Q2 2026 OneSpan Inc Earnings Call Transcript
Key Points
- OneSpan Inc (OSPN) reported strong second-quarter results with subscription revenue growth of 11% and an adjusted EBITDA margin of 28%, demonstrating solid profitability.
- The launch of the DigipassONE platform unifies authentication, verification, protection, and insights, creating cross-sell opportunities and strengthening the company's value proposition for banks.
- Digital Agreements revenue grew 25.2% year-over-year, driven by strong overage revenue, which serves as a leading indicator for future expansion contracts and ARR growth.
- The company raised its full-year 2026 revenue and adjusted EBITDA guidance, reflecting higher e-signature consumption and increased hardware bookings in the first half of the year.
- OneSpan Inc (OSPN) returned nearly $8 million to shareholders in Q2 through dividends and share repurchases, with over $40 million returned over the last four quarters, highlighting a balanced capital allocation strategy.
- The company sees promising growth in the FIDO2 security key market, particularly in corporate banking, which could help stabilize the hardware business and reduce its drag on overall growth.
- Total revenue growth was modest at 1% year-over-year, as strong subscription growth was partially offset by declines in hardware and perpetual maintenance revenue.
- Cybersecurity division revenue decreased 7.5% year-over-year, impacted by lower multi-year term license revenue and reduced past-due renewal catch-up revenue.
- GAAP operating income declined to $8.7 million from $10.5 million in Q2 2025, reflecting increased operating costs from recent acquisitions and organic investments.
- The company's net retention rate (NRR) stepped down to 103%, and ARR saw a sequential decline, indicating some softness in expansion and renewal metrics.
- Operating cash flow was a modest outflow of $0.1 million in the quarter, primarily due to normal working capital fluctuations, which could raise concerns about cash generation.
- The company acknowledged that the impact of new go-to-market leadership and marketing hires on tangible revenue is more likely to be felt in 2027, given the 9-12 month sales cycle.
Good day and thank you for standing by. Welcome to the OneSpan second-quarter 2026 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your first speaker today, Joe Maxa, VP of Investor Relations. Please go ahead.
Thank you, operator. Hello, everyone. Thank you for joining the OneSpan second-quarter 2026 earnings conference call. This call is being webcast and can be accessed on the Investor Relations section of OneSpan's website at investors.onespan.com. Joining me on the call today is Victor Limongelli, our Chief Executive Officer; and Jorge Martell, our Chief Financial Officer. This afternoon, after market close, OneSpan issued a press release announcing results for our second quarter of 2026. To access a copy of the press release and other investor information, please visit our website. Following our prepared comments today, we will open the call for questions.
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