OneSpan Inc. (OSPN): Business Model Canvas [10-2024 Updated]

In an increasingly digital world, securing transactions is paramount, and OneSpan Inc. (OSPN) stands at the forefront of this challenge. With a robust business model canvas that emphasizes key partnerships and innovative security solutions, OneSpan is dedicated to enhancing trust in digital interactions. This blog post will delve into the intricacies of OneSpan's business model, exploring how it delivers value to its diverse customer segments and navigates the complexities of the cybersecurity landscape.

OneSpan Inc. (OSPN) - Business Model: Key Partnerships

Collaborations with technology providers

OneSpan Inc. actively collaborates with various technology providers to enhance its security and digital transaction solutions. This includes partnerships with cloud service providers to support its SaaS offerings. In the nine months ended September 30, 2024, OneSpan reported a gross profit margin of 71%, indicating a robust integration of technology partnerships that drive operational efficiency.

Partnerships with financial institutions

OneSpan has established significant partnerships with multiple financial institutions. These collaborations are crucial for integrating OneSpan's digital identity and e-signature solutions into financial services. As of September 30, 2024, the company reported $43.6 million in subscription revenue from financial institutions, a substantial increase from the previous year. This segment reflects a growing demand for secure digital transaction solutions among banks and credit unions, which is a key revenue driver for OneSpan.

Alliances with digital transaction platforms

OneSpan has formed alliances with various digital transaction platforms to broaden its market reach. The company's annual recurring revenue (ARR) reached $163.9 million as of September 30, 2024, which represents a 9% increase from $149.8 million in the previous year. These alliances are instrumental in facilitating seamless digital transactions and enhancing the user experience across different platforms.

Partnership Type	Key Metrics	Revenue Impact (2024)	Growth Rate
Technology Providers	Gross Profit Margin: 71%	N/A	N/A
Financial Institutions	Subscription Revenue: $43.6 million	Increased from previous year	N/A
Digital Transaction Platforms	ARR: $163.9 million	9% increase from $149.8 million	9%

OneSpan Inc. (OSPN) - Business Model: Key Activities

Development of security software solutions

OneSpan Inc. focuses on developing advanced security software solutions, particularly in the areas of digital agreements and authentication. For the nine months ended September 30, 2024, the revenue from Digital Agreements reached $45.3 million, which represents an increase of 24% compared to the same period in 2023. This growth is attributed to an increase in cloud subscription revenue and expansions with existing customers.

Delivery of cloud-based subscription services

The company has transitioned towards a cloud-based subscription model, which is a critical part of its business strategy. The total subscription revenue from Digital Agreements amounted to $43.6 million for the nine months ended September 30, 2024. Furthermore, the gross margin for services has remained robust, at 74% for the three months ended September 30, 2024. The cost of goods sold for services and other revenue was $24.4 million during the same period, reflecting a 13% increase compared to the previous year.

Customer support and maintenance services

OneSpan provides extensive customer support and maintenance services, essential for retaining customer satisfaction and loyalty. The maintenance and support revenue for Security Solutions was $29.1 million for the nine months ended September 30, 2024. The company has reported a decrease in maintenance revenue due to its shift from legacy perpetual contracts to subscription licenses, which impacted customer service dynamics. Despite this transition, the company continues to focus on enhancing customer experience and support capabilities.

Key Activity	Revenue (in millions)	Gross Margin (%)	Cost of Goods Sold (in millions)
Digital Agreements Development	$45.3	72%	$7.3
Cloud-based Subscription Services	$43.6	74%	$24.4
Customer Support and Maintenance	$29.1	N/A	N/A

OneSpan Inc. (OSPN) - Business Model: Key Resources

Proprietary software technology and SDKs

OneSpan Inc. has developed proprietary software technology that is essential for its digital identity verification and secure transaction solutions. The company's software products include a comprehensive suite of digital agreement and authentication solutions, which are integral to its revenue model. For the nine months ended September 30, 2024, OneSpan reported total revenue of $182.0 million, with Digital Agreements contributing $45.3 million and Security Solutions contributing $136.7 million.

The gross profit margin for Digital Agreements was 68% for the nine months ended September 30, 2024, compared to 74% for the same period in 2023. This change reflects increased costs associated with the cloud platform and depreciation of capitalized software.

Revenue Segment	Revenue (2024)	Gross Profit Margin
Digital Agreements	$45.3 million	68%
Security Solutions	$136.7 million	72%
Total Revenue	$182.0 million	-

Skilled workforce in cybersecurity

OneSpan's workforce is a critical asset, particularly its skilled professionals in cybersecurity. As of September 30, 2024, the average full-time employee headcount in research and development was 228, reflecting a 25% decrease from the prior year. Despite the reduction in workforce, the company continues to prioritize talent acquisition in cybersecurity, aiming to enhance its product offerings.

OneSpan's commitment to maintaining a skilled workforce is evident in its research and development expenditures, which amounted to $24.1 million for the nine months ended September 30, 2024, down from $29.7 million for the same period in 2023.

Metrics	2024	2023
Average R&D Employee Headcount	228	305
R&D Expenditures	$24.1 million	$29.7 million

Strong brand reputation in digital identity verification

OneSpan has established a strong brand reputation in digital identity verification, which is crucial for its competitive positioning in the market. The company's focus on compliance and security has enabled it to secure partnerships with major financial institutions and enterprises, contributing to its revenue growth. The annual recurring revenue (ARR) at September 30, 2024, was reported at $163.9 million, a 9% increase from $149.8 million at the same date in 2023.

The net retention rate, which reflects customer satisfaction and loyalty, is a key indicator of OneSpan's brand strength, further illustrating the effectiveness of its solutions in meeting customer needs in a rapidly evolving digital landscape.

Brand Metrics	2024	2023
Annual Recurring Revenue (ARR)	$163.9 million	$149.8 million
Net Retention Rate	Not disclosed	Not disclosed

OneSpan Inc. (OSPN) - Business Model: Value Propositions

Enhanced security for digital transactions

OneSpan Inc. provides robust security solutions for digital transactions. As of September 30, 2024, the company's Security Solutions segment reported a revenue of $40.8 million, a decrease of approximately 11% from $45.8 million in the same period the previous year. The gross profit for this segment was $30.5 million, with a gross margin of 75%. This reflects the company's focus on enhancing security features within its offerings, such as multi-factor authentication and secure digital identity verification, which are crucial for preventing fraud in online transactions.

Streamlined digital agreement processes

OneSpan's Digital Agreements segment has seen significant growth, reflecting the increasing demand for efficient digital agreement solutions. For the three months ended September 30, 2024, Digital Agreements revenue increased by $2.4 million, or 18%, reaching $15.4 million. For the nine months, revenue rose by $8.9 million, or 24%, amounting to $45.3 million. The company’s e-signature solutions and digital workflow automation tools simplify the agreement process, making it faster and more user-friendly for businesses and consumers alike.

Compliance with regulatory standards

OneSpan emphasizes compliance with various regulatory standards, which is critical for its clients operating in highly regulated industries such as finance and healthcare. The company's solutions are designed to meet compliance requirements, including eIDAS in Europe and the ESIGN Act in the United States. As of September 30, 2024, OneSpan's total revenue was reported at $56.2 million, with a comprehensive income of $14.1 million. The ability to navigate complex regulatory landscapes enhances customer trust and facilitates smoother adoption of digital solutions.

Value Proposition	Key Metrics	Financial Impact
Enhanced security for digital transactions	Revenue: $40.8 million (Q3 2024)	Gross profit: $30.5 million, Gross margin: 75%
Streamlined digital agreement processes	Revenue growth: 18% (Q3 2024)	Total revenue: $15.4 million (Q3 2024), $45.3 million (YTD)
Compliance with regulatory standards	Total revenue: $56.2 million (Q3 2024)	Comprehensive income: $14.1 million

OneSpan Inc. (OSPN) - Business Model: Customer Relationships

Dedicated customer support teams

OneSpan Inc. employs dedicated customer support teams that focus on ensuring customer satisfaction and resolving issues efficiently. The company reported a gross profit of $41.5 million for the three months ended September 30, 2024, with a gross margin of 74%, reflecting the effectiveness of its customer support in driving profitability.

Regular updates and maintenance for software

The company emphasizes regular updates and maintenance for its software products to enhance user experience and security. In the nine months ended September 30, 2024, OneSpan's revenue from maintenance and support was approximately $30.4 million, contributing to a total revenue of $182 million.

Engagement through educational resources and webinars

OneSpan engages its customers through educational resources and webinars, which are crucial for customer retention and satisfaction. The company has seen a significant increase in subscription revenue, which reached $103.3 million for the nine months ended September 30, 2024, up from $79.1 million in the previous year.

Metric	Q3 2024	Q3 2023	Change
Gross Profit	$41.5 million	$40.7 million	+2%
Gross Margin	74%	69%	+5%
Maintenance and Support Revenue	$9.6 million	$12.3 million	-22%
Total Revenue	$56.2 million	$58.8 million	-4%
Subscription Revenue	$33.6 million	$26.2 million	+28%

OneSpan Inc. (OSPN) - Business Model: Channels

Direct sales through online platforms

OneSpan Inc. utilizes its online platforms to directly sell its security, identity, and digital transaction solutions. The company reported total revenue of $56.2 million for the three months ended September 30, 2024, with a significant portion derived from direct online sales. Specifically, the Digital Agreements segment generated $15.4 million and the Security Solutions segment generated $40.8 million during the same period.

Partnerships with resellers and distributors

In addition to direct sales, OneSpan has established partnerships with various resellers and distributors to broaden its market reach. For the nine months ended September 30, 2024, the company reported a revenue of $182 million, reflecting the impact of these partnerships. The revenue from the Americas increased by 10% year-over-year, driven by enhancements in distribution and reseller channels.

Digital marketing and social media outreach

OneSpan employs digital marketing strategies and social media outreach to promote its products and engage with customers. The company reported an Annual Recurring Revenue (ARR) of $163.9 million as of September 30, 2024, which was a 9% increase from $149.8 million in the previous year. This growth was largely attributed to effective digital marketing campaigns and social media engagement strategies that attracted new customers.

Channel	Revenue (Q3 2024)	Year-over-Year Growth
Direct Sales (Digital Agreements)	$15.4 million	18%
Direct Sales (Security Solutions)	$40.8 million	-11%
Total Revenue	$56.2 million	-4%
ARR	$163.9 million	9%

OneSpan Inc. (OSPN) - Business Model: Customer Segments

Financial institutions and banks

OneSpan Inc. serves a variety of financial institutions and banks, providing solutions that enhance security and streamline digital transactions. In the nine months ended September 30, 2024, OneSpan reported a revenue of $59.6 million from its Security Solutions segment, which includes offerings targeted at financial services.

The Digital Agreements revenue specifically increased by $8.9 million, or 24%, during the same period, reflecting a growing demand for secure e-signature and digital transaction capabilities.

Government agencies

OneSpan also targets government agencies, offering products designed to secure digital identities and transactions. The company’s solutions are compliant with various regulatory requirements, enhancing trust in governmental digital services. In Q3 2024, OneSpan's total revenue from government contracts was approximately $15.4 million, which includes both hardware and software solutions.

For the nine months ending September 30, 2024, revenue from government segments showed a resilient performance, contributing to the total revenue growth of 6% year-over-year.

Enterprises requiring secure digital transactions

Enterprises across various sectors seeking secure digital transaction solutions represent another key customer segment for OneSpan. The company reported $41.5 million in gross profit from its enterprise solutions during the third quarter of 2024, driven by an increase in subscription-based offerings.

OneSpan's enterprise clients include large organizations that require integration of security solutions into their existing workflows. The demand for cloud-based solutions has led to a significant increase in annual recurring revenue (ARR), which was reported at $45.3 million for Q3 2024.

Customer Segment	Q3 2024 Revenue (in millions)	Year-over-Year Growth (%)	Key Products/Services
Financial Institutions and Banks	$59.6	24%	e-signatures, authentication solutions
Government Agencies	$15.4	N/A	secure digital identity solutions
Enterprises	$41.5	N/A	cloud-based security solutions, ARR

OneSpan Inc. (OSPN) - Business Model: Cost Structure

Research and Development Expenses

Research and development expenses for OneSpan Inc. for the three months ended September 30, 2024, were $7.5 million, representing a decrease of $2.6 million or 26% compared to the same period in 2023. For the nine months ended September 30, 2024, these expenses totaled $24.1 million, down $5.6 million or 19% year-over-year. The decline was primarily due to lower compensation costs associated with a reduced headcount, alongside decreased consulting expenditures related to the company's strategic transformation efforts. Average full-time R&D employee headcount for the three and nine months ended September 30, 2024 was 228 and 239, respectively, compared to 305 and 313 for the same periods in 2023, indicating a 25% and 24% reduction in headcount, respectively.

Marketing and Sales Costs

Sales and marketing expenses for the three months ended September 30, 2024, were $10.1 million, reflecting a substantial decrease of $6.5 million or 39% from $16.7 million in the same period last year. For the nine months ended September 30, 2024, these costs totaled $33.6 million, down $22.8 million or 40% compared to $56.4 million for the prior year. The reductions were mainly driven by lower employee compensation costs due to headcount reductions, decreased consulting and marketing expenses, and reduced travel and entertainment costs. Average full-time sales and marketing employee headcount for the three and nine months ended September 30, 2024 was 148 and 166, respectively, compared to 336 and 357 in the same periods in 2023, marking a 56% and 54% decrease.

Operational Costs Associated with Service Delivery

Operational costs associated with service delivery include costs of goods sold and other operational expenses. For the three months ended September 30, 2024, the total cost of goods sold was $14.7 million, down from $18.2 million in the prior year, while for the nine months, it decreased to $52.7 million from $57.9 million. The breakdown of operational costs for the three months ended September 30, 2024, includes:

Cost Category	Three Months Ended September 30, 2024 (in thousands)	Three Months Ended September 30, 2023 (in thousands)
Sales and Marketing	$10,138	$16,664
Research and Development	$7,533	$10,133
General and Administrative	$11,343	$11,559
Restructuring and Other Related Charges	$697	$6,524
Amortization of Intangible Assets	$585	$583
Total Operating Costs	$30,296	$45,463

For the nine months ended September 30, 2024, the total operational costs also decreased significantly, totaling $96.3 million compared to $144.9 million in the previous year. This substantial reduction reflects OneSpan's efforts to streamline operations and reduce unnecessary expenditures across various departments.

OneSpan Inc. (OSPN) - Business Model: Revenue Streams

Subscription fees for cloud services

OneSpan Inc. generates significant revenue through subscription fees for its cloud services. For the nine months ended September 30, 2024, the total subscription revenue was approximately $103.3 million, compared to $79.1 million for the same period in 2023, reflecting a year-over-year increase of 30.5%.

In the third quarter of 2024, subscription revenue amounted to $33.6 million, up from $26.2 million in the third quarter of 2023, indicating a growth of 28.7%. The increase in subscription revenue is driven by expansions in customer accounts and the introduction of new service offerings within the Digital Agreements segment, which accounts for approximately 43.6% of total revenue.

Sales of hardware products

Revenue from hardware products has seen fluctuations. For the nine months ended September 30, 2024, hardware revenue was approximately $44.4 million, down from $53.4 million during the same period in 2023, representing a decline of 16.7%. In the third quarter of 2024, hardware sales were $12.1 million, compared to $18.8 million in the third quarter of 2023, a decrease of 35.5%.

This decline is largely attributed to reduced hardware volumes sold and the impact of transitioning from legacy products to software-based solutions. Despite the decrease, hardware products still play a crucial role in OneSpan's overall product offering, particularly in the Security Solutions segment.

Revenue from professional services and support

OneSpan also generates revenue through professional services and support. For the nine months ending September 30, 2024, this revenue segment accounted for approximately $3.9 million, slightly down from $4.7 million in the same period of 2023. During the third quarter of 2024, professional services revenue was around $0.9 million, compared to $1.5 million in the third quarter of 2023.

The decline in professional services revenue is primarily due to a shift in customer preferences towards self-service solutions and subscription models, which have reduced the demand for traditional support services.

Revenue Streams	Q3 2024 (in million $)	Q3 2023 (in million $)	9M 2024 (in million $)	9M 2023 (in million $)
Subscription Fees	33.6	26.2	103.3	79.1
Hardware Sales	12.1	18.8	44.4	53.4
Professional Services	0.9	1.5	3.9	4.7
Total Revenue	56.2	58.8	182.0	172.2

OneSpan's diversified revenue streams reflect its strategic focus on transitioning towards cloud-based services while managing the decline in traditional hardware sales and professional services.

Article updated on 8 Nov 2024

Resources:

1. OneSpan Inc. (OSPN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of OneSpan Inc. (OSPN)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View OneSpan Inc. (OSPN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.