Shares of OneSpan (NASDAQ:VDSI) tumbled on Wednesday after the cybersecurity solutions provider to the financial industry reported its second-quarter results. OneSpan missed analyst estimates across the board, and it pulled its guidance for 2020 due to increased uncertainty related to the pandemic. The stock was down about 38% at 12:35 p.m. EDT.
OneSpan reported second-quarter revenue of $55 million, down 2% year over year and about $2.2 million below the average analyst estimate. Recurring revenue was up 35% to $23.2 million, while annual recurring revenue jumped 29% to $90 million. This growth was offset by a decline in revenue from perpetual software licenses.
Non-GAAP (adjusted) earnings per share came in at $0.02, up from $0.01 in the prior-year period but $0.02 below analyst expectations. The company reduced its operating costs, with meaningful declines in sales and marketing spending and research and development spending, which helped prop up the bottom line.
"With the resurgence of the pandemic and increasing economic uncertainty, we are seeing longer sales cycles for larger complex projects and lower than expected demand for hardware authentication products," OneSpan CEO Scott Clements said in a statement. Due to the pandemic uncertainty, OneSpan withdrew its full-year guidance.
Wednesday's rout has largely undone the stock's rally this year. Including the post-earnings losses, shares of OneSpan are now up just 13% year to date.