Onespan (OSPN) Financials

OneSpan’s recent results show a company that has improved substantially from the losses reported in 2022 and 2023, but its latest quarter also highlights weaker operating cash flow and pressure on margins. Revenue has generally remained in the $57 million to $66 million quarterly range, while profitability has become consistently positive since 2024.

• Revenue remains relatively stable. Q2 2026 revenue was $60.5 million, up from $59.8 million in the restated Q2 2025 and $56.2 million in Q3 2024. Q1 2026 revenue of $65.9 million was also up approximately 4% year over year.
• OneSpan has maintained positive earnings. The company reported net income of $6.8 million, or $0.18 per diluted share, in Q2 2026. This compares with a $17.8 million loss in Q2 2023 and a $4.1 million loss in Q3 2023.
• Gross margins remain strong. Q2 2026 gross profit was $44.5 million, representing a gross margin of approximately 73.5%. That was broadly consistent with Q2 2025 and materially better than the approximately 61% gross margin reported in Q2 2024.
• The balance sheet remains well capitalized. OneSpan had $43.3 million of cash and equivalents at the end of Q2 2026, compared with only $5.0 million of long-term debt. Total equity was $273.5 million, or roughly 71% of total assets.
• Liquidity remains adequate despite the recent cash decline. Current assets of $127.6 million exceeded current liabilities of $96.2 million, producing a current ratio of approximately 1.3.
• Deferred revenue provides visibility into future revenue. Current and noncurrent deferred revenue totaled approximately $63.3 million at the end of Q2 2026, up from roughly $55.3 million in Q2 2024. This represents contracted or prepaid business that can support future revenue recognition.
• Share repurchases and dividends continue to return capital to investors. OneSpan repurchased $2.9 million of stock and paid $4.8 million in dividends during Q2 2026. The company has also reduced its share count over time, which can support earnings per share when profitability is sustained.
• Operating performance has improved significantly over the multi-year period. Operating income was negative in Q3 2023 and positive in every reported quarter supplied from Q2 2024 through Q2 2026, although the level of profitability has fluctuated.

There are also several factors investors should monitor. Cash generation was particularly weak in the latest quarter, and the improvement in earnings has not translated consistently into operating cash flow. In addition, much of the asset growth since 2023 has come from goodwill and deferred tax assets, which may provide less tangible support than cash or operating assets.

• Goodwill has increased materially. Goodwill rose from $92.2 million in Q1 2023 to $127.8 million in Q2 2026, with intangible assets also increasing from $13.3 million to $15.3 million over the same period. Investors should evaluate whether acquisitions are producing sufficient revenue and cash-flow growth.
• Results include restated historical figures. The supplied Q1 and Q2 2025 income statements and cash-flow statements were restated, so comparisons with earlier periods should be made using the restated figures where available.
• Operating cash flow nearly disappeared in Q2 2026. Cash from operating activities was only $68,000, down from $6.2 million in Q2 2025 and $28.2 million in Q1 2026. Changes in operating assets and liabilities consumed $7.9 million during the quarter.
• Cash balances have declined sharply from early 2025. Cash and equivalents fell from $105.2 million in Q1 2025 to $43.3 million in Q2 2026. Q2 2026 cash declined by $6.4 million, following a $20.7 million decline in Q1 2026.
• Profit margins weakened sequentially and year over year. Q2 2026 operating income was $8.7 million, or approximately 14.5% of revenue, compared with $14.8 million, or 22.5%, in Q1 2026. Net income also fell from $11.6 million in Q1 to $6.8 million in Q2.
• Operating expenses are rising faster than revenue in the latest quarter. Q2 2026 operating expenses totaled $35.7 million, up from $33.5 million in Q2 2025, despite revenue increasing by only about 1%. Selling, general and administrative, marketing, and research and development expenses all increased year over year.
• Free cash flow was negative in Q2 2026. Operating cash flow of $68,000 did not cover $3.2 million of capital expenditures and acquisitions, before considering dividends and share repurchases.
• Capital returns are adding to cash pressure. OneSpan paid approximately $7.8 million through dividends and share repurchases in Q2 2026 while generating virtually no operating cash flow. These distributions may be sustainable over time, but they reduce the company’s cash cushion when operating performance weakens.
• Acquisition spending has increased. OneSpan spent $34.6 million on acquisitions in Q1 2026, compared with $12.0 million in Q2 2025 and less than $2 million in most of the earlier reported quarters. The acquisitions could support growth, but they also increase execution and integration risk.
• Q4 2025 earnings benefited from an unusually large tax benefit. The $43.5 million of net income reported in Q4 2025 included a negative $31.0 million income tax expense, making that quarter an unreliable baseline for recurring earnings power.

Overall, OneSpan’s long-term trend is constructive from a profitability and balance-sheet perspective: the company has moved from significant losses to recurring positive earnings, maintained high gross margins, and carries relatively little debt. However, the latest quarter is a warning sign because operating cash flow weakened sharply, margins compressed, and cash continued to fall while the company funded dividends, buybacks, capital expenditures, and acquisitions. Investors may want to focus on whether revenue growth accelerates and whether operating cash flow recovers in upcoming quarters.