OneSpan Raises 2026 Outlook on 16% Subscription Growth

OneSpan Inc. (NASDAQ: OSPN) raised its full-year 2026 revenue, adjusted EBITDA and annual recurring revenue guidance after third-quarter revenue increased 12%, supported by double-digit growth across its Cybersecurity and Digital Agreements divisions. Subscription revenue rose 16% and reached a record 81% of total revenue, underscoring the company’s shift toward recurring software and services.

Revenue for the quarter ended September 30 was $63.9 million, up from $57.1 million a year earlier. Subscription revenue increased to $51.5 million from $44.4 million, while total software and services revenue grew 13% and represented 84% of company revenue. Perpetual maintenance and services revenue declined to $1.9 million from $2.9 million as legacy software licenses continued transitioning from perpetual to term-based arrangements. Hardware revenue increased 7% to $10.5 million.

Adjusted EBITDA was $19.3 million, compared with $17.5 million a year earlier, producing a 30% margin. GAAP net income increased to $7.8 million from $6.5 million, while non-GAAP net income rose to $13.6 million from $12.9 million. Non-GAAP diluted earnings per share were $0.35, up from $0.33.

Third-quarter free cash flow increased to $13.3 million from $8.8 million, as operating cash flow rose to $16.5 million from $11.3 million. OneSpan ended September with $51 million in cash and cash equivalents and declared a quarterly dividend of $0.13 per share.

Annual recurring revenue reached $195.5 million, an increase of 9% from $180.2 million. Excluding Build38, which OneSpan acquired in the first quarter, organic ARR growth was approximately 7%. Net revenue retention was 105%.

Both Divisions Post Double-Digit Quarterly Growth

Cybersecurity division revenue increased 11% to $44.9 million. Subscription revenue rose 17% to $32.5 million, while hardware revenue increased to $10.5 million. The subscription gains were partly offset by lower perpetual maintenance and services revenue, reflecting the migration of legacy licenses to term-based contracts.

Cybersecurity ARR rose 10% to $127.2 million, or approximately 8% on an organic basis. On a trailing-12-month basis, the division generated $180 million in revenue and had a 40% operating margin. OneSpan said longer-term total revenue growth in the division continued to be affected by declining legacy perpetual maintenance and lower demand for hardware tokens as customers adopt mobile-first policies.

Digital Agreements revenue grew 14% to $19 million, driven by overage expansion, contract renewals and new customers. The business is subscription-based and delivered through a software-as-a-service model. Its ARR increased 6% to $68.4 million. For the trailing 12 months, Digital Agreements generated $73 million in revenue and recorded a 34% operating margin.

OneSpan launched its unified DigipassONE authentication platform during the quarter. The company is investing in product development, customer expansion and its partner network, and expects an authentication passkey free trial to become available in early 2027. Its growth strategy also incorporates targeted acquisitions, including Build38, which closed in the first quarter of 2026.

Full-Year Guidance Increased

OneSpan now expects 2026 revenue of $254 million to $258 million, compared with its previous range of $248 million to $252 million. At the midpoint, the updated forecast is $6 million higher.

Software and services revenue is projected at $208 million to $210 million, up from the prior $202 million to $204 million range. Hardware revenue guidance was maintained at $46 million to $48 million.

The company increased its adjusted EBITDA forecast to $72 million to $76 million from $67 million to $71 million. The new guidance includes an estimated $3 million to $4 million impact from the Build38 acquisition and incremental internal investments intended to support future revenue growth. ARR is expected to finish the year between $197 million and $201 million, compared with the previous $194 million to $198 million range.

OneSpan said its longer-term priorities are efficient revenue growth, continued profitability and cash generation, product expansion, broader customer relationships and shareholder returns. The company cautioned that its outlook depends in part on its ability to attract and retain customers, commercialize new products, manage lengthy sales cycles and integrate strategic investments. Other disclosed risks include competition, pricing pressure, cybersecurity incidents, product disruptions, reliance on third parties, employee retention challenges and broader economic, trade and geopolitical uncertainty.