OneSpan (OSPN) FY2025 10-K Risk Factors: 7 New, 7 Dropped

What the changes say

OneSpan faces growth challenges as hardware Digipass revenue declines, offset by expanding software and digital agreements.

What changed since the prior 10-K

New

NewRisks Related to our Business and Industry
We may encounter challenges in achieving our revenue growth objectives
We anticipate hardware Digipass revenue will decrease in 2026 due to banking customers shifting to mobile-first authentication.
NewRisks Related to our Business and Industry
The markets we serve are highly competitive, which may negatively affect our ability to add new customers, retain existing customers and grow our business
Competition in cybersecurity and digital agreements may intensify as AI enables rapid, low-cost software application development.
NewRisks Related to our Business and Industry
If we are unable to retain key employees and successfully hire and train qualified new employees, we may be unable to achieve our business objectives
We face intense competition from better-resourced technology companies for key employees and qualified personnel.
NewRisks Related to our Business and Industry
We may be unable to maintain or increase our level of profitability
Although we were profitable in 2024 and 2025, we may not maintain profitability given our historical losses and ongoing expenses.
NewRisks Related to our Business and Industry
The credit agreement for our revolving credit facility contains financial covenants and various other restrictions and requirements that could limit our operational flexibility and adversely affect our financial condition and results of operations if we are unable to comply with them
Our $100.0 million revolving credit facility with MUFG restricts operational flexibility through financial covenants and requirements.
NewRisks Related to our Business and Industry
These negative covenants may prevent us from taking actions that we believe would be in the best interests of our business and may make it difficult for us to execute our business strategy successfully or effectively compete with companies that are not similarly restricted
Defaults under our credit agreement could allow lenders to accelerate debt repayment and seize collateral, harming our stock price.
NewRisks Related to our Business and Industry
U.S. trade policy or foreign policy developments could have a material adverse impact on our business
U.S. tariffs on Chinese imports could negatively impact profit margins for Digipass devices assembled in China and Romania.

Dropped

DroppedRisks Related to our Business and Industry
We may experience difficulties increasing or maintaining our rate of revenue growth
Achieving revenue growth and maintaining profitability across segments may prove challenging.
DroppedRisks Related to our Business and Industry
The market for digital solutions for security, authentication, identity, electronic signature, and digital workflow solutions is very competitive and, like most technology-driven markets, is subject to rapid change and constantly evolving solutions and services
DroppedRisks Related to our Business and Industry
If we are unable to retain key employees and successfully hire and train qualified new employees, we may be unable to achieve our business objectives. In addition, we may experience negative effects from the significant workforce reductions we have completed over the past several years
DroppedRisks Related to our Business and Industry
We have operated at a loss for two of the past three fiscal years, and we may not be profitable in the future
The market for digital solutions and authentication is competitive and rapidly changing.
DroppedRisks Related to our Business and Industry
addition, any changes in service levels from our third-party hosting providers or other cloud-based technology vendors may adversely affect our ability to meet our customers' requirements
DroppedRisks Related to our Business and Industry
applicable accounting rules may make it more difficult for investors to accurately assess our operating results and the condition of our business
DroppedRisks Related to our Business and Industry
evolving interpretations of DORA or additional regulatory updates could lead to unexpected compliance challenges and costs

Reworded

94% rewrittenRisks Related to our Business and Industry
The revenue recognition treatment of SaaS subscriptions and term subscription licenses for on-premises software may make it more challenging to accurately assess our operating results and the condition of our business
Updated SaaS and on-premises term subscription revenue contribution to 64% for 2025 from 57% in 2024.
76% rewrittenRisks Related to our Business and Industry
International and domestic laws and regulations relating to data privacy, protection, access, sharing, portability and use could have a material adverse impact on our results of operations
Expanded data privacy and protection disclosures to include broader data governance frameworks, portability, and interoperability regimes.
Was: International and domestic privacy and data protection laws and regulations could have a material adverse impact on our results of operations
66% rewrittenRisks Related to our Business and Industry
Security breaches or cyberattacks could expose us to significant liability, cause our business and reputation to suffer and harm our competitive position
Minor phrasing updates regarding corporate infrastructure and customer data transmission and processing.
64% rewrittenRisks Related to our Business and Industry
A significant portion of our sales are to a limited number of customers. The loss of substantial sales to any one of them could have an adverse effect on revenues and profits
Updated top 10 customer revenue concentration to 18% for 2025, down from 20% in 2024 and 22% in 2023.
57% rewrittenRisks Related to our Business and Industry
Provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses
Added indemnification risk coverage for third-party software, open-source components, and AI-related legal theories.
55% rewrittenRisks Related to our Business and Industry
Our business in certain countries and transactions with foreign governments increase the risks associated with our international activities
Retained anti-corruption and FCPA risk disclosures for international operations in high-corruption regions.
51% rewrittenRisks Related to our Business and Industry
Acquisitions or other strategic transactions, such as our planned acquisition of Build38, may not achieve the intended benefits and could disrupt our operations
Disclosed specific 2025 transactions including the Nok Nok Labs acquisition, ThreatFabric investment, and planned Build38 acquisition.
Was: Acquisitions or other strategic transactions may not achieve the intended benefits or may disrupt our current plans and operations
46% rewrittenRisks Related to our Business and Industry
Failure to maintain high-quality customer support could have a material adverse effect on our business
Noted that we have adopted AI-enabled customer service technology, which may not always meet customer expectations.
40% rewrittenRisks Related to Ownership of Our Common Stock
A small group of shareholders control a substantial amount of our common stock and could promote, delay or prevent a change of control
32% rewrittenRisks Related to our Business and Industry
If our new product offerings and product enhancements do not keep pace with the needs of our customers or do not achieve sufficient customer acceptance, our competitive position and financial results will be negatively impacted
28% rewrittenRisks Related to our Business and Industry
We face a number of risks associated with our international operations, any or all of which could result in a disruption in our business and a decrease in our revenue
24% rewrittenRisks Related to our Business and Industry
We use open-source software in our products, which could subject us to litigation or other actions
22% rewrittenRisks Related to our Business and Industry
We are subject to foreign currency exchange rate fluctuations, which could adversely affect our financial condition and results of operations
21% rewrittenRisks Related to our Business and Industry
We could be subject to additional tax liabilities, and our ability to use our net operating losses may be limited

All 42 risk factors

Headings as the filing states them, in filing order.

Risks Related to our Business and Industry

01We may encounter challenges in achieving our revenue growth objectivesNew
02Acquisitions or other strategic transactions, such as our planned acquisition of Build38, may not achieve the intended benefits and could disrupt our operations51% rewritten
03Any of these risks could result in acquisitions or other strategic transactions failing to achieve their intended objectives and/or disrupting our business
04If our new product offerings and product enhancements do not keep pace with the needs of our customers or do not achieve sufficient customer acceptance, our competitive position and financial results will be negatively impacted32% rewritten
05A significant portion of our sales are to a limited number of customers. The loss of substantial sales to any one of them could have an adverse effect on revenues and profits64% rewritten
06The markets we serve are highly competitive, which may negatively affect our ability to add new customers, retain existing customers and grow our businessNew
07If we are not able to enhance our brand recognition and maintain our brand reputation, our business may be adversely affected
08Security breaches or cyberattacks could expose us to significant liability, cause our business and reputation to suffer and harm our competitive position66% rewritten
09We face a number of risks associated with our international operations, any or all of which could result in a disruption in our business and a decrease in our revenue28% rewritten
10Our Digipass authenticator business has a complex global supply chain and is dependent on a limited number of suppliers for certain components, such that supply chain disruptions could materially impact our operations. Our Digipass business may also experience inventory-related losses
11The sales cycle for our products, which is the period of time between the identification of a potential customer and completion of the sale, is typically lengthy and subject to a number of significant risks over which we have little control
12Real or perceived malfunctions and errors in our products could result in warranty and product liability risks and economic and reputational damages
13If we are unable to retain key employees and successfully hire and train qualified new employees, we may be unable to achieve our business objectivesNew
14Our financial results may fluctuate from period to period, making it difficult to project future results. If we fail to meet the expectations of securities analysts or investors, the price of our common stock could decline
15We may be unable to maintain or increase our level of profitabilityNew
16The credit agreement for our revolving credit facility contains financial covenants and various other restrictions and requirements that could limit our operational flexibility and adversely affect our financial condition and results of operations if we are unable to comply with themNew
17These negative covenants may prevent us from taking actions that we believe would be in the best interests of our business and may make it difficult for us to execute our business strategy successfully or effectively compete with companies that are not similarly restrictedNew
18Our success depends in part on establishing and maintaining relationships with other companies to distribute our technology and products or to incorporate their technology into our products and services, or vice versa
19SaaS offerings, which involve various risks, constitute an important part of our business
20Failure to maintain high-quality customer support could have a material adverse effect on our business46% rewritten
21Failure to effectively manage our product and service lifecycles could harm our business
22We are subject to foreign currency exchange rate fluctuations, which could adversely affect our financial condition and results of operations22% rewritten
23Consolidations, failures and other developments in the banking and financial services industry may adversely impact our revenue
24U.S. trade policy or foreign policy developments could have a material adverse impact on our businessNew
25If our goodwill or intangible assets become impaired, we may be required to record a significant charge to earnings
26The revenue recognition treatment of SaaS subscriptions and term subscription licenses for on-premises software may make it more challenging to accurately assess our operating results and the condition of our business94% rewritten
27We could be subject to additional tax liabilities, and our ability to use our net operating losses may be limited21% rewritten
28Provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses57% rewritten
29Any failure to protect our proprietary technology and intellectual property rights could substantially harm our business and operating results
30We use open-source software in our products, which could subject us to litigation or other actions24% rewritten
31There is significant government regulation of technology imports and exports. If we cannot meet the requirements of applicable regulations, we may be prohibited from exporting some of our products, which could negatively impact our revenue
32We employ cryptographic technology in our authentication products. If the codes used in our cryptographic technology are eventually broken or become subject to additional government regulation, our technology and products may become less effective, which would have a material adverse effect on our business
33International and domestic laws and regulations relating to data privacy, protection, access, sharing, portability and use could have a material adverse impact on our results of operations76% rewritten
34Our business in certain countries and transactions with foreign governments increase the risks associated with our international activities55% rewritten
35We may require additional capital to support our business objectives, and this capital might not be available on acceptable terms, if at all

Risks Related to Ownership of Our Common Stock

36Our stock price has been and will likely continue to be volatile
37A small group of shareholders control a substantial amount of our common stock and could promote, delay or prevent a change of control40% rewritten
38Certain provisions of our charter and of Delaware law make a takeover of our Company more difficult
39Future issuances of blank check preferred stock may reduce voting power of common stock and may have anti-takeover effects that could prevent a change in control
40Our business could be adversely affected as a result of actions of activist stockholders

General Risks

41Economic uncertainties or downturns could materially adversely affect our business
42Catastrophic events may disrupt our business

Other OneSpan 10-Ks

FY2024 10-K risk factors
42 risks
International revenue accounts for approximately 83 percent of total sales, exposing operations to significant foreign currency and geopolitical risks. Top 10 customers generated 20 percent of worldwide revenue in 2024, creating customer concentration risk. Workforce reductions totaled approximately 330 employees over the past three years, which could negatively impact execution. Profitability was recently achieved in Digital Agreements, but historical operating losses raise sustainability concerns.
Filed Feb 27, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.