Q2 2025 OneSpan Inc Earnings Call

Welcome to the Q2 2025 OneSpan Inc. Earnings Call.

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 1. 1 on your telephone, you will then be hear an automated message. Advising your hand is raised to withdraw your question. Please press star 1 1 again.

Please be advised that today's conference is being recorded, I would now like to hand the conference over to Joe Maxa vice president of investor relations.

Please go ahead.

Joe Maxa: Thank you, operator. Hello, everyone, and thank you for joining the OneSpan's second quarter 2025 earnings conference call. This call is being webcast and can be accessed on the Investor Relations section of OneSpan's website at investors.onespan.com. Joining me on the call today is Victor Limongeli, our Chief Executive Officer, and Jorge Martell, our Chief Financial Officer. This afternoon, after market close, OneSpan issued a press release announcing results for our second quarter 2025. 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 2025 and other long-term financial targets, are forward-looking statements. These statements involve risks and uncertainties and are based on current assumptions.

Thank you, operator. Hello, everyone, and thank you for joining the OneSpan second quarter 2025 earnings conference call.

This call is being webcast and can be accessed on the investor relations section of 1 stands website at investors 1, span.com.

Joining me on the call today is Victor wanji, our chief executive officer and Jorge Martell our Chief Financial Officer.

This afternoon, after the market closed, OneSpan Inc. issued a press release announcing results for our second quarter 2025.

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.

Long-term Financial targets are forward-looking statements.

Joe Maxa: Consequently, actual results could differ materially from the expectations expressed in these forward-looking statements. I direct your attention to today's press release and the company's filings with the US Securities and Exchange Commission for a discussion of such risks and uncertainties. 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. In addition, please note that all growth rates discussed on this call refer to a year-over-year basis unless otherwise indicated. The date of this conference call is August 5th, 2025. Any forward-looking statements and related assumptions are made as of this date.

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.

I direct your attention to today's press release and the company's filings with the US Securities and Exchange Commission.

For discussion of such risks and uncertainties.

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.

In addition, please note that all growth rates discussed on this call.

Refer to a year-over-year basis unless otherwise indicated.

Joe Maxa: 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.

The date of this conference call is August 5th 2025, any forward-looking statements and related assumptions are made as of this date.

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.

Victor Limongelli: Thank you, Joe. Hello, everyone, and thank you for joining us on the call today. Before turning to our results, as we are halfway through my second year at the company, I thought I'd take a moment to review our trajectory and the overall position of our business. Last year, as you know, we focused on restructuring OneSpan to enhance its profitability so that it remained viable as a business and continued to be a long-term reliable partner for our customers. With that accomplished, our focus in 2025 has been on building the foundation necessary for OneSpan to not only be profitable but also to grow the business and strengthen our product offerings for our customers. Right before the year started, we hired a new CTO, Ashish Jain, to lead our R&D team.

I will now turn the call over to Victor.

Thank you, Joe. Hello, everyone, and thank you for joining us on the call today.

Before turning to our results as we are halfway through my second year at the company. I thought I'd take a moment to review our trajectory and the overall position of our business last year. As you know, we focused on restructuring 1 Spann.

To enhance its profitability so that it remained viable as a business and continue to be a long-term reliable partner for our customers.

With that accomplished, our focus in 2025, has been on building the foundation, necessary for 1 Spann, to not only be profitable, but also to grow the business and strengthen our product offerings for our customers.

Victor Limongelli: And part of our strategy is to augment our increased internal development efforts with targeted M&A so that we can move faster in delivering great products to our customers. You saw that in the second quarter, both with our acquisition of Knock Knock Glass and with the establishment of a new line of credit to facilitate that kind of targeted M&A. As we move through the second half of the year, we will continue to enhance our go-to-market capabilities so that we can deliver our great products to more customers. As we have said previously, our goal is to grow the business while delivering strong profitability and to do both of those things while also returning cash to shareholders. Halfway through my second year, I'm happy to say that our transformation of OneSpan is on track.

Right. Before the year started, we hired a new CTO. She's Jane to lead our R&D team.

Part of our strategy is to augment our increased internal development efforts with targeted m&a. So that we can move faster in delivering, great products to our customers.

You saw that in the second quarter, both with our acquisition of Knock-Knock Labs and with the establishment of a new line of credit to facilitate that kind of targeted M&A.

As we move through the second half of the year, we will continue to enhance our go to market capabilities so that we can deliver our great products to more customers.

As we have said, previously our goal is to grow the business while delivering strong profitability and to do both of those things. While also returning cash to shareholders.

Victor Limongelli: Looking ahead, our goal is that by the beginning of next year, we will have made significant progress in evolving our go-to-market capabilities, as well as our product suite under Ashish's leadership, such that we are well positioned to accelerate top-line growth in 2026 as we continue to drive to a Rule of 40 performance. Turning to our results, I'm pleased to report another strong quarter and a solid first half of 2025, reflecting our team's disciplined execution. This focus by our team is driving our strong performance and positions us well to deliver sustained long-term value for our shareholders. As I mentioned a moment ago, I'm also pleased and excited by our acquisition of Knock Knock Labs during the quarter, which brings to us FIDO2 passwordless authentication software to add to our FIDO2 hardware security keys.

Halfway through my second year, I'm happy to say that our transformation of wants span is on track.

Looking ahead. Our goal is that by the beginning of next year, we will have made significant progress in evolving, our go to market capabilities.

As well as our product Suite under Aisha's leadership.

Such that we are well positioned to accelerate Topline growth in 2026.

as we continue to drive to a rule of 40 performance,

Turning to our results, I'm pleased to report another strong quarter and a solid first half of 2025, reflecting our team's disciplined execution.

This focus by our team is driving our strong performance and positions us well to deliver sustained, long-term value for our shareholders.

as I mentioned a moment ago, I'm also pleased and excited by our acquisition of knock knock Labs, during the quarter,

Victor Limongelli: We've long been an industry leader in multi-factor authentication and transaction sign-in technologies, with our solutions widely trusted by many of the world's largest financial institutions for their strong security, flexibility, and innovation. The addition of Knock Knock's FIDO2 software, combined with our recently launched FIDO2 security keys hardware, enables the company to provide customers worldwide with the industry's most innovative, comprehensive, and future-ready authentication portfolio. Whether on-prem or in the cloud, OTP or FIDO, software or hardware, including DigiPass and FIDO2 protocols, and Qonto solutions for transaction signing, OneSpan now offers customers maximum flexibility to meet their authentication needs. As you can see, Knock Knock was exactly the kind of targeted acquisition that enhances our product portfolio and delivers value to our customers. With respect to the second quarter, we were solidly profitable in the quarter with an adjusted EBITDA of $18 million, or 29.5% of revenue.

Which brings us to $502 million, passwordless authentication software to add to our $502 million hardware security keys.

We've long been an industry leader in multifactor authentication and transaction sign and Technologies. With our Solutions, widely trusted by many of the world's largest financial institutions for their strong security, flexibility and innovation.

Combined with our recently launched 502, security Keys Hardware enables. The company to provide customers worldwide with the industry's, most Innovative comprehensive and Future. Ready authentication portfolio.

Whether on-prem or in the cloud.

OTP or pho.

Software or Hardware, including digipass and 502. Protocols.

Pronto solutions for transactions signing.

1 Spann. Now offers customers maximum flexibility to meet their authentication needs.

As you can see, knock, knock knock was exactly the kind of targeted acquisition that enhances our product portfolio and delivers value to our customers.

Victor Limongelli: Also, for the first half of the year, we achieved record adjusted EBITDA of $41 million, representing 33% of revenue, our highest first-half performance to date. We ended the quarter with annual recurring revenue of $178 million, up 8% year over year, including $8 million from the Knock Knock acquisition. Excluding Knock Knock, ARR grew 3%, in line with the low to mid-single-digit growth rate that we expected and discussed last quarter. As a reminder, we had a few very large contracts in last year's second quarter, which made for a challenging year-over-year ARR comparison this quarter. By the end of 2025, we anticipate our ARR to grow at a mid-single-digit percentage rate from the June 30th ARR level. Subscription revenue grew 22% in the second quarter of 2025, led by 39% growth in security and 5% growth in digital agreements.

With respect to the second quarter, we were solidly profitable in the quarter, with adjusted EBITDA of $18 million, or 29.5% of revenue.

Also, for the first half of the year, we achieved record adjusted ibida of 41 million representing 33% of Revenue. Our highest first half performance today.

We ended the quarter with annual recurring. Revenue of 178 million up 8% year-over-year, including 8 million from the knock knock acquisition.

Excluding Knock-Knock ARR, group 3% in line with the low to mid single-digit growth rate that we expected and discussed last quarter.

As a reminder, we had a few very large contracts in last year's second quarter, which made for a challenge in year-over-year ARR and comparison this quarter.

By the end of 2025, we anticipate our ARR to grow at a mid single digit percentage rate from the June 30th. Our level

Victor Limongelli: Security growth was primarily driven by on-prem authentication and app shielding software. As expected, total revenue declined modestly in the quarter. Strong subscription revenue growth was primarily offset by the three trends we've discussed on prior calls. First, banks in EMEA, and to a lesser extent in APAC, have been adopting mobile-first authentication strategies with respect to consumer banking. This has reduced security hardware revenue over time. Second, our 2024 transition of certain legacy perpetual maintenance contracts to term-based subscriptions lowered maintenance revenue compared to the prior year. Third, revenue was impacted by $1.2 million from sunsetted products. However, this was partially offset by $300,000 of acquired revenue during the quarter. Looking at geographies, in July 2024, we started a dedicated sales effort in North America focused on our security business.

Subscription Revenue, grew 22% in the second quarter of 2025, led by 39% growth in security and 5% growth in digital agreements.

Security growth was primarily driven by on-prem authentication and appshell software.

Expected, total revenue declined modestly in the quarter.

Strong subscription, Revenue growth was primarily offset by the 3. We've discussed on prior calls.

First.

Banks and Amia and to a lesser extent in APAC, have been adopting mobile first authentication strategies with respect to Consumer banking

This has reduced security Hardware Revenue over time.

Second, our 2024 transition of certain legacy, perpetual maintenance contracts to term-based subscriptions lowered maintenance revenue compared to the prior year.

Third Revenue was impacted by 1.2 million. From sunsetted products.

however, this was partially offset by $300,000 of acquired Revenue, during the quarter,

Victor Limongelli: I'm pleased to report that that team had a great first half, and we expect continued high performance in that region in the second half of the year. As you know, historically, North America has represented only 10% to 12% of our overall security revenue, so we see that as a growth opportunity heading into 2026. In the first half of 2025, we also saw strong bookings performance in our Latin American region. In terms of the overall outlook, Jorge will provide additional details on the second half in a few minutes. Both business units remain solidly profitable at the segment level, and we believe we are well positioned to achieve our stated goals of delivering growth and strong profitability across both segments. We also continued to generate significant cash from operations.

looking at geographies in July 2024, we started a dedicated sales effort in North America focused on our security business.

I'm pleased to report that that team had a great first half and we expect continued high performance in that region in the second half of the year.

As you know, historically North America has represented only 10 to 12% of our overall security Revenue.

So we see that as a growth opportunity heading into 2026.

In the first half of 20125, we also saw strong bookings performance in our Latin American region.

In terms of the overall Outlook, Jorge will provide additional details on the second half in a few minutes.

Both business units remain solidly profitable at the segment level.

And we believe we are well positioned to achieve our stated goals of delivering growth and strong profitability across both segments.

Victor Limongelli: In the first half of the year, we generated $36 million and ended the second quarter with $93 million in cash on hand. As we've discussed previously, our board remains committed to a balanced capital allocation strategy, weighing shareholder returns, organic investments, and targeted M&A. In the first half of the year, we returned cash to shareholders through two quarterly dividend payments of 12 cents per share, which totaled close to $10 million of cash returned to shareholders. The board has also approved another 12 cents per share dividend to be paid in the current quarter. In addition, we used cash to make the strategic acquisition of Knock Knock, consistent with our plan to pursue targeted technology-driven acquisitions with proven market fit, enabling us to bring additional value-added products to our customers and prospects. We have a strong global customer base and a leading position in the authentication market.

We also continue to generate significant cash from operations.

In the first half of the year, we generated $36 million and ended the second quarter with $93 million in cash on hand.

Strategy. Wayne shareholder returns organic Investments and targeted m&a.

In the first half of the year, we returned cash to shareholders through two quarterly dividend payments of $0.12 per share, which totaled close to $10 million of cash returned to shareholders.

The board has also approved. Another 12 cents, per share dividend to be paid in the current quarter.

In addition, we used cash to make the Strategic acquisition of knock knock consistent, with our plan to pursue targeted, technology-driven Acquisitions with proven Market, fit, and enabling us to bring additional value, added products to our customers and Prospects.

Victor Limongelli: With AI increasingly being used to amplify the scale and sophistication of account takeover attacks, we remain focused on innovating to stay ahead of emerging threats and to enable customers to adopt a wide range of flexible, future-proof authentication solutions. As a result, we will continue to invest in internal R&D and explore targeted M&A opportunities to enhance our product portfolio. And we plan to help our clients succeed by continuing to provide them with seamless and secure user solutions to meet their authentication needs and address related security challenges. As we look to the future, we are committed to operational excellence and to driving efficient, sustainable revenue growth while maintaining strong profitability. With that, I'll turn the call over to Jorge.

We have a strong Global customer base and a leading position in the authentication Market.

With AI increasingly being used to amplify the scale and sophistication of account takeover attacks, we remain focused on innovating to stay ahead of emerging threats and to enable customers to adopt a wide range of flexible, future-proof authentication solutions.

As a result, we will continue to invest in internal R&D and export-targeted M&A opportunities to enhance our product portfolio.

And we plan to help our clients succeed by continuing to provide them with seamless and secure user solutions to meet their authentication needs and address related security challenges.

As we move to the future, we are committed to operational excellence and to drive afficient sustainable Revenue growth while maintaining strong profitability.

Jorge Martell: Thank you, Victor, and good afternoon, everyone. I am pleased to report another strong quarter, and I'm excited about our acquisition of Knock Knock Labs, which enhances our authentication portfolio and allows us to bring a broader suite of authentication solutions to our customers. We acquired Knock Knock on June 4th. As such, our second quarter results include Knock Knock's financials from the acquisition date or for about a month. ARR grew 8% to 178 million, including 8 million from the Knock Knock acquisition. Our net retention rate, or NRR, was 101%. As previously discussed, we anticipated a tough year-over-year ARR and NRR comparison this quarter, primarily due to large expansion contracts that benefited last year's Q2. In addition, this quarter, there was contraction at a few customers that reduced our overall ARR.

With that, I'll turn the call over to Jorge.

Thank you, Victor and good afternoon everyone. I am pleased to report another strong quarter. And I'm excited about our acquisition of knockoff Labs which enhances our authentication and portfolio and allows us to bring the broader sweep of authentication solutions to our customers.

We acquired knock knock, knock on June 4th, as such our second quarter results, including dog, knock knock's financials from the acquisition date, or for about a month.

ARR group 8% to 178 million, including 8 million from the knock knock acquisition.

Our net retention rate or nrr was 101%.

As previously discussed, we anticipated a tough year-over-year comparison for ARR and NRR this quarter, primarily due to large expansion contracts that benefited last year's Q2.

In addition, this quarter there was contraction at a few customers that reduce our overall ARR.

Jorge Martell: Second quarter revenue was 59.8 million, down 2% compared to last year's Q2, primarily due to the anticipated decline in security hardware as a result of the long-term trends of banks moving to a mobile-first authentication approach. Digital agreements' revenue grew 1%, while security solutions' revenue declined 3%, both in line with expectations. Second quarter gross margin was 73%, up from 66% in Q2 of last year. The improvement was driven by a favorable product and customer mix, including increased software and reduced hardware revenues, as well as the absence of approximately 1.5 million in asset write-up charges recorded in the second quarter of last year. GAAP operating income was 10.5 million compared to 7.6 million in Q2 last year.

Second quarter Revenue was 59.8 Million down 2% compared to last year's Q2 primarily due to the anticipated decline in security Hardware as a result of the long-term, trends of banks. Moving to a mobile first authentication approach.

Digital agreements Revenue grew 1% while Security Solutions Revenue declined, 3%. Both in line with expectations

Second quarter growth margin was 73% up from 66% in Q2 of last year.

The improvement was driven by a favorable product and customer mix, including increased software and reduced hardware revenues, as well as the absence of approximately $1.5 million in asset write-off charges recorded in the second quarter of last year.

Jorge Martell: The increase reflects higher gross profit and lower restructuring costs, partially offset by increased operating expenses related to share-based compensation, commission expenses, legal and consulting costs associated with the Knock Knock acquisition, and incremental operating expenses from Knock Knock. GAAP net income per share was 21 cents, up from 17 cents in the same period last year. As a reminder, we made changes to our non-GAAP net income and non-GAAP net income per share reporting framework last quarter to better reflect our profitability trajectory and to ensure consistency across the interim period in 2025 and in future years. Please refer to our Q2 earnings release and investor presentation for additional details. Non-GAAP earnings per share was 34 cents compared to 31 cents in Q2 of 2024. This metric excludes long-term incentive compensation and related payroll taxes, amortization, restructuring charges, and non-recurring items, and the impact of tax adjustments.

Gap. Operating income was 10 and a half million compared to 7.6 million in Q2 last year.

The increase reflects higher gross profit and lower restructuring costs, partially offset by increased operating expenses related to share-based compensation, commission expenses, legal fees, and consulting costs associated with the North of acquisition, as well as incremental operating expenses from Knock Knock.

Per share was 21 cents up from 17 cents in the same period last year.

As a reminder, we make changes to our non-gaap net income and non-gaap, net income per share reporting framework last quarter to better reflect our profitability trajectory and to ensure consistency across inner and period in 2025 and in future years.

Please refer to our Q2 earnings release and investor presentation for additional details.

Non-GAAP earnings per share were $0.34 compared to $0.31 in Q2 of 2024.

Jorge Martell: Adjusted EBITDA and adjusted EBITDA margin was 17.6 million and 29.5% compared to 16.2 million and 26.5% in the same period of last year. Turning to our security solutions business, ARR was 114.5 million, up 9% year over year. Excluding Knock Knock, ARR grew 2%. Security revenue declined 3% to 44.2 million. Strong subscription revenue growth of 39%, including an immaterial amount of revenue from Knock Knock, was offset by expected declines in hardware and maintenance revenues and hit wins from sunsetted products. The strong growth in subscription revenue was primarily driven by the timing of multi-year renewals and conversion to multi-year customer contracts in the quarter, expansion of licenses, and to a lesser extent, new logos. This growth was partially offset by the sunsetting of our legacy deal flow solution.

This metric excludes long-term incentive compensation and related payroll, taxes, and amortization, as well as restructuring charges, non-recurring items, and the impact of tax adjustments.

Adjusted ibida and adjusted, even a margin was 17.6 million, and 29, and a half percent compared to 16.226% in the same period of last year.

Turning to our Security Solutions business.

ARR was $114.5 million, up 9% year-over-year.

Are grew, 2%.

Security Revenue declined, 3% to 44.2 million.

Strong subscription Revenue, growth of 39% including an immaterial amount of revenue from knockoff was offset by inspected, the client in hardware, and maintenance revenues, and hit wins from Sunset of products.

a strong growth in subscription Revenue was primarily driven by the timing of multi-year renewals and conversion to multi-year customer contracts in the quarter expansion of licenses and to a lesser extent new logos

Jorge Martell: Gross margin for security was 74%, up from 67% in the second quarter of last year, reflecting favorable product and customer mix. Segment operating income was 19.8 million, or 45% of revenue compared to 20.7 million, or 46% of revenue in the prior year quarter. The slight decline was primarily due to higher commission expense and increased operating expenses related to the Knock Knock acquisition. Turning to our digital agreements business, ARR grew 4.5% to 63 million. Revenue grew 1% to 15.6 million. New SaaS contracts and expansion of renewal contracts were partially offset by reduced maintenance revenue from the sunsetting of our on-premise e-signature product. Hit wins related to sunsetted products impacted revenue growth by about three percentage points. Subscription revenue grew 5% to 15.6 million. As mentioned earlier, we faced a tough year-over-year comparison due to a few large contracts that benefited Q2 of last year.

This growth was, partially of said by the sun setting or a legacy deal flow solution.

Gross margin for security was 74% up from 67% in the second quarter of last year reflecting favorable product and customer mix.

Segment operating income was $19.8 million, or 45% of revenue, compared to $20.7 million, or 46% of revenue, in the prior year quarter.

The slide declined was primarily due to higher commission, expense and increased operating expenses related to the note of acquisition.

Turning to our digital agreements business.

ARR grew 4.5% to $63 million.

Revenue grew 1% to 15.6 million.

New SAS contracts and expansion of renewal contracts were partially upset by reduced. Maintenance revenue from the Sun setting of our on premise, e signature product.

Headwinds related to Sunset of products, impacted Revenue growth by about 3 percentage points.

Subscription Revenue, growth 5% to 15.6 billion.

Jorge Martell: Maintenance and support revenue was negligible this quarter, compared to half a million in Q2 of last year. The year-over-year decline is attributed to the sunsetting of our on-premise e-signature solution. Gross margin for digital agreements was 71%, up from 63% in the prior year quarter. The increase was primarily due to the absence of 1.5 million in asset write-up charges for a quarter last year. Segment operating income was 2.9 million, or 18% of revenue, compared to a loss of 0.2 million, or negative 1% in Q2 of last year. The improvement was driven by higher gross profit and lower operating expenses, primarily due to lower headcount and variable expenses. Now turning to our balance sheet, we ended the quarter with 92.9 million in cash and cash equivalents, compared to 105.2 million at the end of Q1 and 83.2 million at the end of 2024.

As mentioned earlier, we faced a tough year, over year comparison due to a few large contracts that benefited Q2 of last year.

Maintenance and support Revenue was negligible this quarter compared to half a million in Q2 of last year.

The year-over-year decline is attributed to the sun setting of our on premise e signature solution.

Gross margin for digital agreements was 71%, up from 63% in the prior year quarter.

The increase was primarily due to the absence of $1.5 million in asset right of charges for the quarter last year.

Segment, operating income was 2.9 Million or 18% of Revenue compared to a loss of 0.2 million or negative - 1% in Q2 of last year.

The Improvement was driven by higher growth profit and lower operating expenses primarily due to lower head count and variable expenses.

now, turning to our balance sheet,

Jorge Martell: We generated 6.2 million in operating cash flow during the quarter, up from 2.3 million in the second quarter of last year. We used 4.6 million to pay our quarterly cash dividend and 12.1 million net of cash acquired as part of a consideration for the Knock Knock acquisition. We expect to pay an additional 1.9 million in Q3 and the remaining balance in late 2026. As you are already aware, during the quarter, we entered into a five-year syndicated revolving credit facility in the amount of 100 million, which may be used for general corporate purposes, including to support our strategic growth priorities, including targeted M&A. Except for a small letter of credit supporting an office lease, we currently have no borrowings under the credit agreement and have no long-term debt. Geographically, our revenue mix was 39% from EMEA, 40% from the Americas, and 21% from APAC.

.2 million at the end of q1 and 83.2 million. At the end of 2024,

we generated 6.2 million in operating cash flow during the quarter up from 2.3 million in the second quarter of last year.

We used 4.6 million to pay our quarterly cash dividend and 12.1 million. Net of cash acquired as part of a consideration for the knock knock acquisition.

The expect to pay an additional 1.9 million in Q3 and the remaining balance in late 2026.

As you are already aware. During the quarter, we enter into a 5-year, syndicated revolving credit facility in the amount of 100 million which may be used for General Corporate purposes, including to support our strategic growth, priorities, including targeted m&a.

Except for a small letter of credit supporting an office lease. We currently have no borrowings under the credit agreement and have no long-term debt.

Jorge Martell: This compares to 41%, 35%, and 24% respectively in the second quarter of last year. Moving to our modeling notes and financial outlook, we're very pleased with our second quarter and first half performance and expect a return to positive revenue growth in the second half of the year. We expect double-digit subscription revenue growth for the full year 2025, along with a modest revenue contribution from the acquisition of Knock Knock. We expect to see continued hardware headwinds, primarily in Q3, with gradual improvement in Q4. Also, in the second half of the year, as compared to the first half, we expect reduced year-over-year maintenance revenue headwinds from the transition of perpetual contracts to term-based licenses and from the impact of sunsetted products.

Geographically, our Revenue mix was 39% from Mia. 40% from the Americas and 21% from APAC.

This compares to 41% 35% and 24%. Respectively in the second quarter of last year.

Moving to our modeling notes and financial Outlook.

We're very pleased with our second quarter and first half performance, and the expected return to positive Revenue growth in the second half of the year.

We expect double digit subscription Revenue, growth for the full year 2025 along with a modest Revenue contribution from the acquisition of knock knock.

We expect to see continued Hardware, headwinds primarily in Q3 which gradually Improvement in Q4.

Jorge Martell: Regarding hardware, due to the increased disability into orders and shipping schedules as compared to earlier in the year, including the delay to 2026 of the shipment of certain already booked hardware deals, we now expect total second half 2025 hardware revenue to be similar to the first half, with the majority of the second half revenue recognized in the fourth quarter. On a sequential basis, in the second half of 2025, we expect an increase in year-over-year ARR growth and an increase in NRR for both the third and fourth quarters. For the full year 2025, we are maintaining our revenue guidance in the range of $245 to $251 million. We expect incremental revenue from the Knock Knock acquisition to be offset by a similar reduction in hardware revenue.

Also, in the second half of the year, as compared to the first half, we expect reduced year-over-year maintenance revenue, headwinds from the transitional perpetual contract to turn-based licenses, and from the impact of the sunset of products.

Regarding hardware, due to the increased visibility into orders and shipping schedules as compared to earlier in the year, including the delay to 2026 of the shipment of certain already booked hardware deals, we now expect total second half 2025 hardware revenue to be similar to the first half, with the majority of the second half revenue recognized in the fourth quarter.

On a sequential basis. In the second half of 2025, we expect an increase in year-over-year, our growth and an increase in nrr for both the third and fourth quarters.

For the full year 2025.

We are maintaining our Revenue guidance in the range of 245 to 251 million.

Jorge Martell: We are increasing our ARR guidance to be in the range of 186 to 192 million, as compared to our previous guidance range of 180 to 186 million. The increase in guidance is attributed to our acquisition of Knock Knock, partially offset by a few reductions by the customers that I discussed earlier. And we are maintaining our adjusted EBITDA guidance in the range of 72 to 76 million. We expect the acquisition of Knock Knock to be slightly accretive to adjusted EBITDA in the fourth quarter of 2025. That concludes my remarks. I will now turn the call over to Victor.

We expect incremental revenue from the knockoff acquisition to be offset by a similar reduction in Hardware revenue.

We are increasing our guidance to be in the range of $186 million to $192 million, as compared to our previous guidance range of $180 million to $186 million.

The increase in guidance is attributed to our acquisition of knock knock knock, partially offset, by a few reductions, by the customers that I discussed earlier.

And we are maintaining our adjusted EBITDA guidance in the range of $72 million to $76 million.

We expect the acquisition of enough, not to be slightly accretive to adjust at ibida in the fourth quarter of 2025.

Victor Limongelli: Thanks, Jorge. To recap, we had another strong quarter, and I'm very proud of the OneSpan team's disciplined execution and commitment to operational excellence. I'm also excited about our strategic acquisition of Knock Knock, which expands our authentication offering to include software-based FIDO2 capabilities and provides us with an additional proven value-added solution that we can bring to our customers and prospects. Looking ahead, we remain focused on delivering value for our customers and executing well as a business in the second half, which we believe will position OneSpan for profitable growth. To that end, we remain committed to maintaining our strong profitability as we drive towards our goal of achieving a Rule of 40 performance as a business. Jorge and I will now be happy to take your questions.

That concludes my remarks. I will now turn the call over to Victor.

Thanks Tori.

To recap, we had another strong quarter and I'm very proud of the 1 span teams disciplined execution and commitment to operational excellence.

I'm also excited about our strategic acquisition of knock knock, which expands our authentication offering to include software-based 502, capabilities, and provides us with an additional proven value added solution that we can bring to our customers and Prospects.

To that end, we remain committed to maintaining our strong profitability as we drive towards our goal of achieving a rule of 40 performance as a business.

Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. Please stand by as we compile the Q&A roster. Our first question comes from Catherine Trebnik of Rosenblatt. Your line is now open.

For a and I will now be happy to take your questions.

Thank you. At this time. We will conduct the question and answer session.

As a reminder 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. Please. Press star 1 1 again.

Please stand by as we compile the Q&A roster.

Catharine Trebnick: Yes, thank you for taking my question. On this acquisition, that's interesting that you're headed in this direction. Can you give us some more detail on how competitive you feel you'll be with this by buying Knock Knock and adding this to your capabilities? Thanks.

Our first question comes from Katherine trebnick of rosenblat, your line is now open.

Uh yes, thank you for taking my question on this acquisition. That's interesting that you're headed in this direction. Can you give us some more detail on how competitive you feel? You'll be with this, uh, the by buying not, not, not knock. Knock knock knock, and adding this, to your capabilities. Thanks,

Jorge Martell: Victor, you want to take this one? I'll jump in, Catherine. Maybe they can chime in. So, so thanks for the question, Catherine. So I think this is one of the areas that we have been talking about in terms of complementing our solutions in the security software space. You know, it fits really well when it comes to it's a talking acquisition where we like the technology and we can also plug it in into an existing technology from FIDO. As you remember, we launched FIDO security keys, our hardware, a few of those keys last year. And so when you think about where this is headed in terms of security for user seamless authentication within FIDO2, it's also going to be an important part of the mix that our banking and financial services customers will head and will move towards in the future.

Nick, do you want to take this 1?

Jorge Martell: And so we think that this is going to be a very, very good acquisition in the long term for us as we provide, again, the maximum flexibility, as Vic alluded, in terms of offering and becoming the authentication company, particularly for banks and financial institutions. So I'm happy to answer any additional questions you have on that.

I'll I'll jump in, uh, uh, Karen. Maybe they can chime in. So, um, sometimes for the question, uh, uh, Katherine. So I think this is 1 of the, uh, areas that we have been talking about in terms of complementing, our Solutions in the security uh, software space. You know if it's really well, when it comes to, it's a talking acquisition where we like the technology that we can also plug it in into an existing technology from fee as you remember, we launched 5o, uh, security Keys, our Hardware, uh, a few of those keys last year. Um, and so, when you think about where this, where this is headed in terms of of security for user seamless, authentication within 5, or 2 is also going to be an important part of the mix that our Banking and Financial Services. Customers will ahead and we'll move towards in the future.

Catharine Trebnick: Well, is this more like of a if it's already installed customers? Are you looking at this as maybe new landing because it's the newer tech, but also an upsell into your existing banking customers?

And so, we think that this is going to be a very, very good acquisition in the long term for us as we provide again. The maximum flexibility as big alluded in terms of offering and becoming the authentication company, uh, for for, for particularly, for banks and financial institutions. So, uh, happy to answer any, any additional questions you have on that.

Jorge Martell: Yeah, so that's a very good question, Catherine. So when you think about, you know, one of the biggest assets, and Vic has mentioned this in the past, one of the biggest assets this company has once been, it's a long 10-year customer base. So we service over 1,000 banks, you know, globally. And so when you think about that, so we really, the purpose of this acquisition was not for the revenue. Let's just be clear. The purpose of this acquisition was because of the technology and the cross-sell opportunity that we can have from from this technology to our existing customer base. Okay? And so we see that as an opportunity, obviously more in 2026 than 2025 in terms of the cross-sell. We're getting, obviously, the teams aligned.

Well, is this more like of a if it's already installed uh, customers that more? Are you looking at this as maybe new Landing because it's the newer Tech. But also an upsell into your existing banking customers.

Yeah, so that's a very good question Katherine. So when you think about, you know, 1 of the biggest assets and big has mentioned this in the past, 1 of the biggest assets. This company has 1 Spann. It's in Long tenure, customer base. So we service over a thousand uh Banks, you know, globally. And so when you think, when you think about that, so we really the purpose of this acquisition was not for the revenue, let's just be clear.

Jorge Martell: You know, the product needs to be, you know, put in the same server so it can be a seamless product for our customer base. And there's, obviously, the teams, as I mentioned, sales teams getting aligned as well. And so we feel pretty good about not only the product that we acquired, the team that we acquired as well. Catherine is a very, you know, experienced team that has been a pioneer in this area in the FIDO2 space. You know, they also have a board seat in terms of the FIDO Alliance, and now we have a board seat as well. And so we feel good about where we are. Again, this is more about.

The purpose of these acquisition was because of the technology and the cross opportunity that we can have from from this technology to our existing customer base. Okay. And so we see that as a as a as a opportunity, uh, obviously more in 2026 now than, than 2025, in terms of the Cross sale, we're getting obviously the teams aligned, you know, the product needs to be, you know, put in the same server so we can be, it could be a seamless, uh, product for for our customer base and there's and there's, uh, obviously the teams as I mentioned sales teams getting aligned as well. Is that we feel pretty pretty good about. Uh, not only the, the product that we are part of the team that we acquired as well. Katherine is a very, uh, you know, um, experienced team and, uh, that has been a Pioneer in this in this area in the 502 space, uh, you know, they they also have a board, a board seat uh, in terms of the fee to align

Victor Limongelli: Can you hear me?

Jorge Martell: We can hear you now, Vic. Yeah, this is more about the cross-sell opportunity into our existing customer base, Catherine. So I should say, feel free to chime in.

Catharine Trebnick: Thank you.

Now we we we we have a voice in as well and so we feel good about where we are again. This is we can hear you now. Okay. Yeah. This is more about the cross opportunity into our existing customer base Gathering, but they feel free to chime in

thank you.

Jorge Martell: Thanks for the question, Catherine.

Speaker 6: Welcome to the conference replay.

Operator: One moment for your next question. Our next question comes from Anja Soderstrom of Sadoty. Your line is now open.

Thanks for the questions Gathering. Welcome to the conference.

1 moment for your next question.

Anja Söderström: Hi, and thank you for taking my question. So I have a question about the ARR guidance and the increase there about 6 million, but Knock Knock, you said, added about 8 million for the second quarter. How should we think about that?

Our next question, question comes from ANA soderstrom of Saudi, your line is now open.

Hi, and thank you for taking my question. So,

8 million for the second quarter.

Jorge Martell: Yeah, I can answer that. Thanks for the question, Anja. So yeah, we mentioned Knock Knock added about $8 million into our ARR pool. Part of the, and when we sort of like gave new guidance, we increased it by 6 million on both the low end and the high end. So the remaining 2 million, Anja, is primarily related to a couple of contractions that, one, that we have mentioned in the past calls, really, about a bank that was selling operations, particularly in the Middle East. And so that accelerated a little bit more than we expected in the first half of the year. And then the second component of that was we also had another, I would say, seven-figure customer that impacted ARR that is moving slower than anticipated in implementing our solutions because of their internal delays.

Uh, how should we think about that?

Jorge Martell: And so conservatively, we decided to move that out of the ARR for the remaining of the year. And so that's really the puts and takes for getting the six increase on both the low and high end.

Yeah, I can answer that. Okay, so the question and yeah. So yeah we mentioned um knock dog added about 8 million dollars uh into irr pool uh part of the uh and when you when we sort of like gave new guidance, uh we increased by 6 million in both the low end and the high end. So the the remaining 2 million Andrew is primarily related to a couple of contractions that 1 that we have mentioned in the in the past calls really uh, about a bank that was um, selling operations particularly in the Middle East and so that accelerated a little bit more than we expected, uh, in in the first half of the year. And then the second component of that was we also had another, I would say 7 figure customer, uh, that impacted ARR that is moving slower than anticipated and implementing our Solutions because of their internal delays. And so conservatively, we decided to move that out of the ARR for the remaining of the year. And so that's really the puts and takes for for getting the 6.

Anja Söderström: Okay, thank you. And then just in general, regarding the pipeline, how is that shaping up for you?

Increase on both low and high end.

Jorge Martell: Sorry, say that one more time, Anja. You cut out for me a little.

Okay, thank you. And then just in in general regarding the pipeline. How is that shipping up for you?

Anja Söderström: The pipeline, how is that shaping up for you, just in general?

Jorge Martell: Yeah, Vic, you want to take that one?

Sorry for that. 1 more time on it. You can you can up for me, a little, the pipeline. How, how is that uh shipping up for your just in general.

Yeah, thank you. You want to take that 1?

Victor Limongelli: Hello?

Jorge Martell: Yeah, we can hear you now.

Victor Limongelli: Okay, great. I'm sorry. Could you repeat the question? I had a little internet trouble there.

Hello.

Yep, we can hear it now.

Anja Söderström: Yes, no problem. Yeah, I'm just curious about the pipeline, just in general, how is that shaping up for you?

Okay, great. I'm sorry. Could you repeat the question? I had a little uh, internet trouble there.

Victor Limongelli: Well, we had a great first half of the year in terms of bookings. And then in the second half of the year, of course, the way our business works, the third quarter and the fourth quarter are much bigger, tend to be much bigger quarters in terms of closing business. We've been very happy with the progress overall on our go-to-market. And you know, as we mentioned on the prepared remarks, the hardware business, we think, will be a little bit tougher in the back half of the year, but we're excited about, you know, having something new to offer to customers as well with respect to the Knock Knock FIDO2 capability. So the second half of the year, I think, is shaping up pretty well for us.

Yes no problem. Uh yeah I'm just curious about the pipeline just in general. How is that shaping up for you?

Well, uh, we had a great first half of the year in terms of booking, and then in the second half of the year, of course, the way our business works, the third quarter, and the fourth quarter are much bigger, tend to be much bigger quarters in terms of closing business. We've been very happy with the progress overall, on our go to market and um,

you know, the the as we mentioned on the, on the prepared remarks, the hardware business we think will be a little bit tougher in the back half of the year, but we're excited about

you know, having something new to

To offer to customers as well with respect to the um, the knock knock knock 502 capability. So um, the second half of the year I think

Anja Söderström: Okay, thank you. That was all for me.

Is shaping up pretty well for us.

Operator: Thank you. One moment for our next question. Our next question comes from Trevor Rambo of BTIG. Your line is now open.

Okay, thank you. That was all for me.

Thank you.

1 moment for our next question.

Trevor Rambo: Great. Thanks for taking the question. This is Trevor on for GrayPal. So a lot was happening in the quarter from a macro perspective with the tariff announcement we had in April, then the 90-day pause, and then an extension of that pause. And you mentioned in the prepared remarks that a few customers contracted in the quarter, but maybe from a higher level, can you give some more color on what you saw in the quarter and then if the uncertainty in the macro had an impact on general customer buying behavior? And then has any of that spilled over into the first month of Q3 so far? Thanks.

Comes from Trevor Rambo of btig. Your line is now open.

Victor Limongelli: Yeah, thanks, Trevor. So we had a good first half in terms of bookings. So what we report, of course, is revenue. It's not exactly analogous to our bookings, but we had a good first quarter. The tariff situation for us was very minimal. I think we talked about it last year when I think the tariffs, the initial tariffs proposed, were much higher. It was still not going to be that big of an impact. And the way things have shaken out, it's a few hundred thousand dollar impact for us. So that's a very minor thing. And then the other aspect that a lot of people talked about in the second quarter was the federal cuts, the DOJ cuts. And we have, I think, 2% of our revenue is from the federal government. So that had a relatively small impact as well.

Great. Thanks for taking the question. This is Trevor on for grey pal. Um so a lot was happening in the quarter from a macro perspective with the Tariff announcement we had in April then the 90-day pause and then an extension of that pause and you mentioned in the prepared remarks that a few customers can track it in the quarter but maybe from a higher level, can you give some more color on what you saw in the quarter? And then if if the uncertainty in the macro had an impact on General customer buying behavior and then has any of that spilled over into the first month of Q3 so far. Thanks.

Yeah, thanks Trevor. So we had a good first half in terms of booking. So what we report, of course is revenue. It's not exactly analogous to our bookings, but we had a good first quarter. The Tariff situation for us was very minimal. Um, I think we talked about it last year. When I think that the, the tariffs for the initial tariffs proposed were much higher, it was still not going to be that big of an impact. And the way things have shaken out, it's a few hundred thousand dollar impact for us. So that's a very minor thing. And then the other aspect that a lot of people talked about in the second quarter was the

The federal cuts, the Doge cuts, and we have, I think, 2% of our revenue.

Victor Limongelli: So overall, things have been going pretty well in terms of our performance. I mean, I would say geographically, Europe, and I mentioned this last quarter, Europe has been a little weaker for us. And we've done a little bit better in the Americas and in North and South America. And EMEA is typically a strong market for us. So, you know, we'd love to see that turn around, but overall, it has been solid so far.

Uh, from the federal government, so that had a relatively small impact as well.

so overall things have been have been going pretty well in terms of our um,

Our performance. I mean, I would say geographically Europe and I mentioned this last quarter Europe, has been a little weaker for us uh and we've done a little bit better in the Americas and and North and South America.

Trevor Rambo: Great. That's some great color. And then maybe from my second, you talked on the prepared remarks a little bit earlier about evolving the go-to-market program by the start of next year. Can you dive a bit deeper into what that's going to look like and maybe provide some more color on the process and maybe what the outcome is? Thanks.

Um and Amy is typically a strong market for us. So you know we'd love to see that turn around but overall it it has been uh solid so far.

Victor Limongelli: Yeah, I mean, so part of it is we're just putting additional resources where things are going well. So we talked about this on the call we started up in North America. Before, we had a combined team in North America. We had a sales team, if you go back, you know, a year plus ago, a sales team that was supposed to sell both product lines, very different buyers, very different competitive set. So what we started last July, so a year ago, is we split the North American sales team to a dedicated security team and a dedicated digital agreements team. And what we're doing is continuing to invest as that's starting to pay off. So we've increased the size of the North American security sales team. We added additional resources when we did the Knock Knock acquisition as well. So that's part of it.

Yeah, I mean, so part of it is we're just putting additional resources where things are going well. So I we talked about this

On the call, we start up in North American before, we had a combined team in North America, we had a a sales team.

Victor Limongelli: And then part of it is us refining our approach on the DA side and really trying to, without giving too many competitive details, trying to do better in the new logo acquisition. That business, as we've talked about in the past, is a land and expand business. So we're really focused on trying to land more because we know the expansion happens.

If you go back, you know, a year plus ago, a sales team that was supposed to sell both product lines, very different buyers, very different competitive set. So what we what we started last July. So a year ago is we split the North American Sales team to a dedicated security team and a dedicated digital agreements team. And what we're doing is continuing to invest, as that's as that's starting to pay off. So we've increased the size of the North American Security sales team, we added additional resources when we did the, uh, knock knock knock acquisition as well.

So that's part of it. And then part of it is US refining, our approach, on the da side and, um, really trying to

Without giving too many competitive details, trying to do better in the new logo acquisition that business as we've talked about the past is is a land and expand business. So we're really focused on trying to land more.

Trevor Rambo: Great. That's it for me. Thanks for taking the questions, guys.

Because we know the expansion happens.

Operator: Thank you. As a reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. Our next question comes from Rudy Kessinger of DA Davidson. Your line is now open.

Great. That's it. For me. Thanks for taking the questions guys.

Thank you.

As a reminder to ask a question. Please press star 1, 1 on your telephone, and wait, for your name to be announced.

Rudy Kessinger: Great. Thanks for taking my questions, guys. Jorge, could you maybe expand or just quantify maybe the contraction with those two large customers? Because, you know, understanding you're saying second half bookings are stronger historically, but you know your first half net new ARR, 2 million relative to past years. I know last year, Q2 is a tough compare, but even relative to several years prior to that, still down quite a bit. So could you quantify maybe what the impact there was from those two customers?

Our next question comes from Rudy kessinger of Da Davidson your line is now open.

Jorge Martell: Yeah, Rudy, thanks for the question. It was about $3 million, Rudy, between those two customers and the year-over-year contraction.

Great. Thanks for taking my questions guys. Um. Jorge. Could you maybe expand or or just quantify maybe the contracts from the 2 large customers? Because, you know, understanding you're saying second half bookings are stronger historically but um, you know, your first half net new are 2 million relative to past years. I know last year, Q2 is a tough compared and even relative to to several years prior to that, um, still down quite a bit. So could you quantify maybe what the impact there was from those 2 customers?

Rudy Kessinger: Okay. And with that one customer, you know, selling off assets in the Middle East, is there risk that they sell off more assets in other geographies or any further, you know, contraction risk from that one?

Yeah, really, uh, can you answer the question? It was about, uh, million dollars, Rudy, uh, between those two customers of the year-over-year, uh, contraction.

Okay. And, and with that 1,

Jorge Martell: So obviously, we don't have this ability, you know, of the quantification, Rudy, specifically for that particular client. I think my sense is that, you know, as I mentioned, this accelerated in the first half. I think there's still going to be some of it, but it may be a little more, you know, muted. But we still have yet to see it, you know.

Customer, you know, selling off assets and then released is their risk that they fell off more assets and other geographies or any further, you know, contractions risk from that 1.

Rudy Kessinger: Okay. Got it. And then with Knock Knock, could you maybe just quantify or try to size up for us just the upsell cross-sell opportunity that they bring? You know, what percent of your installed base do you believe, you know, can really use this capability or that you could sell to over the next couple of years?

So obviously we don't have the stability uh, you know, uh of of the quantification uh Rudy specifically for that particular client. Uh, I think my my sense is that, you know, as I mentioned this accelerated uh in the first half, I think there's still going to be some of it but it may be a little more uh you know muted uh but we still have yet to see it, you know?

Okay, got it. And then, um,

With knock knock. Could you maybe?

Just quantify or try to size up for us. Just the upsell and cross-sell opportunity that they bring, you know, what percent of your installed base do you believe.

Victor Limongelli: Yeah, so this is an interesting, interesting topic because I think it's fair to say that the FIDO authentication protocol is something that has grown over the past few years and will grow even more over the next three to five years. So part of this strategy is for us to be able to offer a complete solution to our customers. And we saw this, if you go back 10-plus years ago, when banks in EMEA and in APAC were doing largely, their consumer authentication was largely through hardware. And over time, we've talked about this before, it shifted to mobile-first, so we needed to have a mobile offering, and we did. We did. So with respect to the FIDO authentication protocol, we wanted to make sure that we had an offering both in hardware, which we introduced those recently, and software.

You know, could really use this capability or that you could sell to over the next couple years.

yeah, so this is, this is an interesting, uh, interesting topic because

I think it's fair to say that the faux Authentication Protocol is something that has grown over the FAA past few years and will grow even more over the next 3 to 5 years.

So part of this strategy is for us to be able to offer a complete solution to our customers.

And we saw this, if you go back 10 plus years ago, when banks in Amia and we're doing largely, uh, they were their consumer authentication was largely through hardware and over time, we've talked about this before it shifted to mobile first. So we needed to have a mobile offering and we, and we did

We did. So,

Victor Limongelli: So it gives us the opportunity to grow with those banks, to grow with our customers into the FIDO ecosystem without losing them to competitors and offering them a solution where they don't have to rush all at once into FIDO. Like flipping a light switch, they can start using FIDO and they can still use our DigiPass approach. So I think ultimately, all of our customers, you know, if you fast forward five to ten years out, will be using FIDO. Exactly how fast that goes, hard to say right now, but you know, passkeys are here and we see banks rolling it out in some markets and other markets will probably take a little bit longer.

with respect to the fiio Authentication Protocol, we wanted to make sure that we had an offering both in Hardware which we introduced those recently and software.

So, it gives us the opportunity.

To grow with those banks and to grow with our customers into the phyto ecosystem without losing them to competitors.

And offering them a solution where they don't have to rush all at once into Pho like flipping a light switch, they can start.

using Pho and they can still use our

Digi pass approach. So

I think, ultimately.

all of our customers, you know, if you if you fast forward 5 to 10 years out,

We'll be using phyto.

You know, pass keys are here and uh we see Banks rolling it out in in some markets and uh other markets will probably take a little bit longer.

Operator: Thank you. This concludes the question and answer session. I would now like to turn it over to Joe Maxa for closing remarks.

Thank you.

Jorge Martell: Thanks, everyone. I'm glad you could join us. Have a nice day.

This concludes the question and answer session, I would now like to turn it over to Joe Maxa for closing remarks.

Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Thanks, everyone. I'm glad you could join us. Have a nice day.

Thank you for your participation. In today's conference, this does conclude the program. You may now disconnect