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Segment Information | 6 Months Ended
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Jun. 30, 2024
Segment Reporting [Abstract] |
Segment Information | 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 OneSpan Sign e-signature, OneSpan Notary, and Identity Verification. This segment also includes costs attributable to our transaction cloud platform. •Security Solutions. Security Solutions consists of our broad portfolio of software products, software development kits (SDKs) and Digipass authenticator devices that are used to build applications designed to defend against attacks on digital transactions across online environments, devices, and applications. The software products and SDKs included in the Security Solutions segment are largely on-premises software products and include multi-factor authentication and transaction signing solutions, such as mobile application security and mobile software tokens. 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. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not directly attributable to a particular segment. The tables below set forth information about the Company’s reportable operating segments for the three and six months ended June 30, 2024 and 2023, along with the items necessary to reconcile the segment information to the totals reported in the accompanying condensed consolidated financial statements.
| Three Months Ended June 30, |  | Six Months Ended June 30,
(In thousands, except percentages) | 2024 |  | 2023 |  | 2024 |  | 2023
Digital Agreements |  |  |  |  |  |  |
Revenue | $ | 15,463 |  |  | $ | 11,862 |  |  | $ | 29,876 |  |  | $ | 23,414 |
Gross profit (1) | $ | 9,741 |  |  | $ | 8,583 |  |  | $ | 19,632 |  |  | $ | 17,031 |
Gross margin | 63 | % |  | 72 | % |  | 66 | % |  | 73 | %
Operating loss (2) | $ | (155) |  |  | $ | (7,121) |  |  | $ | (420) |  |  | $ | (13,154) |
Security Solutions |  |  |  |  |  |  |
Revenue | $ | 45,461 |  |  | $ | 43,871 |  |  | $ | 95,891 |  |  | $ | 89,926 |
Gross profit (3) | $ | 30,600 |  |  | $ | 25,711 |  |  | $ | 68,104 |  |  | $ | 56,549 |
Gross margin | 67 | % |  | 59 | % |  | 71 | % |  | 63 | %
Operating income (4) | $ | 20,693 |  |  | $ | 8,523 |  |  | $ | 46,571 |  |  | $ | 24,154 |
Total Company: |  |  |  |  |  |  |
Revenue | $ | 60,924 |  |  | $ | 55,733 |  |  | $ | 125,767 |  |  | $ | 113,340 |
Gross profit | $ | 40,341 |  |  | $ | 34,294 |  |  | $ | 87,736 |  |  | $ | 73,580 |
Gross margin | 66 | % |  | 62 | % |  | 70 | % |  | 65 | %
Statements of Operations reconciliation: |  |  |  |  |  |  |
Segment operating income | $ | 20,538 |  |  | $ | 1,402 |  |  | $ | 46,151 |  |  | $ | 11,000 |
Corporate operating expenses not allocated at the segment level | 12,901 |  |  | 19,166 |  |  | 24,404 |  |  | 36,894 |
Operating income (loss) | $ | 7,637 |  |  | $ | (17,764) |  |  | $ | 21,747 |  |  | $ | (25,894) |
Interest income, net | 521 |  |  | 585 |  |  | 622 |  |  | 1,088 |
Other income (expense), net | 331 |  |  | 29 |  |  | 622 |  |  | (11) |
Income (loss) before income taxes | $ | 8,489 |  |  | $ | (17,150) |  |  | $ | 22,991 |  |  | $ | (24,817) |
(1) Digital Agreements gross profit includes intangible asset write-off of $0.8 million and internal capitalized software write-off of $0.7 million (see Note 7, Intangible Assets and Note 8, Property and Equipment, net ) for the three and six months ended June 30, 2024. (2) Digital Agreements operating loss includ es $0.6 million and $1.1 million of amortization of intangible assets expense for the three and six months ended June 30, 2024, respectively, and $0.6 million and $1.1 million of amortization of intangible assets expense for the three and six months ended June 30, 2023, respectively. (3) Security Solutions gross profit includes $1.6 million of inventory impairments related to discontinuation of investments in our Digipass CX product for the three and six months ended June 30, 2023 (see Note 5, Inventories, net). (4) Security Solutions operating income includes $1.6 million of inventory impairments and $1.4 million of capitalized software write-offs related to discontinuation of investments in our Digipass CX product for the three and six months ended June 30, 2023 (see Note 5, Inventories, net and Note 8, Property and Equipment, net). 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 and six months ended June 30, 2024 and 2023:
| Three Months Ended June 30,
| 2024 |  | 2023
(In thousands) | Digital Agreements |  | Security Solutions |  | Digital Agreements |  | Security Solutions
Subscription | $ | 14,785 |  |  | $ | 14,857 |  |  | $ | 10,486 |  |  | $ | 12,499 |
Maintenance and support | 490 |  |  | 9,742 |  |  | 1,130 |  |  | 10,473 |
Professional services and other (1) | 188 |  |  | 1,123 |  |  | 246 |  |  | 1,253 |
Hardware products | — |  |  | 19,739 |  |  | — |  |  | 19,646 |
Total Revenue | $ | 15,463 |  |  | $ | 45,461 |  |  | $ | 11,862 |  |  | $ | 43,871 |
| Six Months Ended June 30,
| 2024 |  | 2023
(In thousands) | Digital Agreements |  | Security Solutions |  | Digital Agreements |  | Security Solutions
Subscription | $ | 28,597 |  |  | $ | 41,039 |  |  | $ | 20,834 |  |  | $ | 32,107 |
Maintenance and support | 994 |  |  | 19,808 |  |  | 2,126 |  |  | 20,638 |
Professional services and other (1) | 285 |  |  | 2,728 |  |  | 454 |  |  | 2,669 |
Hardware products | — |  |  | 32,316 |  |  | — |  |  | 34,512 |
Total Revenue | $ | 29,876 |  |  | $ | 95,891 |  |  | $ | 23,414 |  |  | $ | 89,926 |
(1) Professional services and other includes perpetual software licenses revenue, which was approximately 1% of total revenue for both the three and six months ended June 30, 2024 and approximately 1% of total revenue for both the three and six months ended June 30, 2023. 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.

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- 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 Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 48 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482785/280-10-55-48 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards 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