OneSpan Inc (NASDAQ:OSPN) reported financial results for the third quarter of 2025, delivering a mixed performance that fell short of top-line revenue expectations while exceeding adjusted profit forecasts. The market's immediate reaction was decisively negative, with the stock dropping sharply in after-hours trading.
Quarterly Performance Versus Estimates
The company's results presented a clear divergence between its revenue generation and its profitability on a non-GAAP basis.
- Revenue: Total revenue for the quarter was $57.1 million. This fell short of the analyst consensus estimate of $59.3 million, representing a modest 1% increase compared to the $56.2 million reported in the same quarter last year.
- Earnings Per Share (Non-GAAP): The company reported non-GAAP net income of $12.9 million, or $0.33 per diluted share. This result surpassed the analyst estimate of $0.29 per share and was consistent with the $0.33 per share earned in the prior year period.
The performance across business segments was varied. The Security Solutions segment saw a 1% year-over-year decline in revenue to $40.3 million, while the Digital Agreements segment grew 9% to $16.7 million. A key positive highlight was the 10% year-over-year growth in Annual Recurring Revenue (ARR), which reached $180.2 million, underscoring the company's strategic shift towards a more predictable software-based revenue model.
Market Reaction and Outlook
The discrepancy between the earnings beat and the stock's negative price action suggests investors are focusing on the revenue miss and a downward revision to the company's full-year guidance.
Following the earnings release, the stock experienced a significant decline of over 14% in after-market trading. This sell-off appears to be primarily driven by the company's updated financial outlook for the full year 2025, which was lowered from previous expectations.
The company now expects:
- Full-Year 2025 Revenue: $239 million to $241 million, compared to the previous guidance range of $245 million to $251 million.
- Full-Year 2025 ARR: $183 million to $187 million, down from the prior range of $186 million to $192 million.
This revised revenue guidance falls notably below the current analyst consensus estimate of $252.8 million for the full year, likely fueling investor concerns about near-term growth momentum.
Key Business Highlights
Beyond the financial figures, the quarter included several strategic developments. OneSpan completed the acquisition of Nok Nok Labs and forged a partnership with ThreatFabric to enhance its cyber fraud prevention capabilities. The company also continued its capital return program, repurchasing approximately 450,000 shares for $6.3 million and declaring a quarterly cash dividend of $0.12 per share.
Conclusion
OneSpan's third-quarter results paint a picture of a company successfully expanding profitability and growing its recurring software base, as evidenced by the ARR growth and EPS beat. However, the failure to meet revenue expectations for the quarter, coupled with a reduced full-year sales forecast, has overshadowed these positives in the eyes of the market. The immediate double-digit percentage drop in the stock price reflects investor apprehension regarding the company's top-line growth trajectory heading into 2026.
For a detailed look at historical earnings and future analyst estimates for OneSpan Inc., you can review the data here.
Disclaimer: This article is for informational purposes only and is not intended as investment advice. All data is sourced from publicly available information.
