Summary
OneSpan's second quarter revenue came in at $59.8 million, down 2% from $60.9 million in the same quarter last year. Profit moved in the opposite direction. Gross profit rose 9% to $44.0 million, lifting gross margin to 73.5% from 66.2%. Operating income climbed 38% to $10.5 million, and operating margin expanded to 17.6% from 12.5%. Net income was $8.3 million, or $0.21 per diluted share, compared with $6.6 million, or $0.17 per diluted share, a year earlier.
The first six months tell a similar story. Revenue for the year to date was $123.2 million, down 2% from $125.8 million. Gross profit rose 4% to $91.1 million, and gross margin was 73.9% against 69.8%. Operating income for the six months was $27.7 million, up 27% from $21.7 million, with operating margin of 22.5% versus 17.3%. Net income was $22.8 million, or $0.59 per diluted share, up from $20.0 million, or $0.52 per diluted share.
Subscription revenue carried the quarter, rising 22% to $36.2 million. Security Solutions revenue fell 3% to $44.2 million, while Digital Agreements revenue rose 1% to $15.6 million. Management blamed the Security Solutions decline on the mobile-first trend, where banks favor software authentication over Digipass hardware devices, and on lower perpetual-based maintenance as customers move to term and cloud subscriptions. Higher on-premises license and maintenance revenue from existing customers and the Nok Nok Labs acquisition, which closed on June 4, 2025, partly offset those declines. Foreign exchange added roughly $1.2 million to total revenue in the quarter.
Annual recurring revenue rose 8% to $177.8 million, including $8.1 million from Nok Nok Labs. Net retention rate was 101%, down from 112% a year earlier, which the company attributed to fewer expansion contracts after a strong prior-year comparison and to more contracts that shrank in value. Cash and cash equivalents were $92.9 million at June 30, 2025, up from $83.2 million at December 31, 2024. Operating cash flow was $6.2 million for the quarter, up 170% from $2.3 million, and $35.6 million for the six months, up 22% from $29.3 million. Capital expenditures were $1.9 million in the quarter, down 18%, and $3.5 million year to date, down 35%. Deferred revenue was $57.4 million, down 3% from $59.3 million a year earlier, while remaining performance obligations rose 3% to $101.4 million. Non-GAAP net income was $13.3 million, or $0.34 per diluted share, compared with $12.2 million, or $0.31 per diluted share, and Adjusted EBITDA was $17.6 million against $16.2 million. The board declared a quarterly dividend of $0.12 per share, and the company signed a $100.0 million five-year revolving credit facility with no borrowings outstanding at quarter end.
Full-year 2025 guidance calls for ARR of $186 million to $192 million, up from a prior range of $180 million to $186 million, and Adjusted EBITDA of $72 million to $76 million. The ARR increase leans on the acquisition and on subscription momentum. Risks remain. Hardware demand keeps eroding as banks go mobile first, and NRR of 101% means the installed base is barely expanding. Currency swings cut both ways, and about 78% of quarterly revenue came from outside the U.S. The filing also cites competition, lengthy sales cycles, reliance on third parties for data center services, tariffs and trade disputes, and the loss of one or more large customers. Restructuring charges tied to the 2023 Actions are expected to total $0 to $0.5 million for the remainder of 2025.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $59.8M | $63.4M | -5.6% | $60.9M | -1.8% |
| Gross profit | $44.0M | $47.1M | -6.6% | $40.3M | +9.0% |
| Gross margin | 73.5% | 74.3% | -0.8 pp | 66.2% | +7.3 pp |
| Research & development | $9.4M | $7.9M | +19.1% | $8.3M | +13.2% |
| Sales & marketing | $11.5M | $11.5M | +0.4% | $10.5M | +9.5% |
| General & administrative | $11.8M | $9.5M | +23.4% | $11.6M | +1.9% |
| Total operating expenses | $33.5M | $29.9M | +11.9% | $32.7M | +2.3% |
| Operating income (loss) | $10.5M | $17.2M | -38.9% | $7.6M | +37.6% |
| Operating margin | 17.6% | 27.1% | -9.6 pp | 12.5% | +5.0 pp |
| Net income (loss) | $8.3M | $14.5M | -42.5% | $6.6M | +27.3% |
| Net margin | 13.9% | 22.9% | -9.0 pp | 10.8% | +3.2 pp |
| Diluted EPS | $0.21 | $0.37 | -$0.16 | $0.17 | +$0.04 |
| Net retention rate | 101.0% | 107.0% | -6.0 pp | 112.0% | -11.0 pp |
Risks
Customers adopting a "mobile first" approach are reducing purchases of Digipass hardware authenticator devices as banks shift to software authentication delivered through mobile devices. This drove Security Solutions revenue down 3% for the three months and down 4% for the six months ended June 30, 2025, and contributed to a 7% year-over-year decline in EMEA revenue for the quarter.
Net Retention Rate fell to 101% at June 30, 2025 from 112% at June 30, 2024, driven by a decrease in expansion contracts following a strong expansion quarter in 2024 and an increase in contracts that renewed at lower value. With deferred revenue down 3.2% year over year to $57.4 million, weakening expansion limits recurring revenue growth.
Approximately 78% of revenue and 54% of operating expenses were generated outside the U.S. in the three months ended June 30, 2025, and 41% of first-half revenue was denominated in Euros. Foreign exchange transaction losses were $1.0 million for the quarter and $1.1 million for the six months, versus gains in the prior-year periods, and rate changes added roughly $0.4 million to quarterly operating expenses.
Management states that revenue comparisons are heavily influenced by the timing of orders and shipments given the transactional nature of significant parts of the business, and the quarter benefited from the timing of customer renewals and a shift by certain customers from single-year to multi-year on-premises term subscription contracts with upfront license recognition. This makes period-over-period revenue sensitive to renewal and contract-term timing.
The June 4, 2025 acquisition of Nok Nok Labs added $8.1 million of ARR focused on term-based license contracts and contributed to higher sales and marketing, research and development, and general and administrative expenses, while Security Solutions operating income fell 4% for the quarter and 6% for the six months ended June 30, 2025. Integration and retention of the acquired passwordless authentication technology and customers is a key execution risk.
Stock-based and long-term incentive plan expenses rose to $3.5 million in the quarter and $6.3 million for the six months ended June 30, 2025, versus $2.0 million and $3.6 million a year earlier, and long-term incentive compensation plus payroll taxes is now a reconciliation item in Adjusted EBITDA. Rising equity compensation is pressuring operating expense growth even as headcount declines in sales, marketing, research and development, and general and administrative functions.
SaaS KPIs
All quarters →Annual Recurring Revenue (ARR)
Net Retention Rate (NRR)
Summary, forecast, risks and KPIs are extracted from OneSpan Inc.'s SEC filings for Q2 FY2025 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 1, 2026.