OneSpan OSPN shares have surged 72.3% year to date, outperforming the Zacks Computer & Technology sector’s appreciation of 31.8% and the Zacks Internet-Software industry’s return of 38.5%.

OSPN shares have also outperformed peers like DocuSign DOCU, Adobe Systems ADBE and Broadcom AVGO in the same time frame.

While Broadcom and DocuSign shares have gained 52.7% and 40.8%, respectively, Adobe shares have lost 9.6% in the year-to-date period.

OSPN’s performance can be attributed to its strong subscription revenue growth, improved product portfolio and a rich partner base.

Expanding Digital Agreements Market Aids OSPN’s Prospects

OneSpan benefits from a rapidly expanding Digital Agreements market, boosting its top-line growth. OSPN has also been benefiting from expansion contracts and new customer acquisitions, supported by the shift to digital-first workflows across industries.

Driven primarily by its eSignature and digital transaction management offerings, OSPN’s subscription revenues grew by 29% in the third quarter of 2024 and accounted for 60% of the total revenues.

OneSpan’s Security segment continues to contribute to Annual Recurring Revenue (ARR) through its authentication and identity verification solutions, maintaining a solid base for future expansion.

OSPN recently partnered with Ping Identity to integrate FIDO-enabled solutions for passwordless and stronger authentication, now available through Ping’s Integration Directory. This collaboration aims to enhance security and user experience, supporting enterprises in the digital era.

Investments in SaaS offerings are driving operational efficiencies and higher gross margins, contributing to long-term scalability and profitability. A strategic shift toward high-margin software revenues is notable, as it is reducing dependency on hardware sales and strengthening profitability.

OSPN Offers Mixed 2024 Guidance

For 2024, OSPN has narrowed the range of its previously issued revenue guidance to account for the reduction in anticipated hardware token shipments, partially offset by improved subscription revenues.

It now expects revenues to be in the range of $238 - $242 million compared to its previous guidance of $238 - $246 million.

ARR is expected to be in the range of $166 - $170 million.

Adjusted EBITDA is expected to be $65 - $67 million, higher than the previous guidance range of $55 - $59 million.

The Zacks Consensus Estimate for fourth-quarter earnings is currently pegged at 27 cents per share, unchanged over the past 30 days and suggesting year-over-year growth of 42.11%.

The Zacks Consensus Estimate for 2024 earnings is currently pegged at $1.34 per share, up by 15.5% over the past 60 days.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

What Should Investors Do With OSPN Stock?

OSPN’s strong growth in subscription revenues is improving its prospects. Its innovative solutions have positioned it for sustained growth, despite challenges in hardware sales.

OSPN currently flaunts a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.

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