Shares of OneSpan Inc. (NASDAQ: OSPN), a provider of authentication software, plunged more than 20% in pre-market trading on Friday, following the release of disappointing third-quarter results and a significant reduction in full-year guidance. The sharp decline reflects growing investor concerns about the company's growth prospects and profitability in an increasingly competitive market.
OneSpan reported third-quarter revenue of $57.1 million, representing a modest 1% year-over-year increase but falling short of analyst expectations of $58.2 million. Despite beating earnings per share estimates with $0.33 against an expected $0.29, the company's operating income saw a substantial 27% decrease compared to the same period last year, attributed to higher operating costs. Subscription revenue, a key growth driver for OneSpan, increased by 12% to $37.8 million, but failed to offset investor concerns.
Adding to the negative sentiment, OneSpan significantly reduced its full-year 2025 guidance. The company now expects revenue between $239 million and $241 million, down from the previous forecast of $245 million to $251 million. Annual Recurring Revenue (ARR) guidance was also cut to between $183 million and $187 million, from the earlier projection of $186 million to $192 million. In response to the earnings report, multiple analysts lowered their price targets, with D.A. Davidson cutting its target from $15 to $13, and Rosenblatt reducing its target to $15 from $17, further impacting investor confidence. The drastic stock price drop reflects the market's growing uncertainty about OneSpan's ability to meet growth expectations and maintain profitability in the face of rising costs and potential market challenges.
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