OneStream, Inc.(OS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Covers unaudited condensed consolidated financial statements and management's discussion and analysis Item 1. Financial Statements Presents OneStream, Inc.'s unaudited condensed consolidated financial statements and detailed notes Condensed Consolidated Balance Sheets Presents the company's financial position, including assets, liabilities, and equity for the reported periods | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Assets | | | | Cash and cash equivalents | $652,082 | $544,174 | | Total current assets | $822,418 | $737,366 | | Total assets | $910,530 | $823,221 | | Liabilities | | | | Total current liabilities | $343,039 | $312,175 | | Total liabilities | $363,906 | $332,263 | | Equity | | | | Total stockholders' / members' equity | $546,624 | $490,958 | - Total assets increased by $87.3 million (10.6%) from December 31, 2024, to June 30, 2025, primarily driven by an increase in cash and cash equivalents[22] - Total liabilities increased by $31.6 million (9.5%) over the same period, with current liabilities increased by $30.9 million[22] - Total stockholders' / members' equity increased by $55.7 million (11.3%) from December 31, 2024, to June 30, 2025[22] Condensed Consolidated Statements of Operations Details the company's revenues, expenses, and net loss for the reported three and six-month periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------- | | Total revenue | $147,590 | $117,501 | 26% | | Total cost of revenue | $46,392 | $36,975 | 25% | | Gross profit | $101,198 | $80,526 | 26% | | Total operating expenses | $133,438 | $92,097 | 45% | | Loss from operations | $(32,240) | $(11,571) | 179% | | Net loss attributable to OneStream, Inc. | $(18,432) | $(7,850) | 135% | | Net loss per share (basic and diluted) | $(0.10) | N/A | N/A | | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change (%) | | :-------------------------------- | :----------------------------- | :----------------------------- | :------------- | | Total revenue | $283,899 | $227,792 | 25% | | Total cost of revenue | $89,970 | $71,003 | 27% | | Gross profit | $193,929 | $156,789 | 24% | | Total operating expenses | $266,042 | $173,740 | 53% | | Loss from operations | $(72,113) | $(16,951) | 325% | | Net loss attributable to OneStream, Inc. | $(42,448) | $(12,809) | 231% | | Net loss per share (basic and diluted) | $(0.24) | N/A | N/A | - Subscription revenue increased by 30% for both the three and six months ended June 30, 2025, compared to the same periods in 2024, driven by new customer acquisition, existing customer expansion, and a shift to a SaaS-based model[26] - Operating expenses significantly increased, with Research and Development up 70% (QoQ) and 87% (YoY), and Sales and Marketing up 35% (QoQ) and 37% (YoY), primarily due to higher employee compensation costs, including equity-based compensation, and increased headcount[26] Condensed Consolidated Statements of Comprehensive Loss Outlines the company's net loss and other comprehensive income (loss) for the reported periods | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Net loss | $(24,810) | $(7,850) | | Foreign currency translation | $1,206 | $(96) | | Comprehensive loss | $(23,604) | $(7,946) | | Comprehensive loss attributable to OneStream, Inc. | $(17,536) | $(7,946) | | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(57,461) | $(12,809) | | Foreign currency translation | $1,931 | $(275) | | Comprehensive loss | $(55,530) | $(13,084) | | Comprehensive loss attributable to OneStream, Inc. | $(41,019) | $(13,084) | - Foreign currency translation resulted in a gain of $1.2 million for the three months ended June 30, 2025, compared to a loss of $0.1 million in the prior year, and a gain of $1.9 million for the six months ended June 30, 2025, compared to a loss of $0.3 million in the prior year[31] Condensed Consolidated Statements of Stockholders' / Members' Equity Details changes in the company's equity structure, including net loss, equity-based compensation, and stock transactions - Total stockholders' / members' equity increased from $490.9 million as of December 31, 2024, to $546.6 million as of June 30, 2025[34] - Key changes include a net loss of $(57.5) million, equity-based compensation of $69.3 million, stock option exercises generating $41.8 million, and foreign currency translation gains of $1.4 million for the six months ended June 30, 2025[34] - There were significant exchanges of Class C common stock for Class D common stock (6.8 million shares) and conversions of Class D common stock to Class A common stock (2.6 million shares) during the three months ended June 30, 2025[34] Condensed Consolidated Statements of Cash Flows Presents the company's cash flows from operating, investing, and financing activities for the reported periods | Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $65,938 | $33,654 | | Net cash used in investing activities | $(4,446) | $(8,694) | | Net cash provided by (used in) financing activities | $45,853 | $(1,045) | | Net increase in cash and cash equivalents | $107,908 | $23,428 | | Cash and cash equivalents - End of period | $652,082 | $140,515 | - Net cash provided by operating activities increased by 96% to $65.9 million for the six months ended June 30, 2025, primarily due to noncash charges like equity-based compensation and favorable changes in working capital[41][219][220] - Net cash used in investing activities decreased by 49% to $4.4 million, mainly due to lower acquisition spending compared to the prior year's DataSense acquisition[41][222][223] - Net cash provided by financing activities was $45.9 million, a significant increase from a net cash outflow in the prior year, driven by proceeds from option exercises and tax withholdings for LLC Unit redemptions[41][224] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and disclosures supporting the condensed consolidated financial statements NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Describes OneStream, Inc.'s corporate structure, IPO, and reorganization transactions - OneStream, Inc. was incorporated in October 2021 as a holding company for its IPO, which was completed on July 25, 2024, raising $409.6 million in net proceeds[45][46] - The company underwent Reorganization Transactions in connection with the IPO, appointing OneStream, Inc. as the sole manager of OneStream Software LLC and reclassifying all outstanding units into a single class of non-voting LLC Units[48][50] - The amended certificate of incorporation authorized Class A, B, C, and D common stock, with specific voting and economic rights, and established a one-to-one ratio between LLC Units owned by the Company and Class A/D common stock outstanding[48] NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Outlines the key accounting principles and methods applied in preparing the financial statements - No material changes occurred in the Company's significant accounting policies for the six months ended June 30, 2025, compared to the Annual Report on Form 10-K for 2024[51] - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim information, consolidating OneStream, Inc. and its subsidiaries, with prior periods adjusted for common control transactions[52][53] - The Company operates in one operating segment, with the CEO as the chief operating decision maker, assessing performance based on consolidated financial information[56] - Equity-based compensation is accounted for based on grant date fair values, recognized straight-line for service-only vesting or accelerated attribution for performance conditions, and includes an Employee Stock Purchase Plan (ESPP)[62][63] NOTE 3 – BUSINESS COMBINATIONS Details the company's acquisitions of partner-developed solutions during the period - During the three months ended June 30, 2025, OneStream acquired three partner-developed solutions for $3.7 million to enhance its platform and product portfolio, accounted for using the acquisition method[66] NOTE 4 – PROPERTY AND EQUIPMENT Provides information on the company's property and equipment, including gross amounts, depreciation, and net values | Category (in thousands) | June 30, 2025 | December 31, 2024 | | :---------------------- | :------------ | :---------------- | | Gross property and equipment | $19,116 | $18,313 | | Accumulated depreciation and amortization | $(9,833) | $(8,229) | | Property and equipment, net | $9,283 | $10,084 | - Net property and equipment decreased by $0.8 million from December 31, 2024, to June 30, 2025[68] - Depreciation and amortization expense was $0.8 million and $0.7 million for the three months ended June 30, 2025 and 2024, respectively, and $1.6 million and $1.4 million for the six months ended June 30, 2025 and 2024, respectively[68] NOTE 5 – COMMITMENTS AND CONTINGENCIES Discloses the company's contractual obligations, operating lease commitments, and potential liabilities | Commitment Type (in thousands) | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | | :----------------------------- | :---- | :--------------- | :---------- | :---------- | :---------------- | | Operating lease obligations | $21,893 | $2,260 | $7,330 | $5,510 | $6,793 | | Future purchase obligations | $25,943 | $15,030 | $10,806 | $107 | $0 | - As of June 30, 2025, the Company had a remaining commitment of $177.8 million under a five-year consumption agreement for data center, cloud, and IT services, amended in November 2024 to increase from $300.0 million to $360.0 million[69][225] - The Company provides indemnification for intellectual property infringement and service level commitments to customers, but has not incurred material costs to date[70][73] NOTE 6 – DEBT Describes the company's revolving credit facility and compliance with financial covenants - OneStream has a $150.0 million revolving credit facility expiring October 27, 2028, with no amounts drawn as of June 30, 2025[76] - The credit facility is secured by substantially all company assets and requires compliance with financial covenants, including maintaining a debt-to-recurring revenue ratio below 0.50 to 1.00 and $50.0 million in liquidity, which the Company met as of June 30, 2025[78] NOTE 7 – INCOME TAXES Explains the company's income tax provision, effective tax rate, and deferred tax assets, including the TRA | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Provision for income taxes | $616 | $331 | | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :----------------------------- | :----------------------------- | | Provision for income taxes | $1,036 | $646 | - The effective tax rate for the three and six months ended June 30, 2025, differed from the U.S. statutory rate of 21% primarily due to non-controlling interest and a full valuation allowance against U.S. deferred tax assets[83] - The Company has established a full valuation allowance against its U.S. deferred tax asset, concluding that a Tax Receivable Agreement (TRA) liability is not probable as of June 30, 2025. The maximum estimated unrecorded TRA liability from past exchanges could be $193.5 million[86][87] NOTE 8 – STOCKHOLDERS' / MEMBERS' EQUITY Details the company's authorized common stock classes and changes in LLC Units and common stock - The Company's certificate of incorporation was amended to authorize Class A, B, C, and D common stock, with Class A and B having one vote per share, and Class C and D having ten votes per share[89][90] - In connection with the Reorganization Transactions, all OneStream Software LLC membership interests were reclassified into a single class of LLC Units[91][95] - During the six months ended June 30, 2025, 7.4 million LLC Units and corresponding Class C common stock were redeemed for Class D common stock (subsequently converted to Class A), and 24.0 million shares of Class D common stock were converted to Class A common stock[93][94] NOTE 9 – NON-CONTROLLING INTERESTS Explains the ownership percentage of non-controlling interests in OneStream Software LLC - As of June 30, 2025, non-controlling interests in OneStream Software LLC owned 23.1% of LLC Units, with OneStream, Inc. owning 76.9%[97][98] - The ownership percentage of non-controlling interests decreased from 26.6% at December 31, 2024, due to exchanges of Class C common stock and issuance of LLC Units in connection with equity-based compensation plans[98] NOTE 10 – EQUITY-BASED COMPENSATION Provides details on the company's equity-based compensation plans and associated expenses | Plan | Unrecognized Expense (in thousands) | Weighted-Average Remaining Service Period (Years) | | :-------------------------------- | :-------------------------------- | :---------------------------------------------- | | 2019 Common Unit Option Plan | $53,100 | 2.3 | | 2024 Equity Incentive Plan (Stock Options) | $11,500 | 3.1 | | 2024 Equity Incentive Plan (RSUs) | $132,000 | 3.7 | | Employee Stock Purchase Plan (ESPP) | $3,900 | 1.9 | | DataSense Holdings Awards | $6,600 | 1.4 | | Expense Category (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------------ | :------------------------------- | :----------------------------- | | Cost of subscription | $634 | $1,340 | | Cost of professional services and other | $1,190 | $3,227 | | Sales and marketing | $11,774 | $25,642 | | Research and development | $8,799 | $19,347 | | General and administrative | $9,037 | $19,787 | | Total equity-based compensation | $31,434 | $69,343 | - Total equity-based compensation expense for the six months ended June 30, 2025, was $69.3 million, a significant increase from $3.8 million in the prior year, reflecting increased grants and vesting[111] NOTE 11 – NET LOSS PER SHARE Presents the calculation of basic and diluted net loss per share for OneStream, Inc | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :------------------------------------------------ | :------------------------------- | :----------------------------- | | Net loss attributable to OneStream, Inc. (in thousands) | $(18,432) | $(42,448) | | Weighted-average shares of Class A and Class D common stock outstanding (in thousands) | 178,302 | 176,525 | | Net loss per share (basic and diluted) | $(0.10) | $(0.24) | - Diluted net loss per share is the same as basic net loss per share because the inclusion of potentially issuable shares (stock options, RSUs, ESPP purchase rights) would be anti-dilutive[113] | Potentially Dilutive Securities (in thousands) | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--------------------------------------------- | :------------------------------- | :----------------------------- | | Stock options | 30,514 | 30,514 | | RSUs | 5,628 | 5,628 | | Purchase rights committed under the ESPP | 544 | 536 | | Total | 36,686 | 36,678 | NOTE 12 – REVENUE RECOGNITION Describes the company's revenue streams, recognition policies, and geographic revenue breakdown - Revenue is primarily derived from subscription services (SaaS, cloud computing, PCS) recognized ratably over the contract term, and software licenses recognized at the point of customer use[116] | Geographic Region (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $98,589 | $81,050 | $187,326 | $157,343 | | Other | $49,001 | $36,451 | $96,573 | $70,449 | | Total revenue | $147,590 | $117,501 | $283,899 | $227,792 | - The aggregate amount of transaction price allocated to remaining performance obligations as of June 30, 2025, was $1,171.5 million, with approximately 40% expected to be recognized as revenue in the next 12 months[122] NOTE 13 – RELATED PARTY TRANSACTIONS Discloses transactions with related parties, specifically payments to DataSense LLC prior to its acquisition - Prior to its acquisition in Q2 2024, OneStream paid DataSense LLC $0.8 million and $1.9 million during the three and six months ended June 30, 2024, respectively, for consulting and software development services, included in research and development expenses[124] - DataSense LLC was a related party, as OneStream's co-founder and CEO, Thomas Shea, is the father of Andrew Shea, DataSense's former CEO and equity holder[124] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Provides detailed discussion and analysis of financial condition and results of operations for the reported periods Overview Provides a high-level description of OneStream's AI-enabled Digital Finance Cloud platform and its business model - OneStream provides an AI-enabled Digital Finance Cloud platform that unifies financial and operational data, with software revenue (subscription and license) accounting for 95% of total revenue for the three and six months ended June 30, 2025[127][128] - The company is transitioning to a SaaS-based model, with SaaS contracts representing over 90% of new customer contracts since 2023, and expects this to be an increasing portion of total revenue[129][147] - International revenue accounted for 33% and 34% of total revenue for the three and six months ended June 30, 2025, respectively, with a focus on global expansion and leveraging a strong partner ecosystem for implementation and lead generation[131][133][145] Recent Developments Highlights recent strategic acquisitions made by the company to enhance its platform capabilities - In Q2 2025, OneStream acquired three partner-developed solutions for $3.7 million to enhance its platform's features and capabilities, aiming to drive further product adoption[138] Factors Affecting Our Performance Discusses key drivers and challenges influencing the company's financial and operational performance - Customer growth is a significant driver, with 1,695 customers as of June 30, 2025, representing 14% year-over-year growth, primarily through marketing, direct sales, and go-to-market partners[140] - The company focuses on customer success to drive retention and expansion, aiming to increase use cases and users within existing large enterprise customers, which offer greater opportunity for scale[142][143][144] - OneStream plans continued investment in R&D to expand platform features, develop new applications, and enhance AI-enabled solutions for the Office of the CFO, while also expanding internationally[145][146] - The mix of subscription and license revenue is shifting, with subscription revenue increasing to 91% of total revenue for the three and six months ended June 30, 2025, as the company continues its transition to a SaaS-based model[147] Components of Results of Operations Breaks down the various revenue and expense categories contributing to the company's financial results - Subscription revenue, primarily from SaaS contracts, cloud computing, and post-contract customer support (PCS), is recognized ratably over the contract term[149][150][151][152] - License revenue from term-based and perpetual software licenses is recognized when the software is made available to the customer[153] - Professional services and other revenue, including implementation, consulting, and training, are recognized as services are performed, with a strategy to increasingly leverage partners for these services[154][156] - Gross margin remained consistent at 69% for the three months ended June 30, 2025 and 2024, and decreased slightly to 68% for the six months ended June 30, 2025, from 69% in the prior year, influenced by equity-based compensation and sales mix[157][173][190] Results of Operations Provides a detailed analysis of the company's financial performance for the reported periods Comparison of the Three Months Ended June 30, 2025 and 2024 Compares the company's financial results for the three-month periods | Metric (in thousands) | 2025 | 2024 | % Change | | :---------------------- | :----- | :----- | :------- | | Total revenue | $147,590 | $117,501 | 26% | | Subscription revenue | $133,630 | $103,133 | 30% | | License revenue | $5,962 | $6,905 | (14)% | | Professional services and other revenue | $7,998 | $7,463 | 7% | | Expense (in thousands) | 2025 | 2024 | % Change | | :----------------------- | :----- | :----- | :------- | | Total cost of revenue | $46,392 | $36,975 | 25% | | Sales and marketing | $70,258 | $52,216 | 35% | | Research and development | $33,918 | $19,952 | 70% | | General and administrative | $29,262 | $19,929 | 47% | - Loss from operations increased by 179% to $(32.2) million, primarily due to significant increases in operating expenses, particularly in R&D (70% increase) and Sales and Marketing (35% increase), driven by higher employee compensation and equity-based compensation[174][175][176][177] - Net interest income increased by $4.8 million due to higher average cash and cash equivalent balances[179] Comparison of the Six Months Ended June 30, 2025 and 2024 Compares the company's financial results for the six-month periods | Metric (in thousands) | 2025 | 2024 | % Change | | :---------------------- | :----- | :----- | :------- | | Total revenue | $283,899 | $227,792 | 25% | | Subscription revenue | $258,730 | $198,820 | 30% | | License revenue | $9,660 | $13,084 | (26)% | | Professional services and other revenue | $15,509 | $15,888 | (2)% | | Expense (in thousands) | 2025 | 2024 | % Change | | :----------------------- | :----- | :----- | :------- | | Total cost of revenue | $89,970 | $71,003 | 27% | | Sales and marketing | $137,880 | $100,525 | 37% | | Research and development | $68,920 | $36,876 | 87% | | General and administrative | $59,242 | $36,339 | 63% | - Loss from operations increased by 325% to $(72.1) million, driven by substantial increases in operating expenses, particularly R&D (87% increase) and Sales and Marketing (37% increase), largely due to higher employee compensation and equity-based compensation[192][193][194][195] - Net interest income increased by $9.1 million due to higher average cash and cash equivalent balances[197] Non-GAAP Financial Measures Defines and reconciles non-GAAP financial measures, including operating income (loss) and free cash flow - Non-GAAP operating income (loss) is defined as loss from operations adjusted for non-cash, non-operational, and non-recurring items such as equity-based compensation, employer taxes on employee stock transactions, amortization of acquired intangibles, and acquisition-related costs[203] | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Loss from operations (GAAP) | $(32,240) | $(11,571) | $(72,113) | $(16,951) | | Non-GAAP operating income (loss) | $1,592 | $(8,669) | $1,070 | $(12,936) | - Free cash flow is defined as net cash provided by operating activities less purchases of property and equipment[206] | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $65,938 | $33,654 | | Purchases of property and equipment | $(746) | $(1,100) | | Free cash flow | $65,192 | $32,554 | Liquidity and Capital Resources Assesses the company's ability to meet its short-term and long-term financial obligations - As of June 30, 2025, OneStream had $652.1 million in cash and cash equivalents and an undrawn $150.0 million credit facility, which are expected to be sufficient for operating requirements for at least the next 12 months[207] - Deferred revenue totaled $262.5 million as of June 30, 2025, with $257.2 million expected to be recognized as current revenue[208] - The company's Tax Receivable Agreement (TRA) obligations are expected to be substantial, requiring payments to TRA Members (including KKR) for 85% of certain tax savings, which could impact liquidity and potentially accelerate payments under certain circumstances[214][215][216][217] | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $65,938 | $33,654 | | Net cash used in investing activities | $(4,446) | $(8,694) | | Net cash provided by (used in) financing activities | $45,853 | $(1,045) | | Contractual Obligation (in thousands) | Total | Less than 1 Year | 1 - 3 Years | 3 - 5 Years | More than 5 Years | | :------------------------------------ | :---- | :--------------- | :---------- | :---------- | :---------------- | | Operating lease obligations | $21,893 | $2,260 | $7,330 | $5,510 | $6,793 | | Purchase obligations | $25,943 | $15,030 | $10,806 | $107 | $0 | Item 3. Quantitative and Qualitative Disclosures About Market Risk Outlines OneStream's exposure to market risks, focusing on foreign currency, interest rates, and inflation - OneStream faces foreign currency risks from revenue, cost of revenue, and operating expenses denominated in non-U.S. dollar currencies, but benefits from a natural hedge where local revenue and expenses are in the same currency[233] - The company's $652.1 million in cash and cash equivalents are subject to interest rate risk, but historical fluctuations have not been significant, and a hypothetical 10% change in interest rates is not expected to materially impact operating results or cash flows[235] - Inflation has not had a material effect on the business, but significant inflationary pressures on costs could harm financial condition if not offset by price increases[236] Item 4. Controls and Procedures Details evaluation of disclosure controls and procedures, concluding their effectiveness - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level[238] - No material changes in internal control over financial reporting occurred during the period covered by the report[239] - As of December 31, 2025, OneStream will be deemed a large accelerated filer, requiring an auditor's attestation report on internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act[231] PART II. OTHER INFORMATION Contains additional disclosures not included in financial statements, such as legal proceedings and risk factors Item 1. Legal Proceedings OneStream is not currently involved in litigation expected to have a material adverse effect - The Company is not currently involved in any legal proceedings that are believed to have a material adverse effect on its business or financial condition[243] - The results of any current or future litigation are uncertain, and litigation can adversely impact the company due to defense and settlement costs, and diversion of management resources[243] Item 1A. Risk Factors Details significant risks and uncertainties that could materially and adversely affect OneStream's business and financial condition Risks Related to Our Business and Industry Outlines risks inherent to OneStream's operations, growth, competition, and market dynamics - OneStream's rapid growth may not be sustainable, and failure to attract new customers, retain existing ones, or expand platform adoption could harm revenue growth[245][247] - The company has a history of operating losses and may not achieve or sustain profitability due to significant investments in scaling the business, R&D, sales and marketing, and public company compliance costs[251][252][253] - Intense competition from legacy players (Oracle, SAP) and point product providers (Anaplan, Workday) poses a risk to market share, potentially leading to lower sales, price reductions, and reduced margins[254][255] - Long and unpredictable sales cycles, especially for large enterprises, require considerable time and expense, making it difficult to predict sales timing and potentially impacting cash flows and margins[262][263] - The company's success depends on strategic relationships with third-party go-to-market and implementation partners; failure to establish or maintain these relationships could adversely affect business and operating results[264][265][266] - Quarterly results may fluctuate due to factors like customer acquisition/retention, transition to SaaS, uneven revenue from perpetual licenses, and timing of operating costs, making quarter-to-quarter comparisons unreliable[272][273] Risks Related to our International Operations Details risks associated with global business activities, including regulatory and currency exposures - International expansion exposes OneStream to risks such as foreign laws, regulatory requirements, tariffs, exchange rate fluctuations, and difficulties in managing global operations, which could increase costs and harm financial performance[309][310] - Compliance with governmental export and import controls, including U.S. embargoes and sanctions, is critical; non-compliance could lead to investigations, penalties, and reputational harm[313][314] - The company is subject to the U.S. Foreign Corrupt Practices Act (FCPA) and similar anti-corruption laws globally; non-compliance by employees or third parties could result in criminal or civil liability and reputational damage[316][317][318] - Fluctuations in foreign currency exchange rates, particularly a stronger U.S. dollar, could negatively impact dollar-equivalent revenue from international operations, as the company does not currently hedge these exposures[319][320] Risks Related to our Technology and Intellectual Property Covers risks concerning platform security, intellectual property, and reliance on third-party infrastructure - Security breaches or incidents affecting OneStream's platform or third-party vendors could lead to data loss, reputational damage, loss of customers, regulatory investigations, and significant liabilities[321][322][326] - Interruptions or performance problems with the cloud-based platform, reliant on Microsoft Azure, could harm business, operating results, and reputation, potentially leading to service credits or contract terminations[287][288][289][290] - Failure to obtain, maintain, protect, or enforce intellectual property rights, including patents, trademarks, and trade secrets, could impair the ability to protect proprietary technology and brand, leading to significant costs and competitive disadvantages[329][331][332][334] - Assertions by third parties alleging infringement or misappropriation of their intellectual property rights could result in substantial costs, require platform redesigns, or force costly settlement/license agreements[335][337][338] - The use of open-source software in the platform carries risks, including potential requirements to release proprietary source code or exposure to litigation if license terms are misinterpreted or violated[339] Risks Related to Regulation and Taxation Addresses risks arising from evolving legal, privacy, and tax regulations impacting the company - Evolving privacy, data protection, and cybersecurity regulations (e.g., CCPA, GDPR, EU AI Act, NIS2, DORA) may limit platform use, increase compliance costs, and expose the company to liabilities if not adequately addressed[348][349][350][355][356][357][358][359][360] - Changes in laws and regulations related to the Internet and cloud computing, or changes to Internet infrastructure (e.g., net neutrality), could diminish demand for the platform and negatively impact the business[361][362][363][364] - Operating as a public company, especially after ceasing to be an 'emerging growth company' at the end of 2025, will increase compliance costs, divert management attention, and require auditor attestation on internal controls[366][367][368][369][370] - The company may be required to collect additional sales, use, or other taxes in new jurisdictions, potentially resulting in substantial tax assessments, administrative burdens, and competitive disadvantages[371][372] - International operations subject OneStream to adverse tax consequences from transfer pricing regulations and potential changes in domestic or international tax laws (e.g., OECD Pillar Two rules), which could increase effective tax rates[373][374] Risks Related to our Organizational Structure Describes risks related to OneStream's holding company structure and Tax Receivable Agreement obligations - OneStream, Inc. is a holding company dependent on OneStream Software LLC for operating results, cash flows, and distributions, with no independent means of generating revenue[375][376] - The company is required to pay TRA Members (including KKR) 85% of certain tax savings, which are expected to be substantial and could significantly impact liquidity, potentially requiring debt financing or accelerating payments[379][380][381][385][389] - The TRA payments may be accelerated under certain circumstances (e.g., change of control, material breach), potentially requiring immediate lump-sum payments that could exceed actual tax benefits realized[387][388] - The organizational structure, including the TRA, confers benefits upon TRA Members (like KKR) that do not equally benefit Class A common stockholders and imposes additional compliance costs[390][392] - Generally, the company will not be reimbursed for TRA payments if tax benefits are disallowed, and KKR's consent is required for certain tax challenges, potentially creating conflicts of interest[393] Risks Related to Ownership of Our Class A Common Stock Highlights risks for Class A common stockholders, including voting control and stock price volatility - Concentrated voting control with holders of Class C and Class D common stock (including KKR and the CEO), who collectively hold ~95% of voting power, limits other stockholders' influence and may negatively impact Class A common stock price[395][396] - KKR's control, including director nomination rights and consent requirements for certain transactions, may lead to conflicts of interest with Class A common stockholders and could deter acquisitions[397][398][399][400] - The company's certificate of incorporation renounces interest in certain corporate opportunities identified by KKR or its affiliates, potentially diverting attractive opportunities away from OneStream[401][402] - The stock price may be volatile and decline regardless of operating performance due to various factors, including fluctuations in operating results, analyst expectations, competitive announcements, and macroeconomic conditions[406][408] - Substantial future sales of Class A common stock, particularly from redemptions of LLC Units or conversions of Class D common stock, or the perception of such sales, could cause the market price to decline[409][410][411][412] - OneStream does not intend to pay dividends on Class A common stock for the foreseeable future, meaning capital appreciation is the primary source of gain for investors[416] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered sales of equity securities or use of proceeds during the period Item 3. Defaults Upon Senior Securities Indicates no defaults upon senior securities during the reporting period Item 4. Mine Safety Disclosures States that mine safety disclosures are not applicable to the company Item 5. Other Information Reports no Rule 10b5-1 or non-Rule 10b5-1 trading arrangements by directors or officers - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[435] Item 6. Exhibits Lists exhibits filed or furnished as part of the Quarterly Report on Form 10-Q - Exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents[437] Signatures Contains required signatures for the Quarterly Report on Form 10-Q - The report is signed by Thomas Shea, Chief Executive Officer and President, and William Koefoed, Chief Financial Officer, on August 7, 2025[442]