Q1 2024 OneSpan Inc Earnings Call
Okay.
Operator: Good day. Thank you for standing by.
Operator: Welcome to OneSpan's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Joe Maxa, Vice President of Resolutions. Please go ahead.
Good day, Thank you for standing by welcome.
Operator: To watch brands first quarter 2024 earnings conference call at this time, all participants on a listen only mode.
Joseph Anderson Maxa: The speaker's presentation, there will be a question and answer session.
Operator: Ask a question during the session you will need to press star one on your telephone.
Joseph Anderson Maxa: In automotive messages fights and Johan is race they.
Operator: Please note that today's conference is being recorded.
Operator: I will now hand, the conference over to your Speaker House, Joe Maxa I Express enough. Mr. Relations. Please go ahead.
Joseph Anderson Maxa: Thank you, Operator. Hello, everyone, and thank you for joining the OneSpan First Quarter 2024 Earnings Conference. This call is being webcast and can be accessed in the investor relations section of OneSpan's website at investors.onespan.com. Joining me on the call today are Victor Limongelli, our Interim Chief Executive Officer, and Jorge Martell, our Chief Financial Officer. This afternoon, after market close, OneSpan issued a press release announcing results for our first quarter of 2024.
Joseph Anderson Maxa: Thank you operator, Hello, everyone and thank you for joining the <unk> first quarter 2024 earnings conference call.
Joseph Anderson Maxa: This call is being webcast and can be accessed on the Investor Relations section of one spans website at investors got one span dot com.
Victor T. Limongelli: Joining me on the call today is Victor Lamont, Julie our interim Chief Executive Officer, and Jorge Martell, Our Chief Financial Officer.
Joseph Anderson Maxa: This afternoon after market close one spent issued a press release announcing results for our first quarter 2024 to.
Joseph Anderson Maxa: To access a copy of the press release and other investor information, please visit our website. Following our prepared comments today, we will open the call for questions. Please note that statements made during this conference call that relate to future plans, events, or performance, including the outlook for full year 2024 and other long-term financial targets, are forward-looking statements. These statements involve risks and uncertainties and are based on current assumptions. Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements.
Joseph Anderson Maxa: To access a copy of the press release and other Investor information. Please visit our website.
Joseph Anderson Maxa: Following our prepared comments today, we will open the call for questions.
Joseph Anderson Maxa: Please note that statements made during this conference call that relate to future plans events or performance, including the outlook for full year 2024, and other long term financial targets are forward looking statements.
Joseph Anderson Maxa: These statements involve risks and uncertainties and are based on current assumptions.
Joseph Anderson Maxa: Consequently, actual results could differ materially from the expectations expressed in these forward looking statements.
Joseph Anderson Maxa: I direct your attention to today's press release and the company's filings with the U.S. Securities and Exchange Commission for a discussion of such risks and uncertainty. Also note that certain financial measures that may be discussed on this call are expressed on a non-GAAP basis and have been adjusted from a related GAAP financial measure. We have provided an explanation for and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the earnings press release and in the investor presentation available on our website.
Joseph Anderson Maxa: I direct your attention to today's press release, and the company's filings with the U S Securities and Exchange Commission for a discussion of such risks and uncertainties.
Joseph Anderson Maxa: Also note that certain financial measures that may be discussed on this call are expressed on a non-GAAP basis and have been adjusted from a related GAAP financial measure.
Joseph Anderson Maxa: We have provided an explanation for and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the earnings press release and in the Investor presentation available on our website.
Joseph Anderson Maxa: In addition, please note that the date of this conference call is May 2, 2024. Any forward-looking statements and related assumptions are made as of this date, and, except as required by law, we undertake no obligation to update these statements as a result of new information or future events or for any other reason. I will now turn the call over to Victor. Thank you.
Joseph Anderson Maxa: In addition, please note that the date of this conference call is may 2nd 2024.
Victor: Any forward looking statements and related assumptions are made as of this date.
Victor: Except as required by law, we undertake no obligation to update these statements as a result of new information or future events or for any other reason.
Joseph Anderson Maxa: I will now turn the call over to Victor.
Victor T. Limongelli: Thank you, Joe. And good afternoon, everyone.
Victor: Thank you Joe and good afternoon, everyone. Thank you for joining us today.
Victor T. Limongelli: Thank you for joining us today. I want to start out by congratulating the entire OneSpan team for delivering another solid quarter, which exceeded our internal revenue and adjusted EBITDA expectations. Revenue grew 13% year-over-year to $65 million, and adjusted EBITDA was $20 million with 31% of revenue. AR growth also exceeded our internal expectations. It grew 9% year-over-year to $155 million and offset the headwinds we discussed on our last earnings call related to expired contracts for sunsetted products. 2-1 was my first full quarter leading OneSpan, and I continue to be impressed with the team's work ethic and dedication to operational rigor.
Victor T. Limongelli: I wanted to start out by congratulating the entire one span per.
Victor T. Limongelli: For delivering another solid quarter, which exceeded our internal revenue and adjusted EBITDA expectations.
Victor T. Limongelli: Revenue grew 13% year over year to $65 million and adjusted EBITDA was $20 million.
Victor T. Limongelli: 31% of revenue.
Victor T. Limongelli: Our growth also exceeded our internal expectations. It grew 9% year over year to $155 million and offset the headwinds we discussed on our last earnings call related to expired contracts of sunset It products.
Victor T. Limongelli: Q1 was my first full quarter, leading wants me and I continue to be impressed with the team's work ethic and dedication to operational rigor.
Victor T. Limongelli: For example, one of the major factors in the Q1 outperformance was that our renewal team did a great job closing several delayed renewals earlier than expected, which increased Q1 revenue by a few million dollars. And our APAC team did excellent work delivering its strongest quarter in terms of year-over-year growth in more than three years. In addition to the impact from delayed renewals closing in Q1, our first quarter top line outperformance was largely driven by expansion contracts from existing customers, who continue to place high value on our industry-leading anti-fraud solutions designed to mitigate potential hackers.
Victor T. Limongelli: For example, one of the major factors in the Q1 outperformance was that our renewals team.
Victor T. Limongelli: Great job closing several delayed renewals earlier than expected, which increased Q1 revenue by a few million dollars.
Victor T. Limongelli: And our APAC team.
Victor T. Limongelli: Excellent work delivering its strongest quarter in terms of year over year growth in more than three years.
Victor T. Limongelli: In addition to the impact from delayed renewals closing in Q1, our first quarter top line outperformance was largely driven by expansion contracts from existing security customers.
Victor T. Limongelli: Continue to place high value on our industry, leading anti fraud solutions designed to mitigate potential hacking attacks.
Victor T. Limongelli: Profitability outperformance was driven by strong revenue, favorable product mix, and increased operating leverage resulting from the right sizing of our cost structure over the last several quarters. We also generated $27 million in cash from operations and ended the quarter with $64 million in cash. We have two business units, security solutions, and digital agreements.
Victor T. Limongelli: Profitability outperformance was driven by strong revenue.
Victor T. Limongelli: Verbal product mix and increased operating leverage resulting from the right sizing of our cost structure over the last several quarters.
Victor T. Limongelli: We also generated $27 million in cash from operations and ended the quarter at $64 million in cash.
Victor T. Limongelli: Our two business units.
Victor T. Limongelli: Security solutions and digital agreements, both had strong quarters with solid year over year revenue growth and significantly improved profitability.
Victor T. Limongelli: Both companies had strong quarters with solid year-over-year revenue growth and significantly improved profitability. Revenue growth and security were primarily driven by strong increases in software licenses, including approximately $3 million from the past two renewals just discussed that we had originally expected to close in Q2. We also saw several annual contracts renewed with multi-year term lengths, resulting in about $2 million of additional revenue as compared to our fortune. And we had solid double-digit ACV growth and security, driven in part by increased demand for our cloud-based authentication solution, OCA, including a new seven-figure ACV contract and the expansion of a two-year contract to the mid-seven figures, with new ACV of nearly $1 million. DigiPass hardware revenue declined, as expected.
Victor T. Limongelli: Revenue growth in security was primarily driven by strong increases in software licenses, including approximately $3 million from the past do renewables just discussed that we had originally expected to close in Q2.
Victor T. Limongelli: We also saw several annual contracts review with multiyear term lengths, resulting in about $2 million of additional revenue as compared to our forecast.
Victor T. Limongelli: And we had solid double digit ACB growth in security driven in part by increased demand for our cloud based authentication solution.
Victor T. Limongelli: Including a new seven figure ACB contract and the expansion of a two year contract to the mid seven figures with new ACB of nearly $1 million.
Victor T. Limongelli: DIGIPASS hardware revenue declined as expected last quarter, we discussed a few orders that had shipped in Q4 to the tune of approximately $2 million.
Victor T. Limongelli: Last quarter, we discussed a few orders that shipped in Q4 to the tune of approximately $2 million that were originally scheduled to ship in the first quarter of 2021. Revenue growth in digital agreements was primarily driven by expansion of cloud subscriptions from existing testers. Our profitability and cash flow generation improved significantly in the first quarter as compared to the prior year period. For the balance of the year, seasonal software and hardware revenue patterns suggest more modest revenue growth and profit margins in Q2 and in the second half of the year. We will continue to focus on operational excellence and on driving efficient revenue growth to help ensure we achieve our profitability and cashflow commitments. With that, I will turn the call over to Jorge. Jorge?
Jorge: That were originally scheduled to ship in the first quarter of 2024.
Jorge: Revenue growth in digital agreements was primarily driven by expansion of cloud subscriptions from existing customers.
Jorge: Our profitability and cash flow generation improved significantly in the first quarter as compared to the prior year period.
Victor T. Limongelli: For the balance of the year seasonal software and hardware revenue patterns suggest more modest revenue growth and profit margins in Q2 and in the second half.
Jorge: We will continue to focus on operational excellence and are driving efficient revenue growth to help ensure we achieve our profitability and cash flow commitments with that I will turn the call over to Jorge Jorge.
Jorge Garcia Martell: Thank you, Victor, and good afternoon, everyone. I'll start by providing an update on our cost reduction activities. Cumulative annualized cost savings to date from our restructuring efforts reached $64.5 million, in line with the $64 to $65 million target range we previously announced, although achieved earlier than our end of 2024 forecast. We now expect total cumulative annualized cost savings to approximate $75 million by the end of 2024. Now turning to our first quarter results. I'll provide a brief overview of our results and then discuss each business unit in more detail before providing an update on our 2024 outlook. I will then turn the call back to Victor for his closing remarks.
Speaker Change: Thank you Victor and good afternoon, everyone I will start by providing an update on our cost reduction activities.
Jorge Garcia Martell: Cumulative annualized cost savings to date from our restructuring efforts reached $64 5 million in line with the 64 to 65 million target range. We previously announced although achieved earlier than end of 2024 forecast.
Jorge Garcia Martell: We now expect total cumulative annualized cost savings to approximately $75 million by the end of 2024.
Jorge Garcia Martell: ARR grew 9% year-over-year to $155 million. ARR specific to subscription contracts grew 17% to 128 million and accounted for approximately 83% of total ARR. The net retention rate, or NRR, was 107 percent.
Jorge Garcia Martell: Now turning to our first quarter results.
Jorge Garcia Martell: The company was impacted by a few percentage points, as expected, due to the timing of contract expirations related to Sunset Products. First quarter 2024 revenue grew 13% to $64.8 million as compared to the same period last year, driven by 9% growth in security solutions and 25% growth in digital. Subscription revenue grew 34% to $40 million. Security subscriptions grew 34%, and digital agreement subscriptions grew 33%. The strong growth in subscription revenue was partially offset by a decline in maintenance revenue, which is by design as we transition to SAS and subscription licenses and declining hardware.
Jorge Garcia Martell: I'll provide a brief overview of our results and then discuss each business unit in more detail before providing an update to our 2020 for outlook.
Jorge Garcia Martell: I'll, then turn the call back to Victor for closing remarks.
Jorge Garcia Martell: <unk> grew 9% year over year to $155 million.
Jorge Garcia Martell: Specific to subscription contracts grew 17% to 128 million and accounted for approximately 83% of total <unk>.
Jorge Garcia Martell: Net retention rate or <unk> was 107% U.
Jorge Garcia Martell: It was impacted by a few percentage points as expected due to the timing of contract explorations related to sunset products.
Jorge Garcia Martell: First quarter 2024 revenue grew 13% to $64 8 million as compared to the same period last year, driven by 9% growth in our security solutions and 25% growth in digital agreements.
Jorge Garcia Martell: Subscription revenue grew 34% to $40 million secured.
Jorge Garcia Martell: Security subscriptions grew to 34% and digital agreement subscriptions grew 33%.
Jorge Garcia Martell: The strong growth in subscription revenue was partially offset by other cloud and maintenance revenue, which was by design as we transition to SaaS and subscription licenses and a declining hardware.
Jorge Garcia Martell: First quarter gross margin was 73% compared to 68% in the prior year quarter, driven primarily by favorable product mix, including record subscription revenue and seasonally low hardware, partially offset by an increase in depreciation of capitalized software. First quarter GAAP operating income was $14.1 million compared to an operating loss of $8.1 million in the first quarter of last year. Increases in revenue and gross profit margin and a decrease in operating expenses primarily from lower headcount Non-GAAP earnings per share, which excludes long-term incentive compensation, amortization, restructuring charges, other non-recurring items, and the impact of tax adjustments, was $0.43 in the first quarter of 2024.
Jorge Garcia Martell: First quarter gross margin was 73% compared to 68% in the prior year quarter, driven primarily by favorable product mix, including a record subscription revenue and seasonally low hardware, partially offset by an increase in depreciation of capital.
Jorge Garcia Martell: Software costs.
Jorge Garcia Martell: First quarter GAAP operating income was $14 1 million compared to an operating loss of $8 1 million in the first quarter of last year.
Jorge Garcia Martell: Increases in revenue and gross profit margin and a decrease in operating expenses, primarily from lower head count related costs were partially offset by an increase in restructuring and other related charges.
Jorge Garcia Martell: GAAP net income per share was 35 cents in the first quarter of 2024 compared to a GAAP net loss per share of 21 in the same period last year.
Jorge Garcia Martell: non-GAAP earnings per share, which excludes long term incentive compensation our <unk>.
Jorge Garcia Martell: Asian restructuring charges and other nonrecurring items and the impact of tax adjustments was <unk> 43 in the first quarter of 2024.
Jorge Garcia Martell: This compares to a non-gap loss per share of nine cents in the first quarter of 2023. First quarter adjusted EBITDA and adjusted EBITDA margin were $19.8 million and 30.5 percent, respectively, compared to negative $1.6 million and negative 3 percent in the same period of last year, respectively. Turning to our security solution business unit,
Jorge Garcia Martell: This compares to a non-GAAP loss per share up nine cents in the first quarter of 2023.
Jorge Garcia Martell: First quarter, adjusted EBITDA, and adjusted EBITDA margin was $19 8 million and 35% compared to negative $1 6 million and negative 3% in the same period of last year, respectively.
Jorge Garcia Martell: Turning to our security solutions business unit.
Jorge Garcia Martell: ARR grew 7% year-over-year in the first quarter to $100 million. However, ARR growth was impacted by approximately one and a half percentage points due to the transition of identity verification products to our digital agreements business unit at the beginning of the quarter. Subscription ARR grew 16% to $77 million, and was partially upset by an expected declining perpetual maintenance ARR. We are transitioning perpetual days maintenance contracts to subscription overtime. First quarter revenue increased 9% to $50.4 million.
Jorge Garcia Martell: <unk> grew 7% year over year in the first quarter to $100 million.
Jorge Garcia Martell: <unk> growth was impacted by approximately one five percentage points due to the transition of identity verification products towards digital agreements business unit at the beginning of the quarter.
Jorge Garcia Martell: Subscription <unk> grew 16% to $77 million and was partially upset by an expected decline in perpetual maintenance.
Jorge Garcia Martell: We are transitioning perpetual base maintenance contracts to subscription over time.
Jorge Garcia Martell: First quarter revenue increased 9% to $54 million.
Jorge Garcia Martell: Subscription revenue increased 34% to $26.2 million, driven by strong renewals, primarily expansion of licenses from existing customers for on-premise mobile security and authentication solutions. The earlier-than-expected closing of past renewals and larger-than-expected increase in multi-year term contracts, as discussed by Victor, resulted in approximately $5 million of revenue upside in the quarter. Maintenance and support revenue declined slightly year-over-year to $10.1 million, with growth from on-premise subscriptions offset by the expected decline from legacy perpetual contracts.
Jorge Garcia Martell: Subscription revenue increased 34% to $26 2 million driven by strong renewals, primarily expansion of licenses from existing customers around premise mobile security and authentication solutions the.
Jorge Garcia Martell: The earlier than expected close in the past the renewals and larger than expected increase in multiyear term contracts as discussed by Victor resulted in approximately $5 million of revenue upside in the quarter.
Jorge Garcia Martell: Maintenance and support revenue declined slightly year over year to $10 1 million with growth from on premise subscriptions offset by the expected declines from our legacy perpetual contracts.
Jorge Garcia Martell: Did you notice hardware token revenue decrease by 2.3 million, or 15%, as compared to the same quarter last year? This was primarily a result of a few contracts totaling approximately $2 million that closed earlier than expected and shipped in Q4 of last year instead of the first quarter of this year. Q1 2024 gross profit margin was 74% as compared to 67% in the first quarter of 2023. The increase in margin is primarily attributable to favorable product mix, including a strong increase in high-margin subscription revenue and a decrease in lower-margin hardware revenue. As a reminder, security growth margin is typically highest in the first quarter of the year due to product mix favoring software, but it can fluctuate on a quarterly basis due to product and customer.
Jorge Garcia Martell: Did you pass hardware token revenue decreased by two points to $3 billion or 15% as compared to the same quarter last year.
Jorge Garcia Martell: This was primarily a result of a few contracts totaling approximately $2 million at close earlier than expected and shipped in Q4 of last year instead of the first quarter of this year.
Jorge Garcia Martell: Q1, 2024 gross profit margin was 74% as compared to 67% in the first quarter of 2023.
Jorge Garcia Martell: The increase in margin is primarily attributable to favorable product mix, including strong increase in high margin subscription revenue and a decrease in lower margin hardware revenue.
Jorge Garcia Martell: As a reminder, security gross margin is typically highest in the first quarter of the year due to product mix favoring software and can fluctuate on a quarterly basis due to product and customer mix.
Jorge Garcia Martell: Operating income was $25.9 million, and operating margin was 51 percent, compared to $15.6 million and 34 percent in last year's first quarter. The strong increases in revenue and gross profit margin, combined with reduced operating expenses, primarily attributed to restructuring and other cost reduction activities, drove the improved performance. I'll now discuss the financial results for digital equity. ARR grew 14% year-over-year to $55 million. ARR growth benefited by approximately three percentage points due to the relocation of identity verification products to digital agreements at the beginning of the quarter.
Jorge Garcia Martell: Operating income was $25 9 million and operating margin was 51% compared to $15 6 million and study 4% in last year's first quarter.
Jorge Garcia Martell: Strong increases in revenue and gross profit margin combined with reduced operating expenses, primarily attributed to restructuring and other cost reduction activities drove the performance.
Jorge Garcia Martell: I'll now discuss the financial results with digital agreements.
Jorge Garcia Martell: <unk> grew 14% year over year to $55 million.
Jorge Garcia Martell: Our growth benefited by approximately three percentage points due to the relocation of identity verification products to teach out agreements at the beginning of the quarter.
Jorge Garcia Martell: Subscription <unk> grew 18% year over year to $51 million.
Jorge Garcia Martell: Maintenance they are declined as expected to the sunsetting of our on premise products.
Jorge Garcia Martell: Subscription ARR grew 18% year-over-year to $51 million; maintenance ARR declined, as suspected due to the sunset of our on-premise product. First quarter revenue grew 25% to $14.4 million. Subscription revenue consisting primarily of cloud solutions grew 33% in Q1 2024 to $13.8 million and included an unexpected $0.5 million short-term on-premise contract renewal, which we do not expect to repeat in future quarters. SAS revenue grew 29% to $13.3 million. Maintenance and support revenue was half a million as compared to one million in Q1 of last year.
Jorge Garcia Martell: First quarter revenue grew 25% to $14 4 million.
Jorge Garcia Martell: Subscription revenue consisted primarily of cloud solutions grew 33% in Q1 2024 to $13 8 million and included an unexpected 0.5 million short term on premise contract renewal, which we do not expect to repeat in future quarters.
Jorge Garcia Martell: SaaS revenue grew 29% to $13 3 million.
Jorge Garcia Martell: Maintenance and support revenue was.
Jorge Garcia Martell: $1 million as compared to $1 million in Q1 of last year.
Jorge Garcia Martell: The year-over-year decline is attributed to the sunsetting of our on-premise e-signature solution. First quarter gross profit margin was 69% as compared to 73% in the prior year quarter. The declining gross margin is mainly related to the following two items that we discussed last quarter.
Jorge Garcia Martell: The year over year decline is attributed to the sunsetting of our on premise E signature solution.
Jorge Garcia Martell: First quarter gross profit margin was 69% as compared to 73% in the prior year quarter.
Jorge Garcia Martell: The declining gross margin is mainly related to the following two items that we discussed last quarter.
Jorge Garcia Martell: One, we relocated certain costs primarily related to customer support and professional services, and Sales and Marketing Spends to Cost of Revenue. We did this to better reflect where employees are spending their time.
Jorge Garcia Martell: One we relocate as sort of costs, primarily related to customer support and professional services from sales and marketing expense to cost of revenues.
Jorge Garcia Martell: We did this to better reflect our employees are spending their time.
Jorge Garcia Martell: And two, depreciation of capitalized software costs has increased now that certain R&D projects are in product. Operating loss was $0.3 million as compared to an operating loss of $6 million in Q1 last year. The improved performance was driven by an increase in revenue and a decrease in operating expenses primarily attributed to the restructuring and other cost reduction activities, which were partially offset by an increase in cost of revenue.
Jorge Garcia Martell: And to depreciation of capitalized software costs have increased now that certain R&D projects are in production.
Jorge Garcia Martell: Operating loss was <unk> 3 million as compared to an operating loss of $6 million in Q1 last year.
Jorge Garcia Martell: The improved performance was driven by an increase in revenue and a decrease in operating expenses, primarily attributed to the restructuring and other cost reduction activities and were partially offset by an increasing cost of revenues.
Jorge Garcia Martell: Now turning to our balance sheet, we ended the first quarter of 2024 with $63.9 million in cash and cash equivalents, compared to $42.5 million at the end of 2023. Due in part to the seasonality in our collections, with the first quarter being typically strong, we generated $27 million in cash from operations during the quarter. We use three million in capital expenditures, primarily capitalized software costs, and three million for restructuring payments. We have no long-term debt.
Jorge Garcia Martell: Now turning to our balance sheet. We ended the first quarter of 2024 with $63 9 million in cash and cash equivalents compared to $42 5 million at the end of 2023.
Jorge Garcia Martell: Julian part of the seasonality in our collections with the first quarter. It would be typically strong we generated $27 million in cash from operations during the quarter.
Jorge Garcia Martell: We use $3 billion of capital expenditures, primarily capitalized software costs and $3 million for restructuring payments.
Jorge Garcia Martell: Have no long term debt.
Jorge Garcia Martell: Geographically, revenue by region in the first quarter of 2024 was 49% from EMEA, 33% from the Americas, and 18% from Asia Pacific. This compares to 48%, 36%, and 18% from the same regions in the first quarter of last year, respectively. I'll now provide our financial outlook. For the full year 2024, although we are, of course, pleased with the Act Q1 outperformance, given the time-shifted nature of certain items in Q1, such as the 3 million delay renewals closing in Q1 rather than Q2, at this point, we are affirming our previously issued revenue and ARR guidance.
Jorge Garcia Martell: Geographically our revenue mix by region in the first quarter of 2024 was 49% from EMEA, 33% for the Americas and 18% from Asia Pacific.
Jorge Garcia Martell: This compares to 48%, 36% and 18% from the same regions in the first quarter of last year, respectively.
Jorge Garcia Martell: I'll now provide our financial outlook.
Jorge Garcia Martell: For the full year 2024, although we are of course pleased with the Q1 outperformance given that time shifted nature of certain items in Q1, such as a $3 million of delay renewals close in in Q1, rather than Q2 at this point, we are affirming our previously issued revenue guidance.
Jorge Garcia Martell: We are increasing our adjusted EBITDA guidance to reflect an increase in operating leverage for the year. More specifically, we expect revenue to be in the range of $238 to $246 million. ARR to end the year in the range of $160 to $168 million, and Adjusted EBITDA to be in the range of $51 to $55 million as compared to our previous guidance range of $47 to $52 million. Taking into consideration of the seasonality of collections in our business, we expect to end the year with more than $70 million of cash, absent additional share repurchase.
Jorge Garcia Martell: Guidance, we are increasing our adjusted EBITDA guidance to reflect an increase in operating leverage for the year.
Jorge Garcia Martell: More specifically, we expect revenue to be in the range of $238 million to $246 million.
Jorge Garcia Martell: To end the year in the range of $160 million to $168 million.
Jorge Garcia Martell: And adjusted EBITDA to be in the range of $51 million to $55 million as compared to our previous guidance range of $47 million to $52 million.
Jorge Garcia Martell: With due consideration of seasonality of collections in our business, we expect to end the year with more than $70 million of cash absent additional share repurchases.
Jorge Garcia Martell: That concludes my remarks. Victor? Thanks, Jorge.
Jorge Garcia Martell: That concludes my remarks Victor.
Victor T. Limongelli: Thanks, Jorge. Just to recap, we had an excellent first quarter, and I'm very proud of the OneSpan team's performance. Beyond the first quarter, however, we know that we have more work to do in order to deliver an excellent year. We're going to continue to focus our efforts on delivering value to our customers and thereby creating value for our shareholders. Jorge and I will now be happy to take your questions. Thank you.
Victor T. Limongelli: Thanks, Jorge just to recap we had an excellent first quarter and I'm very proud of the <unk> team's performance.
Victor T. Limongelli: Beyond the first quarter. However, we know that we have more work to do in order to deliver an excellent year.
Victor T. Limongelli: Going to continue to focus our efforts on delivering value to our customers and thereby creating value for our shareholders.
Jorge: And I will now be happy to take your questions.
Operator: Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1-1 again. Please stand by while we compile the Q&A roster. Now, the first question comes from the line of Trevor Rampa with BTIG. Your line is open.
Jorge: Thank you, ladies and gentlemen to ask a question you will need the best Star one on your telephone and link planning to be announced to withdraw your question simply press Star One again, please standby, while we compile the Q&A roster.
Trevor Rampa: Hi guys, this is Trevor on behalf of Gray. Congratulations on a great quarter all around. So first one for me, now that we're about four months into the year, how do you guys feel about your visibility in your pipeline for both the next quarter and the second half of the year? And I was wondering if you could touch on any linearity that you saw throughout Q1 as well.
Speaker Change: First question is coming from the line of Jeffrey <unk> with <unk>. Your line is now open.
Trevor Rampa: Thanks, Trevor. What was the last part of the question? Could you repeat that?
Speaker Change: Hi, guys. This is trevor on for Gray.
Trevor Rampa: Congrats on a great quarter all around.
Trevor Rampa: So first one for me and other of about four months into the year. How do you guys feel about your visibility on your pipeline for the next quarter in the second half of the year.
Speaker Change: I was wondering if you could touch on any linearity that you saw throughout Q1 as well.
Speaker Change: Thanks, Trevor what was the last part of the question could you repeat that.
Trevor Rampa: Yeah, just wondering if you could touch on any linearity you saw throughout Q1, or if there were any one-time items you saw besides some of the things you mentioned on the call.
Trevor Rampa: Yes, just wondering if you could touch on any linearity you saw throughout Q1 or if there's any like one time items you saw besides some of the things you mentioned on the call.
Victor T. Limongelli: Well, we did mention a few things that were more one-time in nature. The big one in Q1 was the delayed renewals that came in in Q1, a significant chunk of the one-time performance in Q1. For the rest of the year, I mean, we have a pretty good view of Q2, as you might imagine. We're sitting here on May 2nd, almost halfway through the quarter, and we've continued to see good performance in many regions. I mentioned the APAC team by name in my remarks about the first quarter, and they're continuing to do well in the second quarter.
Victor T. Limongelli: Well, we did mentioned a few things that were more one time nature. The big one in Q1 was the delayed renewals that came in in Q1 that made.
Victor T. Limongelli: Made up.
Victor T. Limongelli: A significant chunk of one time.
Victor T. Limongelli: Sure.
Victor T. Limongelli: The one time performance in Q1 for the rest of the year I mean, we have a pretty good view into Q2 as you might imagine we're seeing here on may 2nd almost halfway through the quarter.
Victor T. Limongelli: And we've continued to see good performance in many regions I mentioned the APAC team.
Speaker Change: My name is.
Victor T. Limongelli: In my remarks about the first quarter and they're continuing to do well in the second quarter.
Victor T. Limongelli: Obviously, as you get later out in the year, things get a little fuzzier when you're talking about, you know, Q4, the pipeline for, say, Q4. And that's part of the reason why we wanted to keep the revenue guidance where it was. Just a lot of our revenue, as you know, comes in later in the year, and it's a little too early to get excited about it. Jorge, I don't know if you have anything you want to add to that.
Victor T. Limongelli: Obviously as you get later out in the year things get a little fuzzier when Youre talking about Q4 pipeline for say Q4.
Jorge: And that's part of the reason why we wanted to keep the.
Jorge: Revenue guidance, where it was because it's just a lot of our revenue as you know comes in later in the year and it's a little too early to get.
Victor T. Limongelli: Too certain about Q4 revenue Jorge I don't know if you have anything you want to add on that.
Jorge Garcia Martell: Yeah, no, I think the only thing I would add is, you know, it takes four quarters to make a year, Trevor. And so, you know, we got a solid Q1. We're proud about what the team executed on. But yeah, we have a number of, you know, key renewals, with potential add-ons that we're looking at. But, you know, it's still a little too early; we want to, we want to see a little more movement. And once that, you know, transpires one way or the other, obviously, we'll be looking into, you know, either changing guidance, etc. But that's going to happen later. Later in the year, actually.
Jorge Garcia Martell: Yes, no I think the only thing I would add is it takes it takes four quarters to make the year Trevor and so we've got a solid Q1, we're proud about what the team executed on but yes, we have a we have a number of.
Jorge Garcia Martell: Key renewals with potential add ons that we're looking at but it's still a little bit too early we want we want to see a little more more movement and ones that.
Jorge Garcia Martell: Transpired, one way or the other obviously will be we'll be looking into.
Jorge Garcia Martell: Changing guidance et cetera, but that's going to happen later in the year. So hey, Kevin Let me just comment also I know you asked specifically about pipeline and revenue, but I will say when it comes to the cost structure of the business, we have a pretty good sense of it for later in the year and that was partly.
Victor T. Limongelli: Hey Trevor, let me just comment also. I know you asked specifically about pipeline and revenue, but I will say when it comes to the cost structure of the business, we have a pretty good sense of it for later in the year, and that was partly the reason why we were, why we increased the adjustability of the guide.
Victor T. Limongelli: The reason why we were while we.
Victor T. Limongelli: We increased the.
Victor T. Limongelli: Adjusted EBIT guidance for the year.
Trevor Rampa: Yeah, awesome. That makes a lot of sense. Thanks for the color there. And maybe just one more.
Trevor Rampa: Yes, awesome that makes a lot of sense. Thanks for the color there.
Speaker Change: And maybe just one more.
Speaker Change: You mentioned last quarter that you had strong visibility into your large customers and some visibility into the mid market. I was wondering if you could touch on that aspect of the business.
Speaker Change: And kind of seeing how that compares to some of your commentary and what you saw last quarter.
Speaker Change: Sure I think we definitely saw some good large deals last quarter and we continue to have some good opportunities in that area.
Trevor Rampa: I know you mentioned last quarter that you had strong visibility into your large customers and some visibility into the mid market. I was wondering if you could touch on that aspect of the business and kind of see how that compares to some of your commentary and what you saw last quarter.
Victor T. Limongelli: Sure, I think... We definitely saw some good, large deals last quarter, and we continue to have some good opportunities in that area in the second quarter.
Trevor Rampa: In the second quarter.
Victor T. Limongelli: So I think quite naturally the larger the opportunity the more attention and focus it gets not just from from a salesperson, but also all the way up the chain.
Victor T. Limongelli: Quite naturally, the larger the opportunity, the more attention and focus it gets, not just from the salesperson but also all the way up the chain for the sales management, up to and including Jorge and myself. Mid-market, we do have decent visibility there. Once you get to the smaller deals, probably a little bit less. So I don't think that that's the whole story. I don't think Q2 is too different from Q1 in that regard
Victor T. Limongelli: For the sales management up two iniquity Jorge and myself.
Victor T. Limongelli: Mid market, we do have decent visibility there once you get to the smaller deals are probably a little bit less so I don't think that Thats I don't think Q2 is two different.
Victor T. Limongelli: In Q1 in that regard.
Trevor Rampa: Great, thanks. That's it for me.
Speaker Change: Great. Thanks, that's it for me congrats again on a great quarter guys.
Operator: Congratulations again on a great quarter, guys. Thank you. Thanks, Trevor.
Speaker Change: Thanks Trevor.
Chad Michael Bennett: Thank you. Our next question comes from the line of Chad Bennett with Craig Hallam. Your line is open.
Speaker Change: Thank you.
Chad Michael Bennett: Next question coming from the line of Chad Bennett with Craig Hallum. Your line is open.
Chad Michael Bennett: Great. Thanks for taking my questions. So, obviously, you know, a few one-time items that benefited the first quarter here. And, you know, I think, you know, the rest of the year is pretty straightforward from a guide standpoint, but I'm just curious. Just in terms of digital agreements versus security solutions, just kind of the relative growth rate for the rest of the year of those two segments, and if you kind of have any different views on the growth rates of the two businesses for the remainder of the year.
Speaker Change: Great. Thanks for taking my questions.
Chad Michael Bennett: So so.
Chad Michael Bennett: Obviously, a few one time items that benefited the first quarter here and.
Chad Michael Bennett: I think the rest of the year, it's pretty straightforward from a guidance standpoint, but I'm. Just curious just in terms of digital agreements versus security solutions, just kind of the relative growth rate.
Chad Michael Bennett: For the rest of the year of those two segments and if you kind of have any different view on the growth rates of the two businesses for the remainder of the year.
Jorge Garcia Martell: Yeah, thanks, Chad. I mean, part of the Q1 numbers are due to the shift of the IDB business. We put it into the digital agreements segment from Jorge. I don't know if you can comment on exactly what percentage of that growth came from that shift.
Speaker Change: Yes, Thanks Chad.
Jorge: Part of the Q1 numbers are part of that is due to the shift.
Jorge: The IBD business, we've put it into the digital agreements segment from.
Jorge Garcia Martell: Jorge I don't know if you can comment on exactly what percentage of that growth came from that shift.
Jorge Garcia Martell: Yeah, it was a bit more. So, from a revenue perspective, it was about $300,000. From an ARR perspective, it's a million and a half, Chad. So, not too much from that standpoint.
Jorge Garcia Martell: Yes.
Jorge Garcia Martell: But even more so from a revenue perspective was about 300000 from an IRR perspective, just a million and a half Chad so not too much from that standpoint.
Jorge Garcia Martell: And one thing to add is, so, if I may, Vic, so on the digital agreements side of the house, so that you have to also take into account, it is a land and expand sort of approach, right? And so you normally land a customer, one or two use cases, and then from that, it expands. And so the timing is critical, right? Once you land it, particularly enterprises, and the land expands across the top of the pyramid, also the bottom of the pyramid. And so the timing of that could be, it's always critical.
Jorge Garcia Martell: One thing to add is so if.
Jorge Garcia Martell: If I may so on the two year agreement side of the house. So that you have to also take into account.
Jorge Garcia Martell: It is a land and expand sort of like approach right and so we normally land the customer.
Jorge Garcia Martell: One or two use cases, and then from that data expand because of the timing is critical right. Once you land that particularly enterprises and the lack of expanse is across the top top of the pyramid also the bottom of the pyramid and so the timing of that could be is always critical.
Jorge Garcia Martell: What you would expect to see is gradual increases, particularly in SaaS. Now that on-premises is basically in the rear view mirror, we still have some dynamics there, as we explained, but taking that aside, you would expect to continue to see growth there, not exponentially, but gradual growth on the SaaS component with that expansion. Obviously, we have new customers, but again, those are not in the millions of dollars. Some are, but obviously not often as we hope, but it's more the land and expanding.
Jorge Garcia Martell: I would expect to see is a gradual increases, particularly the SaaS now that the on Prem is basically in the rearview mirror, we still have some some some dynamics there as we explained but taking that aside.
Jorge Garcia Martell: To continue to see growth there.
Jorge Garcia Martell: Not exponentially, but gradual growth on the SaaS component with that expansion. Obviously, we all we have new customers, but again those are not in the.
Jorge Garcia Martell: Millions of dollars some are but not obviously not often as we as we hope, but it's more of a land and expand on the security side you will see in the security software most of that growth is going to continue to be from expansions, we do have new new customers new logos in there.
Jorge Garcia Martell: On the security side, you will see in the security software, most of that growth is gonna continue to be from expansions. We do have new customers, new logos in there, but that doesn't move; it's not gonna be as dramatic because of our scale there. We serve 60% of the top 100 banks, a more mature market as well. And then on the hardware side of the business, you have to take into account the secular decline in some regions like APAC and EMEA to a certain extent, right, where the dynamic is shifting a little bit off of hardware into software. We try to capitalize on that as best we can.
Jorge Garcia Martell: And but that doesn't move or is that going to be up dramatically because of our scale. There right. We service, 60% of the top 100 bank. So.
Jorge Garcia Martell: It's a more mature market as well and then on the hardware side of the business you have to take into account the secular decline a little bit in some regions like APAC and EMEA circumstance right, where the dynamic is shifting a little bit off of hardware and software. It would try to capitalize from that as best we can.
Jorge Garcia Martell: And so what I would expect is, you know, security to be in low single-digit growth, whereas on the DA side of the house, a little bit more like mid to high single-digits, that will be sort of like expectations. But again, we want to have more visibility, you know, into the second quarter, not the second quarter, but the second half rather, to be able to give you more precise guidance, but again, we don't guide on a per-quarter basis.
Jorge Garcia Martell: And so what I would expect is.
Jorge Garcia Martell: Security to be in the low single digit growth, whereas on the <unk> side of the house, a little bit more like mid to high single digits that will be so like the expectations, but again, we want to have more visibility into the second quarter.
Jorge Garcia Martell: So you can put a second half rather.
Jorge Garcia Martell: To be able to give you more precise but again, we don't guide on a per quarter basis. So just keep that in mind.
Chad Michael Bennett: That is mine. Yeah.
Chad Michael Bennett: No, that's a great color. Thank you, Jorge. So maybe follow up just on, I mean, you guys are, you know, ahead of plan on cost savings and actually exceeding plan, it sounds like, on cost savings. You know, buy, you know, call it that. $10 million from where we started, and I know you upped EBITDA incrementally there. Is there any other type of investment we're making? Why kind of that incremental 10 million wouldn't wouldn't just kind of drop down to that EBITDA guide?
Chad Michael Bennett: No.
Chad Michael Bennett: Great color. Thank you Jorge so maybe follow up just on I mean, you guys are.
Chad Michael Bennett: Ahead of plan on cost savings and actually exceeding plan.
Chad Michael Bennett: It sounds like on cost savings.
Chad Michael Bennett: Bye.
Chad Michael Bennett: Call it.
Jorge: 10 million box from from where we started.
Chad Michael Bennett: <unk>.
Chad Michael Bennett: And I know you up to EBITDA incrementally there.
Chad Michael Bennett: Is there are there any other types of investments, we're making y.
Chad Michael Bennett: That incremental $10 million wouldn't wouldn't just kind of dropdown today that EBIT guide and obviously, we will want to be conservative and do better I appreciate that but just curious your thoughts there.
Victor T. Limongelli: And obviously, we'll want to be conservative and do better. I appreciate that. But I was just curious about your thoughts there.
Jorge Garcia Martell: Well, Jorge, I'll let you touch on this, but let me just, let me just comment that 10 million is not an annualized number. So some of those cost savings are going to be coming later in the year as we, as we, they're already identified, but as we move through the year, so it won't, all of that won't hit in 2020.
Jorge: Well Jorge.
Jorge: I'll, let you touch on this but let me just let me just comment on the $10 million is not.
Jorge: The annualized number.
Jorge Garcia Martell: Some of the cost savings are going to be coming later in the year as we as theyre already identified but as we move through the year. So it will all of that will hit in 2024.
Jorge Garcia Martell: Yeah, and I would say just from a product perspective, Chad, what investments we deploy, you know, from an R&D perspective, things like that. We mentioned last quarter about FX, bioproducts, etc., more towards the, or 100% towards the workforce authentication market, right? And so obviously, it's still early, it's still premature, but it's just one example of the investments that we are that we're working on.
Speaker Change: Got it.
Jorge Garcia Martell: Yes.
Jorge Garcia Martell: And I would say just from a product perspective, Chad. So obviously, we've been selective.
Jorge Garcia Martell: What investments we deploy you know from an R&D perspective things fight that we mentioned last quarter about.
Jorge Garcia Martell: FX bio products.
Jorge Garcia Martell: Et cetera.
Jorge Garcia Martell: More towards the.
Jorge Garcia Martell: 100% or was the war first authentication market right.
Jorge Garcia Martell: And so obviously you still it's still early it's still premature but is just one example of the investments that we that we are that we're working on.
Chad Michael Bennett: Got it. Thanks much. I appreciate it. Nice job on the quarter. Thank you.
Speaker Change: Got it thanks, so much I appreciate it nice job on the quarter. Thank you. Thanks Scott.
Operator: Thank you. Thanks, Chad.
Anja Marie Theresa Soderstrom: And our next question comes from the lineup: Anja Soderstrom with Sudoti. Your line is open.
Speaker Change: Thank you.
Anja Marie Theresa Soderstrom: And our next question coming from the line up and just sandstorm with Sidoti Your line is open.
Anja Marie Theresa Soderstrom: Hi, thank you for taking my question and congrats on a good quarter here. Just to clarify, the gross margin this quarter was held by the lower volume of hardware, right? So that should be coming down as you see more hardware revenue in the coming quarters. That's correct. Okay, thank you. And then, in terms of sort of the macro environment and your customers at ProNet, to take on more subscription costs and whatnot. Are you seeing that changing at all, the sentiment among your customers?
Anja Marie Theresa Soderstrom: Yeah.
Anja Marie Theresa Soderstrom: Great. Thank you for my for taking my questions and congrats on the good quarter here.
Anja Marie Theresa Soderstrom: Just to clarify the gross margin. This quarter was helped by then but a lower volume on hardware right. So that should be coming down as you see more higher hardware revenue in the coming quarters.
Anja Marie Theresa Soderstrom: Correct.
Anja Marie Theresa Soderstrom: Okay. Thank you and then.
Anja Marie Theresa Soderstrom: Okay.
Anja Marie Theresa Soderstrom: Sure.
Anja Marie Theresa Soderstrom: The.
Anja Marie Theresa Soderstrom: The macro environment and your customers.
Anja Marie Theresa Soderstrom: <unk> to take on more subscription.
Anja Marie Theresa Soderstrom: Hudson and whatnot, how do you see that changing at all or the semiconductor market customers correct.
Victor T. Limongelli: Well, I think I'll talk about the macro. I don't think, and I think we talked about this last quarter, about this.
Anja Marie Theresa Soderstrom: Well I think let me talk about the macro I don't think.
Victor T. Limongelli: We talked about this last quarter, it's not the greatest macro environment ever, but it's not terrible either from our perspective. So we've had good results in some regions.
Victor T. Limongelli: It's not the greatest macro environment ever, but it's not terrible either from our perspective. So we've had good results in some regions, probably the European environment has been a little bit less strong than some of the other regions for us so far, but all in all, it's decent. Tolerable, I guess.
Victor T. Limongelli: <unk>.
Victor T. Limongelli: Probably the European.
Victor T. Limongelli: The environment has been a little bit less strong with some of the other regions for us so far but.
Victor T. Limongelli: All in all it's.
Victor T. Limongelli: Decent tolerable I guess I would say.
Anja Marie Theresa Soderstrom: Okay, thank you. And is there any way you're sort of measuring the land and expand approach, how that is trending?
Speaker Change: Okay. Thank you I understand the way you're measuring.
Speaker Change: Land and expand.
Speaker Change: Approach how that is trending.
Victor T. Limongelli: Well, we do report NRR; we report that quarterly. And so, in terms of things that we're sharing with the public, that would probably be the most pertinent data point.
Speaker Change: While we do report.
Victor T. Limongelli: We report that quarterly.
Victor T. Limongelli: And so that in terms of things that we're that we're sharing with the public that would probably the most.
Victor T. Limongelli: Pertinent data point.
Anja Marie Theresa Soderstrom: Okay, and there's some sun setting and stuff that's clouding that right now, right?
Victor T. Limongelli: Okay and there is some.
Anja Marie Theresa Soderstrom: Some kind of setting your stuff, that's clouding that right now rank.
Jorge Garcia Martell: A little bit, yeah. So, Jorge, I don't know if you want to comment on that.
Jorge: A little bit yes. So we're I don't know if you want to comment on that I think it was 107, if im remembering correctly that's alright.
Jorge Garcia Martell: I think it was 107, if I'm remembering correctly. That's right, Vic. That's right, yeah. So, and if you remember, last quarter we had 110, and we mentioned two, three percentage points of that were clouded with the conversion from on-prem and in our signature solution to the cloud. Clients were in migration. They bought those solutions. Now that they've completed those migrations in Q1, we guided towards it being about 3% lower, right? Once the on-prem version of those that completed the migration dropped, and that's exactly what happened.
Vic: Right yes.
Jorge Garcia Martell: If you remember last quarter, we had 110.
Jorge Garcia Martell: And we mentioned two to three percentage points of that was clouded with the with the conversion from on Prem and in our esignature solution to the cloud clients.
Jorge Garcia Martell: Clients, where they are.
Jorge Garcia Martell: In migration.
Jorge Garcia Martell: They bought those solutions now that theyre completely those migrations in Q1, we guided tours is going to be about 3% lower right. Once the on Prem version of those that completed migration dropped and that's exactly what happened. So you saw it behaved the way we expected.
Jorge Garcia Martell: So, it sort of behaved the way we expected. I think the end of life will have a little bit more with respect to, I think Q3. There's more deal flow. I think that's going to materialize in that quarter on the security side. But, you know, I think when you take those one-offs, you would expect that sort of like, you know, 107, 106 to sort of like go through. But obviously, as I always caution, we don't guide on a quarterly basis. So, I'll just keep that in mind.
Jorge Garcia Martell: I think the end of life will have a little more with respect to I think Q3 Theres more deal flow I think that was gonna materialized in that quarter on the security side.
Jorge Garcia Martell: But I think when you take those one offs you would expect that so like.
Jorge Garcia Martell: 107 $106.
Jorge Garcia Martell: Go through but but but obviously those are all discussions we don't we don't guide on a quarterly basis. So just keep that in mind.
Anja Marie Theresa Soderstrom: Okay, thank you. That was all for me.
Speaker Change: Okay. Thank you that was all for me.
Speaker Change: Thank you.
Operator: Thank you. And our next question comes from the line of Rudy Kessinger with DAPS. Your line is open.
Speaker Change: Thank you and our next question coming from the line of <unk> <unk> with D. A Davidson your line is now open.
Rudy Grayson Kessinger: Hey, Gray, thanks for taking my questions. Jorge, I want to double-click on some things.
Rudy Grayson Kessinger: Okay, great. Thanks for taking my questions I wanted to double click on some things and I'm not sure I caught it all just just on the outperformance in the quarter.
Rudy Grayson Kessinger: I'm not sure I caught it all. Just on the outperformance in the quarter, there was, I believe you said, a couple million benefits from renewals that pushed from last quarter. And then what was the benefit from multi-year terms? Were those renewals, or were those new deals for the multi-year term?
Rudy Grayson Kessinger: There was that I believe you said a couple of million dollars of benefit from renewals.
Rudy Grayson Kessinger: Bush from last quarter, and then what was the benefit from multi year term, but where those were more like the.
Jorge Garcia Martell: Yeah, it answers the question. So, what Benefit is, so just to go back to this, so there were $3 million of delayed renewals that closed earlier than we expected this quarter, so that's $3 million in software terms subscription revenue. There's also a couple million dollars, about $2 million of increased multi-year deals that closed this quarter that we were not forecasting. And again, that's part of the operational rigor that team is going through. They're incentivized to close multi-year deals.
Rudy Grayson Kessinger: The Mafia.
Jorge Garcia Martell: Yeah. Thanks for the question so what benefit so just to go back.
Jorge Garcia Martell: So there were $3 million delayed renewals that closed earlier than we expected this quarter, so thats $3 million from the software terms.
Jorge Garcia Martell: Subscription revenue. There is also a couple of million dollar is about $2 million of increased multiyear deals that closed this quarter.
Jorge Garcia Martell: We were not forecasting and again thats part of the operational rigor that team is going through their incentivize to closed multiyear deals and so we benefit benefited from that standpoint this quarter.
Jorge Garcia Martell: And so, we benefited from that standpoint this quarter. And, you know, we always have in any given quarter a number of conversions also, Rudy, from perpetual to term. And so, that also benefited this quarter. But so, you're looking at about $5 million, or a little more than that in terms of those three items. Again, I caution you about conversion. We always have a number of conversions in any given quarter. So, but yeah, those are the most notable things.
Jorge Garcia Martell: We always have in any given quarter a number of conversions also bruney from perpetual to term and so that also benefited this quarter, but so youre looking at about $5 million.
Jorge Garcia Martell: Dollars.
Jorge Garcia Martell: More than that in terms of dose three items again I caution the conversion, we always have a number of conversions in any given quarter. So yes.
Jorge Garcia Martell: Those are the most notable thanks Rudy.
Rudy Grayson Kessinger: Okay, that's helpful. And then I guess just, I heard you guys call it the strength of APEC, but APEC is less than 20% of revenue. So, if you look at the U.S. and the rest of the world, how was Booking's performance in those regions in the quarter relative to expectations? Yeah, thanks for the question, Rudy.
Rudy Grayson Kessinger: Okay. That's helpful.
Speaker Change: And then I guess just.
Speaker Change: Did you guys call it the strength in APAC, but APAC is less than 20% of the revenue. So if you look at the U S. Congressional world how is bookings performance in those regions in the quarter relative to expectations.
Rudy Grayson Kessinger: Yes.
Speaker Change: Yeah. Thanks for the question Larry.
Speaker Change: From a from a.
Victor T. Limongelli: You know, from a public statement standpoint, we're not giving detailed geographical performance. I was calling out APEC because the team performed very well there. And I did mention that the macro environment in Europe was, I think, a little bit weaker. So you can probably read into that what you will. But overall, I think performance in North America feels, The macro environment in North America feels pretty decent, so... You know, we're continuing to work on execution, and we're looking to have, of course, every region and both business units performing well.
Speaker Change: Public statements standpoint, we're not giving detailed geographical performance.
Victor T. Limongelli: Calling on APAC, because the team has performed very well there.
Victor T. Limongelli: And I did mention that the macro environment in Europe, I think was a little bit weaker so you could probably read into that.
Victor T. Limongelli: What you will but overall.
Victor T. Limongelli: Think performance North America feels.
Victor T. Limongelli: The macro environment in North America feels pretty decent.
Victor T. Limongelli: So.
Victor T. Limongelli: We're continuing to work on execution.
Victor T. Limongelli: Looking to have of course every region in both business units performing well.
Speaker Change: Thank you.
Joseph Anderson Maxa: And I'm showing no further questions in the queue at this time. I will now turn the call back over to Joe Maxa for any closing remarks. Thank you, everyone.
Victor T. Limongelli: And im showing no further questions in the queue. At this time I will now turn the call back over to Joe Maxa for any closing remarks. Thank you everyone. We appreciate your time today and look forward to sharing our progress with you again next quarter. Thanks.
Joseph Anderson Maxa: Thank you, everyone. We appreciate your time today and look forward to sharing our progress with you again next quarter. Thanks again, and have a nice day.
Joseph Anderson Maxa: Again have a nice day.
Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation, and you may now disconnect.
Joseph Anderson Maxa: Okay.
Speaker Change: Ladies and gentlemen that does conclude our conference for today. Thank you for your participation and you may now disconnect.
Operator: Okay.
Operator: Okay.
Operator: Yes.
Operator: [music].
Operator: Okay.
Operator: Okay.
Operator: Okay.
Operator: [music].
Operator: Okay.
Operator: [music].
Operator: Okay.
Operator: Sure.
Operator: Okay.
Operator: Hi.
Operator: [music].
Operator: So.
Operator: