Onespan ((OSPN)) has held its Q3 earnings call. Read on for the main highlights of the call.
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The recent earnings call of Onespan painted a mixed picture of the company’s current standing and future prospects. On the positive side, the call highlighted robust growth in the software segment and successful strategic acquisitions, which are expected to drive future growth. However, challenges such as a decline in hardware revenue and revised revenue guidance were also discussed, indicating some concerns about short-term growth prospects. Despite these challenges, profitability and cash generation remain strong, providing a solid foundation for the company’s future endeavors.
Strong Software Business Growth
The software segment of Onespan’s business has shown remarkable performance, now constituting over 80% of the company’s overall operations. This segment delivered double-digit growth in subscription revenue and annual recurring revenue (ARR), underscoring its critical role in the company’s growth strategy.
Successful Acquisition and Strategic Investments
Onespan’s strategic acquisition of Nok Nok and investment in ThreatFabric have already begun to bear fruit. The acquisition was funded by the company’s cash reserves and has led to the closure of two new logos, contributing to a promising pipeline for the fourth quarter.
Record Adjusted EBITDA and Cash Generation
The company reported a record adjusted EBITDA of $58 million, representing 32% of its revenue, and generated $47 million in cash from operations over the first nine months. This strong financial performance highlights Onespan’s ability to generate cash and maintain profitability.
Digital Agreements Business Performance
The digital agreements segment reported an 11% year-over-year increase in subscription revenue and achieved record-high segment operating income. This growth is a testament to the segment’s importance in Onespan’s business model.
Return of Capital to Shareholders
In a move to reward shareholders, Onespan returned over $20 million through share repurchases and dividends in the first nine months of 2025, demonstrating its commitment to delivering shareholder value.
Revised Revenue and ARR Guidance
Onespan revised its full-year 2025 revenue guidance to a range of $239-$241 million, down from the previous forecast. The ARR guidance was also adjusted, reflecting the company’s cautious outlook amid lower-than-expected net expansions and declining hardware demand.
Decline in Hardware Revenue
The shift towards mobile-first authentication has led to a decline in hardware revenue, which now accounts for less than 20% of Onespan’s business. This transition reflects broader industry trends and Onespan’s strategic focus on software solutions.
Reduced GAAP Operating Income
The company’s GAAP operating income decreased to $8.2 million in Q3 2025 from $11.3 million in Q3 2024, primarily due to increased operating expenses. This decline highlights the challenges Onespan faces in managing costs while pursuing growth.
Lower Activity in Security Business
Onespan experienced lower activity in its security business, particularly in the EMEA and APAC regions, with fewer net expansions and new logos. This slowdown poses a challenge for the company’s growth in these key markets.
Forward-Looking Guidance
Looking ahead, Onespan has adjusted its revenue guidance for 2025, reflecting a cautious outlook due to lower-than-expected net expansions and declining hardware demand. Despite these challenges, the company remains optimistic about its software and services revenue, which is expected to be between $190 million and $192 million. Onespan’s focus on enhancing its software offerings, coupled with strategic acquisitions, is expected to drive long-term growth and improve product capabilities.
In conclusion, Onespan’s earnings call presented a balanced view of the company’s current performance and future prospects. While the software segment and strategic acquisitions offer promising growth opportunities, challenges such as declining hardware revenue and revised guidance indicate some short-term hurdles. Nevertheless, Onespan’s strong profitability and cash generation provide a solid foundation for navigating these challenges and pursuing future growth.