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].
OneStream, Inc.(OS) - 2024 Q4 - Annual Report