OSPN

Unless otherwise noted, references in this Quarterly Report on Form 10-Q to “OneSpan,” “Company,” “we,” “our,” and “us” refer to OneSpan Inc. and its subsidiaries. This commentary should be read in conjunction with the condensed consolidated financial statements and related notes thereto of OneSpan for the three- and six-month periods ended June 30, 2026 and 2025 as well as our consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “Form 10-K”). Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of applicable U.S. securities laws, including statements regarding: our goal of driving profitable, efficient growth in both operating segments, with a particular emphasis on subscription revenue growth; expectations regarding the contributions of, and results from, our acquisitions of Build38 GmbH and Nok Nok Labs, Inc.; expectations about trends in our cost of goods sold, gross margin, and sales and marketing, research and development, and general and administrative expenses; the expected impact of foreign currency rate fluctuations; expectations regarding sources and uses of cash; and our general expectations regarding our operational or financial performance in the future. Forward-looking statements may be identified by words such as "seek", "believe", "plan", "estimate", "anticipate", “expect", "intend", "continue", "outlook", "may", "will", "should", "could", or "might", and other similar expressions. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could materially affect our business and financial results include, but are not limited to: difficulties increasing or maintaining our rate of revenue growth; our ability to attract new customers and retain and expand sales to existing customers; our ability to successfully develop and market new product offerings and product enhancements; changes in customer requirements; the potential effects of technological changes; the loss of one or more large customers; difficulties enhancing and maintaining our brand recognition; competition; lengthy sales cycles; challenges retaining key employees and successfully hiring and training qualified new employees; security breaches or cyber-attacks; real or perceived malfunctions or errors in our products; interruptions or delays in the performance of our products and solutions; reliance on third parties for certain products and data center services; our ability to effectively manage third party partnerships, acquisitions, divestitures, alliances, or joint ventures; economic recession, inflation, tariffs or trade disputes, and political instability; claims that we have infringed the intellectual property rights of others; changing laws, government regulations or policies; pressures on price levels; component shortages; delays and disruption in global transportation and supply chains; impairment of goodwill or amortizable intangible assets causing a significant charge to earnings; actions of activist stockholders; and exposure to increased economic and operational uncertainties from operating a global business, as well as other factors described in the “Risk Factors” section of our most recent Annual Report on Form 10-K (filed with the SEC on February 26, 2026). Our filings with the Securities and Exchange Commission and other important information can be found in the Investor Relations section of our website at investors.onespan.com. We do not have any intent, and disclaim any obligation, to update the forward-looking information to reflect events that occur, circumstances that exist or changes in our expectations after the date of this Form 10-Q, except as required by law. Our website address is included in this Quarterly Report on Form 10-Q as an inactive textual reference only. Overview OneSpan helps organizations build secure, seamless, and trusted digital experiences through two solution portfolios: Cybersecurity and Digital Agreements. Our cybersecurity solutions protect identities, secure mobile apps, and safeguard access through advanced high-assurance authentication, threat intelligence, fraud prevention, and robust mobile app protection, defending users, devices, and applications against sophisticated attacks. Our digital agreement solutions streamline agreement workflows with secure e-signatures, identity verification, and smart digital forms, built to enable speed, compliance and exceptional customer experiences. Trusted by leading global enterprises, including more than 60% of the world’s 100 largest banks, OneSpan processes over 100 million digital agreements and billions of secure authentication transactions across more than 120 countries each year. We offer our products primarily through a subscription licensing model and provide multiple deployment options, including cloud-based and on-premises solutions. Our solutions are sold worldwide through our direct sales force, as well as through distributors, resellers, systems integrators, and original equipment manufacturers. 26 Table of Contents We report our financial results under the following two business units, which are our reportable operating segments: Cybersecurity and Digital Agreements. •Cybersecurity. Cybersecurity, formerly Security Solutions, consists of our broad portfolio of software products, software development kits ("SDKs") and Digipass authenticator devices that are used to build applications designed to defend against attacks on digital transactions across online environments, devices, and applications. The software products and SDKs included in the Cybersecurity segment are delivered through on-premises and cloud-based deployment models and include standards-based authentication technologies such as Fast Identity Online ("FIDO") authentication and passkeys, multi-factor authentication, transaction signing solutions and mobile application security. •Digital Agreements. Digital Agreements consists of solutions that enable our clients to secure and automate business processes associated with their digital agreement and customer transaction lifecycles that require consent, non-repudiation and compliance. These solutions, which are cloud-based, include OneSpan Sign e-signature, OneSpan Notary, and Identity Verification. We seek to drive profitable, efficient growth in both operating segments, with a particular emphasis on subscription revenue growth. Both operating segments were profitable for the three and six months ended June 30, 2026, and Cybersecurity and Digital Agreements subscription revenue grew 2% and 25%, respectively, as compared to the three months ended June 30, 2025, respectively, and 5% and 18% as compared to the six months ended June 30, 2025, respectively. Overview of Key Factors Impacting our Results of Operations As discussed in greater detail below in "Results of Operations", the following factors had a significant impact on our financial results for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025. Foreign exchange rate impact for the six months ended June 30, 2026. Changes in foreign exchange rates, in particular the weakening of the U.S. Dollar relative to the Euro, favorably impacted both total revenue and Cybersecurity revenue by approximately $3.3 million and $3.0 million, respectively, for the six months ended June 30, 2026 as compared to the same period in 2025. The impact of changes in foreign exchange rates on the Digital Agreements segment for this period was approximately $0.3 million as compared to the same period in 2025. Recent acquisitions. In June 2025, we acquired Nok Nok Labs, Inc. ("Nok Nok Labs"), a leading provider of passwordless software authentication solutions, and in February 2026, we acquired Build38 GmbH ("Build38"), a leader in next-generation mobile application protection solutions. See Note 6, Business Acquisitions, for additional information about these two transactions. Components of Operating Results Revenue We generate revenue from the sale of our subscriptions, perpetual maintenance and services, and Digipass hardware products. We believe comparison of revenues between periods is heavily influenced by the timing of orders and shipments, reflecting the transactional nature of significant parts of our business. •Product and license revenue. Product and license revenue includes Digipass hardware products and software licenses, which are provided on a perpetual or term basis subscription model. •Service and other revenue. Service and other revenue includes solutions that are provided on a cloud-based subscription model, term and perpetual maintenance and support, and services. Cost of Goods Sold Our total cost of goods sold consists of cost of product and license revenue and cost of service and other revenue. We expect our cost of goods sold to increase in absolute dollars as our business grows, although it may fluctuate as a percentage of total revenue from period to period. 27 Table of Contents •Cost of product and license revenue. Cost of product and license revenue primarily consists of direct product and license costs, including personnel costs, production costs, freight, and inventory write-off adjustments for discontinued products and services. •Cost of service and other revenue. Cost of service and other revenue primarily consists of costs related to cloud subscription solutions, including personnel and equipment costs, depreciation, amortization, and personnel costs of employees providing professional services and maintenance and support. Gross Profit Gross profit is revenue net of the cost of goods sold. Gross profit as a percentage of total revenue, or gross margin, has been and will continue to be affected by a variety of factors, including our average selling price, manufacturing costs, the mix of products sold, and the mix of revenue among products, subscriptions and services. We expect our gross margins to fluctuate over time depending on these factors. Operating Expenses Our operating expenses are generally based on anticipated revenue levels and fixed over short periods of time. As a result, small variations in revenue may cause significant variations in the period-to-period comparisons of operating income or operating income as a percentage of revenue. Generally, the most significant factor driving our operating expenses is headcount. Direct compensation and benefit plan expenses generally represent between 50% and 60% of our operating expenses. In addition, a number of other expense categories are directly related to headcount. We attempt to manage our headcount within the context of the economic environments in which we operate and the investments we believe we need to make for our infrastructure to support future growth and for our products to remain competitive. Historically, operating expenses have been impacted by changes in foreign exchange rates. We estimate the change in currency rates during the three months ended June 30, 2026 compared to the comparable prior year period resulted in an increase in operating expenses of $1.2 million. The comparison of operating expenses can also be impacted significantly by costs related to our stock-based and long-term incentive plans. Long-term incentive plan compensation expense includes both stock-based incentives and an immaterial amount of cash-based incentives. During the three months ended June 30, 2026 and 2025, operating expenses included $3.5 million and $3.5 million, respectively, of expenses related to stock-based and long-term incentive plans. During the six months ended June 30, 2026 and 2025, operating expenses included $5.3 million and $6.3 million, respectively, of expenses related to stock-based and long-term incentive plans. Our operating expenses consist of: •Sales and marketing. Sales and marketing expenses consist primarily of personnel costs, commissions and bonuses, trade shows, marketing programs and other marketing activities, travel, outside consulting costs, and long-term incentive compensation. Our sales and marketing expenses may fluctuate as a percentage of total revenue. •Research and development. Research and development expenses consist primarily of personnel costs and long-term incentive compensation. Our research and development expenses may fluctuate as a percentage of total revenue. •General and administrative. General and administrative expenses consist primarily of personnel costs, legal, consulting and other professional fees, transaction related expenses, and long-term incentive compensation. Our general and administrative expenses may fluctuate as a percentage of total revenue. •Amortization of intangible assets. Acquired intangible assets are amortized over their respective amortization periods and are periodically evaluated for impairment or changes in estimated useful life. 28 Table of Contents •Restructuring and related charges. Restructuring and other related charges consists of employee costs incurred in connection with headcount reductions, which include severance, retention pay, and related benefits, real estate rationalization costs, which include lease contract termination costs, asset impairment charges, and lease right-of-use asset and lease liability write-off gains or losses; product and services optimization costs, which include write-offs of capitalized software assets no longer in use; write-offs of acquired technology and capitalized software; and vendor rationalization costs for contractually committed services that we are no longer utilizing. Prior to 2026, these costs were incurred in connection with restructuring plans previously approved by the Company's Board of Directors. There were no costs recorded for restructuring and related charges during the six months ended June 30, 2026. Segment Results Segment operating income (loss) consists of the revenue generated by a segment, less the direct costs of revenue, sales and marketing, research and development amortization and any impairment charges that are incurred directly by a segment. Unallocated corporate costs include general and administrative expense and other company-wide costs that are not attributable to a particular segment. Financial results by reportable operating segment are included below under Results of Operations. As of December 31, 2024, we adopted ASU 2023-07, Segment Reporting (Topic 280) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. See Note 3, Segment Information, for additional information. Interest (Expense) Income, Net Interest (expense) income, net, consists of income earned on our cash equivalents, which are invested in short-term instruments at current market rates and expense primarily related to the amortization of debt issuance costs associated with our credit facilities. Other Income (Expense), Net Other income (expense), net, primarily includes exchange gains (losses) on transactions that are denominated in currencies other than our subsidiaries’ functional currencies, subsidies received from foreign governments in support of our research and development in those countries and other miscellaneous non-operational expenses. Income Taxes Our effective tax rate reflects our global structure related to the ownership of our intellectual property (“IP”). The IP in our Cybersecurity business is owned by our U.S. and German subsidiaries. The e-signature IP in our Digital Agreements business is owned by a subsidiary in Canada. These subsidiaries have entered into agreements with most of the other OneSpan entities under which those other entities provide services to the IP owners on either a percentage of revenue or on a cost plus basis or both. Under this structure, the earnings of our service provider subsidiaries are relatively constant. These service provider companies tend to be in jurisdictions with higher effective tax rates. Fluctuations in earnings flow to the IP owners. Changes in the effective tax rate reflect changes in the geographic mix of earnings and the tax rates in each of the countries in which it is earned. The statutory tax rate for the primary foreign tax jurisdictions ranges from 17% to 33%. Impact of Currency Fluctuations During the three months ended June 30, 2026 and 2025, we generated approximately 76% and 78% of our revenues, respectively, and incurred approximately 57% and 54% of our operating expenses, respectively, outside of the U.S. During the six months ended June 30, 2026 and 2025, we generated approximately 78% and 81% of our revenues, respectively, and incurred approximately 57% and 56% of our operating expenses, respectively, outside of the U.S. As a result, changes in currency exchange rates, especially the Euro exchange rate and the Canadian Dollar exchange rate, can have a significant impact on our revenue and operating expenses. 29 Table of Contents While the majority of our revenue is generated outside of the U.S., a significant amount of our revenue earned during the six months ended June 30, 2026 was denominated in U.S. Dollars. For the six months ended June 30, 2026, approximately 60% of our revenue was denominated in U.S. Dollars, 37% was denominated in Euros and 3% was denominated in other currencies. For the six months ended June 30, 2025, approximately 56% of our revenue was denominated in U.S. Dollars, 41% was denominated in Euros and 3% was denominated in other currencies. In general, to minimize the net impact of currency fluctuations on operating income, we attempt to denominate an amount of billings in a currency such that it would provide a natural hedge against the operating expenses being incurred in that currency. We expect that changes in currency rates may impact our future results if we are unable to match amounts of revenue with our operating expenses in the same currency. If the amount of our revenue in Europe denominated in Euros continues as it is now or declines, we may not be able to balance fully the exposures of currency exchange rates on revenue and operating expenses. The financial position and the results of operations of our foreign subsidiaries, with the exception of our subsidiaries in Switzerland, Singapore and Canada, are measured using the local currency as the functional currency. The functional currency for our subsidiaries in Switzerland, Singapore and Canada is the U.S. Dollar. Accordingly, assets and liabilities of our foreign subsidiaries are translated into U.S. Dollars using current exchange rates as of the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during the year. Translation adjustments arising from differences in exchange rates generated a comprehensive loss of $0.4 million and $2.3 million during the three and six months ended June 30, 2026, respectively. For the three and six months ended June 30, 2025, translation adjustments arising from differences in exchange rates generated a comprehensive gain of $5.5 million and $8.2 million, respectively. Gains and losses resulting from foreign currency transactions are included in the condensed consolidated statements of operations in other income (expense), net. Foreign exchange transaction losses aggregated $0.2 million and $0.7 million for the three and six months ended June 30, 2026, respectively. For the three and six months ended June 30, 2025, losses resulting from foreign currency transactions were $1.0 million and $1.1 million, respectively. Results of Operations The following table sets forth information about the Company's two operating segments, for the periods indicated, and selected segment and condensed consolidated operating results. Unallocated corporate costs include costs related to administrative functions that are performed in a centralized manner that are not attributable to a particular segment. Three Months Ended June 30, 2026 (In thousands, except percentages) Cybersecurity Digital Agreements Corporate and Other Total Revenue $ 40,928 $ 19,538 $ — $ 60,466 Cost of goods sold 11,037 4,946 — 15,983 Gross profit 29,891 14,592 — 44,483 Gross margin 73 % 75 % * 74 % Sales and marketing 8,896 3,318 859 13,073 Research and development 6,315 3,064 529 9,908 Other segment items (1)(3) 861 1,238 10,662 12,761 Operating income (loss) (2)(4) 13,819 6,972 (12,050) 8,741 Interest (expense) income, net (154) Other income (expense), net 47 Income before income taxes $ 8,634 30 Table of Contents Three Months Ended June 30, 2025 (In thousands, except percentages) Cybersecurity Digital Agreements Corporate and Other Total Revenue $ 44,235 $ 15,608 $ — $ 59,843 Cost of goods sold 11,413 4,463 — 15,876 Gross profit 32,822 11,145 — 43,967 Gross margin 74 % 71 % * 73 % Sales and marketing 7,329 3,467 709 11,505 Research and development 5,358 3,587 499 9,444 Other segment items (1)(3) 336 1,212 10,964 12,512 Operating income (loss) (2)(4) 19,799 2,879 (12,172) 10,506 Interest (expense) income, net 732 Other income (expense), net (669) Income before income taxes $ 10,569 Six Months Ended June 30, 2026 (In thousands, except percentages) Cybersecurity Digital Agreements Corporate and Other Total Revenue $ 89,475 $ 36,938 $ — $ 126,413 Cost of goods sold 23,677 9,739 — 33,416 Gross profit 65,798 27,199 — 92,997 Gross margin 74 % 74 % * 74 % Sales and marketing 17,385 6,750 1,618 25,753 Research and development 12,255 5,884 846 18,985 Other segment items (1)(3) 1,552 2,311 20,838 24,701 Operating income (loss) (2)(4) 34,606 12,254 (23,302) 23,558 Interest (expense) income, net (173) Other income (expense), net (339) Income before income taxes $ 23,046 31 Table of Contents Six Months Ended June 30, 2025 (In thousands, except percentages) Cybersecurity Digital Agreements Corporate and Other Total Revenue $ 91,948 $ 31,261 $ — $ 123,209 Cost of goods sold 23,041 9,110 — 32,151 Gross profit 68,907 22,151 — 91,058 Gross margin 75 % 71 % * 74 % Sales and marketing 14,201 6,870 1,891 22,962 Research and development 10,277 6,593 502 17,372 Other segment items (1)(3) 471 2,443 20,122 23,036 Operating income (loss) (2)(4) 43,958 6,245 (22,515) 27,688 Interest (expense) income, net 1,424 Other income (expense), net (678) Income before income taxes $ 28,434 *Percentage not meaningful. (1) Cybersecurity other segment items includes general and administrative expense and amortization of intangibles for the three months ended June 30, 2026, and general and administrative expense, write-off of assets, and amortization of intangibles for the six months ended June 30, 2026. Cybersecurity other segment items includes general and administrative expense and restructuring and other related charges for the three and six months ended June 30, 2025. (2) Cybersecurity operating income includes $1.0 million and $1.7 million of total amortization and depreciation expense for the three and six months ended June 30, 2026, respectively. Cybersecurity operating income includes $0.2 million and $0.4 million of total amortization and depreciation expense for the three and six months ended June 30, 2025, respectively. Cybersecurity operating income does not include any restructuring and other related charges for the three and six months ended June 30, 2026. Cybersecurity operating income includes $0.1 million and $0.2 million of restructuring and other related charges for the three and six months ended June 30, 2025, respectively. (3) Digital Agreements other segment items includes general and administrative expense and amortization of intangibles for the three and six months ended June 30, 2026. Digital Agreements other segment items includes general and administrative expense and restructuring and other related charges for the three and six months ended June 30, 2025. (4) Digital Agreements operating income includes $2.2 million and $4.3 million of total amortization and depreciation expense for the three and six months ended June 30, 2026, respectively. Digital Agreements operating income includes $1.8 million and $3.5 million of total amortization and depreciation expense for the three and six months ended June 30, 2025, respectively. Digital Agreements operating income does not include any restructuring and other related charges for the three and six months ended June 30, 2026. Digital Agreements operating income includes $0.1 million and $0.2 million of restructuring and other related charges for the three and six months ended June 30, 2025, respectively. 32 Table of Contents Revenue Revenue by products and services allocated to the segments for the three and six months ended June 30, 2026, and 2025 is as follows: Three Months Ended June 30, 2026 2025 (In thousands) Cybersecurity Digital Agreements Cybersecurity Digital Agreements Subscription (1) $ 27,186 $ 19,523 $ 26,532 $ 15,599 Perpetual maintenance and services 2,303 15 3,688 9 Hardware products 11,439 — 14,015 — Total Revenue $ 40,928 $ 19,538 $ 44,235 $ 15,608 Six Months Ended June 30, 2026 2025 (In thousands) Cybersecurity Digital Agreements Cybersecurity Digital Agreements Subscription (1) $ 62,499 $ 36,877 $ 59,655 $ 31,168 Perpetual maintenance and services 4,950 61 7,215 93 Hardware products 22,026 — 25,078 — Total Revenue $ 89,475 $ 36,938 $ 91,948 $ 31,261 (1) Cybersecurity and Digital Agreements Subscription revenue during the three months ended June 30, 2025 includes $5.9 million and less than $0.1 million, respectively, of term maintenance that has been reclassified from maintenance and services to align with the revised presentation of revenue. Cybersecurity and Digital Agreements Subscription revenue during the six months ended June 30, 2025 includes $11.0 million and less than $0.1 million, respectively, of term maintenance that has been reclassified from maintenance and services to align with the revised presentation of revenue. See Note 4, Revenue from Contracts with Customers, for additional information. Total revenue increased by $0.6 million, or 1%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Changes in foreign exchange rates as compared to the same period in 2025 favorably impacted revenue by approximately $0.6 million. Total revenue increased by $3.2 million, or 3%, during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Changes in foreign exchange rates as compared to the same period in 2025 favorably impacted revenue by approximately $3.3 million. Additional information on our revenue by segment follows. •Cybersecurity revenue decreased $3.3 million, or approximately 7%, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025. For the six months ended June 30, 2026, Cybersecurity revenue decreased $2.5 million, or approximately 3%, compared to the six months ended June 30, 2025. The decrease in Cybersecurity revenue for both periods was primarily due to lower hardware revenue, partially offset by an increase in software revenue. The decrease in hardware revenue was due to lower volume of hardware devices sold, partially offset by favorable customer mix. The increase in software revenue was due to an increase in subscription revenue primarily due to the two recent acquisitions and existing customer expansions, partially offset by lower multi-year term license revenue, the timing of customer renewals, and lower perpetual maintenance revenue due to contract transitions to term-based arrangements. Changes in foreign exchange rates for the three months ended June 30, 2026 compared to the same period in 2025 favorably impacted Cybersecurity revenue by $0.5 million. Changes in foreign exchange rates for the six months ended June 30, 2026 compared to the same period in 2025 favorably impacted Cybersecurity revenue by $3.1 million. 33 Table of Contents •Digital Agreements revenue increased $3.9 million, or 25%, during the three months ended June 30, 2026, compared to the three months ended June 30, 2025. For the six months ended June 30, 2026, Digital Agreements revenue increased $5.7 million, or 18%, during the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The increase for both periods was primarily attributable to an increase in subscription revenue from existing customer expansions and overage usage fees. Changes in foreign exchange rates for the three months ended June 30, 2026, compared to the same period in 2025, favorably impacted Digital Agreements revenue by $0.1 million. Changes in foreign exchange rates for the six months ended June 30, 2026, compared to the same period in 2025, favorably impacted Digital Agreements revenue by $0.3 million. Our revenue is heavily influenced by the timing of orders and shipments, as well as the timing of customer annual and multi-year renewals in any given period. As a result, we believe that the overall strength of our business is best evaluated over a longer term where the impact of transactions in any given period is not as significant as in a quarter-over-quarter comparison. Revenue by Geographic Regions: We classify our sales by customer location in three geographic regions: 1) the Americas, which includes North, Central, and South America; 2) EMEA, which includes Europe, Middle East and Africa; and 3) Asia Pacific (APAC), which includes Australia and New Zealand. The breakdown of revenue in each of our major geographic areas was as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands, except percentages) 2026 2025 2026 2025 Revenue Americas $ 27,729 $ 23,879 $ 52,878 $ 44,974 EMEA 20,943 23,398 49,464 54,404 APAC 11,794 12,566 24,071 23,831 Total revenue $ 60,466 $ 59,843 $ 126,413 $ 123,209 % of Total Revenue Americas 46 % 40 % 42 % 37 % EMEA 35 % 39 % 39 % 44 % APAC 19 % 21 % 19 % 19 % For the three months ended June 30, 2026, revenue generated in the Americas was $3.9 million, or 16%, higher than the three months ended June 30, 2025. For the six months ended June 30, 2026, revenue generated in the Americas was $7.9 million, or 18%, higher than the same period in 2025. The increase in revenue for both periods was largely due to an increase in Digital Agreements revenue, and to a lesser extent, Cybersecurity software revenue. For the three months ended June 30, 2026, revenue generated in EMEA was $2.5 million, or 10%, lower than the same period in 2025. For the six months ended June 30, 2026, revenue generated in EMEA was $4.9 million, or 9%, lower than the same period in 2025. The decrease for both periods was primarily due to a decrease in Cybersecurity hardware and software revenues, partially offset by an increase in Digital Agreements revenue. For the three months ended June 30, 2026, revenue generated in APAC was $0.8 million, or 6%, lower than the three months ended June 30, 2025, primarily due to lower Cybersecurity hardware revenue, offset partially by Cybersecurity software revenue. For the six months ended June 30, 2026, revenue generated in APAC was $0.2 million, or 1%, higher than the same period in 2025 due to an increase in Cybersecurity software revenue, offset partially by a decrease in Cybersecurity hardware revenue. Cost of Goods Sold and Gross Margin The following table presents cost of goods sold for our products and services for the three and six months ended June 30, 2026 and 2025: 34 Table of Contents Three Months Ended June 30, Six Months Ended June 30, (In thousands, except percentages) 2026 2025 2026 2025 Cost of goods sold Product and license $ 6,631 $ 8,296 $ 15,391 $ 17,014 Services and other 9,352 7,580 18,025 15,137 Total cost of goods sold $ 15,983 $ 15,876 $ 33,416 $ 32,151 Gross profit $ 44,483 $ 43,967 $ 92,997 $ 91,058 Gross margin Product and license 76 % 74 % 76 % 76 % Services and other 71 % 73 % 71 % 72 % Total gross margin 74 % 73 % 74 % 74 % The cost of product and license revenue decreased by $1.7 million, or 20%, and $1.6 million, or 10% during the three and six months ended June 30, 2026, respectively, compared to the three and six months ended June 30, 2025. The decrease in the cost of product and license revenue for both the three and six months ended June 30, 2026 was driven primarily by lower hardware revenues and more favorable customer mix. The cost of services and other revenue increased by $1.8 million, or 23%, and $2.9 million, or 19% during the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025. The increase in both periods is largely attributed to additional hosting server costs and third-party license costs driven by increased cloud subscription revenue from existing customers and, to a lesser extent, new customers, as well as amortization of intangible assets related to our acquisitions. Gross profit increased by $0.5 million, or 1%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Gross margin was 74% for the three months ended June 30, 2026, as compared to 73% for the three months ended June 30, 2025. Gross profit increased by $1.9 million, or 2%, during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. Gross margin was 74% for both the six months ended June 30, 2026 and 2025. The majority of our inventory purchases are denominated in U.S. Dollars. Our sales are denominated in various currencies, including the Euro. The impact of changes in currency rates are estimated to have had an unfavorable impact on overall cost of goods sold of $0.1 million for three months ended June 30, 2026 and $0.6 million for the six months ended June 30, 2026. Had currency rates during the three months ended June 30, 2026 been equal to rates in the comparable period of 2025, the gross margin would have been 1 percentage point higher, driven by the favorable currency rate impact to revenue. Had currency rates during the six months ended June 30, 2026 been equal to rates in the comparable period of 2025, the gross margin would have 3 percentage points higher. Additional information on our gross profit by segment follows. •Cybersecurity gross profit decreased by $2.9 million, or 9%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Cybersecurity gross margin was 73% during the three months ended June 30, 2026, compared to 74% for the three months ended June 30, 2025. For the six months ended June 30, 2026, Cybersecurity gross profit decreased $3.1 million, or 5%, compared to the same period in 2025. Cybersecurity gross margin for the six months ended June 30, 2026 was 74%, compared to 75% for the six months ended June 30, 2025. The decrease in gross profit for both periods is primarily due to lower hardware revenues and higher third-party costs and cloud infrastructure costs, partially offset by improved hardware customer mix. •Digital Agreements gross profit increased $3.4 million, or 31%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. Digital Agreements gross margin for the three months ended June 30, 2026 was 75%, compared to 71% for the three months ended June 30, 2025. For the six months ended June 30, 2026, Digital Agreements gross profit increased $5.0 million, or 23%, compared to the same period in June 30, 2025. Digital Agreements gross margin for the six months ended June 30, 2026 35 Table of Contents was 74%, compared to 71% for the six months ended June 30, 2025. The increase in gross profit and gross margin for both periods was driven by higher subscription revenue from existing customer expansions and overage fees, as well as lower cloud infrastructure costs. Operating Expenses Operating expenses increased by $2.3 million, or 7%, during the three months ended June 30, 2026 compared to the three months ended June 30, 2025. For the three months ended June 30, 2026, changes in foreign exchange rates increased operating expenses by approximately $0.2 million as compared to the same period in 2025. Operating expenses increased by $6.1 million, or 10%, during the six months ended June 30, 2026 compared to the six months ended June 30, 2025. For the six months ended June 30, 2026, changes in foreign exchange rates increased operating expenses by approximately $1.2 million as compared to the same period in 2025. The following table presents the breakout of operating expenses by category for the three and six months ended June 30, 2026 and 2025: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Operating costs Sales and marketing $ 13,073 $ 11,505 $ 25,753 $ 22,962 Research and development 9,908 9,444 18,985 17,372 General and administrative 11,954 11,779 22,913 21,326 Amortization of intangible assets 776 685 1,473 1,241 Write-off of assets 31 — 315 — Restructuring and other related charges — 48 — 469 Total operating costs $ 35,742 $ 33,461 $ 69,439 $ 63,370 Sales and Marketing Expenses Sales and marketing expenses for the three months ended June 30, 2026 increased by $1.6 million, or 14%, compared to the three months ended June 30, 2025. Sales and marketing expenses for the six months ended June 30, 2026 increased by $2.8 million, or 12%, compared to the six months ended June 30, 2025. The increase in expense for both periods was driven primarily by higher employee compensation costs, which included higher headcount from organic hires and from the two recent acquisitions, increases in salaries, benefits, bonus, and commissions. Average full-time sales, marketing, support, and operating employee headcount for the three and six months ended June 30, 2026 was 176 and 173, respectively, compared to 163 and 160 for the three and six months ended June 30, 2025, respectively. Average headcount was 8% higher for both the three and six months ended June 30, 2026, respectively, compared to the same periods in 2025. Research and Development Expenses Research and development expenses for the three months ended June 30, 2026 increased by $0.5 million, or 5%, compared to the three months ended June 30, 2025, which was largely driven by higher employee compensation costs from the two recent acquisitions, offset partially by higher internal software capitalization costs. Research and development expenses for the six months ended June 30, 2026 increased by $1.6 million, or 9%, compared to the six months ended June 30, 2025. The increase for the period was primarily driven by higher employee compensation costs, largely due to higher headcount from the two recent acquisitions, and higher contractor costs, offset partially by higher internal software capitalization costs. Average full-time research and development employee headcount for the three and six months ended June 30, 2026 was 254 and 250, respectively, compared to 228 and 225 for the three and six months ended June 30, 2025, respectively. Average headcount was 11% higher for both the three and six months ended June 30, 2026 compared to the same periods in 2025. 36 Table of Contents General and Administrative Expenses General and administrative expenses for the three months ended June 30, 2026 increased by $0.2 million, or 1%, compared to the three months ended June 30, 2025, which was primarily due to higher employee compensation costs, offset partially by lower consulting expenses compared to the prior year period. General and administrative expenses for the six months ended June 30, 2026 increased by $1.6 million, or 7%, compared to the six months ended June 30, 2025. The increase in expense for the period was largely driven by higher employee compensation costs and higher non-recurring acquisition-related advisor costs, offset partially by lower consulting expenses compared to the prior year period. Average full-time general and administrative employee headcount for both the three and six months ended June 30, 2026 was 92, compared to 86 for both the three and six months ended June 30, 2025. Average headcount was 7% higher for both the three and six months ended June 30, 2026 compared to the same periods in 2025. Amortization of Intangible Assets Amortization of intangible assets expense for the three months ended June 30, 2026 increased by less than $0.1 million, or 13%, compared to the three months ended June 30, 2025. Amortization of intangible assets expense for the six months ended June 30, 2026 increased by $0.2 million, or 19%, compared to the six months ended June 30, 2025. The increase in amortization expense for both periods was driven by an increase in acquired intangible assets due to the two recent acquisitions. Segment Operating Income (Loss) Information on our operating income (loss) by segment follows. •Cybersecurity operating income for the three months ended June 30, 2026 was $13.8 million, which was a year-over-year decrease of $6.0 million, or 30%, from the three months ended June 30, 2025. Operating income for the six months ended June 30, 2026 was $34.6 million, which was a year-over-year decrease of $9.4 million, or 21%, from the six months ended June 30, 2025. The decrease for both periods was largely due to lower revenue and higher operating expenses as a result of organic investments and incremental headcount from the recent acquisitions, respectively. •Digital Agreements operating income for the three and six months ended June 30, 2026 was $7.0 million and $12.3 million, respectively, compared to operating income of $2.9 million and $6.2 million, for the three and six months ended June 30, 2025, respectively. The increase for both periods ended June 30, 2026 is largely due to higher revenue, including overages fees, and lower research and development expenses, and sales and marketing expenses compared to the prior year periods. Interest (expense) income, net Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Interest (expense) income, net $ (154) $ 732 $ (173) $ 1,424 Interest (expense) income, net, was $(0.2) million and $0.7 million for the three months ended June 30, 2026 and 2025, respectively. Interest (expense) income, net, was $(0.2) million and $1.4 million for the six months ended June 30, 2026 and 2025, respectively. The decrease for both periods relates to higher average excess cash invested in the prior year period compared to the current year period, as well as interest expense incurred in the current year related to the Credit Agreement. The decrease in invested cash is largely the result of the Company using cash to fund the acquisitions. Other income (expense), net 37 Table of Contents Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Other income (expense), net $ 47 $ (669) $ (339) $ (678) Other income (expense), net, primarily includes subsidies received from foreign governments in support of our research and development in those countries, exchange gains (losses) on transactions that are denominated in currencies other than our subsidiaries’ functional currencies, and other miscellaneous non-operational, non-recurring expenses. Other income (expense), net, for the three months ended June 30, 2026 and 2025 was income of less than $0.1 million and expense of $0.7 million, respectively. Other income (expense), net, for the six months ended June 30, 2026 and 2025 was expense of $0.3 million and $0.7 million, respectively. The year-over-year change for both periods was largely driven by lower foreign exchange transaction losses in 2026 compared to 2025, due to the U.S. Dollar weakening against the Euro, as well as decreased subsidies received from foreign governments. Provision for Income Taxes Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Provision for income taxes $ 1,853 $ 2,227 $ 4,700 $ 5,587 We recorded income tax expense of $1.9 million and $2.2 million for the three months ended June 30, 2026 and 2025, respectively, $4.7 million and $5.6 million for the six months ended June 30, 2026 and 2025, respectively. Lower income tax expense for both three months and six months ended June 30, 2026 was primarily attributable to lower pre-tax income. Liquidity and Capital Resources At June 30, 2026, we had cash and cash equivalent balances of $43.3 million. Our cash and cash equivalents balance includes money market funds. At December 31, 2025, we had cash and cash equivalent balances of $70.5 million. As of June 30, 2026, we held $25.6 million of cash and cash equivalents in subsidiaries outside of the United States. Of that amount, $24.4 million is not subject to repatriation restrictions, but may be subject to taxes upon repatriation. As of June 30, 2026, we had $5.0 million of borrowings outstanding under our $100.0 million revolving credit facility entered into on June 23, 2025. The borrowing will be used for general corporate purposes and reflects our ability to access liquidity under the Credit Agreement, as needed, to support our operating and capital requirements. As of June 30, 2026, we had $0.4 million letters of credit outstanding. Subject to the terms of the Credit Agreement, we may borrow, repay, and reborrow amounts under the revolving credit facility until its maturity on June 23, 2030, and may prepay revolving loans without penalty or premium, subject to notice and customary breakage costs. Borrowings under the Credit Agreement bear interest at variable rates based on our election and consolidated net leverage ratio, and we are also required to pay a commitment fee on the unused portion of the facility. We believe that the revolving credit facility, including the remaining availability thereunder, provides us with additional financial flexibility to fund general corporate purposes and support our liquidity needs. We believe that our financial resources are adequate to meet our operating needs over the next twelve months. 38 Table of Contents Our cash flows are as follows: Six Months Ended June 30, (In thousands) 2026 2025 Cash provided by (used in): Operating activities $ 28,069 $ 35,583 Investing activities (40,974) (15,540) Financing activities (14,375) (12,167) Effect of foreign exchange rate changes on cash and cash equivalents 118 1,679 Operating Activities Changes in cash flows from operating activities primarily consists of net income, as adjusted for non-cash items, and changes in operating assets and liabilities. Non-cash adjustments consist primarily of allowance for credit losses, amortization of intangible assets, deferred taxes, depreciation of property and equipment, and stock-based compensation. We expect cash inflows from operating activities to be affected by increases or decreases in sales and timing of collections. Our primary uses of cash from operating activities have been for personnel and vendor costs. We expect cash outflows from operating activities to be affected by changes in personnel costs and the timing of payment of expenditures. For the six months ended June 30, 2026, $28.1 million of cash was provided by operating activities. This was largely driven by the net income from the period excluding depreciation and amortization, collections of accounts receivable and contract assets. This was partially offset by an increase of payments for accrued expenses. For the six months ended June 30, 2025, $35.6 million of cash was provided by operating activities. Our working capital at June 30, 2026 was $31.4 million compared to $57.6 million at December 31, 2025. This decrease was driven by less cash on hand and less outstanding receivables from customers. This was partially offset by a decrease in deferred revenue and short-term taxes payable. Investing Activities Changes in cash flows from investing activities primarily relate to purchases of property and equipment, capitalized software activities, and activity in connection with acquisitions. We expect to continue to purchase property and equipment to support the growth of our business as well as to continue to invest in our infrastructure and activity in connection with potential acquisitions. For the six months ended June 30, 2026, net cash used in investing activities was $41.0 million, compared to net cash used in investing activities of $15.5 million for the six months ended June 30, 2025. The increase in cash used was largely due to the acquisition of Build38 and higher software capitalization costs included in property and equipment. Financing Activities Changes in cash flows from financing activities primarily relate to dividends paid, payment of debt issuance costs, purchases of common stock under our share repurchase program (when applicable) and tax payments for restricted stock issuances. For the six months ended June 30, 2026, net cash used in financing activities was $14.4 million and was primarily related to dividends paid, repurchases of shares, and tax payments for stock issuances. The cash used was partially offset by the draw of $5.0 million on the credit facility. Cash of $12.2 million used in financing activities during the six months ended June 30, 2025 was attributable to dividends paid and tax payments for stock issuances. Key Business Metrics and Non-GAAP Financial Measures In our quarterly earnings press releases and conference calls, we discuss the below key metrics and financial measures that are not calculated according to generally accepted accounting principles (“GAAP”). These metrics and non-GAAP financial measures help us monitor and evaluate the effectiveness of our operations and evaluate period-to-period comparisons. Management believes that these metrics and non-GAAP financial measures help illustrate underlying trends 39 Table of Contents in our business. We use these metrics and non-GAAP financial measures to establish budgets and operational goals (communicated internally and externally), manage our business and evaluate our performance. We also believe that both management and investors benefit from referring to these metrics and non-GAAP financial measures as supplemental information in assessing our performance and when planning, forecasting, and analyzing future periods. We believe these metrics and non-GAAP financial measures are useful to investors both because they allow for greater transparency with respect to financial measures used by management in their financial and operational decision-making and also because they are used by investors and the analyst community to help evaluate the health of our business. Annual Recurring Revenue We use annual recurring revenue, or ARR, as an approximate measure to monitor the growth of our recurring business. ARR represents the annualized value of the active portion of SaaS, term-based license, and maintenance and support contracts at the end of the reporting period. ARR is calculated as the approximate annualized value of our customer recurring contracts as of the measurement date. These include subscription, term-based license, and maintenance and support contracts and exclude one-time fees. For term-based license arrangements, the amount included in ARR is consistent with the amount that we invoice the customer annually for the term-based license transaction. A customer with a one-year term-based license contract will be invoiced for the total value of the contract at the beginning of the contractual term, while a customer with a multi-year term-based license contract will be invoiced for each annual period at the beginning of each year of the contract. For contracts that include annual values that increase over time because there are additional deliverables in subsequent periods, we include in ARR only the annualized value of components of the contract that are considered active as of the date of the ARR calculation. We do not include the future committed increases in the contract value as of the date of the ARR calculation. We consider a contract to be active from when the product or service contractual term commences (the “start date”) until the right to use the product or service ends (the “expiration date”). Even if the contract with the customer is executed before the start date, the contract will not count toward ARR until the customer right to receive the benefit of the products or services has commenced. To the extent that we are negotiating a renewal with a customer within 90 days after the expiration of a recurring contract, we continue to include that revenue in ARR if we are actively in discussions with the customer for a new recurring contract or renewal and the customer has not notified us of an intention not to renew. We exclude from the calculation of ARR renewal contracts that are more than 90 days after their expiration date, even if we are continuing to negotiate a renewal at that time. ARR is not calculated based on recognized or unearned revenue and there is no direct relationship between revenue recognized in accordance with ASC 606 and the Company’s ARR business metric. We believe ARR is a valuable operating measure to assess the health of our SaaS, term-based license, and maintenance and support contracts because it illustrates our customer recurring contracts as of the measurement date. ARR is not a forecast of future revenue, which can be impacted by contract start and end dates and renewal rates, and does not include revenue from perpetual licenses, purchases of Digipass authenticators, training, professional services or other sources of revenue that are not deemed to be recurring in nature. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue as ARR is an operating metric and is not intended to be combined with or replace these items. Investors should consider our ARR operating measure only in conjunction with our GAAP financial results. At June 30, 2026, we reported ARR of $189.7 million, which was 7% higher than ARR of $177.8 million at June 30, 2025. ARR primarily consists of the annualized value of the active portions of term-based license and SaaS contracts, and to a lesser extent, maintenance contracts. Changes in foreign exchange rates as compared to the prior year positively impacted ARR by approximately $1.4 million. Net Retention Rate Net Retention Rate, or NRR, is defined as the approximate year-over-year percentage growth in ARR from the same set of customers at the end of the prior year period. It measures our ability to increase revenue across our existing customer base through expanded use of our platform, offset by customers whose subscription contracts with us are not renewed or renew at a lower amount. Our ability to drive growth and generate incremental revenue depends, in part, on our 40 Table of Contents ability to maintain and grow our relationships with customers. NRR is an important way in which we track our performance in this area. We reported NRR of 103% at June 30, 2026 as compared to 101% at June 30, 2025. The year-over-year increase in NRR was driven primarily by an increase in contracts that expanded in value. Adjusted EBITDA We define Adjusted EBITDA as net income before interest, taxes, depreciation, amortization, long-term incentive compensation and related payroll tax expense, restructuring and other related charges, and certain non-recurring items, including acquisition related costs, rebranding costs, and non-routine shareholder matters. Adjusted EBITDA is a non-GAAP financial metric. We use Adjusted EBITDA as a simplified measure of performance for use in communicating our performance to investors and analysts and for comparisons to other companies within our industry. As a performance measure, we believe that Adjusted EBITDA presents a view of our operating results that is most closely related to serving our customers. By excluding interest, taxes, depreciation, amortization, long-term incentive compensation and related payroll tax expense, restructuring costs, and certain other non-recurring items, we are able to evaluate performance without considering decisions that, in most cases, are not directly related to meeting our customers’ requirements and were either made in prior periods (e.g., depreciation, amortization, long-term incentive compensation and related payroll tax expense, non-routine shareholder matters), deal with the structure or financing of the business (e.g., interest, one-time strategic action costs, restructuring costs, impairment charges) or reflect the application of regulations that are outside of the control of our management team (e.g., taxes). In addition, removing the impact of these items helps us compare our core business performance with that of our competitors. The following table reconciles net income as reported on our condensed consolidated statements of operations to Adjusted EBITDA: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2026 2025 2026 2025 Net income $ 6,781 $ 8,342 $ 18,346 $ 22,847 Interest expense (income), net 154 (732) 173 (1,424) Provision for income taxes 1,853 2,227 4,700 5,587 Depreciation and amortization of intangible assets (1) 3,434 2,456 6,566 4,585 Long-term incentive compensation and related payroll tax expense (2) 3,525 3,678 5,603 6,926 Restructuring and other related charges (3) — 88 — 534 Other non-recurring items (4) 1,148 1,579 2,516 1,618 Adjusted EBITDA $ 16,895 $ 17,638 $ 37,904 $ 40,673 (1) Includes cost of sales depreciation and amortization expense directly related to delivering cloud subscription revenue of $2.2 million and $4.1 million for the three and six months ended June 30, 2026, respectively, and $1.3 million and $2.3 million for the three and six months ended June 30, 2025, respectively. Costs are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations. (2) Long-term incentive compensation and related payroll tax expense includes stock-based compensation and related payroll tax expense, and cash incentive grants awarded to employees located in jurisdictions where we do not issue stock-based compensation due to tax, regulatory or similar reasons. The immaterial expense associated with these cash incentive grants was less than $0.1 million for the three and six months ended June 30, 2026 and 2025. 41 Table of Contents (3) Costs are recorded in "Services and other cost of goods sold" and "Restructuring and other related charges," respectively, on the condensed consolidated statements of operations. Includes restructuring and other related charges of less than $0.1 million and $0.1 million for the three and six months ended June 30, 2025, respectively. These charges are recorded in "Services and other cost of goods sold" on the condensed consolidated statements of operations. (4) For the three months ended June 30, 2026 and 2025, other non-recurring items consist of $1.1 million and $1.6 million, respectively, of fees related to non-recurring acquisition projects. For the six months ended June 30, 2026 and 2025, other non-recurring items consist of $2.5 million and $1.6 million, respectively, of fees related to non-recurring acquisition projects. Adjusted EBITDA for the three months ended June 30, 2026 was $16.9 million compared to $17.6 million for the three months ended June 30, 2025. Adjusted EBITDA for the six months ended June 30, 2026 was $37.9 million compared to $40.7 million for the six months ended June 30, 2025. The decrease for both periods was largely driven by lower net income both quarter to date and year to date, largely due to internal investments and incremental costs year over year form the two recent acquisitions. Year-over-year changes in foreign exchange rates favorably impacted Adjusted EBITDA by approximately $0.2 million for the three months ended June 30, 2026 and favorably impacted Adjusted EBITDA by approximately $1.7 million for the six months ended June 30, 2026. Critical Accounting Policies Our accounting policies are fully described in Note 1, Summary of Significant Accounting Policies, to our Consolidated Financial Statements in our Form 10-K for the year ended December 31, 2025 and Note 2, Summary of Significant Accounting Policies, of our interim Condensed Consolidated Financial Statements in this Quarterly Report on Form 10-Q for the three months ended June 30, 2026.