OneSpan (NASDAQ:OSPN) executives highlighted rising recurring revenue, improving profitability, and continued progress in shifting the business toward software during the company’s fourth-quarter and full-year 2025 earnings call held Feb. 26, 2026. Management also discussed planned investments in go-to-market and product development, along with the expected closing of the Build38 acquisition to expand mobile application protection capabilities.
Business mix shifts further toward software
Chief Executive Officer Victor Limongelli opened the call by framing OneSpan as “a software business,” saying that more than 80% of 2026 revenue is expected to come from software, with hardware representing less than 20%. He noted the hardware portion of the business has declined significantly over time—down from more than 50% of revenue in 2019—and said that while the company expects the secular decline in consumer banking tokens to continue, the hardware business still generates attractive cash that supports software growth and overall profitability.
Build38 acquisition aimed at strengthening App Shielding
Limongelli said OneSpan recently signed a definitive agreement to acquire Build38 to strengthen its App Shielding offering amid an evolving threat landscape and more sophisticated attacks. He said the acquisition is intended to enable deeper integration with customer mobile applications and allow OneSpan to dynamically update detection methods. Over time, he also said the combined platform could allow OneSpan to aggregate signals across its broader mobile portfolio to deliver “richer insights and more robust protection.” Management expects the acquisition to close in the current quarter.
In response to analyst questions, Limongelli said OneSpan’s acquisition approach is focused on buying modern technology that solves customer problems—particularly in core areas like authentication and App Shielding—rather than buying revenue. He characterized prior deals including Nok Nok and the pending Build38 transaction as technology-driven acquisitions where the targets had “great technology” but not significant revenue.
Q4 and full-year results: ARR growth and record profitability
Management reported a strong finish to 2025, including approximately $3 million of revenue that came into the fourth quarter that the company “typically would have expected to come in Q1” of 2026. Limongelli said this benefited the 2025 finish while making 2026 “a little lighter” than would otherwise have been expected, noting the revenue pull-forward was on the software side. CFO Jorge Martell later clarified during Q&A that the incremental $3 million referenced was not hardware revenue and was instead tied to software, specifically within the security business.
For the fourth quarter, OneSpan reported:
- Total revenue of $62.9 million, up 3% year-over-year.
- Adjusted EBITDA of $19.4 million, with an adjusted EBITDA margin of 30.9%.
- Gross margin of approximately 74%.
- Annual recurring revenue (ARR) of $187 million at year-end, up 11.5% year-over-year, including 12% growth in cybersecurity ARR and 10% growth in digital agreements ARR.
For the full year 2025, Martell reported revenue of $243.2 million, flat versus 2024, reflecting software and services growth of 5.3% offset by a 16.6% decline in hardware revenue. Full-year subscription revenue grew 12% to $156.1 million, and full-year adjusted EBITDA rose to $77.6 million, with a 31.9% margin. The company generated $59.5 million in operating cash flow in 2025.
Martell said GAAP operating income rose to $48.4 million in 2025 from $44.8 million in 2024, and GAAP net income per share was $1.88 for 2025 compared with $1.46 in 2024. He noted both periods included certain income tax benefits related to the release of valuation allowance, and said the company adjusted for tax benefits in non-GAAP EPS. Non-GAAP EPS was $1.49 for 2025 compared with $1.42 in 2024.
Division performance: cybersecurity steady, digital agreements expands
In the cybersecurity division, Martell said fourth-quarter ARR grew 12% to $120 million. Q4 cybersecurity revenue was $45.4 million, essentially flat year-over-year, while subscription revenue grew 1% against what he described as a particularly strong comparison in the prior-year quarter. For the full year, cybersecurity revenue declined 2.5% to $177.7 million, primarily due to the expected decline in hardware, partially offset by 13% subscription revenue growth driven by license expansion, new logos, and the Nok Nok acquisition.
In digital agreements, Martell said ARR increased 10% to $67 million. Revenue grew 11% in Q4 to $17.5 million and rose 7% for the full year to $65.5 million. He attributed the growth to renewal expansions, new contracts, and increases in overages and other one-time revenues, partially offset by a reduction in maintenance revenue tied to the sunsetting of an on-prem e-signature product. Digital agreements operating income reached a record $5.6 million in Q4 and $16 million for the full year, and Martell said the year-over-year improvement was driven by higher revenue and gross profit along with lower operating expenses.
Limongelli also said gross retention in the digital agreements business improved by more than four percentage points in 2025 versus 2024 and is now above 90%.
Capital allocation, dividend increase, and 2026 outlook
Management emphasized a “balanced capital allocation strategy,” including shareholder returns, organic investment, and targeted M&A. Martell said 2025 uses of cash included $18.5 million in dividends, $13.1 million in share repurchases (about one million shares), $14.7 million for the Nok Nok acquisition, and $11.6 million for a 15% ownership stake in ThreatFabric. The company ended 2025 with $70.5 million in cash and cash equivalents and no long-term debt, and Martell noted the company also has an untapped $100 million revolver.
Limongelli said the board approved an increase in the quarterly dividend to $0.13 per share from $0.12 per share, representing an annualized dividend of $0.52 per share and an 8% increase.
For 2026, Martell said OneSpan plans incremental internal investments of about $5.5 million in sales and marketing and in product and R&D, which are expected to pressure near-term profitability. He also said the pending Build38 acquisition is expected to dilute adjusted EBITDA by $3 million to $4 million in 2026.
Guidance for full-year 2026 includes:
- Software and services revenue of $201 million to $204 million (4% to 5% growth).
- Hardware revenue of $43 million to $45 million (down 8% to 12%).
- Total revenue of $244 million to $249 million (0% to 2% growth).
- ARR of $192 million to $196 million (3% to 5% growth).
- Adjusted EBITDA of $64 million to $68 million, inclusive of the expected Build38 impact.
During Q&A, Limongelli said the company is “off to a reasonable start” building pipeline early in 2026 and expects improvements from the new Chief Revenue Officer, hired in December, to show up more meaningfully in the second half of the year given a typical six- to nine-month sales cycle. He added that the CRO’s role includes tighter execution, pipeline development, account risk review, and improved lead generation.
On hardware trends, executives reiterated that the long-term decline is driven by the shift from web-based banking to mobile banking, and Limongelli said hardware in early 2026 appeared “reasonable,” aligning with the company’s full-year expectations.
Management also discussed AI as an emerging theme, saying that evolving threats increase the need for up-to-date App Shielding capabilities and that, over time, consumer AI agents could increase demand for authentication and application protection.
About Onespan (NASDAQ:OSPN)
OneSpan, formerly known as Vasco Data Security International, is a Chicago-based cybersecurity software company specializing in digital identity and anti-fraud solutions. Founded in 1991, the company provides a suite of authentication and transaction security products designed to help organizations protect critical applications and high-value transactions across online, mobile and in-branch channels.
The core OneSpan portfolio includes multi-factor authentication, risk-based authentication and transaction signing solutions.
