Summary
OneSpan's fiscal 2026 second quarter told two different stories about the same business. Total revenue rose 1% to $60.5 million from $59.8 million in the prior-year quarter, and subscription revenue climbed 11% to $46.7 million. Underneath that headline, Cybersecurity revenue fell 7% to $40.9 million while Digital Agreements revenue rose 25% to $19.5 million. Annual recurring revenue reached $189.7 million, up 7%, and the net retention rate was 103%. Management put the DigipassONE launch, a unified authentication platform introduced two weeks before the print, at the center of the quarter's product news. The platform bundles authentication, identity verification for digital wallets, mobile app shielding and telemetry into one offering.
Profitability moved the other way. Gross profit was $44.5 million, or 74% gross margin, against $44.0 million and 73% a year earlier. Operating income fell 17% to $8.7 million from $10.5 million, and operating margin dropped to 14.5% from 17.6%. Net income was $6.8 million, or $0.18 per diluted share, compared with $8.3 million, or $0.21 per diluted share. Adjusted EBITDA slipped 4% to $16.9 million. Operating costs rose 7%, with sales and marketing up 14%. Headcount is the driver. Average sales, marketing, support and operating headcount was 176, up 8%, and research and development headcount was 254, up 11%, reflecting organic hiring plus the Nok Nok Labs and Build38 acquisitions.
Cash generation weakened. Operating cash flow was negative $0.1 million for the quarter, down from $6.2 million a year earlier, though the first half still produced $28.1 million versus $35.6 million. Capital expenditures rose to $3.2 million from $1.9 million. Cash and cash equivalents stood at $43.3 million at June 30, 2026, down from $70.5 million at December 31, 2025, after the Build38 acquisition and share repurchases. Deferred revenue was $63.3 million, up 10.3%, while remaining performance obligations of $100.0 million were down 1.3%. Working capital fell to $31.4 million from $57.6 million at December 31, 2025.
Geography shifted as well. Americas revenue was $27.7 million, up 16%, while EMEA fell 10% to $20.9 million and APAC fell 6% to $11.8 million. For the full year 2026, OneSpan raised its total revenue outlook to $248 million to $252 million from $244 million to $249 million. Software and services revenue is guided to $202 million to $204 million, hardware to $46 million to $48 million, ARR to $194 million to $198 million, and Adjusted EBITDA to $67 million to $71 million. The company declared a quarterly dividend of $0.13 per share and repurchased roughly 230,000 shares for $2.9 million.
The risks are the familiar ones for this business. Cybersecurity hardware volumes are shrinking, and that segment's operating income fell 30% to $13.8 million in the quarter. Foreign exchange moves flattered reported results, so underlying growth is thinner than the headline. OneSpan also flagged dependence on large customers, lengthy sales cycles, competition, security breaches, tariffs and supply chain disruption, and the integration of recent acquisitions. With RPO down slightly and operating cash flow negative in the quarter, the raised guidance leans on subscription momentum and cost discipline holding through the second half.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $60.5M | $65.9M | -8.3% | $59.8M | +1.0% |
| Gross profit | $44.5M | $48.5M | -8.3% | $44.0M | +1.2% |
| Gross margin | 73.6% | 73.6% | ±0.0 pp | 73.5% | +0.1 pp |
| Research & development | $9.9M | $9.1M | +9.1% | $9.4M | +4.9% |
| Sales & marketing | $13.1M | $12.7M | +3.1% | $11.5M | +13.6% |
| General & administrative | $12.0M | $11.0M | +9.1% | $11.8M | +1.5% |
| Total operating expenses | $35.7M | $33.7M | +6.1% | $33.5M | +6.8% |
| Operating income (loss) | $8.7M | $14.8M | -41.0% | $10.5M | -16.8% |
| Operating margin | 14.5% | 22.5% | -8.0 pp | 17.6% | -3.1 pp |
| Net income (loss) | $6.8M | $11.6M | -41.4% | $8.3M | -18.7% |
| Net margin | 11.2% | 17.5% | -6.3 pp | 13.9% | -2.7 pp |
| Diluted EPS | $0.18 | $0.30 | -$0.12 | $0.21 | -$0.03 |
| Net retention rate | 103.0% | 105.0% | -2.0 pp | 101.0% | +2.0 pp |
Risks
Cybersecurity revenue decreased $3.3 million, or approximately 7%, for the three months ended June 30, 2026 and decreased $2.5 million, or approximately 3%, for the six months ended June 30, 2026, primarily on lower hardware device volumes. The company states that revenue comparisons between periods are heavily influenced by the timing of orders, shipments and customer renewals, so results in any given quarter can swing materially.
Operating margin fell to 14.5% for the quarter ended June 30, 2026 from 17.6% a year earlier (down 3.1 pp) and to 18.6% year to date from 22.5% (down 3.8 pp), while operating income fell 16.8% quarter over quarter and net income fell 18.7%. Management attributes the decline to internal investments and incremental costs from the two recent acquisitions, and notes that small revenue variations can cause significant swings in operating income because expenses are largely fixed in the short term.
For the six months ended June 30, 2026, approximately 78% of revenue and 57% of operating expenses were generated outside the U.S., with 37% of revenue denominated in Euros. Management states that if Euro-denominated revenue in Europe continues at current levels or declines, the company may not be able to fully balance currency exposure between revenue and operating expenses; the weakening U.S. Dollar favorably impacted total revenue by approximately $3.3 million for the six months ended June 30, 2026 and translation adjustments generated a comprehensive loss of $2.3 million in that period.
The company completed the Nok Nok Labs acquisition in June 2025 and the Build38 GmbH acquisition in February 2026, which drove higher headcount, employee compensation, amortization of intangibles and non-recurring acquisition fees of $2.5 million for the six months ended June 30, 2026. Integrating these businesses is central to the subscription growth strategy, and the company also notes dependence on effectively managing acquisitions, alliances and divestitures.
Cash and cash equivalents fell to $43.3 million at June 30, 2026 from $70.5 million at December 31, 2025, working capital decreased to $31.4 million from $57.6 million at December 31, 2025, and the company drew $5.0 million on its $100.0 million revolving credit facility. Operating cash flow also declined to $28.1 million for the six months ended June 30, 2026 from $35.6 million a year earlier, with the quarter ended June 30, 2026 producing negative operating cash flow of $0.1 million.
Net retention rate was 103% at June 30, 2026 and ARR was $189.7 million, with growth dependent on expanding existing customer contracts rather than new logos. The company is also exposed to a concentrated enterprise customer base, noting that its solutions are used by more than 60% of the world's 100 largest banks and that EMEA revenue fell 10% for the three months ended June 30, 2026 on lower Cybersecurity hardware and software sales.
SaaS KPIs
All quarters →Annual Recurring Revenue
Summary, forecast, risks and KPIs are extracted from OneSpan Inc.'s SEC filings for Q2 FY2026 (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.