OneSpan Inc. Q4 FY2025 earnings call

• OneSpan is a software business with over 80% of revenue expected from software in 2026, with hardware being less than 20% but providing attractive cash generation. - In cybersecurity, focuses on consumer authentication and app shielding, recently announced acquisition of Build38 to strengthen app shielding. - In digital agreements, has a highly reliable SaaS platform, gross retention rate improved in 2025, and planning to integrate AI-driven capabilities. - Both cybersecurity and digital agreements divisions are profitable. - Strong finish in Q4 with about $3 million of revenue coming in Q4 that typically would have been in Q1 2026. - Hired new Chief Revenue Officer in December and planning to continue investing in sales, marketing, and R&D, and evaluating targeted M&A.

In Q4 2025, software and services accounted for 80% of revenue, up from 76% in 2024. Cybersecurity ARR grew 12% year-over-year to $120 million in Q4, with Q4 cybersecurity revenue $45.4 million (flat year-over-year). Subscription revenue in cybersecurity grew 1% in Q4. Full-year 2025 cybersecurity revenue declined 2.5% to $177.7 million, with subscription revenue up 13%. Digital agreements ARR grew 10% to $67 million. Q4 and full-year 2025 digital agreements revenue grew 11% and 7% to $17.5 million and $65.5 million respectively. Subscription revenue in digital agreements grew 14.5% in Q4 and 11% for the full year 2025.

• For 2026, expect software and services revenue in range of $201 - $204 million (4% - 5% growth). - Hardware revenue expected in range of $43 - $45 million (8% - 12% decline year-over-year). - Total revenue expected in range of $244 - $249 million (0% - 2% growth). - ARR expected in range of $192 - $196 million (3% - 5% growth year-over-year). - Adjusted EBITDA expected in range of $64 - $68 million, inclusive of impact of pending Build38 acquisition. - Board approved increase in quarterly dividend from 12 cents a share to 13 cents per share.

Q: Trevor Rambo from BTIG asks about demand at start of fiscal Q1 2026 and comparison to start of last year's same period.

A: Finished year strongly with last couple days of year having good business that would have naturally occurred in Q1. Off to reasonable start in building pipeline for year, new CRO hired in December, with benefits expected in second half of year.

Q: Anja Soderstorm from Sidoti asks about new CRO's impact on sales/marketing, acquisition of Build38, and AI opportunity/threat.

A: New CRO will add focus and discipline to sales execution, pipeline development, etc. Acquisition of Build38 is to get modern valuable technology for core areas. AI is seen as having opportunity in areas like consumers employing agents increasing need for authentication, and app shielding is fairly insulated from current AI threats for now.