OneSpan Announces Acquisition of Build38 to Boost Mobile App Protection

Why It Matters

The shift to a software‑first model improves margin stability and positions OneSpan for sustainable Rule‑of‑40 performance, while the acquisition expands its mobile app‑shielding capabilities in a high‑growth security market.

Key Takeaways

• ARR reached $187M, up 11.5% YoY.
• Software now exceeds 80% of revenue, hardware below 20%.
• Quarterly dividend raised 8% to $0.13 per share.
• Net retention rate reached 104% in Q4.
• Build38 acquisition to close Q1 2026, adds app protection.

Pulse Analysis

OneSpan’s FY 2025 results underscore a decisive pivot toward recurring software revenue, a trend that mirrors broader SaaS dynamics across the cybersecurity sector. With ARR climbing to $187 million and subscription revenue up 12%, the company demonstrated that its high‑margin software portfolio can offset the secular decline in hardware sales, which fell 16.6% year‑over‑year. The 74% gross margin and 32% adjusted EBITDA margin signal a robust profitability foundation, reinforcing OneSpan’s ability to meet the Rule‑of‑40 benchmark that investors use to gauge balanced growth and earnings.

Strategic acquisitions have been central to OneSpan’s growth narrative. The recent Knock and ThreatFabric deals, coupled with the imminent Build38 purchase, broaden the firm’s capabilities in mobile app protection and advanced authentication. Build38’s technology is expected to deepen OneSpan’s app‑shielding offering, creating cross‑sell opportunities and enhancing its competitive stance against pure‑play identity providers. These M&A moves are financed without tapping the $100 million revolving credit facility, illustrating disciplined capital allocation that also supports a $32 million shareholder return program.

Looking ahead, OneSpan projects modest top‑line growth of 0‑2% for FY 2026, with software revenue expected to rise 4‑5% and hardware to contract further. The company’s increased dividend and strong cash generation provide a compelling yield for income‑focused investors, while the 104% net retention rate signals deepening customer relationships. As financial institutions accelerate digital transformation and adopt AI‑driven authentication, OneSpan’s expanded product suite positions it to capture emerging demand and sustain long‑term value creation.

Deal Summary

OneSpan Inc. disclosed a definitive agreement to acquire Build38, a mobile application protection provider, with the transaction expected to close in Q1 2026. The acquisition aims to enhance OneSpan's app‑shielding capabilities and expand its cybersecurity portfolio. Deal terms were not disclosed.