OneSpan's Q2 2025: Navigating Contradictions on Tariffs, Revenue Growth, and Strategic Acquisitions

Impact of tariffs and federal budget cuts on revenue, focus on revenue growth and customer base expansion, impact of federal budget cuts, growth opportunities from Nok Nok acquisition, and impact of tariffs and economic conditions are the key contradictions discussed in OneSpan's latest 2025Q2 earnings call.



Strong Financial Performance and Strategic Acquisitions:
- OneSpan reported adjusted EBITDA of $18 million or 29.5% of revenue in Q2 2025, with a record adjusted EBITDA of $41 million for the first half, representing 33% of revenue.
- The company acquired Nok Nok Labs, adding FIDO2 passwordless authentication software to enhance its product portfolio.
- The acquisition was aimed at enhancing authentication offerings and retaining customers in the face of emerging threats in the authentication market.

Revenue Trends and Geographic Performance:
- Total revenue declined modestly in Q2 2025, primarily due to a shift towards mobile-first authentication strategies and the transition of certain legacy maintenance contracts to term-based subscriptions.
- There was strong bookings performance in Latin America, while North America saw a dedicated sales effort focused on the security business.
- The company's revenue mix was 39% from EMEA, 40% from the Americas, and 21% from APAC, comparing to 41%, 35%, and 24% in the same period last year.

Subscription Revenue Growth and Customer Retention:
- Subscription revenue grew by 22% in Q2 2025, led by 39% growth in security and 5% growth in digital agreements.
- The company's Net Retention Rate was 101%, indicating customer loyalty and satisfaction.
- The growth was driven by the timing of multiyear renewals and expansion of licenses, partially offset by the sunsetting of legacy solutions.

Capital Allocation and Dividend Payments:
- OneSpan returned cash to shareholders through two quarterly dividend payments of $0.12 per share, totaling $10 million.
- The company secured a $100 million 5-year revolving credit facility to support strategic growth priorities, including targeted M&A.
- This balanced capital allocation strategy aims to weigh shareholder returns, organic investments, and acquisitions to enhance product offerings.