Shares of OneSpan Inc. (NASDAQ: OSPN), a provider of authentication software, plummeted 20.83% 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 the revenue miss, the company's adjusted earnings per share of $0.33 surpassed the consensus estimate of $0.29. Subscription revenue, a key growth driver for OneSpan, increased by 12% to $37.8 million. However, operating income saw a substantial decrease of 27% compared to the same period last year, attributed to higher operating costs.
Adding to investor worries, 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, D.A. Davidson cut its target price for OneSpan from $15 to $13, further impacting investor sentiment. The market's reaction reflects growing uncertainty about the company's ability to meet growth expectations in the face of rising costs and potential market challenges in the authentication software sector.
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