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Segment Information
 12 Months Ended
Dec. 31, 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. The Company's reportable segments are businesses units that offer different products and services and are as follows:

•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 on-premises and, to a lesser extent, cloud software products, and include multi-factor authentication and transaction signing solutions, such as mobile application security and mobile software tokens.

•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.

The CODM evaluates performance for both reportable segments based on segment revenue, gross margins and operating income (loss). When using these metrics, the CODM considers forecast-to-actual variances on a quarterly basis when making decisions about the allocation of operating and capital resources to each segment. The CODM also uses these metrics for evaluating pricing strategy to assess the performance of each segment by comparing the results of each segment with one another and in determining the compensation of certain employees.

Segment operating income (loss) consists of the revenues generated by a segment, less the direct costs of revenue, sales and marketing expenses, research and development expenses, general and administrative expenses, restructuring and other related charges, and amortization of intangible assets expense that are incurred directly by a segment. Sales and marketing and research and development expenses were determined to be significant segment expenses. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. The accounting policies of both reportable segments are the same as those described in Note 2, Summary of Significant Accounting Policies.

Prior to 2023, the Company allocated certain cost of goods sold and operating expenses to its two reportable operating segments using a direct cost allocation and an allocation based on revenue split between the segments. As a result of the ongoing strategic transformation, the Company refined its operating segment allocation methodology to better align internal and external costs more directly to where the employee efforts are being spent on each segment moving forward. The revised methodology was applied on a prospective basis beginning in 2023. As a result of this change, there was an increase in cost of goods sold and operating expenses being allocated to the Digital Agreements segment, which better aligned with the investments the Company is making in that segment.

The tables below set forth information about the Company’s operating segments for the years ended December 31, 2024, 2023, and 2022, along with the items necessary to reconcile the segment information to the totals reported in the accompanying consolidated financial statements.
Year Ended December 31, 2024
(In thousands)Security SolutionsDigital Agreements
Corporate and Other
Total
Revenue
$182,187$60,992$—$243,179
Cost of goods sold49,31919,281368,603
Gross profit (1)
132,86841,711(3)174,576
Gross margin73%68%*72%
Sales and marketing24,68415,6584,20444,546
Research and development16,13216,11717432,423
Other segment items (2)(4)1,9904,32146,49152,802
Operating income (loss) (3)(5)90,0625,615(50,872)44,805
Interest income, net
1,807
Other income (expense), net
(125)
Income (loss) before income taxes
$46,487
Year Ended December 31, 2023
(In thousands)Security SolutionsDigital Agreements
Corporate and Other
Total
Revenue
$184,181$50,925$—$235,106
Cost of goods sold64,20713,183177,391
Gross profit119,97437,742(1)157,715
Gross margin65%74%*67%
Sales and marketing35,35631,5663,31370,235
Research and development18,89418,68783938,420
Other segment items (2)(4)5,5346,01466,38377,931
Operating (loss) income (3)(5)60,190(18,525)(70,536)(28,871)
Interest income, net
2,090
Other income (expense), net
(532)
Income (loss) before income taxes
$(27,313)
Year Ended December 31, 2022
(In thousands)Security SolutionsDigital Agreements
Corporate and Other
Total
Revenue
$170,605$48,401$—$219,006
Cost of goods sold59,52310,913—70,436
Gross profit
111,08237,488—148,570
Gross margin65%77%*68%
Sales and marketing42,13516,3052,50960,949
Research and development26,12811,7203,88741,735
Other segment items (2)(4)10,7684,11558,11873,001
Operating income (loss) (3)(5)32,0515,348(64,514)(27,115)
Interest income, net
595
Other income (expense), net
14,827
Income (loss) before income taxes
$(11,693)
* Percentage not meaningful
(1) Digital Agreements gross profit includes an intangible asset write-off of $0.8 million and an internal capitalized software write-off of $0.7 million for the year ended December 31, 2024 (see Note 8, Intangible Assets, net and Note 9, Property and Equipment, net).
(2) Security Solutions other segment items includes general and administrative expense, restructuring and other related charges, and amortization of intangibles for the years ended December 31, 2024, 2023, and 2022.
(3) Security Solutions operating income includes $0.9 million, $0, and $1.7 million of total amortization and depreciation expense for the years ended December 31, 2024, 2023, and 2022, respectively.
Security Solutions operating income includes $2.0 million, $5.5 million, and $9.0 million of restructuring and other related charges for the years ended December 31, 2024, 2023, and 2022, respectively.
(4) Digital Agreements other segment items includes general and administrative expense, restructuring and other related charges, and amortization of intangibles for the years ended December 31, 2024, 2023, and 2022.
(5) Digital Agreements operating income includes $6.2 million, $3.7 million, and $2.3 million of total amortization and depreciation for the years ended December 31, 2024, 2023, and 2022, respectively.
Digital Agreements operating income includes $1.7 million, $3.7 million, and $1.9 million of restructuring and other related charges for the years ended December 31, 2024, 2023, and 2022, respectively.
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 operating segments for the years ended December 31, 2024, 2023, and 2022.
Years Ended December 31,
202420232022
(In thousands)Security SolutionsDigital AgreementsSecurity SolutionsDigital AgreementsSecurity SolutionsDigital Agreements
Subscription$80,555 $58,848 $60,550 $45,886 $47,124 $42,029 
Maintenance and support38,342 1,736 42,240 4,143 42,894 5,451 
Professional services and other (1)4,439 408 5,425 896 7,087 921 
Hardware products58,851 — 75,966 — 73,500 — 
Total Revenue$182,187 $60,992 $184,181 $50,925 $170,605 $48,401 
(1) Professional services and other includes perpetual software licenses revenue, which was immaterial for the year ended December 31, 2024 and approximately 1%, and 2% of total revenue for the years ended December 31, 2023 and 2022, respectively.
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.
Geographic, Customer and Supplier Information
The Company classifies sales by customers’ locations in three geographic regions: 1) EMEA, which includes Europe, the Middle East, and Africa; 2) the Americas, which includes sales in North, Central, and South America and Canada; and 3) Asia Pacific, which also includes Australia and New Zealand.
(In thousands)
Europe,
Middle East,
Africa (EMEA)		AmericasAsia PacificTotal
2024
Revenue$108,555 $86,803 $47,821 $243,179 
Long-lived assets$7,479 $20,699 $512 $28,690 
2023
Revenue$111,568 $80,057 $43,481 $235,106 
Long-lived assets$5,783 $18,795 $315 $24,893 
2022
Revenue$100,298 $77,740 $40,968 $219,006 
Long-lived assets$4,856 $15,270 $577 $20,703 
For the years 2024, 2023, and 2022, the top 10 customers contributed 20%, 22% and 23%, respectively, of total worldwide revenue. During 2024, all of the Company's hardware products are assembled by four independent factories in China and one independent factory in Romania