Onestream Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 8, 2025
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Operator

Welcome to the OneStream's First Quarter Fiscal twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Annie Lesage, Vice President, Investor Relations and Strategic Finance.

Operator

Please go ahead, ma'am.

Annie Leschin
Annie Leschin
VP - Strategic Finance & IR at OneStream

Thank you, operator. Good afternoon, everyone. Welcome to OneStream's first quarter twenty twenty five earnings conference call. Joining me on the call today is our Co Founder and CEO, Tom Shea and our CFO, Bill Kofet. The press release announcing our first quarter twenty twenty five results issued earlier today is posted on our Investor Relations website at investor.onestream.com, along with an earnings highlights presentation.

Annie Leschin
Annie Leschin
VP - Strategic Finance & IR at OneStream

Before we get started, I'd like to let everyone know that we plan to participate in two conferences in the upcoming weeks. The first is JPMorgan's Global Technology, Media and Communications Conference in Boston on May 14, and the second is Bank of America's Global Technology Conference in San Francisco on June 3. A live stream and replay of our presentations at the conferences will be made available on our Investor Relations website. Now let me remind everyone that some of the statements on today's call are forward looking, including statements related to guidance for the second quarter ending 06/30/2025, and the year ending 12/31/2025. Forward looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors.

Annie Leschin
Annie Leschin
VP - Strategic Finance & IR at OneStream

Some of these risks are described in greater detail in the documents we file with the SEC from time to time, including our quarterly report on Form 10 Q for the quarter ended 03/31/2025. We undertake no obligation to update any forward looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During our call today, we will also reference certain non GAAP financial measures. There are limitations to our non GAAP measures, and they may not be comparable to similarly titled measures of other companies. The non GAAP measures referenced on today's call should not be considered in isolation from, or as a substitute for, their most directly comparable GAAP measures.

Annie Leschin
Annie Leschin
VP - Strategic Finance & IR at OneStream

Our management believes that our non GAAP measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. Reconciliations of our non GAAP measures to the most directly comparable GAAP measures can be found in this afternoon's press release and the earnings highlights presentation posted on our IR website. Now I'll turn the call over to Tom. Tom?

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Thank you for joining us this afternoon. 2025 got off to a strong start with our first quarter results. While the rapid shift in sentiment around the macro has brought increasing budget scrutiny, the needs of CFOs and finance departments remain front and center in today's market. We have seen macro turbulence in the past, and we are confident in our ability to navigate through it and execute our long term strategy. And what we know from experience is that increased uncertainty leads to more focus on system modernization.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

With that, let me recap our strong results in Q1 amidst the highly dynamic environment. We achieved total revenue growth of 24% and free cash flow margin of 26%. We saw increasing customer interest and strong momentum for our Sensible AI machine learning product, as well as strength in our commercial business. Continuing our trend over the last few years, our unified platform was recognized by leading third party industry analysts as a leader in software for the Office of the CFO. For the third year in a row, OneStream was named as the leader in financial flows and consolidation solution in Gartner's Magic Quadrant.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

And for the fifth consecutive year, Bark ranked OneStream as a leader in financial performance management solutions. And we officially brought some of last year's new product innovations to market this quarter at our sales kickoff. This included our ESG reporting and planning and our prepackaged CPM Express offering for rapid implementation. We also launched our new pricing and packaging. All in all, a solid start to the year.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Since then, the world has changed dramatically. Changing tariffs and trade policies are causing currency variability, impacting supply chains, and tightening enterprise and government budgets, leaving businesses globally to navigate the ongoing uncertainty. While the macro may initially pause some digital transformation efforts, events such as these have historically also had the potential to drive opportunity for us. The changing conditions can expose the shortcomings of outdated legacy systems and cause a renewed focus on technology upgrades and the modernization of old tech stacks. More than ever, this landscape underscores the importance of agility in financial operations.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Ultimately, this can be an opportunity for finance leaders to look for systems with greater accuracy and efficiency, along with more dynamic forecasting and planning. In our view, the current environment further amplifies the drivers at the heart of OneStream's value proposition. Number one, it's still early in the digital transformation of finance. Finance departments have been slow to fully embrace and trust the cloud. If anything, the current landscape is highlighting the need for the modernization of the Office of the CFO and a unified view of corporate financial data.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Number two, the scope of the CFO role continues to expand, especially in times like these. There are even higher expectations on CFOs to provide strategic insights and operational planning to drive business strategy and execution. This requires financial tools like dynamic reporting to complement the static nature of traditional ERP systems. Number three, AI is an incredible opportunity to increase the value of finance knowledge workers and business performance. Strong, proven, and applied AI solutions have the potential to give CFOs even greater visibility, agility, and predictability into their business.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Today, a growing volume of economic and other business drivers are changing so quickly that the speed and accuracy of AI is becoming vital to be able to forecast and plan the business. Business calibration is demanding greater forecast accuracy more quickly than ever before. We built the OneStream platform to help companies respond to any market environment. The breadth and depth of our platform enables customers to, number one, unify financial and operational data into one common data model to serve as a single source of truth for real time scenario planning. Number two, to accelerate and improve planning, forecasting, and decision making with AI solutions purpose built for finance, a category we refer to as finance AI.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

And number three, extend the platform through rapid and innovative product development, all without adding technical debt. These core tenants continue to serve as the north star of our product roadmap and how we innovate and expand the value of our platform for customers. We see great opportunity ahead and continue to invest for growth, including strategic investments to build out our finance AI portfolio, which you will hear more about at Splash next week. During the first quarter, we officially released our CPM Express product, designed to democratize the accessibility of our enterprise level platform for companies of all sizes and sophistication levels. This added to the solid bookings growth of over 50% year over year we saw in our commercial business this quarter.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

We launched our ESG reporting and planning solution, enabling customers to collect, analyze, report, and plan for ESG requirements, including scope one, two, and three emissions, and link sustainability efforts with financial performance. Finally, building off last year's strong results, Sensible ML Q1 bookings for our AI product, which we are now calling Sensible AI Forecast, grew over 50% year over year, as customers are putting a greater premium on our differentiated finance AI capabilities. We continue to create solutions that are purpose built for finance using our proven quantitative AI capabilities, along with expanded generative and agentic AI capabilities. Now let me give you some examples of how our customers are modernizing their core financial systems and utilizing sensible AI forecast with OneStream. We saw great momentum in our international business this quarter with 40% year over year revenue growth.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

One of the foundational wins we had was with a new customer that chose OneStream to replace a decades old legacy system. A large European retail group signed a multi year engagement with 500 users and plans to leverage OneStream's core financial consolidation, reporting, tax, cash flow, and ESG. After a thorough evaluation, the customer saw the power and breadth of our unified platform, together with our Sensible AI forecast and planning capabilities as more than capable of supporting its growing complexity and scale, as well as the evolving reporting demands of its global business. As I mentioned, we now have many of the world's most important companies using our Sensible AI forecast solution to help them better plan their business and drive efficiencies. More and more, AI has become a part of virtually every customer conversation.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Prospects and customers are now approaching us about the potential of AI in their workflows earlier and earlier, with some even beginning their one string relationship with our Sensible AI forecast solution, which incorporates our proven machine learning based time series forecasting and scenario modeling capabilities with generative AI capabilities. An example of this comes from a large energy utility company in Asia Pacific called Endeavor Energy that recently selected OneStream to lead a transformative, finance driven growth strategy. The very first thing they wanted was a demand forecast using our Sensible AI forecast solution because of the outsized value that a more accurate forecast of energy consumption would bring. Within eight weeks, they were leveraging Sensible AI forecast to predict demand across regions and pricing structures, including flat rate and time of day tariffs. They achieved over 95% forecast accuracy and reduced the effort required to reforecast by 90%.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

This highlights why customers, both new and existing, are embracing Sensible AI forecast as an important strategic lever in their financial transformation journey. Many companies have only just begun to supplement their use of OneStream's core platform with these quantitative AI capabilities. Not only are we seeing adoption from our existing core customers to facilitate their demand forecasting, but we are starting to see customers that have previously purchased Sensible AI Forecast expand their use of the product. Last year, one of the world's largest retailers deployed six use cases of our Sensible AI Forecast product across four business segments. They realized significant time savings and higher forecasting accuracy during the year.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Fast forward to Q1 of this year, and that same customer purchased more than seven additional use cases, nearly doubling their initial investment in Sensible AI Forecast. They plan to use it to drive both daily short term outlooks as well as monthly long term outlooks for sales, SG and A, headcount, and cash. The combination of our comprehensive core capabilities with our growing finance AI portfolio is helping OneStream become a one stop shop for companies to navigate complexities. In summary, CFOs are recognizing the need for a more dynamic, unified cloud platform to react to changes in today's unpredictable environment. This is not the first time we have seen a macro disruption of this magnitude.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

What we know from experience is that often this is when some of the greatest opportunities emerge. Demand for the OneStream platform continues to gain momentum as we add more brand name companies to our customer base. Our uniquely unified, AI powered, infinitely extensible platform is highly aligned to the financial and operational information needs of modern businesses. And next week, at our Splash user conference, nearly 50 customers will tell their stories of just how significantly the OneStream platform has impacted their business. We believe OneStream has never been more relevant to today's environment, and our speed to value is only increasing with the results our Sensible AI Forecast technology delivers.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

OneStream was engineered to help customers steer their business in moments like these. Markets may take some time to sort out, and we will manage accordingly. But make no mistake, we plan to continue to grow and invest in our mission to be the operating system for modern finance, so we can capture the enormous opportunity that we see ahead. Before I wrap up, as you saw recently, we made a few organizational changes so that our primary innovation and growth functions now report directly to me, including our CRO, Ken Hohenstein, our CMO and Strategy Officer, Tim Minahan, and Craig Colby, who will be our Chief Success Officer, focusing on building strategy around customer success and expansion, including CPM Express. I believe these changes cement our leadership for the next phase of growth.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Lastly, I want to thank all of our employees, customers, and partners for their continued support and trust in us. We are confident we have the right team and product to navigate this environment. Now let me turn the call over to Bill.

Bill Koefoed
Bill Koefoed
CFO at OneStream

Thanks, Tom. Good afternoon, everyone. We had a strong first quarter of revenue growth and free cash flow generation. Total revenue grew 24% year over year to $136,000,000 Subscription revenue increased 31% year over year to $125,000,000 We had license revenue of $4,000,000 which was down 40% compared with last year due to customer SaaS conversions, as we have signaled previously. Professional services and other revenue was $8,000,000 slightly above expectations.

Bill Koefoed
Bill Koefoed
CFO at OneStream

We had a record quarter of free cash flow at $36,000,000 which represents a 26% free cash flow margin. Our international business had a particularly strong quarter with revenue growth of 40% year over year and continues to represent more than 30% of total revenue. We continue to see more than 60% of our business come from new customers as we continue to capitalize on finance and AI transformation opportunities at some of the world's most important companies. We ended the quarter with sixteen forty six total customers, up 16% year over year, a slight acceleration from Q4. Billings had a strong quarter, increasing 30% year over year to $154,000,000 and 24% on a trailing twelve month basis.

Bill Koefoed
Bill Koefoed
CFO at OneStream

I would like to remind everyone that we view our trailing twelve months as the best indicator of billings momentum as it normalizes lumpiness in any single quarter. Our twelve month CRPO was up 35% year over year. Total RPO grew 24% year over year to $1,100,000,000 Our Q1 non GAAP gross margin was 70% compared with 69% last year, as our services margin improved over last year, partially offset by lower software license revenue. Our non GAAP software gross margin was 76% compared with 77% last year due to the lower software license mix. Our non GAAP operating loss was $500,000 in the quarter, exceeding our expectation.

Bill Koefoed
Bill Koefoed
CFO at OneStream

This favorability was due in part to lower R and D hiring and timing of marketing expenses relative to beginning of the year expectations. Total non GAAP operating expenses increased 19% year over year. Non GAAP net income was $6,700,000 and non GAAP earnings per share was $04 Total equity based compensation expense for the first quarter was $38,000,000 We ended the quarter with $594,000,000 in cash and cash equivalents. Now let me move on to our outlook. We are coming off a strong quarter and have the largest pipeline we have ever had at this point of the year.

Bill Koefoed
Bill Koefoed
CFO at OneStream

Additionally, we believe our product portfolio, including announcements we will make at Splash next week, is well positioned for market needs. As we look at our business signals, our leading indicators are positive. That being said, we are all living through a period of heightened uncertainty in the broader markets, where we may see companies and government agencies slow or even pause spending for a time. This may result in deal headwinds and potential down sells as budgets tighten and government restructuring continues. Additionally, ongoing customer conversions to SaaS will continue to impact license revenue.

Bill Koefoed
Bill Koefoed
CFO at OneStream

At the same time, in addition to our strong pipeline and product roadmap, FX rates have turned, And if that trend continues, FX will be a tailwind for 2025 revenue. When all of this is taken together, we are reiterating our prior 2025 guidance of 20% year over year revenue growth and slightly increasing our profitability outlook. For Q2 twenty twenty five, we expect total revenue to be between $140,000,000 to $142,000,000 We expect non GAAP operating margin to be between minus 2% to 0%. Remember that our North America SPLASH user conference is in Q2, which is a considerable sales and marketing investment. We expect non GAAP net income per share to be between $00 to $02 And we expect stock based compensation to be between $30,000,000 to $35,000,000 For full year 2025, we expect total revenues to be between $583,000,000 to $587,000,000 We expect non GAAP operating margin to be between 0% to 2%.

Bill Koefoed
Bill Koefoed
CFO at OneStream

We expect non GAAP net income per share to be between $0.5 to $0.13 And we expect stock based compensation to be between $120,000,000 to $130,000,000 All in all, we were pleased with our strong performance in Q1. More than ever, companies need the ability to run real time financial scenarios to respond to today's dynamic environment. In times of uncertainty, CFOs, in particular, focus on driving efficiencies, maximizing ROI, and reducing costs. At OneStream, that is what our platform enables every day. We are focused on managing our business in a thoughtful way during these uncertain times and confident that we can realize the long term opportunity we see ahead.

Bill Koefoed
Bill Koefoed
CFO at OneStream

Now let's turn it over to the operator for Q and A.

Operator

Certainly. And our first question for today comes from the line of John DiFucci from Guggenheim Securities. Your question, please.

John DiFucci
Senior Managing Director at Guggenheim Partners

Thank you. And nice job this quarter with a lot of uncertainty out there, guys. My question, I have a bunch of them, but I'm going ask one and be respectful here. It's on your comments, Bill, about the sort of potential demand issues out there. But you also talked about leading indicators being positive.

John DiFucci
Senior Managing Director at Guggenheim Partners

So I just want to clarify because you put up really good numbers this quarter, but you didn't raise for the year. Is that based on sort of just your prudence? I mean, you've been around a while of what could happen? Or are you currently seeing demand sort of trail off a little bit at this time?

Bill Koefoed
Bill Koefoed
CFO at OneStream

Hey, John, it's Bill. Thanks for the question, and thanks for the nice comments. As I mentioned in my prepared remarks, our leading indicators are positive. We've got, as I mentioned, the strongest sales pipeline at this point of the year that we've ever had. We've got an exciting product pipeline that you'll see more about or hear more about from Tom and the team next week at Splash, including obviously things you already know about.

Bill Koefoed
Bill Koefoed
CFO at OneStream

But look, there's, as you know, uncertainty out there. To your point, we haven't seen it in our current results. But I think to your point, it's prudent to be cautious as we look toward the rest of the year.

Operator

Thank you. And our next question comes from the line of Chris Quatrochi from Morgan Stanley. Your question, please. Chris, your line is open. You might have your phone on mute.

Bill Koefoed
Bill Koefoed
CFO at OneStream

Let's come back to Chris.

Operator

Certainly. And our next question comes from the line of Adam Hodges from Goldman Sachs.

Adam Hotchkiss
Adam Hotchkiss
VP - Emerging Software Equity Research at Goldman Sachs

Great. Thanks so much for taking the question.

Adam Hotchkiss
Adam Hotchkiss
VP - Emerging Software Equity Research at Goldman Sachs

I know you've talked a lot about, CTM Express, and that seems to be a product that's growing for you really quickly. Are you seeing that resonate particularly well in a time where, time to value is incrementally important for customers? Just curious how that's been tracking for you.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Hi, Adam. Thanks for the question. And yes, we are as I've mentioned in prior quarters and throughout our whole investor education, we're really excited and interested in serving the emerging customer with a faster on ramp to the OneStream platform. So CPM Express is a strategy that we're really focused on to make sure that we're delivering this comprehensive CPM experience for customers of all sizes and scale. And we're definitely we're in the early innings of that product, but the feedback has been very, very exciting that we're getting in terms of the time to value and results that customers are seeing with the platform and the completeness of the offering.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

All in all, we're really excited about the investments that we've been making there and thinking about the long term. In addition, it really opens up the door for us to onboard capabilities like AI. That faster time to value is all part of our larger plan and really looking to bring that sort of productization methodology to customers of all shapes and sizes and be able to deliver on these really exciting opportunities around artificial intelligence as well.

Operator

Thank you. Our next question comes from the line of Koji Ikeda from Bank of America. Your question, please.

Koji Ikeda
Koji Ikeda
Director - Enterprise Software Equity Research at Bank of America

Yeah. Hey, guys. Thanks for taking the questions. I wanted to ask another question on the revenue guide and maybe in a different way. And so, I do understand the broad conservatism, but when I look at the growth drivers in the revenue build, there's a lot, There's SaaS, there's on prem, single instance, etcetera.

Koji Ikeda
Koji Ikeda
Director - Enterprise Software Equity Research at Bank of America

And so when you constructed the guide this quarter versus last quarter, were there any changes in the assumptions in the growth of the deployments? Why would anything change? Or was there any change at all?

Bill Koefoed
Bill Koefoed
CFO at OneStream

I would just and thanks, Koji. I would just say, look, there's certainly been some macroeconomic announcements that have happened since we last talked back in February, which I think not just us, but other companies are looking at. A lot of those companies that you've heard from are our customers. And so look, we're just being cautious. And as I mentioned before, our leading indicators are quite positive.

Bill Koefoed
Bill Koefoed
CFO at OneStream

And like I said, we have the largest sales pipeline we've ever had. We have an exciting product pipeline. And we're going to execute to the best of our ability in the macroeconomic environment that we have ahead of us.

Operator

Thank you. And our next question comes from the line of Alex Zulkin from Wolfe Research. Ryan

Ryan Krieger
VP - Software Equity Research at Wolfe Research, LLC

Krueger on for Alex. I just wanted to ask about end market bookings trends, just given it sounds like it was quite strong here in 1Q. So I think in 2023 and 2024, about two thirds of bookings was coming from legacy replacements. So curious if you're continuing to see that level of mix here in early twenty twenty five. And then I think in fourth Q, '1 third of bookings was coming from non core solutions.

Ryan Krieger
VP - Software Equity Research at Wolfe Research, LLC

So just given the strength you're seeing in SML, CPM Express coming online, are you seeing any tick up in that mix as well? Thanks.

Bill Koefoed
Bill Koefoed
CFO at OneStream

Great question. And I'm going to start and then I'm going turn it over to Tom as he's been on the road a lot this quarter. A couple tidbits that I would give you, and again, this I love that you guys asked this question. Over 60% of our business came from new customers. This is a metric that we continue to really be excited about, especially as we continue to scale the business.

Bill Koefoed
Bill Koefoed
CFO at OneStream

Because as I've talked about with this whole group, as we land more new logos, then we have opportunities to upsell from there, which I think we've had some pretty good success with. I think, as Tom mentioned, AI is a really big opportunity, as well as some of the other things that we've talked about. So and we continue to see a huge legacy market and a legacy TAM. We've talked about, obviously, some of the lighthouse wins that we've had, obviously, in The US over time. But globally, we're starting to get some really nice ones.

Bill Koefoed
Bill Koefoed
CFO at OneStream

And that's certainly been a driver of bookings growth for us. But why don't

Bill Koefoed
Bill Koefoed
CFO at OneStream

I turn it over to Tom? You've been traveling a lot, so maybe give some color.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Thanks, Bill. And yes, there's really just three common themes that I'm hearing from customers in general. That is these equate to what you might consider legacy, but they're not every company has to manage their core financial requirements.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

And especially, there's a real focus on those core financial requirements during these more volatile or turbulent times, and that is financial planning, financial reporting, and as many insights as you can get. And that traditionally would have been the job of more legacy types of solutions. So that's number one. That's still there. And what people are looking to what CFOs are looking to do is to do that as quickly and as efficiently as possible so that they can get into the things that they really want to do, which is steer the business during these more volatile times.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

And that's more operational analytics. So we're seeing those discussions continue on in this order in all cases. And then ultimately, it's about taking those operational insights and forecasting them better and getting as much insight as you can out of those with artificial intelligence. And that's a full circle for us. That then flows back to the core.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

So our goal, and you mentioned CPM Express, is getting as many people, as many customers into that loop as we can and help them become efficient with the core, and then let them really start to become a partner to the business and get the most advanced forecasting possible with AI. And that's a continuing trend that's resonating with all customers, it's a consistent theme that I hear from customers as I'm out presenting and meeting with CFOs.

Operator

Thank you. Our next question comes from the line of Brent Bracelin from Piper Sandler. Your question, please.

Brent Bracelin
Brent Bracelin
Sr. Research Analyst at Piper Sandler Companies

Thank you. Good afternoon. Great to see solid execution this quarter. I wanted to double click into the sales pipeline. I get you had a few deal delays exiting the year.

Brent Bracelin
Brent Bracelin
Sr. Research Analyst at Piper Sandler Companies

It sounds like you're not seeing that now. What would you attribute to driving the recovery in the sales pipeline? Is it pretty broad based? Is it any vertical standing out? Is there a couple of large deals?

Brent Bracelin
Brent Bracelin
Sr. Research Analyst at Piper Sandler Companies

Just walk through what you're seeing on the sales pipeline, specifically in the recovery you're seeing there? Thanks.

Bill Koefoed
Bill Koefoed
CFO at OneStream

Yes. Brent, thanks for the question. I would say, look, Q4 was a bit of a surprise for us in terms of some of the deals that ended up pushing into Q1. And I think our sales team has become a lot more focused on making sure that they've got all the Is dotted, Ts crossed along the sales journey. I think they're an excellent team, and I think they've got a lot more focus and discipline on making sure that we've got everything buttoned up as we ended the quarter.

Bill Koefoed
Bill Koefoed
CFO at OneStream

And I think that was a good we had a nice execution quarter from those guys for sure.

Operator

Thank you. And our next question comes from the line of Mark Murphy from JPMorgan. Your question, please.

Sonak Kolar
Sonak Kolar
Software Equity Research Associate at JP Morgan

Hi, this is Sona Kolar on for Mark Murphy. Thanks for taking the question. I just wanted to follow-up on that point actually. It seemed like there's been some signals out there that the DOGE optimization efforts may be a bit closer to their peak now with some of our partner conversations sounding a little bit more hopeful for stabilization in the second half around U. S.

Sonak Kolar
Sonak Kolar
Software Equity Research Associate at JP Morgan

Federal. So understanding there's a lot of moving pieces there, but is there any update you can give us on how you view federal spending progressing through the year, and any perhaps noticeable changes occurring over the last ninety days?

Bill Koefoed
Bill Koefoed
CFO at OneStream

Yeah, I'll take that one as well.

Bill Koefoed
Bill Koefoed
CFO at OneStream

I would

Bill Koefoed
Bill Koefoed
CFO at OneStream

say, if we just step back and think about OneStream and the federal government, we're an efficiency play. We help to drive efficiency for the federal government. We provide information. We're the only cloud based CPM vendor who's FedRAMP high. So we're quite optimistic about our federal business over time.

Bill Koefoed
Bill Koefoed
CFO at OneStream

There's a lot of legacy software that's in the federal government, and we're the modernization play. So we're really bullish about the federal government over time. In the short run, obviously, there's a lot of government downsizing, restructuring, etcetera. Q3 is the quarter that government renewals happen. And we'll see what happens as we get into Q3.

Operator

Thank you. And our next question comes from the line of Steve Enders from Citi. Your question, please.

Steven Enders
Steven Enders
Equity Research Analyst at Citi

Okay, great. Thanks for taking the question here. I just want to ask about the pricing and packaging changes that you're rolling out right now to the base. Just I guess what are the big changes? What are the highlights?

Steven Enders
Steven Enders
Equity Research Analyst at Citi

And what's kind of the intent for the change in behavior that you're anticipating customers to take with us?

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Sure. So this is Tom. I'll take that question. Really, as you can tell, we're introducing a lot of new innovations to the market. And the entire pricing and packaging strategy that we've had is about making sure that we have a rational, durable pricing structure ourselves and for our customers with a couple of different goals.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Make sure that we're easy to do business with and contract with so that customers know what they're buying from us and how they're buying from us, and that we're actually making sure that we're getting the value for those new offerings in a value oriented way for our customers. And that really comes down to like I said, this not a this is an evolution of our pricing structure, which is we started with our core products in the more user oriented approach, which is how CPM was traditionally sold, moved on into a platform orientation as well as consumption. And so we now have this broad based approach of user platforms and consumption oriented pricing or usage oriented pricing. And so we feel like we have the right strategy that facilitates and will allow us to bring these new innovations to market quickly and efficiently so that it can be consumed by both customers and our go to market teams.

Operator

Thank you. And our next question comes from the line of Terry Tillman from Truist Securities. Your question please.

Terry Tillman
Terry Tillman
Managing Director at Truist Securities

Yeah. Hey, Tom, Bill and Annie. Congratulations on the free cash flow margin. Yeah. So my question is actually, back to Sensible AI forecast.

Terry Tillman
Terry Tillman
Managing Director at Truist Securities

It's a multiparter. I'm I'm curious. I think last quarter, Tom, you're talking a little bit about proof of value concepts and maybe that could resonate, get people up and running faster. So whether it was that or just getting more comfortable being able to kind of pitch the story, maybe you could share a little bit more on what seems like kind of a tipping point there. And then the second part of this question is, I think 50% growth in bookings Bill, you know where I'm going to go with this.

Terry Tillman
Terry Tillman
Managing Director at Truist Securities

When does this start to become kind of material to the bookings overall? Thank you.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Thanks, Terry. I'll start with that, and then I'll let Bill comment as well. We're really excited about our early investments in artificial intelligence. When you think of Sensible AI Forecast, you're looking at our flagship product. And to your point, Terry, we're seeing more and more validation of our customers as we talked about in my script.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Demonstrated improvements in accuracy as well as reductions in the effort and energy that goes into creating those forecasts, which ultimately means you can do more forecasts at a higher quality. And that is why we're starting to see the growth and interest in that product. I did mention last quarter, and I think it's worth still mentioning, it's just the market is still learning how to buy artificial intelligence. So we are really able and excited about being able to stand on these results that we're producing, which are defined, repeatable, and things that are really catching the interest of customers. I think you're going to continue to see us lean into this and invest in it, not only as we grow our go to market motion, which includes not only positioning the successes we've had, but making sure that we are educating customers as quickly as we can to help scale that opportunity.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

In addition, I'm really excited and I know a number of you will be at our conference next week. We'll be continuing to expand and develop and have some great announcements in our AI portfolio, which are going to further demonstrate OneStream's commitment to finance AI and the value that we see really starting to accumulate, not only from Sensible AI Forecast, but also from the core is very important as well, because some of these other capabilities in terms of generative AI and agents depend on solid financial information. So stay tuned for that. I'm excited to share with all of you some of the great things we're doing to further enhance the potential of our AI offering to our customers.

Terry Tillman
Terry Tillman
Managing Director at Truist Securities

I think you said it well. Okay, thanks.

Operator

Thank you. And our next question comes from the line of Siti Panigrahi from Mizuho. Your question please.

Siti Panigrahi
Managing Director at Mizuho Securities

Thank you. I wanted to ask on the international side that was pretty strong growth. Are you seeing, I mean, how is the pipeline? I know you invested last year in the international side. Are you seeing any kind of strength or weakness in any particular industry, any particular region, given the geopolitical situation and how should we think about interest on growth going forward?

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Sure, I'll take that one. This is Tom. And we're really excited about

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

the

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

performance our outside of The United States or in our global markets. And it really comes down to a couple of different characteristics. First and foremost, we're getting more scale in terms of size, so we're able to invest. And those investments that we've been making that have been multiyear are paying off. And also over the prior calls, I have mentioned that we've been landing strategic, what I'll call foundational deals in particular markets, which are really market building deals that become critical references of OneStream's success in those markets, those are all areas that I think those investments are kind of long term investments that you need to make, and they're starting to pay off.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

So that enables us to invest more and continue to grow. Ultimately, think as Bill said, we really see this as an important market and we hope that someday it grows to a similar size as The United States.

Operator

And our next question comes from the line of Scott Berg from Needham and Company. Your question, please.

Scott Berg
Managing Director at Needham & Company

Hi, everyone. Nice quarter. Apologize for any background noise on the airports. Tom, you you've talked a lot about, obviously, sensible use case, and I know you guys have been excited about it since you released it. But you seem to be talking more about customers using it for more and more use cases than what we've heard in the past just in general.

Scott Berg
Managing Director at Needham & Company

How do we think about the uplift of customers paying with these additional use cases knowing this product is more on a consumption basis than a pure subscription basis. But just trying to get a gauge as customer uses it, five, six, seven, eight use cases, whatever the number is, what type of benefit is OneStream gain? Thanks.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Great. Thanks. So yeah, there's significant upside. At this point, the sample size increases, we'll be able to share more of that. But to this point, we're seeing this as a material opportunity for us in terms of ARR growth.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

And you're right, as we get more and more success and demonstrate success with specific use cases, and we demonstrate the agility to actually deliver on those use cases and bring the value to the customer, they want to explore more use cases. It's sort of a self fulfilling prophecy, if you will. And so for us, we're at that point where demonstrating that success, learning from the use cases that we're exploring with those customers, and then generalizing those to bring to other customers is how you sort of build the market and then continue to evaluate. Like I said, some really exciting announcements coming up at Splash in the rounding out or the completion of our AI platform that open up even more use cases that are interesting for us to continue the momentum and investments that we've already made. So all in all, this an exciting area for OneStream, and we're well positioned because of our early investments to be a leader in enterprise finance AI.

Operator

Thank you. And our next question comes from the line of Chris Kochelke from Morgan Stanley. Your question please.

Chris Quintero
Chris Quintero
Analyst at Morgan Stanley

Hey Tom, hey Bill, thanks for taking the questions here. Apologies if this was already answered, but just curious around the new ESP solution that you all rolled out recently. What's been some of the early customer feedback as you develop that solution and start to put it into the marketplace?

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Sure. So ESG is a great example of the infinite extensibility of OneStream's platform. So when we think about this, this is something kind of taking this back full circle to the conversations that I have with CFOs, there's always this focus on core and doing what you have to do on a regular basis, a monthly, quarterly, yearly planning of the business. But there's always these unforeseen, whether it's new statutory requirements or new capabilities that are required or new operational demand. ESG is a great example of a new statutory type of requirement that businesses have to contend with.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

They do it for both the reasons of being good corporate citizens as well as corporate compliance. And so as we look our ESG solution, we're committed to making sure that we're offering a comprehensive solution that's integrated into the platform that gives the customer leverage on the work they're already doing within the core, as well as if they want to start with ESG or they want to come in and bring this as a new opportunity and bring them to the platform, we're using it in both ways. We're committed, again, so that was officially launched as a GA product just in the last few months at our SKO. And we're excited about the future of that product and we continue to invest in

Operator

Thank you. Our next question comes from the line of Brian Peterson from Raymond James. Your question please.

Brian Peterson
Brian Peterson
Managing Director at Raymond James Financial

Hi, thanks for taking the question. Tom, I know you mentioned that AI is coming up much earlier in customer conversations, but I'm curious with the solutions exchange maybe trending in that customer journey. How frequently is that coming up as a differentiator with new logos, or is that more of an expansion driver post launch?

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Great question. The Solution Exchange is really part of this term that I just used in the last response, and I'm going use it again, internet extensibility. The reason that it comes up it's always part of the conversation because it represents leverage for a customer. They're never going to run out of software with OneStream. And what I mean by that is, no matter what the challenge is that's coming up in the market or in the customer's business, we have the opportunity with the solution exchange.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

If we don't already have a solution in the market or a partner hasn't created one. There's always an opportunity for us to rapidly innovate and bring that capability or for the customer to self serve because of One Tree being a true platform that you can develop on. So all in all, when I think of solution exchange, it really is just another way of saying infinitely extensible. And it's part of every single sales pitch. It's foundational to the OneStream message.

Operator

Thank you. And our next question comes from the line of Nick Goldman from Scotiabank. Your question, please.

Nick Altmann
Director - U.S. Software Equity Research at Scotiabank

Awesome. Thank you. Tom, you and your leadership team have been in this end market through various macro cycles. What have been some of your past learnings? And can you maybe just walk us through how you're thinking about adjusting the playbook to offset some of the macro ambiguity?

Nick Altmann
Director - U.S. Software Equity Research at Scotiabank

I mean, it leaning more into the commercial side where maybe you have shorter sales cycles, focusing more on upsell and cross sell versus new logos? Just any details on some of your past learnings and how you're thinking about any adjustments would be helpful. Thanks.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Sure. So to start off, I would just say that we always try to run the business from a position of discipline, no matter what the economic conditions are, and really focus on the things that we can control. And that means being I think you've heard Bill say this and myself say this in the past, we're really focused on efficient growth at all times. And this is something that I appreciate this question because for those of you that are getting to know us and our history, I did bootstrap both of these companies and I typically have a conservative stance when it comes to running the business. But the reason I bring up bootstrapping is because I've always had a growth mindset in growing the company, as well as a disciplined mindset to make sure that we're growing efficiently and funding ourselves and being capital efficient.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

So in general, our playbook does not change no matter what we see here, and that is we're comfortable operating a business in mindset, whether the mindset is plentiful or scarcity, and focusing on our long term objectives. And right now, my message to our team is let's focus on what we can control and let's execute. When the sky is clear, we're just in that much better position.

Operator

Thank you. And our next question comes from the line of Patrick Scholes from Baird. Your question please.

Patrick Schulz
Vice President & Senior Research Associate at Baird

Hey, thanks for taking my question. Just on the updated guidance, it looks like you reiterated revenue but raised the margin guide. Can you talk about some of the drivers behind this and some of leverage you have with the margins? Just how are you thinking about balancing near term investments across product innovation and go to market relative to driving improved margins?

Bill Koefoed
Bill Koefoed
CFO at OneStream

Yes. No, thanks. I'll take that one. Thank you. I mean, as I mentioned in my prepared remarks, we have had slower hiring growth than we had expected when the year started.

Bill Koefoed
Bill Koefoed
CFO at OneStream

And so certainly, that's been a bit of a tailwind to operating margin. I mean, as Tom said, we are calibrating the business. I had the opportunity to talk to a reporter actually a couple of weeks ago. And in some ways, this is the best time to be a CFO. When business is easy, then your job is easy.

Bill Koefoed
Bill Koefoed
CFO at OneStream

But in today's world, me and my peers, Tom talked about, we're helping CEOs to look around corners. We did our just to kind of reiterate the Finance 02/1935 report that we did a few months ago, where they talk about how the CFO is becoming more strategic. This is the time when CFOs are becoming more strategic. And it's a time when obviously our software is quite relevant. We certainly do scenario planning and looking at the business, leveraging our own software.

Bill Koefoed
Bill Koefoed
CFO at OneStream

And so I think we're continuing to manage the business accordingly. I would also just in addition, obviously, leveraging our tools, I would say we continue to make investments in our product to help us reduce COGS. We still have a journey to go there. And yes, all those things give us confidence in the increase in profitability guidance that we gave you.

Operator

Thank you. And our next question comes from the line of Derrick Wood from TD Cowen. Your question please.

Derrick Wood
Managing Director at TD Cowen

Great, thanks. You guys had a nice growth quarter in net new customer count. How are you feeling about the potential cadence of new customer growth at 2025? I mean, one end, we have a tougher macro, but on the other end, it sounds like you're seeing nice strength out of the commercial side where volumes could be higher. So when you put these together, do you think you could continue to drive growth on the net new customer count?

Derrick Wood
Managing Director at TD Cowen

Or how should we be thinking about assumptions there?

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Thanks. I'll take this one. We definitely are looking at this as having multiple vectors of growth. We've got these areas of strength within the business, as you pointed out. Obviously, interest in our artificial intelligence is fueling new customers.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

We see customers starting with that use case specifically, that's getting prioritized. So I think that's one avenue that can help us continue to drive. And as you mentioned though, the commercial segment, which we're intentionally focusing on and looking to really give the opportunity for, like I said, businesses of all sizes and sophistication and on ramp to an enterprise level CPM platform to help them manage these types macro turbulence that they're seeing at the moment. Plus some of the other areas that we have in terms of we talked about the infinite extensibility or the product offerings that we have within the marketplace. All those people, all those different solutions or vectors give us the opportunity to continue to add new customers.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

And it's really early days in the areas of CPM Express, where we're leaning into that at this point, and we're really focused on continuing to invest in driving that opportunity. So I think all in all, it's why I've sort of been mentioning that over time is that we see that as a significant opportunity for us to continue to invest and drive adoption.

Operator

Thank you. And our next question comes from the line of Daniel Jester from BMO Capital Markets. Your question, please.

Daniel Jester
Daniel Jester
Director & Equity Research Analyst at BMO Capital Markets

Great. Good evening. Thanks for taking my question. I guess we're going to see some of this firsthand next week, but maybe just an update in terms of what you're seeing from your partners in terms of the investments in their OneStream practices and any teasers in terms of how many of them are participating in building for this Lucent Exchange? Thank you.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Sure. So we really are excited about the health of partner community. We're embracing a select set of partners around CPM Express to help us drive that into the market. We're excited about our GSI participation and interest in our AI solutions. At the same time, we have our core artists and partners that have been really focused on helping us drive and deliver success at the core side of the business or the financial analytics and operational.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

We take all those things together, that cohort of partners that's on the ground implementing the software, they're critical to our innovation engine. And you're going to see more and more of them. In fact, we just recently announced and we will be announcing the acquisition of partner generated solutions to provide more value to our customers, which is a great example of a win win for everybody in the OneStream community, not only for OneStream but for customers and for the partner. And that's a signal for me in particular of the health of that ecosystem. So again, we'll continue to invest in that area, invest in the community around OneStream, which ultimately powers opportunity for all of us in the future.

Operator

Thank you. And our next question comes from the line of Andrew DeGasperi from BNP Paribas.

Andrew Degasperi
Director - Senior Software Analyst at BNP Paribas

Thanks. I just had a question on the federal executive order that came out back in April about modernizing financial accounting systems. Do you guys benefit from that? And if so, how? And what would be the timeline for that?

Andrew Degasperi
Director - Senior Software Analyst at BNP Paribas

Thank you.

Bill Koefoed
Bill Koefoed
CFO at OneStream

Hey, Andrew. And nice to see you picking up coverage on us. So thanks for that. Look, I'd just reiterate, as it relates to the federal government, a few things that I think OneStream helps to provide. Again, we do help modernize the government.

Bill Koefoed
Bill Koefoed
CFO at OneStream

As I mentioned, they do have a number of legacy applications. And so I'm not super familiar with the specifics of the executive order. But to the extent that it's relevant to things like modernization, efficiency, security, which obviously our FedRAMP High certification helps to enable we feel really well positioned, as I mentioned earlier, to be able to serve the federal government over time, and we're quite optimistic about that.

Operator

Thank you. And our final question for today comes from the line of Mark Schappel from Loop Capital Markets. Your question please.

Mark Schappel
Managing Director at Loop Capital Markets LLC

Hi, thank you for taking my question. Tom, the international business continues to perform well. I was wondering if you could just comment on what you're seeing just regarding the demand environment, specifically in Europe. And then also competitively, are you seeing a different mix of competitors over there?

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Thanks, Sylvie. Yes, I actually recently did a trip to Europe, I've got some firsthand customer interaction there. And definitely a common theme, whether I'm in Europe or Asia Pacific, there's an interest in modernizing, and everybody realizes the turbulence that they're seeing and experiencing in the market requires thoughtfulness and optimization in the financial system space. So in general, we feel that we're positioned well, especially because of the investments that we've the multi year investments that we've been making in those regions, again, getting scale. But to your point, there's not really to your question on competitive mix, nothing's really changed in the competitive mix.

Tom Shea
Tom Shea
Co - Founder, CEO & President at OneStream

Some of the foundational deals that we have been able to land and execute on are signaling to the market though about OneTrig's position and potential within those markets. So overall, I like our positioning. And with all the product announcements that we have coming at Splash, again, we're really tailoring when you think about the faster onboarding of CPM Express, the potential of CPM Express, there's different flavors of CPM Express, and some of them we're even looking to tailor for on a regional basis. So again, focusing on competitiveness across the board and ease of use across the board is all part of our long term strategy and execution. So this is why I remain bullish and excited about really all regions for OneStream.

Operator

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Annie Lechen for any further remarks.

Annie Leschin
Annie Leschin
VP - Strategic Finance & IR at OneStream

Thanks very much, operator. Thank you, everyone, for joining us, and we look forward to seeing a number of you next week at Splash.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Analysts
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Key Takeaways

  • OneStream delivered a 24% year-over-year revenue increase to $136 million, achieved a 26% free cash flow margin, saw subscription revenue grow 31%, and added 16% more customers with international revenue up 40%.
  • Bookings for its finance AI product, Sensible AI Forecast, rose more than 50% year-over-year, with clients reporting over 95% forecast accuracy and a 90% reduction in reforecast effort.
  • The company launched CPM Express for rapid on-boarding of its unified platform, introduced an ESG reporting and planning solution, and rolled out updated pricing and packaging to simplify customer adoption.
  • Amid macro uncertainty, CFOs are prioritizing cloud modernization, dynamic scenario planning, and AI-driven financial tools, reinforcing demand for OneStream’s unified data model and finance-focused AI capabilities.
  • OneStream reiterated its full-year guidance of ~20% revenue growth, raised its profitability outlook to 0–2% non-GAAP operating margin for FY25, and set Q2 revenue at $140–142 million with break-even operating margin.
AI Generated. May Contain Errors.
Earnings Conference Call
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