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Segment Information
 9 Months Ended
Sep. 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 nine months ended September 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
September 30,		Nine Months Ended
September 30,
(In thousands, except percentages)2024202320242023
Digital Agreements
Revenue$15,405 $13,012 $45,280 $36,426 
Gross profit (1)$11,031 $9,808 $30,664 $26,839 
Gross margin72 %75 %68 %74 %
Operating income (loss) (2)$3,419 $(4,666)$3,000 $(17,820)
Security Solutions
Revenue$40,837 $45,826 $136,728 $135,752 
Gross profit (3)$30,517 $30,861 $98,620 $87,410 
Gross margin75 %67 %72 %64 %
Operating income (4)$20,200 $15,673 $66,770 $39,827 
Total Company:
Revenue$56,242 $58,838 $182,008 $172,178 
Gross profit$41,548 $40,669 $129,284 $114,249 
Gross margin74 %69 %71 %66 %
Statements of Operations reconciliation:
Segment operating income$23,619 $11,007 $69,770 $22,007 
Corporate operating expenses not allocated at the segment level12,367 15,801 36,771 52,695 
Operating income (loss)$11,252 $(4,794)$32,999 $(30,688)
Interest income, net624 587 1,246 1,675 
Other income (expense), net(1,915)353 (1,293)342 
Income (loss) before income taxes$9,961 $(3,854)$32,952 $(28,671)
(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 nine months ended September 30, 2024.
(2) Digital Agreements operating income (loss) includes $0.6 million and $1.9 million of amortization of intangible assets expense for the three and nine months ended September 30, 2024, respectively, and $0.6 million and $1.7 million of amortization of intangible assets expense for the three and nine months ended September 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 nine months ended September 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 nine months ended September 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 nine months ended September 30, 2024 and 2023:
Three Months Ended September 30,
20242023
(In thousands)Digital AgreementsSecurity SolutionsDigital AgreementsSecurity Solutions
Subscription$15,045 $18,603 $11,807 $14,378 
Maintenance and support327 9,317 995 11,276 
Professional services and other (1)33 820 210 1,333 
Hardware products— 12,097 — 18,839 
Total Revenue$15,405 $40,837 $13,012 $45,826 
Nine Months Ended September 30,
20242023
(In thousands)Digital AgreementsSecurity SolutionsDigital AgreementsSecurity Solutions
Subscription$43,641 $59,642 $32,641 $46,485 
Maintenance and support1,321 29,125 3,121 31,914 
Professional services and other (1)318 3,548 664 4,002 
Hardware products— 44,413 — 53,351 
Total Revenue$45,280 $136,728 $36,426 $135,752 
(1) Professional services and other includes perpetual software licenses revenue, which was less than 1% of total revenue for both the three and nine months ended September 30, 2024 and approximately 1% of total revenue for both the three and nine months ended September 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.