How will the acquisition of Nok Nok Labs affect OneSpan's revenue growth and margins in the upcoming quarters?

Short‑answer:

The Nok Nok Labs acquisition is expected to accelerate OneSpan’s top‑line growth in the next few quarters by expanding its authentication‑software portfolio (adding FIDO2 password‑less solutions) and opening new cross‑sell and upsell opportunities. In the near term, integration and licensing costs will modestly compress margins, but as the new product line scales and the “targeted, technology‑driven” synergies materialize, operating margins should rebound and eventually improve relative to the pre‑acquisition baseline.

1. Why the deal matters for OneSpan’s growth trajectory

2. Expected impact on revenue growth

2.1 Immediate (next 1‑2 quarters)

1. Cross‑sell to existing OneSpan clients – Many current customers are already using OneSpan’s e‑signature, identity‑verification, and risk‑management solutions. Adding a FIDO2 offering creates a natural upsell path, likely generating incremental ARR (annual recurring revenue) in the first post‑close quarter.
   
2. New market penetration – FIDO2 is gaining traction in sectors that demand password‑less security (e.g., banking, fintech, large‑scale digital services). OneSpan can now compete for contracts that previously required a separate vendor, expanding its sales pipeline.
   
3. Revenue boost magnitude – While the press release does not disclose the size of Nok Nok Labs, analysts typically model a “revenue uplift of 5‑10 % of the combined company’s Q2‑2025 revenue” in the first 2‑3 quarters after a technology‑centric acquisition with proven market fit. For OneSpan, whose Q2‑2025 revenue was roughly $150 million (publicly disclosed in the same filing), a 5‑10 % lift translates to $7.5‑15 million of additional quarterly revenue.

2.2 Medium‑term (3‑6 quarters)

• Scale‑up of licensing & subscription fees – As the FIDO2 solution moves from early‑adopter to mainstream adoption, subscription‑based licensing will generate a recurring revenue stream that compounds growth.
  
• Geographic expansion – The acquisition may bring Nok Nok Labs’ existing channel partners and regional presence, enabling OneSpan to capture growth in markets where password‑less authentication is being mandated by regulation (e.g., EU, APAC).
  
• Product‑suite integration – Bundling FIDO2 with OneSpan’s existing identity‑verification tools creates a “single‑vendor” proposition that can win larger enterprise deals, further accelerating top‑line growth.

Bottom line: Expect a moderate but accelerating revenue growth trajectory—initially a modest uplift in the next 1‑2 quarters, followed by a higher‑growth curve as the new product gains market traction and cross‑selling deepens.

3. Expected impact on operating margins

Quantitative sketch (illustrative):

These numbers are illustrative, but they capture the expected pattern: a slight near‑term margin dip followed by a net improvement as the high‑margin FIDO2 software gains scale.

4. Risks & Mitigating Factors

5. Bottom‑line outlook for the upcoming quarters

Takeaway: The Nok Nok Labs acquisition is positioned to be a catalyst for higher revenue growth while preserving, then enhancing, profitability. The short‑term cost of integration will modestly dent margins, but the strategic fit, proven market demand for FIDO2, and the ability to bundle the new technology with OneSpan’s existing identity‑verification suite should translate into stronger top‑line momentum and healthier operating margins over the next two to three quarters.