OSPN — OneSpan Inc.

OneSpan Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total Revenue: $60.5 million, up 1% year-over-year.
• Subscription Revenue: $47 million, up 11%, comprising 77% of total revenue (up from 70% in Q2 2025).
• Annual Recurring Revenue (ARR): $190 million, a 7% increase year-over-year.
• Adjusted EBITDA: $17 million (28% margin), compared to $17.6 million (29.5% margin) in Q2 2025.
• GAAP Net Income: $8.7 million ($0.18 per share), down from $10.5 million ($0.21 per share) in the prior year.
• Cash Position: $43.3 million in cash and equivalents, with $5 million outstanding under the credit facility.

2. Strategic Updates and Business Highlights:

• Launch of DigipassONE: A unified authentication platform integrating technologies from recent acquisitions (Nok Nok Labs and Build38). It includes components for authentication, verification, protection, and insights.
• Digital Agreements Business: Revenue grew 25.2% to $19.5 million, driven by strong overage revenue and new customer additions.
• Investment in AI: Focus on enhancing customer experience and operational efficiency in agreement workflows.
• Shareholder Returns: Returned nearly $8 million through dividends and share repurchases, with a quarterly dividend of $0.13 per share approved.

3. Forward Guidance and Outlook:

• Revenue Guidance for 2026: Increased to $248 million to $252 million (previously $244 million to $249 million).
• Software and Services Revenue: Expected in the range of $202 million to $204 million.
• Hardware Revenue: Expected to be $46 million to $48 million, revised upward due to increased bookings.
• ARR Guidance: Anticipated to be between $194 million and $198 million.
• Adjusted EBITDA: Expected to be in the range of $67 million to $71 million.

4. Bad News, Challenges, or Points of Concern:

• Decline in Hardware Revenue: Noted as a headwind, with a decrease in hardware and perpetual maintenance revenue, which comprised 23% of total revenue (down from 30%).
• Operating Income Decline: GAAP operating income fell to $8.7 million from $10.5 million due to increased operating costs from acquisitions and investments.
• Net Retention Rate (NRR): Reported at 103%, but concerns were raised regarding the sustainability of revenue growth and the impact of declining hardware sales on overall performance.

5. Notable Q&A Insights:

• Growth Sustainability: Management indicated that stabilizing the hardware business and leveraging software growth will be key to achieving mid- to high single-digit organic growth.
• Customer Interest in DigipassONE: Early feedback is positive, with expectations for cross-selling opportunities to existing customers.
• Digital Agreements Overages: Seen as a leading indicator for future ARR growth, with overages primarily driven by a few key customers.
• Market Trends: Regulatory drivers expected to influence customer budgets and adoption of new technologies like DigipassONE Verify, particularly in Europe.
• M&A Strategy: OneSpan remains open to targeted acquisitions that align with its product strategy, with a focus on prudent integration of new technologies.

Overall, OneSpan's second quarter results reflect solid subscription growth and strategic advancements with the DigipassONE platform, despite challenges in hardware revenue and operating income. The company is optimistic about future growth driven by software and digital agreements, while also navigating the evolving market landscape.