OneStream, Inc. Q4 FY2024 earnings call

Key Highlights - 2024 was a milestone year with 29% year-over-year revenue growth in the fourth quarter and strong cash flow. - Introduced 12 new innovations at the U.S. Splash User Conference in May and three more at the European Splash User Conference in September. - Rolled out solution-based packaging aligned with market buying preferences. - Quadrupled bookings and number of customers using Finance AI solution. - Recognized as a leader in multiple industry assessments like Gartner’s Magic Quadrant for Financial Planning Software. - Completed IPO and secondary offering in the second half of 2024. - CPM Express, a prepackaged core CPM capabilities solution, was launched for faster implementation and time to value. - Achieved FedRAMP High authorization, enabling work with all levels of state, local, and federal agencies. - Had significant customer wins in various sectors including banking, consumer products, and public sector education.

In 2024, OneStream achieved significant financial growth. Total revenue grew 31% year-over-year to $489 million, with subscription revenue up 41% to $428 million. International revenue reached $155 million, a 38% increase. For the fourth quarter of 2024, total revenue was $132 million, a 29% year-over-year growth. Subscription revenue in Q4 was $119 million, up 35% year-over-year. International revenue in Q4 grew 49% year-over-year to $46 million. Billings in Q4 reached a record $167 million, up 18% year-over-year. RPO (remaining performance obligation) increased 23% year-over-year to $1.1 billion. Subscription revenue is expected to grow faster than total revenue going forward.

Fiscal Year 2025 Guidance - Total revenue is expected to be $583 million to $587 million. - Non-GAAP operating margin is expected to be minus 1% to plus 1%. - Non-GAAP earnings per share is expected to be between $0.01 to $0.09. - Equity-based compensation will be approximately $125 million to $135 million. ### Q1 2025 Guidance - Total revenue is expected to be $130 million to $132 million. - Non-GAAP operating margin is expected to be minus 9% to minus 7%. - Non-GAAP earnings per share is expected to be between minus $0.04 to minus $0.02. - Equity-based compensation of approximately $45 million to $50 million.

• Macro uncertainty around tariffs, regulations, and reporting requirements impacted large multinational companies and public sector, causing deal scrutiny and some deals to be pushed into the new year. - Significant change in foreign exchange rates negatively impacted financial metrics in the fourth quarter. - Uncertainty in government spending poses a headwind to the public sector business.

Q: John DiFucci from Guggenheim Securities asked about demand for modern consolidation and planning solutions despite a challenged new normal.

A: Tom Shea responded by emphasizing the core solution's importance, the growth model leveraging strong customer retention, and the AI portfolio as a key focus for customers.

Q: Adam Hotchkiss from Goldman Sachs inquired about differentiating FX impact from other headwinds like deal closings.

A: Bill Koefoed explained that about 32% of business is international, and FX strengthened by ~6% from September 30 to December 31, negatively impacting metrics by ~2%, but also mentioned other headwinds like deal scrutiny.

Q: Chris Quintero from Morgan Stanley asked about packaging changes and NRR impact.

A: Tom Shea stated that pricing and packaging changes are part of a multi-solution strategy to bring new innovations to market efficiently.

Q: Mark Murphy from JPMorgan asked about the dollar value of deals pushed out of Q4 and why they're closing.

A: Tom Shea and Bill Koefoed discussed macroeconomic uncertainties and cautiously optimistic market conditions leading to deals closing in January.

Q: Koji Ikeda from Bank of America asked about ARR growth.

A: Bill Koefoed mentioned subscription revenue is expected to grow faster than total revenue but no specific guidance on the number was offered.

Q: Ian Black from Needham & Company asked about the federal government opportunity.

A: Tom Shea stated FedRAMP High authorization is a big opportunity and they remain invested in the government market despite headwinds.

Q: Ivan Yi from Wolfe Research asked about calibrating the buying environment and conservatism in guidance.

A: Tom Shea noted macro uncertainties causing a lack of urgency in some large multinationals and government, leading to prudent guidance while focusing on execution.

Q: Terry Tillman from Truist Securities asked about go-to-market, especially the Microsoft relationship.

A: Tom Shea discussed the important partnership with Microsoft and leveraging it for broader solutions, as well as investing in core markets and artisan partners.

Q: Steve Enders from Citi asked about margin outlook.

A: Bill Koefoed mentioned incremental investments in migrating to Version 8, partnership with Microsoft, and data storage implications on margins.

Q: Brian Peterson from Raymond James asked about customer base conversion.

A: Bill Koefoed provided details on customer contract types, with 5% on perpetual, 15% on term-based licenses, and 80% on SaaS, with plans to reach 100% SaaS.

Q: Brent Bracelin from Piper Sandler asked about public sector revenue.

A: Bill Koefoed highlighted FedRAMP High authorization as unlocking opportunity in the federal government despite uncertainty.

Q: Mark Schappel from Loop Capital Markets asked about attach rate for Sensible ML Solutions.

A: Tom Shea expressed excitement about the potential attach rate, emphasizing customer retention and innovation driving the need for advanced Finance processes.

Q: Jared Jungjohann from TD Cowen asked about legacy displacement and Greenfield activity.

A: Tom Shea stated they are seeing opportunities in legacy replacement and Greenfield with solutions like CPM Express for faster on-ramps.