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Investor Presentation
January 2019
FORWARD-LOOKING STATEMENTS
2
This presentation contains forward-looking statements within the meaning of applicable U.S. Securities laws, including statements regarding the potential
benefits, performance, and functionality of our products and solutions, including future offerings; our expectations, beliefs, plans, operations and
strategies relating to our business and the future of our business; our acquisitions to date and our strategy related to future acquisitions; and our
expectations regarding our financial performance in the future. Forward-looking statements may be identified by words such as "seek", "believe", "plan",
"estimate", "anticipate", expect", "intend", and statements that an event or result "may", "will", "should", "could", or "might" occur or be achieved and any
other similar expressions. These forward-looking statements involve risks and uncertainties, as well as assumptions which, 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: market acceptance of our products and solutions and competitors’
offerings; the potential effects of technological changes; our ability to effectively identify, purchase and integrate acquisitions; the execution of our
transformative strategy on a global scale; the increasing frequency and sophistication of hacking attacks; claims that we have infringed the intellectual
property rights of others; changes in customer requirements; price competitive bidding; changing laws, government regulations or policies; pressures on
price levels; impairment of goodwill or amortizable intangible assets causing a significant charge to earnings; exposure to increased economic and
operational uncertainties from operating a global business as well as those factors set forth in our Form 10K (and other forms) filed with the Securities
and Exchange Commission. Our SEC filings and other important information can be found on 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 presentation.
INVESTMENT HIGHLIGHTS
3
STRONG AND UNIQUE POSITION IN FINANCIAL SERVICES
SOLID BUSINESS FUNDAMENTALS WITH SUBSTANTIAL RESOURCES
2K+
Substantial software/subscription
growth available in top 100
10K+
Geographic expansion
opportunities
70%
Expect margin accretion
in 2019 forward
$92M
Allocating cash to growth
investment–building on our
successful software investments
Targeted acquisition strategy
Financial institution customers
including more than half
of the top 100 global banks
Customers in more than
100 countries; more than
300 million licenses sold
Gross margin Cash and no long
term debt
Cloud-based Open Architecture OneSpan (NASDAQ: OSPN)
4
RECENT BUSINESS HIGHLIGHTS
TRUSTED IDENTITY (TID) PLATFORM LAUNCH
NEW COMPANY NAME & REBRANDING
Strategic Acquisition
ACQUISITION OF DEALFLO
• Reduces transaction-related fraud
and enhances end-user experience
• Enables secure customer onboarding
• Initial Offerings: Intelligent Adaptive
Authentication (IAA), stand-alone
risk analytics and digital account
opening
A single partner helping clients deliver
powerful digital moments when, where
and how their customers want them
• OneSpan TID Platform
• OneSpan Mobile Security Suite
• OneSpan Risk Analytics
• OneSpan Sign
• Adds identity verification capability
• Differentiates OneSpan Sign –
agreement automation expands e-signature
value proposition 3-5x
• Accelerates TID technology development
and roadmap by more than 12 months
• Experienced 40+ person development
team in Montreal
OTP Tokens
Card Readers
Authentication Server
CrontoVisual Authentication
Mobile Security Suite
E-Signatures
Risk Analytics
5
BROAD PORTFOLIO – LEADING INNOVATOR
LEGACYHARDWARE PRODUCTS
SOFTWARE SOLUTIONS KEY CURRENT OFFERINGS
Intelligent Adaptive Authentication
Advanced Analytics - AI & ML
Digital Account Opening & Customer Onboarding
Microservices enabled workflows
Trusted Devices – Smart Tokens
SERVICES 2018-2020EMERGING TRUSTED IDENTITY OFFERINGS
Financial Institutions Other Segment Leaders
GLOBAL BLUE CHIP CUSTOMER BASE
6
Europe: 18 of top 20; US: 7 of top 10; Canada: 8 of top 10; Japan: 3 of top 5
Government; Enterprise; Insurance; Auto Finance & Personal Loans
U.S. Account Take Over and Application Fraud1 Relevant high-growth markets: 2017-2020 CAGR2
7
GROWTH DRIVERS
COMPLEX AND WORSENING THREAT ENVIRONMENT
DEMAND FOR SECURE DIGITIZATION OF BUSINESS PROCESSES
0
500
1,000
1,500
2,000
2,500
3,000
2015 2016 2017 2018 2019 2020
$m
m
Application Fraud
Account Take Over Fraud
2. Sources: Forrester, Company Reports, Gartner, BTIG Industry Report – Cyber Security 2018 and Beyond1. Source: Aite Group
Mobile
Security and
Protection
31%
CAGR
Security Threat
Intelligence and
Analytics
30%
CAGR
Identity and
Access
Management
30%
CAGR
E-Signature
Transaction
Volume
20%
CAGR
22%36%
45%
78%64%
55%
2015 2016 2017 2018* 2019*
Non-Hardware Hardware
Expanding world class, differentiated solutions
Mobile security software revenue: >50% growth YTD
OneSpan Sign subscription revenue: >20% growth YTD
Dealflo acquisition contributing as expected
Anticipate continued strong double digit software and services growth
8
SOLUTION PORTFOLIO TRANSFORMATION
SOFTWARE & SERVICES GROWTH
PERCENT OF REVENUE: HARDWARE AND NON-HARDWARE
Anticipate modest annual decline in hardware -secular trend
Large hardware opportunities available –upside potential
Installed base ofcustomers drive TID and mobile security opportunities
HARDWARE AUTHENTICATORS:STABILE AND HIGHLY PROFITABLE
*Assumes double digit non-hardware growth with a modest decline in hardware
ONESPAN MOBILE SECURITY SUITEA LIBRARY OF MOBILE APPLICATION PROTECTION
Comprehensive suite of mobile security APIs delivered as an SDK
Quick and easy integration of the newest and most effective security techniques into mobile apps
Banks and others can deliver exceptional user experiences while stopping fraud
9
> 50% growth YTD
Top-3 e-Signature solution with industry leading customer satisfaction – Net Promoter Score of 83
Differentiators:
THE CHOICE FOR FINANCIAL SERVICES AND BUSINESSES
10
Patented visual audit trailUniform on-premises and cloud experiences1 3
Private label option reduces phishing risks
Optimized for banking and regulated industries2 4
> 20% subscription growth YTD
“Financial services
rank first in
e-signature adoption.”
FORRESTER
“Europe represents a
greenfield opportunity.”
FORRESTER
> $20B Market Opportunity
THIS IS DRIVING NEW REQUIREMENTS
FINANCIAL INSTITUTIONS UNDER PRESSURE
11
• Evolving threat environment
• Growth in digital channels
• Increased regulation (PSD2, GDPR)
• Non-traditional competitors - open banking
• Narrow interest rate spreads
Primacy of UX – Frictionless, transparent, compliant - adaptive identity security
Accelerated digitization – Cloud & mobileplatform focus to lower costs; increase agility
Services led business models predominate – Outsourcing of identity security to trusted partners
EMERGING TRENDS DRIVE ONESPAN GROWTH STRATEGY
2
3
1
TRUSTED IDENTITY STRATEGY – SECURE DIGITAL CUSTOMER JOURNEYS
TID PLATFORM
• ID document capture & check
• Fraud/AML screening
• E-signing
• Digital ID creation & issuance
• Risk-based adaptive and behavioral authentication
Risk/Fraud Analysis
12
Identity Verification
CustomerOnboarding
Authenticate Transactions
Secure Open
Banking
Support*
An open, cloud-based platform that orchestrates services
enabling institutions to manage fraud, comply with regulations,
easily on-board customers, and authenticate transactions –
across channels in a secure and frictionless manner
• Secure API identity management
• *Future capability
•On-line
•Mobile
•On-premises
13
TRUSTED IDENTITY SOLUTIONS – HIGH VALUE + DIFFERENTIATED
Initial Services:
• Intelligent Adaptive Authentication
• Risk Analytics
• Digital Account Opening – 2019
INTELLIGENT ADAPTIVE AUTHENTICATION – NEXT GENERATION AUTHENTICATION
14
Frictionless!
Very low
Risk
Low
High
Medium
Scan
Broadest range of hardware and mobile form factors and technologies
Frictionless and consistent user experience across channels
Continuous authentication matched to transaction value and risk
Dynamic risk analytics with real-time transaction monitoring
Biometric orchestration – behavioral and contextual awareness
Open architecture integrates third party services
Meets strict regulations including PSD2, GDPR
Risk-Based
Authentication
Orchestrates Authentication, Enhances Customer Experience,
Reduces Risk, Prevents Fraud and Meets Strict Regulations
Historical Immediately Available Total Opportunity
NEW OFFERINGS SIGNIFICANTLY EXPAND TOTAL ADDRESSABLE MARKET
15
VASCO Financial Services Hardware
TAM $400M1
ONESPAN Financial Services
TAM $17.5B1
ONESPAN TID Platform
TAM $65B1
1) Source: OneSpan Inc. estimates based on data from various government and other sources such as the US Census Bureau,
Eurostat, Bacs, FLA, and internal company data; Gartner
*Account opening and onboarding excludes e-signature related TAM
Account
Opening &
Onboarding*
E-Signatures
Security /
Anti-Fraud
16
PREPARING TO SCALE
Experienced
technology
leadership
team in place
New functional
capabilities, business
processes, IT systems
New forward
looking Trusted
Identity Strategy
Returned
to growth
Reallocated R&D
to growth areas;
exited non-strategic
product lines
2018 – Transformation Accelerates
2017 – Foundation for Growth
Renamed
Company
to OneSpan
Strengthened
technology
capabilities
Introduce
additional TID
offerings and
continue to
pursue M&A
Launched
Trusted Identity
Platform & IAA
Acquired
Dealflo
Target
double-digit
growth
STRATEGY + PEOPLE + EXECUTION
2019 – Revenue
Growth Accelerates
REVENUE AND ADJUSTED EBITDA
192 193
201-211
Target double
digit growth
26 2315-19
MarginExpansion
2016 2017 2018* 2019*
In m
illio
ns
USD
Revenue Adjusted EBITDA
*2018 based on midpoint of FY18 guidance; 2019 assumes double digit revenue growth 17
Strong
opportunity
pipeline
Investing for
continued
growth
Returned to
growth in
H2 2017
INVESTMENT SUMMARY
18
Global Leader in Consumer Banking
Security; Top-3 e-Signature Company
Differentiated Strategy - Extend
Leadership Position; $17.5B TAM
Growing Customer Base; Significant
Growth Potential with Existing Customers
Increasing Revenue Growth & Profitability;
Strong Balance Sheet
World-Class Talent; Experienced
Management Team
E-SIGNATUREhttps://www.esignlive.com/blog
SECURITY / ANTI-FRAUDhttps://blog.vasco.com
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• Biometric Authentication: Get a Head Start on Your Vendor Evaluation with Javelin’s Scorecard
• Strong Customer Authentication: Why Consider Adaptive Methods and Tools
• How Raiffeisen Italy Achieved PSD2 Compliance with Mobile Authentication & Mobile App Shielding
• Open Banking is Coming to the U.S., But How Secure Will it Be?
• Digital Customer Onboarding and Account Opening a Top 2019 Priority
• Blockchain in the Mortgage Industry: Hype or Promise?
• OneSpan Sign Developer: Session, Authentication Token, and Signing Url – Part2
• Financial Services in the eIDAS Era
APPENDIX – ONESPAN THOUGHT & TECHNOLOGY LEADERSHIP
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APPENDIX – TID STRATEGY ALIGNED WITH GLOBAL REGULATIONS
U.S. Economic Growth, Regulatory Relief, & Consumer Protection Act (a.k.a. Dodd-Frank Repeal)
• Permits the scan of a driver’s license or personal identification card to open an account with a financial institution
• Enables secure digital onboarding of new account holders
PSD2 – Strong Customer Authentication required for account access & payments; effective Sept. 14, 2019
• Cronto patented technology meets PSD2’s dynamic linking requirement
• Application Shielding protects mobile banking apps from malware
• Risk Analytics Engine analyzes and scores user, device and transaction data in real-time – determines precise
authentication requirements for each financial transaction
Open Banking – Enables third party developers to build applications and services through secure open APIs
• Government-regulated: Australia, Bahrain, Hong Kong, New Zealand, United Kingdom
• Government-endorsed: Singapore; Government evaluation: Canada, USA
• Industry-led: Japan, Brazil, Mexico
GDPR – EU data protection law effective May 25, 2018
• Catalyst for similar regulations – California Consumer Privacy Act, Brazil Data Privacy Law, Chile Data Protection
Act, Argentina Resolution 47/2018
• Large fines and/or imprisonment coupled with large scale breaches are driving organizations to migrate from static
passwords to user-friendly, multi-factor authentication solutions
21
COPYRIGHT AND TRADEMARKS
Copyright© 2018 OneSpan North America Inc., all rights reserved. OneSpan™, the
“O” logo, “BE BOLD. BE SECURE.”™, DEALFLO™, V-HUB™, DIGIPASS® and
CRONTO® are registered or unregistered trademarks of OneSpan North America
Inc. or its affiliates in the U.S. and other countries. Any other trademarks cited herein
are the property of their respective owners. OneSpan reserves the right to make
changes to specifications at any time and without notice. The information furnished by
OneSpan in this document is believed to be accurate and reliable. However, OneSpan
may not be held liable for its use, nor for infringement of patents or other rights of
third parties resulting from its use.