Onespan outlines 4–5% software and services growth for 2026 while advancing cybersecurity and digital agreements

Earnings Call Insights: OneSpan Inc. (OSPN) Q4 2025

MANAGEMENT VIEW

* CEO Victor Limongelli introduced the call by describing OneSpan as "a software business with over 80% of revenue in 2026 expected to be derived from software," highlighting a shift from hardware, which will be "less than 20% of our business, down from over 50% in 2019 and over 1/3 of the business as recently as 2022."
* Limongelli emphasized the company’s two software segments: Cybersecurity and Digital Agreements, noting, "In Cybersecurity, we provide value to our customers in 2 critical areas. Our first focus area is B2C or consumer authentication, particularly for banking and financial institutions."
* He announced a "definitive agreement to acquire Build38 to strengthen our app shielding offering," stating the acquisition "will enable deeper integration with our customers' mobile applications and will allow us to dynamically update our detection methods."
* Limongelli reported, "our gross retention rate in our DA business improved by over 4% in 2025 compared to 2024 and is now over 90%."
* The CEO highlighted that "we generated nearly $60 million in cash from operations" in 2025, returned nearly $32 million to shareholders, and completed acquisitions without drawing on the credit facility.
* Limongelli added, "I'm pleased the team's hard work and focus on operational excellence drove a strong quarter and a record year of profitability," but cautioned about a pull-forward of $3 million in Q4 2025 that would have otherwise come in Q1 2026.
* CFO Jorge Martell stated, "In the fourth quarter, our net retention rate was 104%, up from 103% last quarter… Q4 revenue was $62.9 million, an increase of 3% compared to last year's Q4."

OUTLOOK

* For full year 2026, Martell guided, "we expect software and services revenue to be in the range of $201 million to $204 million, representing 4% to 5% growth. We expect hardware revenue to be in the range of $43 million to $45 million, a decline of 8% to 12% year-over-year. We expect total revenue to be in the range of $244 million to $249 million, representing a 0% to 2% growth. We expect ARR to be in the range of $192 million to $196 million or 3% to 5% growth year-over-year. And we expect adjusted EBITDA in the range of $64 million to $68 million."
* Martell noted, "the pending Build38 acquisitions to dilute adjusted EBITDA this year in the range of $3 million to $4 million."
* The company announced an increase in the quarterly dividend from $0.12 a share to $0.13 per share.

FINANCIAL RESULTS

* OneSpan ended 2025 with ARR of $187 million, up 11.5% year-over-year, including 12% growth in Cybersecurity and 10% in Digital Agreements.
* Q4 software and services revenue grew 4% year-over-year and total revenue in the quarter grew 3% to $63 million, driven by 11% growth in digital agreements.
* For the full year, software revenue (excluding services) grew 6.4%, with DA up 8% and Cybersecurity up 6%. Subscription revenue grew 12% to $156.1 million.
* Gross margin for both Q4 and the full year 2025 was 74%. GAAP net income per share was $1.13 in Q4 and $1.88 for the year. Non-GAAP EPS was $0.36 in Q4 and $1.49 for the year.
* The company reported $70.5 million in cash and cash equivalents at year-end, with no long-term debt.

Q&A

* Trevor Rambo, BTIG: Asked about demand trends at the start of the year and hardware business outlook. Limongelli responded that "we finished the year strongly" with some Q1 revenue pulled into Q4, and "we're off to a reasonable start in terms of building pipeline for the year." Regarding hardware, he explained "hardware landed pretty much where we expected it" and clarified that the pull-forward revenue was on the software side.
* Anja Soderstrom, Sidoti: Inquired about expectations from the new CRO and impact of acquisitions. Limongelli said, "having Shaun on board is a huge benefit because he's able to focus full-time hours a week on sales execution… we expect to see improvements in all those areas over time." On M&A, he noted, "we're not looking to buy customers… we're looking to buy technology that is modern and valuable."
* Soderstrom also asked about AI opportunities and risks. Limongelli explained, "the risk is super high for somebody to try to build their own," and forecasted "quite a bit of opportunity to deliver more value" through increased authentication needs as AI agents become more prevalent.

SENTIMENT ANALYSIS

* Analysts focused on demand visibility, hardware decline stabilization, and the impact of new executive hires and acquisitions, with a neutral to slightly positive tone. Questions were forward-looking and sought clarity on execution and strategic direction.
* Management maintained a confident tone, highlighting "a strong quarter and a record year of profitability" and repeatedly emphasizing the company's improved position and growth opportunities. Limongelli’s responses in Q&A remained measured, with consistent references to ongoing investments and expected future benefits.
* Compared to the previous quarter, analyst tone was less focused on guidance reductions and more on strategic execution, while management’s confidence remained steady but increasingly highlighted new initiatives and capital allocation.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for 2026 is incrementally higher, with a focus on software and services revenue growing 4–5%, compared to previous year's 3–4% range.
* Strategic focus has shifted further toward software, with hardware becoming less central.
* Management cited improved gross retention in Digital Agreements and highlighted new investments in sales and marketing, including hiring a CRO.
* Analyst questions shifted from concerns about guidance reductions and hardware declines in Q3 to execution on sales, technology integration, and new growth avenues in Q4.
* Management’s confidence in achieving growth through product development and M&A is more pronounced, with a greater emphasis on AI-driven opportunities and integration of recent acquisitions.

RISKS AND CONCERNS

* Management acknowledged ongoing hardware revenue decline, projecting an 8–12% drop in 2026, driven by continued secular shifts to mobile authentication.
* There is an expected temporary dilution of adjusted EBITDA from the Build38 acquisition.
* Management cited the risk of evolving threats in mobile app security, stating the need for continued investment in app shielding and authentication.
* Analysts probed for clarity on execution risks, particularly regarding sales cycle length, integration of new executives, and realization of M&A benefits.

FINAL TAKEAWAY

OneSpan’s management emphasized record profitability and a strengthened foundation for long-term growth, driven by a clear pivot toward software, investments in AI and cybersecurity, and strategic acquisitions like Build38. The company projects continued growth in software and services and remains committed to disciplined capital allocation, including increased dividends and ongoing share repurchases, while cautioning that near-term profitability will be modestly impacted by new investments and acquisition-related dilution.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/ospn/earnings/transcripts]

MORE ON ONESPAN

* OneSpan Inc. (OSPN) Q4 2025 Earnings Call Transcript [https://seekingalpha.com/article/4875860-onespan-inc-ospn-q4-2025-earnings-call-transcript]
* OneSpan Inc. 2025 Q4 - Results - Earnings Call Presentation [https://seekingalpha.com/article/4875831-onespan-inc-2025-q4-results-earnings-call-presentation]
* As Sentiment Softens, OneSpan's Cash Flow And Dividends Stand Out [https://seekingalpha.com/article/4873158-as-sentiment-softens-onespan-cash-flow-and-dividends-stand-out]
* OneSpan Non-GAAP EPS of $0.36 beats by $0.07, revenue of $62.9M beats by $3.12M [https://seekingalpha.com/news/4558165-onespan-non-gaap-eps-of-0_36-beats-by-0_07-revenue-of-62_9m-beats-by-3_12m]
* OneSpan acquires Build38 [https://seekingalpha.com/news/4538584-onespan-acquires-build38]