OneSpan's Strategic Transformation and Attractive Valuation: A Convincing Case for Growth-Driven Value Investors

In the rapidly evolving cybersecurity landscape, companies that combine innovation with disciplined execution often emerge as standout performers. OneSpan (OSPN), a leader in digital identity and authentication solutions, has positioned itself as a compelling investment opportunity through a strategic transformation driven by targeted M&A, product innovation, and robust financial fundamentals. As the cybersecurity sector continues to expand—projected to surpass $400 billion by 2030—OneSpan's focus on passwordless authentication, digital workflows, and enterprise integration offers a unique value proposition for growth-oriented investors.

Strategic M&A and Product Innovation: Building a Comprehensive Authentication Ecosystem

OneSpan's 2025 acquisition of Nok Nok Labs, a pioneer in FIDO passwordless authentication, marks a pivotal step in its evolution. By integrating Nok Nok's software-based FIDO solutions with its existing hardware authentication keys, OneSpan has created a unified authentication portfolio that caters to both enterprise and consumer markets. This move aligns with the industry's shift toward passwordless security, a trend accelerated by regulatory pressures and the growing threat of credential-based attacks.

The acquisition also enhances OneSpan's ability to address complex use cases, such as securing external user access for clients in financial services and healthcare. For instance, the integration of FIDO passkeys into OneSpan's digital agreements platform allows organizations to reduce reliance on single sign-on (SSO) while maintaining compliance with evolving standards like the NIST Digital Identity Guidelines.

Beyond M&A, OneSpan has rolled out product innovations that directly address pain points in digital workflows. The OneSpan Sign platform now supports ad hoc signing groups and countersigning, streamlining collaboration for internal and external stakeholders. Complementing this, Smart Forms automates data collection and enables seamless cross-device transitions, reducing friction in onboarding processes for HR, insurance, and fintech clients. These enhancements are not just incremental—they reflect a broader commitment to digitizing workflows in a way that balances security with user experience.

Financial Resilience: Strong EBITDA Margins and Undervalued Fundamentals

OneSpan's financial performance in 2025 underscores its operational discipline. For the first half of the year, the company reported adjusted EBITDA of $41 million, representing a 33% margin on revenue. This resilience is particularly notable given a 2% year-over-year decline in total revenue, driven by the transition of legacy hardware contracts to term-based subscriptions. Despite this headwind, subscription revenue grew 22% in Q2 2025, with security solutions up 39% and digital agreements up 5%.

The company's full-year 2025 guidance—$245–251 million in revenue and $72–76 million in adjusted EBITDA—suggests a path to renewed revenue growth in the second half of the year. Annual Recurring Revenue (ARR) is expected to reach $186–192 million, up 8% year-over-year, with the Nok Nok acquisition contributing $8 million to ARR in Q2 alone.

Valuation metrics further highlight OneSpan's appeal. As of mid-2025, the stock trades at a P/E ratio of 9.52x and an EV/EBITDA of 7.37x, significantly below the sector averages for peers like Okta (OKTA) and CyberArk (CYBR). For context, Okta's P/E ratio stands at 150.6x, while CyberArk's forward P/E is 100x, despite both companies operating at a loss. OneSpan's low debt-to-equity ratio (0.04) and $93 million in cash on hand further reinforce its financial flexibility.

A Resilient Cybersecurity Play in a High-Growth Sector

The cybersecurity sector's long-term tailwinds—ranging from AI-driven threats to regulatory mandates—position OneSpan for sustained relevance. Its focus on passwordless authentication and digital identity orchestration aligns with two of the most critical trends in the industry. The Nok Nok acquisition, for example, not only expands OneSpan's technology stack but also accelerates its ability to meet the FIDO Alliance's evolving standards, a critical differentiator in a market where interoperability is key.

Moreover, OneSpan's integration with enterprise platforms like Workday, Salesforce, and Dynamics reduces the need for custom development, unlocking automation for HR and insurance workflows. This modular approach to integration—combined with analytics tools that track signer behavior and drop-off points—enables clients to optimize digital processes while maintaining compliance.

Investment Thesis: A Compelling Balance of Growth and Value

For growth-driven value investors, OneSpan offers a rare combination of strategic agility, financial discipline, and sector-specific tailwinds. Its EBITDA margins, while strong, are underpinned by a business model that prioritizes recurring revenue and cross-selling opportunities. The company's Rule of 40 performance goal (balancing growth and profitability) further signals a commitment to long-term shareholder value.

In comparison to peers, OneSpan's valuation appears undervalued. Okta's high P/E and EBITDA loss reflect a speculative bet on future growth, while CyberArk's forward P/E of 100x assumes a rapid path to profitability. OneSpan, by contrast, is already generating positive EBITDA and has a clear roadmap for scaling its authentication and digital agreements platforms.

Conclusion: A Strategic Bet on the Future of Digital Identity

OneSpan's strategic transformation—from hardware-centric authentication to a software-driven, passwordless ecosystem—positions it as a leader in the next phase of digital identity. With a robust balance sheet, strong EBITDA margins, and a product roadmap aligned with industry trends, the company offers a compelling case for investors seeking exposure to the cybersecurity sector's growth without the premium valuations of its peers. As enterprises increasingly prioritize secure, seamless digital experiences, OneSpan's ability to deliver both innovation and profitability makes it a standout opportunity in a resilient market.

For those willing to capitalize on this inflection point, the time to act is now.