Pitch:
– Small-cap SaaS provides authentification solutions for financial institutions.
– The decline in legacy business has been masking 30%+ growth on the digital signature side.
– In addition, a shift from permanent to term licenses has further muted topline growth, despite ARR growing at a healthy 20%+ with 115%+ net retention.
– New CEO (hired after former management was pushed out by activists in 2021) with a track record of revitalizing security software business and comp incentive to reach $30/share or sell the company.
Valuation: Trades at 12x 2025 EBITDA assuming 10-12% revenue CAGR (with 20%+ ARR growth) and reaching 8-10% EBITDA margins. Unprofitable at the moment.
Exp. gain: 20%+ 5-year IRR.
Full OSPN write-up (free guest account required):
https://valueinvestorsclub.com/idea/ONESPAN_INC/7895441762