Summary
OneSpan closed fiscal 2025 with a stronger fourth quarter than the prior-year period. Fourth-quarter revenue rose 2.9% to $62.9 million. Gross profit increased 2.2% to $46.3 million, while operating income improved 6.1% to $12.5 million. Net income jumped 51.3% to $43.5 million. For the full year, revenue was flat at $243.18 million. Diluted EPS for the full year rose to $1.88 from $1.46. Fourth-quarter gross margin slipped to 73.6%, down 0.5 percentage points, but fourth-quarter operating margin rose to 19.9%, up 0.6 percentage points. Full-year gross margin expanded to 73.8%, up 2.0 percentage points, and full-year operating margin reached 19.9%, up 1.5 percentage points. The profit growth came against a steady top line, and the margin expansion shows the cost structure changes are flowing through.
Cash generation remained solid. Fourth-quarter operating cash flow was $12.6 million, up 1.2% from the prior-year quarter. Full-year operating cash flow was $59.5 million, up 6.8% from the prior year. Capital expenditures were $2.9 million in the fourth quarter, up 49.1%, and $8.96 million for the full year, down 3.1%. Deferred revenue ended the year at $74.2 million, up 4.7% from the prior-year quarter. Remaining performance obligations were $106.1 million, up 2.5% from the prior-year quarter. Annual recurring revenue at December 31, 2025 was $186.9 million, 11% higher than the prior year's $167.7 million. Net retention rate was 104%, down from 106% a year earlier. Adjusted EBITDA for the full year was $77.649 million, compared with $73.373 million in 2024. Those non-GAAP measures point to a business that is growing its recurring base while managing churn.
Management spent 2025 reshaping the product portfolio and leadership team. OneSpan acquired Nok Nok Labs in June 2025, which added passwordless authentication and the S3 FIDO product. In October 2025, OneSpan announced a strategic investment in and partnership with ThreatFabric for mobile threat intelligence and fraud detection. In December 2025, the company agreed to acquire Build38, a mobile application protection provider. The company also hired a new chief technology officer in December 2024 and a new chief revenue officer in December 2025. These moves support the long-running shift away from Digipass hardware authenticators toward software and cloud subscriptions. The restructuring plan ended on December 31, 2025, after the company eliminated approximately 345 positions under the broader cost reduction actions. OneSpan returned approximately $31.6 million to shareholders in 2025 through dividends and share repurchases. On February 26, 2026, the board declared a quarterly dividend of $0.13 per share, an 8.3% year-over-year increase, payable on March 27, 2026.
The outlook carries real execution risks. Foreign exchange remains a swing factor because a large share of revenue and expenses sits outside the United States, and the mobile-first trend continues to pressure hardware sales. The transition to term licenses and cloud subscriptions changes revenue timing and renewal patterns. The Nok Nok Labs, ThreatFabric, and Build38 actions require integration and go-to-market follow-through. The 10-K does not include formal revenue or earnings guidance for the next quarter or the full fiscal year. Instead, the filing frames future growth around recurring revenue, new logos, and product expansion. Investors will watch whether ARR growth of 11% and a net retention rate of 104% can sustain the full-year revenue base while operating margins hold near 19.9%. The dividend increase signals confidence in cash generation, but the flat full-year revenue line leaves little room for operational missteps.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $62.9M | $57.1M | +10.3% | $61.2M | +2.9% |
| Gross profit | $46.3M | $42.0M | +10.2% | $45.3M | +2.2% |
| Gross margin | 73.6% | 73.6% | -0.0 pp | 74.0% | -0.5 pp |
| Research & development | $8.0M | $8.8M | -9.2% | $8.3M | -3.6% |
| Sales & marketing | $12.6M | $11.4M | +10.6% | $11.0M | +14.8% |
| General & administrative | $12.2M | $12.2M | +0.5% | $13.1M | -6.8% |
| Total operating expenses | $33.8M | $33.8M | -0.0% | $33.5M | +0.8% |
| Operating income (loss) | $12.5M | $8.2M | +52.3% | $11.8M | +6.1% |
| Operating margin | 19.9% | 14.4% | +5.5 pp | 19.3% | +0.6 pp |
| Net income (loss) | $43.5M | $6.5M | +568.5% | $28.8M | +51.3% |
| Net margin | 69.2% | 11.4% | +57.8 pp | 47.1% | +22.1 pp |
| Diluted EPS | $1.12 | $0.17 | +$0.95 | $0.74 | +$0.38 |
| Net retention rate | 104.0% | 103.0% | +1.0 pp | 106.0% | -2.0 pp |
Risks
Total revenue was flat for FY2025 compared to FY2024 at $243.18 million, and management expects Digipass hardware revenue to decrease modestly in 2026 as banking customers shift to mobile-first authentication. The company must grow software and Digital Agreements revenue to offset the hardware decline, but competition, long sales cycles and acquisition integration may prevent that.
OneSpan acquired Nok Nok Labs in June 2025, invested in ThreatFabric in October 2025, and signed a definitive agreement to acquire Build38 in December 2025, expected to close in March 2026. Integration delays, failure to cross-sell acquired products, customer uncertainty and loss of key acquired employees could prevent intended benefits.
Competitors may integrate generative artificial intelligence into products more quickly, and AI may lower barriers to entry by enabling new entrants to create competitive software at low cost. OneSpan also faces evolving risks from AI used in security operations, including model manipulation and data poisoning, if systems are improperly governed.
The Digipass authenticator business relies on a complex global supply chain, limited suppliers, and assembly in mainland China and Romania. Tariffs, geopolitical tensions and natural disasters could disrupt supply or increase costs, and inaccurate demand forecasts could lead to inventory losses.
OneSpan must comply with expanding EU regulations including DORA and NIS2, and its financial entity customers are imposing additional contractual requirements, audits and resilience obligations. Non-compliance could lead to penalties, loss of business, reputational damage and significant additional investment.
The top 10 largest customers contributed 18% of total worldwide revenue in 2025, down from 20% in 2024 and 22% in 2023, but the customer base remains concentrated. The loss of substantial sales to any one of these customers could adversely affect revenues and profits.
The sales cycle in the financial services market is often 9 to 18 months long, requiring significant sales and marketing expenses before a sale occurs. Timing of enterprise customer orders and related revenue recognition is difficult to predict, causing operating results to vary significantly between periods.
The company depends on retaining key employees, including its CEO and senior management, and faces intense competition for talent. The loss of key employees or the need to train new hires, including recent CTO and CRO hires, could delay business objectives and harm results.
The June 2025 Credit Agreement with MUFG provides a $100.0 million revolving credit facility and contains minimum net leverage and interest coverage ratios plus restrictive covenants. Non-compliance could limit operational flexibility or trigger acceleration of amounts due, though no borrowings were outstanding and letters of credit were $0.4 million as of December 31, 2025.
As a cybersecurity and digital agreements provider to banks, OneSpan is an attractive target for cyberattacks and has experienced security incidents in the past, none material to date. The recent Salesloft Drift breach affected OneSpan with minimal impact, but future third-party incidents could harm reputation, cause liability and reduce revenue.
A majority of revenue is derived from banking and financial services customers, making OneSpan susceptible to consolidation, failures and cost reduction measures in that industry. Mergers or financial pressures could reduce the number of customers, lengthen sales cycles, delay purchases and increase price competition.
At December 31, 2025, goodwill and intangible assets had a net book value of $113.6 million primarily related to acquisitions. Adverse market conditions or changes in critical assumptions could result in a significant impairment charge to earnings.
SaaS KPIs
All quarters →Summary, forecast, risks and KPIs are extracted from OneSpan Inc.'s SEC filings for Q4 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 2, 2026.