OneSpan (OSPN) Q2 FY26 earnings call: guidance and Q&A

What needs to happen for OneSpan to achieve sustainable mid-to-high single-digit organic revenue growth, especially as hardware becomes a smaller component?

Victor Limongelli explained that solid software growth (subscription and ARR) is expected to continue, and stabilizing the hardware business will allow this growth to show up in overall numbers. New product offerings like DigiPASS One and new go-to-market leadership are key steps.

“Over time, our software business has been growing, and we had an offset, a negative offset from the hardware business for quite some time. And we felt like if we could get the hardware business stable, maybe have some revenue coming from the newer security keys, as well as stabilization in the overall hardware business, that that growth would show up, overall growth would show up as a result of the software growth.”

asked by Gray Powell · answered by Victor Limongelli

What is the early feedback on DigiPASS One, and what is its potential for ASP uplift and improving net retention rates?

Limongelli highlighted cross-sell opportunities for DigiPASS One Protect and Verify to the existing customer base, leveraging the strong authentication platform and newly acquired app shielding technology. This is seen as the most straightforward way to increase software growth rates.

“The easiest path there is going to be a cross-sell, is to sell new things to existing customers. And that's what we're trying to do to drive up the attach rate with DigiPath One Protect to start down the path of an attach rate with DigiPath One Verify since that's new.”

asked by Gray Powell · answered by Victor Limongelli

What specific use cases are being targeted for DigiPASS One Verify, and how does it fit into the budget for 2026/2027, particularly with agent-driven interactions?

Limongelli noted POCs for DigiPASS One Verify are underway in H2 2026. He explained its relevance to European digital identity regulations (banks must accept wallets by end of 2027) and its role in secure onboarding and authentication. He clarified that 2027 budgets are not yet clear, but interest is strong.

“European digital identity regulations, the countries have to have wallet specifications done by the end of the year... And then banks are going to have to accept them by the end of 27. So we see this as just such a great compliment to our authentication offering, because people are going to, in a cryptographically tamper-proof way, prove their identity.”

asked by Catherine Trebnick · answered by Victor Limongelli

What are the use cases for banks using AI agents, and what drove the strong overage revenue in Digital Agreements?

Limongelli described AI agents as a new channel for common banking activities like checking balances and monitoring transactions, augmenting existing channels. Jorge Martel added that Digital Agreements overages were driven by clients over-utilizing committed transactions, primarily from a couple of customers, and are a leading indicator for ARR and future expansion contracts.

“You can think about overages as a leading indicator for ARR if you would, because often happens that overages then translate into higher expansion contracts now part of ARR.”

asked by Eric Suppager · answered by Victor Limongelli, Jorge Martel

What did renewal rates look like, and what explains the sequential step-down in ARR and NRR?

Jorge Martel stated that GRR for Digital Agreements was around 93% and for Cybersecurity around 86%, both consistent. He noted a sequential Q1 to Q2 headwind of $3 million for ARR, which was anticipated. He also highlighted improved proactive renewal efforts, leading to less "catch-up" revenue from past-due renewals compared to the prior year.

“GRR metrics for the businesses were, I'd say, relatively consistent. I think these are agreements, wasn't the 93ish percent. And the GRR for security business was in the kind of 86-ish percent, Rudy.”

asked by Rudy Kessinger · answered by Jorge Martel