OneSpan Inc.

Good afternoon, ladies and gentlemen. Thank you for attending today's OneSpan second quarter 2022. My name is Tia, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call. We have an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to your host, Joe Maxa, Vice President of Investor Relations with OneSpan. You may proceed.

Thank you, operator. Hello, everyone. And thank you for joining the OneSpan second quarter 2022 earnings conference call. This call is being webcast and can be accessed on the investor relations section of OneSpan's website at investors.onespan.com. Joining me on the call today is Matt Moynihan, OneSpan's chief executive officer, and Jan-Kes Van Gaalen, our interim chief financial officer. This afternoon, after market closed, OneSpan issued a press release announcing results for our second quarter 2022. To access a copy of the press release and other investor information, please visit our website. Following our prepared comments today, we will open the call for questions. Please note that statements made during this conference call that relate to future plans, events, or performance, including the outlook for full year 2022, are forward-looking statements. These statements use words such as believes, anticipates, plans, expects, projects, and similar words, and these statements involve risks and uncertainties and are based on current assumptions. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements. I direct your attention to today's press release and the company's Form 10-K and Form 10-Q filings with the US Securities and Exchange Commission for a discussion of such risks and uncertainties. Also note that certain financial measures that may be discussed on this call are expressed on a non-GAAP basis and have been adjusted from a related GAAP financial measure. We provide an explanation for and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the earnings press release. In addition, Please note that the date of this conference call is August 2nd, 2022. Any forward-looking statements and related assumptions are made as of this date. Except as required by law, we undertake no obligation to update these statements as a result of new information or future events or for any other reason. I will now turn the call over to Matt.

Thank you, Joe, and good afternoon, everyone. Thank you for joining us today. We delivered a solid quarter with 21% ARR growth and 26% subscription revenue growth. And we exceeded our internal revenue ARR and adjusted EBITDA expectations despite foreign currency exchange headwinds, which John Keyes will discuss with you during his financial review. Strength in the quarter was primarily driven by expansion contracts with existing customers, including several seven-figure contracts for e-signature and security solutions. Some of our important wins include the following. A multi-year seven-figure TCV contract with a European customer utilizing several of our security solutions. A six-figure ACV expansion of an existing multi-year seven-figure TCV contract with a top global bank in Europe that had been experiencing higher than expected demand for mobile banking across all lines of business. A 300,000 ACV contract with one of the largest private banks in India. This bank is a long-term DigiPass customer that began buying our mobile security solutions Several e-signature customers in North America, including a seven-figure multi-year new logo win, and several expansion contracts with existing customers that added new lines of business and increased volume commitments. And a customer of ours in the Asia-Pacific region acquired three companies, which were all running a competitor's e-signature platform. This customer standardized on one-span sign e-signature as their solution of choice. Our enterprise class feature set, ease of integration, and ability and willingness to white label our solutions were key factors in many of our wins. Now let me update you on our strategic transformation plan. We are hard at work building a digital agreement security company that matters to the world. Our objective is clear, and that is to protect enterprises as they engage and transact with their customers throughout the transaction lifecycle, from identity verification to authentication virtual interactions, the signing of digital transactions and documents, and eventually secure storage. And we are just getting started. We announced our strategic plan in May at our investor day, along with the second phase of our restructuring plan, designed to enable us to move forward with a more effective and efficient operating model. We are beginning to implement the plan, which we expect will take several months to gain traction as we prepare for its first year, fiscal year 2023. Q2 marked the beginning of the new one-span from a financial reporting perspective. For the first time, we reported operating results from our two new segments, digital agreements and security solutions. We plan to manage the digital agreements business for accelerated growth and market share gains, and security solutions for cash flow, given its more modest growth profile. It is important to note that digital agreement solutions are largely cloud-based and consist of solutions that enable our clients to secure and automate business processes associated with the mission critical digital agreement and customer transaction life cycles. Today, they include our e-signature and virtual room solutions. As our transformation plan progresses, we expect to include additional cloud-based security solutions such as identity verification, authentication, virtual interaction, e-signing, and e-vaulting, leveraging the considerable security talent in our company. Security Solutions consists largely of our historical on-premise software security product portfolio, including identity verification, multi-factor authentication, and transaction signing, such as mobile application security and mobile software tokens, along with DigiPass tokens that are not cloud-connected. A key part of this transformation has been the continual strengthening of our executive leadership team. to bring scale experience to the company. I am pleased to share we have successfully added our new chief information officer, general counsel, and chief product officer. Most of the team is in place and are all highly talented and experienced leaders with proven abilities to drive companies forward. We hope to have the remainder of our key executive positions filled within the next few months. Next, I'll provide color in our go-to-market strategy. We internally launched our One Spam 1000 program, which prioritizes growth at our largest 1,000 enterprise and target accounts. We're hard at work to improve our new enterprise logo acquisition and are targeting increased share of wallet at existing customers through sales enablement training and an increased focus on cross-selling and upselling. We plan to access new routes to market through an increase in alliances and partnerships and are targeting the doubling of our direct sales force by the end of fiscal year 2023. These activities will take time to operationally implement. And the next two quarters will be important to put the building blocks in place to enter FY23 on solid ground and begin the execution of our strategic plan. I spent considerable time with our enterprise customers and prospects this quarter, both in person and virtually across the globe. And I'm pleased to tell you our go-forward strategy is resonating. We have enterprise class solutions today, and we're building the next generation solutions to enable an enterprise class go-to-market capability to take advantage of the opportunities we see ahead. It's clear that digital agreements and cybersecurity are both important markets that will become even more important to enterprises in the years to come. A report from a prominent research firm highlighted this trend just a few weeks ago. At OneSpan, we see the world of agreement processes evolving to one that requires security not at the point of authentication, but throughout the entire transaction lifecycle. Our transaction cloud platform will enable the seamless inclusion of security capabilities, and compelling user experience to help customers secure their entire digital agreement process. With that, Yankees will now take you to our second quarter financials. Yankees.