
FirstName LastName