Onespan ((OSPN)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for OneSpan in Q2 2025 reflected a generally positive sentiment, highlighting the company’s strong financial performance and strategic acquisition as indicators of growth potential. Despite challenges such as declines in hardware revenue and some customer contractions in annual recurring revenue (ARR), the overall outlook remains optimistic due to the company’s strategic initiatives and financial health.
Strong Financial Performance
OneSpan reported an adjusted EBITDA of $18 million, representing 29.5% of revenue for Q2 2025. The first half of 2025 saw a record adjusted EBITDA of $41 million, accounting for 33% of revenue. This marks the highest first-half performance to date, underscoring the company’s robust financial health.
Successful Acquisition
The acquisition of Nok Nok Labs was a significant highlight, enhancing OneSpan’s authentication portfolio with FIDO2 passwordless authentication software. This strategic move complements OneSpan’s existing FIDO2 hardware, providing a comprehensive authentication solution and strengthening its market position.
Subscription Revenue Growth
Subscription revenue experienced a notable growth of 22% in Q2 2025. Particularly, security subscription revenue surged by 39%, while digital agreements saw a modest increase of 5%, reflecting a strong demand for OneSpan’s subscription-based offerings.
Improved Gross Margin
OneSpan achieved a second-quarter gross margin of 73%, an improvement from 66% in Q2 of the previous year. This enhancement was driven by a favorable product and customer mix, contributing to the company’s profitability.
Positive Cash Flow and Dividend Payments
The company generated $36 million in operating cash flow during the first half of 2025. Additionally, OneSpan returned cash to shareholders through two quarterly dividend payments totaling nearly $10 million, demonstrating a commitment to shareholder value.
Decline in Security Hardware Revenue
Security Solutions revenue declined by 3% as banks increasingly adopted mobile-first authentication strategies, impacting hardware sales. This shift underscores the challenges faced by OneSpan in the hardware segment.
Year-over-Year Revenue Decline
OneSpan’s second-quarter revenue was $59.8 million, marking a 2% decline compared to Q2 2024. This decrease was primarily attributed to anticipated declines in security hardware, reflecting strategic shifts within the company.
Challenges in ARR Growth
While ARR grew by 8% to $178 million, excluding the contribution from Nok Nok, the growth was only 3%. Contractions at a few customers reduced overall ARR, highlighting challenges in maintaining consistent growth.
Impact of Sunsetted Products
Revenue was impacted by $1.2 million from sunsetted products, with only $300,000 of acquired revenue during the quarter. This reflects the transitional phase as OneSpan shifts its product offerings.
Forward-Looking Guidance
Looking ahead, OneSpan is focused on strengthening its product offerings and market capabilities to drive future growth and profitability. The company anticipates mid-single-digit ARR growth by year-end and maintains its revenue guidance between $245 million and $251 million. With a raised ARR guidance to between $186 million and $192 million, OneSpan is committed to achieving a Rule of 40 performance and sustaining strong profitability while continuing to innovate and expand its product suite.
In summary, OneSpan’s Q2 2025 earnings call conveyed a positive sentiment, driven by strong financial performance and strategic acquisitions. Despite facing challenges in hardware revenue and ARR growth, the company’s strategic initiatives and financial health suggest a promising outlook for future growth.