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- **Software Dominance**: 80% of revenue from software, with ARR up 10% YoY to $180 million. Subscription revenue grows 12% YoY.
- **Strategic Acquisitions**: Nok Nok acquisition drives FIDO2 S3 product success, with 2 new logos in 4 months. ThreatFabric investment for 2026 growth.
- **Hardware Decline**: 16% YoY hardware revenue decline reflects secular shift to mobile authentication.
- **Cash Generation**: $17.5 million adjusted EBITDA (31% of revenue), $47 million YTD cash from operations.
- **2026 Vision**: Focused on FIDO2 adoption, ThreatFabric integration, and internal R&D to achieve Rule of 40 performance.

**【Management Opening】**
- Joe Maxa provided an overview of the call, emphasizing forward-looking statements and non-GAAP financial measures. The company highlighted its balanced capital allocation strategy, including shareholder returns and strategic investments.

**【CEO Commentary】**
- **Business Transformation**: 80% of revenue now from software, with ARR growing 10% YoY to $180 million. Hardware revenue decline (16% YoY) reflects secular shift to mobile-first authentication.
- **Strategic Initiatives**: 
  - Acquired Nok Nok Labs in June, adding FIDO2 S3 product; closed 2 new logos in 4 months, with pipeline for Q4.
  - Invested in ThreatFabric for mobile threat intelligence, enabling sales enablement for 2026 growth.
  - Hired CTO Ashish Jain to enhance R&D and internal development.
- **Financial Highlights**: 
  - Q3 revenue $57.1 million (+1% YoY), driven by 12% subscription growth.
  - Adjusted EBITDA $17.5 million (31% of revenue), cash from operations $11 million.
  - Returned $20 million to shareholders via buybacks and dividends.

**【CFO Financial Commentary】**
- **Revenue**: Q3 total revenue $57.1 million (+1% YoY), with subscription revenue up 12% YoY. Security ARR +11%, digital agreements ARR +8%.
- **Margins**: Gross margin 74% (flat YoY). Operating income $8.2 million (-28% YoY) due to Nok Nok acquisition costs and share-based compensation.
- **Cash Flow**: $85.6 million cash on hand, generating $11 million in Q3 and $47 million YTD.
- **Guidance Update**: 
  - Full-year revenue $239-241 million (-3% YoY), software/services $190-192 million (+3-4%), hardware $49-50 million (-16%).
  - ARR $183-187 million (+13% YoY), adjusted EBITDA $72-76 million.

**【Q&A Highlights】**
- **Revenue Guidance**: Lowered due to hardware decline ($2M) and slower net expansion in EMEA/APAC. Software growth (80% of business) expected to offset hardware decline.
- **FIDO2 Growth**: S3 product sees early success; FIDO2 adoption expected to accelerate in 2026, with Japan and U.S. as key markets.
- **Competitive Position**: Strong market share in mobile authentication; new products (e.g., FIDO2 keys) enhance competitive advantage.
- **2026 Outlook**: ThreatFabric partnership and internal R&D investments position for future growth, targeting Rule of 40 performance.

OneSpan Inc. (OSPN) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

General and Administrative Expenses

Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

Deferred Income Tax

Income Tax Adjustments

Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

OSPN

OSPN fundamentals

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