OneSpan (OSPN) Q2 2025 Earnings Transcript

The key signal is not the modest top-line miss; it is that OneSpan is quietly turning into a higher-quality cash compounder with a decelerating revenue base. The mix shift toward subscription and away from hardware is doing exactly what a restructuring play should do: lift gross margin, stabilize EBITDA, and create optionality for M&A. The market is likely underestimating how much of the current “growth” story is really a product-cycle reset into FIDO/passkeys rather than a linear continuation of legacy security demand.

The second-order winner is any vendor that can sell identity/authentication into regulated financial institutions with low switching costs and a credible migration path from hardware to software. Nok is strategically more important than its revenue contribution because it gives OneSpan a bridge product for the next procurement cycle, not just a bolt-on. That said, the cross-sell opportunity is back-end loaded; the near-term risk is that investors extrapolate ARR uplift before sales capacity, product integration, and packaging are actually complete.

The biggest bear case is the hidden fragility in ARR quality: a few large customers are still driving the quarter-to-quarter optics, and management is implicitly admitting that reported growth is being masked by concentrated churn and delayed hardware shipments. If hardware slip is pushed into 2026, the company may need either a cleaner subscription acceleration or another acquisition to avoid another “revenue flat, EBITDA up” print that the market starts to discount. For now, this is a story best owned as a cash-yielding transformation, not as an early-stage growth compounder.

Contrarian read: consensus will focus on the raised ARR guide and ignore that the durability of that ARR is still being proven. The better setup is if the stock sells off on skepticism around the hardware drag and then rerates on evidence that North America security, FIDO software, and cross-sell are converting in 1H26.