Helping Customer Achieve Efficiency, Compliance and Collaboration The Gartner Magic Quadrant for Financial Close and Consolidation Solutions is a market research report published Gartner, a company that drives actionable, objective insight to executives and their teams. As Gartner states in the report, "The FCCS market continues to see a heightened demand for efficient, compliant and collaborative financial close and consolidation solutions. Vendors are responding with solutions that enhance accessibility, ...

Core Insights - OneStream has achieved FedRAMP High authorization status, meeting the federal government's strictest safety standards for cloud computing environments [1][4] - The FedRAMP program provides a standardized approach to security assessment and authorization for cloud products, facilitating the transition from legacy IT systems to secure cloud solutions [2] - The authorization positions OneStream as a leader in security and compliance, enabling finance leaders in government to enhance operational efficiency and transparency [3] Company Overview - OneStream is a leading enterprise finance management platform that unifies financial and operational functions, including financial close, consolidation, reporting, planning, and forecasting [1][6] - The platform has been FedRAMP authorized since 2018, initially achieving FedRAMP Moderate authorization before advancing to FedRAMP High in January 2025 [4] - OneStream serves over 1,600 customers, including 17% of the Fortune 500, and has a vision to be the operating system for modern finance [8] Industry Context - Finance teams in the public sector face increasing pressure to deliver efficiencies amid rapid organizational changes, with 73% of finance leaders reporting heightened expectations on CFOs in recent years [3] - Risk management is becoming a higher priority for organizations, with 73% of public sector leaders believing it will surpass growth or efficiency by 2035 [3] - The OneStream platform aims to empower finance leaders to become more strategic in navigating the complexities of legacy systems and evolving processes [3]

Financial Performance and Risks - The company has a history of operating losses and expects to continue incurring net losses for the foreseeable future[91]. - There is uncertainty regarding the sustainability of the company's rapid growth and its ability to forecast future operating results[88]. - The company may incur significant compliance costs associated with growth and being a public company, which could affect future operating results[93]. - The company recognizes revenue from SaaS subscriptions ratably over the subscription term, typically three years, impacting immediate revenue visibility[109]. - Revenue growth is dependent on successful strategic relationships with third parties, and failure to maintain these could adversely affect business results[105]. - The company expects seasonality to continue affecting operating results, particularly in the third and fourth quarters due to procurement cycles[119]. - The company may require additional capital, and future financing may not be available on favorable terms, potentially impairing business growth[153]. - The company incurs expenses related to operations and tax obligations, which may limit its ability to pay dividends or fund operations if cash distributions from OneStream Software LLC are insufficient[220]. Sales and Marketing - The average length of the sales cycle is four to eight months, but it can vary significantly and extend over several years for some customers[103]. - The effectiveness of sales and marketing efforts is crucial for attracting new customers and retaining existing ones[86]. - The company plans to invest significantly in sales and marketing to expand its customer base and increase market awareness[92]. - Customer retention rates have historically been high, but there is no assurance that this will continue in the future[102]. - Changes in pricing models may impact customer acquisition and retention, necessitating adjustments to attract new customers[112]. - Expansion of the customer base and sales is dependent on effectively growing the sales and marketing operations, which requires recruiting and training experienced professionals[150]. Competitive Landscape - The company anticipates continued competitive challenges from established competitors with greater resources and market presence[95]. - The introduction and successful implementation of AI-enabled solutions are critical for future growth, with potential competitive disadvantages if not executed effectively[131]. - The company must ensure interoperability with third-party software applications to remain competitive; failure to do so could harm its business[141]. Regulatory and Compliance Issues - The evolving legal and regulatory environment around AI technology may require significant changes to the company's operations and policies, impacting its business[133]. - The company is subject to U.S. export controls and economic sanctions, which could delay or result in the loss of sales opportunities in international markets[163]. - Compliance with anti-corruption laws, such as the FCPA, is critical as non-compliance could lead to significant civil or criminal penalties[165]. - Regulatory changes regarding data privacy and cybersecurity may increase costs and require modifications to the company's platform, impacting its business operations[194]. - The company is subject to the EU GDPR and UK GDPR, which regulate the collection, use, and transfer of personal data, potentially increasing compliance costs[196]. Operational Challenges - The company faces risks related to macroeconomic conditions that may negatively impact customer demand and lengthen sales cycles[88]. - The company faces challenges in selling to government entities, which often involve longer implementation cycles and complex requirements[122]. - The company relies on a limited number of third-party data centers for its cloud-based platform, and any service disruption at these centers could materially harm its business[137]. - The company has experienced past disruptions and outages, which could lead to customer dissatisfaction and impact revenue and renewal rates[138]. - Increased customer demand for product support may lead to higher costs without corresponding revenue, potentially harming operating results[145]. Human Resources and Management - The loss of key executive officers, particularly the CEO, could adversely affect the company's strategic direction and overall business[147]. - Attracting and retaining qualified personnel is critical for executing growth plans, with competition for skilled employees being intense[148]. - The complexity of compliance as a public company may divert management's attention and increase operating expenses[210][211]. Financial and Tax Considerations - The company may face substantial tax assessments and penalties if required to collect additional sales or use taxes in jurisdictions where it has not historically done so[215]. - Changes in tax laws, such as the elimination of the right to deduct research and development expenditures, could increase the company's effective tax rate and adversely affect financial results[218]. - The company has an estimated unrecorded TRA liability of approximately $136.6 million as of December 31, 2024, due to past exchanges and redemptions[226]. - Payments under the TRA are expected to be substantial and could significantly impact the company's liquidity and cash flow available for reinvestment[227]. Cybersecurity and Intellectual Property - Cybersecurity incidents could lead to significant liabilities, loss of customer trust, and operational disruptions[170]. - The company has implemented various security controls, but cannot guarantee their effectiveness against potential breaches[172]. - Protecting intellectual property rights is essential for competitive advantage, and failure to do so could impair the company's technology and brand[178]. - The use of open source software in the company's platform may expose it to litigation and could negatively affect its ability to offer products[185]. Market and Stock Considerations - The trading price of the company's Class A common stock is likely to be volatile, potentially resulting in substantial losses for investors[247]. - The company does not intend to pay dividends on Class A common stock for the foreseeable future, which may limit returns for investors[256]. - KKR holds more than 95% of the voting power of the outstanding capital stock, allowing it to control significant corporate actions[238].

Group 1 - Investors have reacted negatively to earnings reports this season, leading to significant declines in stock prices for companies with poor outlooks [1] - OneStream, a finance software company, has seen its shares drop sharply despite reporting strong performance [1] - Gary Alexander, an analyst with extensive experience in technology and startups, has been contributing insights on industry trends since 2017 [1]

Earnings Q4 2024 February 2025 Disclaimer This presentation is made by OneStream, Inc. (the "Company," "we," "our" or "we") and contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expects," "plans," "anticipates," "could," "int ...

Financial Data and Key Metrics Changes - OneStream reported a 31% year-over-year revenue growth for 2024, reaching $489 million, with subscription revenue growing 41% to $428 million [13][47] - The company achieved a free cash flow of $59 million for the year, representing a 12% free cash flow margin [54] - In Q4, total revenue grew 29% year-over-year to $132 million, with subscription revenue increasing 35% to $119 million [48][49] - The company ended 2024 with an ARR of $568 million and a total RPO exceeding $1 billion [47][51] Business Line Data and Key Metrics Changes - Subscription revenue was the primary driver of growth, with a 41% increase year-over-year [13] - Professional Services and Other revenue remained stable at $7 million in Q4, as the company transitions more implementations to partners [49] - The international revenue grew 38% year-over-year to $155 million, with Q4 international revenue increasing 49% to $46 million [47][50] Market Data and Key Metrics Changes - The strengthening of the U.S. dollar by approximately 6% negatively impacted some financial metrics by about 2% [46][47] - The company reported a 98% gross retention rate, indicating strong customer loyalty and satisfaction [14][42] Company Strategy and Development Direction - OneStream is focused on digital transformation in finance, emphasizing the need for a unified cloud-based platform [18][20] - The company is expanding its Finance AI portfolio and introducing new products like CPM Express and ESG Reporting solutions [21][25] - The strategic partnership with Microsoft is seen as a key growth driver, enhancing both technological and go-to-market capabilities [120][122] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about demand for OneStream's solutions despite macroeconomic uncertainties and geopolitical challenges [11][12] - The company anticipates strong subscription revenue growth and continued innovation in 2025, with guidance for total revenue between $583 million and $587 million [58][59] - Management highlighted the importance of maintaining high customer retention rates and leveraging existing customer relationships for future growth [70][73] Other Important Information - OneStream received FedRAMP High authorization, allowing it to work with various government agencies, which is expected to unlock additional opportunities [31][139] - The company introduced 12 new innovations in 2024, enhancing the value proposition for customers [14][16] Q&A Session Summary Question: Demand for modern consolidation and planning solutions - Management noted that the realization of the need for reliable data and simplified ecosystems is driving demand for their core solutions [66][70] Question: Impact of FX and other non-currency headwinds - Management clarified that FX impacts were significant, but general uncertainty in the market also contributed to elongated sales cycles [78][90] Question: Changes in pricing and packaging - Management explained that the new pricing and packaging structure is designed to facilitate the introduction of new products and improve customer purchasing experiences [81][84] Question: Federal government opportunity post-FedRAMP High authorization - Management expressed confidence in the potential for growth in the federal sector, despite existing uncertainties [109][138] Question: Attach rate for Sensible ML Solutions - Management indicated excitement about the increasing attach rate for their AI solutions, reflecting strong market interest [144]

Financial Performance - Total revenue for Q4 2024 was $132.5 million, representing a 29% year-over-year increase[4] - Subscription revenue for Q4 2024 reached $118.6 million, an increase of 35% year-over-year[4] - For the fiscal year 2024, total revenue was $489.4 million, a 31% increase year-over-year[4] - Subscription revenue for the fiscal year 2024 was $428.2 million, reflecting a 41% year-over-year increase[4] - Total revenue for Q4 2024 reached $132.475 million, a 29.1% increase from $102.594 million in Q4 2023[32] - Subscription revenue grew to $118.608 million in Q4 2024, up 35.4% from $87.583 million in Q4 2023[32] Operating Income and Loss - GAAP operating loss for Q4 2024 was $47.4 million, compared to a profit of $0.2 million in Q4 2023, resulting in a GAAP operating margin of (36%) compared to 0% in Q4 2023[4] - Non-GAAP operating income for Q4 2024 was $8.7 million, up from $1.4 million in Q4 2023, with a non-GAAP operating margin of 7% compared to 1% in Q4 2023[4] - Non-GAAP operating income for Q4 2024 was $8,680,000, compared to $1,391,000 in Q4 2023, indicating a significant improvement[37] - The non-GAAP operating margin for Q4 2024 was 7%, up from 1% in Q4 2023, reflecting enhanced operational efficiency[38] Net Income and Loss - Net loss attributable to OneStream, Inc. for Q4 2024 was $31.449 million, compared to a net income of $2.751 million in Q4 2023[32] - Non-GAAP net income for Q4 2024 was $11,581,000, compared to $3,934,000 in Q4 2023, showing a positive trend in profitability[39] - The company reported a net loss per share of $0.19 for Q4 2024, compared to a net loss per share of $1.23 for the year ended December 31, 2024[40] Cash Flow and Liquidity - Free cash flow for Q4 2024 was $24.7 million, compared to $26.6 million in Q4 2023[4] - The company reported a net cash provided by operating activities of $25.138 million for Q4 2024, compared to $26.795 million in Q4 2023[36] - The net cash provided by operating activities for the year ended December 31, 2024, was $61,152,000, a significant increase from $21,265,000 in 2023[41] - Free cash flow for Q4 2024 was $24,697,000, slightly down from $26,573,000 in Q4 2023, but still demonstrating strong cash generation capabilities[41] - Cash and cash equivalents increased significantly to $544.174 million as of December 31, 2024, from $117.087 million at the end of 2023[36] Expenses - Operating expenses surged to $135.956 million in Q4 2024, compared to $71.900 million in Q4 2023, reflecting a 89% increase[32] - Equity-based compensation expenses totaled $52.582 million in Q4 2024, significantly higher than $1.183 million in Q4 2023[34] - Equity-based compensation expense for Q4 2024 was $52,582,000, compared to $1,183,000 in Q4 2023, indicating increased stock-based compensation[39] - The employer taxes on employee stock transactions were $1,904,000 for Q4 2024, with no costs reported in Q4 2023[39] - The amortization of acquired intangible assets was $275,000 for Q4 2024, with no costs reported in Q4 2023, indicating potential acquisitions or intangible asset recognition[37] Assets and Liabilities - Total assets rose to $823.221 million by December 31, 2024, compared to $361.559 million in 2023, marking a 128% increase[30] - Total current liabilities increased to $312.175 million in 2024, up from $232.370 million in 2023, indicating a 34.3% rise[30] Innovations and Recognition - OneStream introduced 15 new innovations in 2024, including advancements in its Finance AI portfolio[5] - OneStream was recognized as a leader in the Gartner Magic Quadrant for Financial Planning Software for the third consecutive year[9] Guidance - The company provided guidance for Q1 2025, projecting total revenue of $130 million and a non-GAAP operating margin of (9%)[12]

Core Insights - OneStream, Inc. reported a transformative year in 2024, achieving a 35% year-over-year growth in subscription revenue during Q4 and becoming free cash flow positive and non-GAAP profitable [4][8] - The company introduced 15 new innovations in 2024, particularly enhancing its Finance AI portfolio, and plans to launch new products in 2025 [4] Financial Highlights Fourth Quarter 2024 - Total revenue reached $132.5 million, a 29% increase year-over-year - Subscription revenue was $118.6 million, reflecting a 35% year-over-year growth - GAAP operating loss was $47.4 million, compared to a profit of $0.2 million in Q4 2023, resulting in a GAAP operating margin of (36%) [8][27] - Non-GAAP operating income was $8.7 million, with a non-GAAP operating margin of 7% [8][31] - Free cash flow for the quarter was $24.7 million, down from $26.6 million in Q4 2023 [8][32] Fiscal Year 2024 - Total revenue for the year was $489.4 million, a 31% increase year-over-year - Subscription revenue totaled $428.2 million, marking a 41% increase year-over-year - GAAP operating loss was $319.5 million, compared to a loss of $30.5 million in 2023, with a GAAP operating margin of (65%) [8][27] - Non-GAAP operating income was $1.2 million, with a non-GAAP operating margin of 0% [8][31] - Free cash flow for the year was $58.5 million, compared to $18.7 million in 2023 [8][32] Recent Developments - OneStream completed a secondary offering of 17,250,000 shares in November 2024, with no proceeds retained by the company [7][9] - The company launched several AI-powered solutions, including GenAI and machine learning capabilities, aimed at improving forecasting accuracy and speed [8] - OneStream strengthened its partnership with Microsoft, enhancing integrations with Office 365 and launching a Certified Power BI connector [8] Industry Recognition - OneStream was recognized as a Leader in the Gartner Magic Quadrant for Financial Planning Software for the third consecutive year [8] - The company was also named a leader in IDC's Record to Report MarketScape and received high ratings in ISG Software Research's Business Planning Buyers Guide for 2024 [8]

Core Insights - OneStream, Inc. will report its financial results for the fourth quarter and full-year 2024 on February 11, 2025, after market close [1] - The company will host a conference call and webcast on the same day at 4:30 p.m. ET to discuss these results [2] Company Overview - OneStream is a leading enterprise finance management platform that modernizes the Office of the CFO by unifying core finance and operational functions [1][3] - The platform integrates financial and operational data, utilizes AI for enhanced decision-making, and empowers CFOs to drive business strategy [2][3] - OneStream has over 1,500 customers, including 15% of the Fortune 500, and collaborates with more than 250 partners [4]

Group 1 - OneStream (NASDAQ: OS) is expected to sustain rapid growth, leading to a potential premium stock valuation [1] - The author emphasizes a diverse investment approach, incorporating fundamental, technical, and momentum investing strategies [1] Group 2 - The article serves as a platform for tracking investment ideas and connecting with like-minded investors [1]