OS Q1 2025: Upgrades Margin Outlook, Reaffirms 20% Revenue Growth
- Sustained Demand Across Regions: The executives highlighted strong customer interest in modernizing legacy financial systems in both Europe and Asia Pacific, affirming international resilience amid market turbulence.
- Stable Competitive Landscape: The response emphasized that there is no significant change in the competitive mix, suggesting that OneStream’s established positioning continues to be viewed favorably by its customers.
- Tailored Regional Offerings: The company is customizing its CPM Express solutions to meet regional needs, which could bolster adoption and competitiveness in diverse markets.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +3% (from $132,475K in Q4 2024 to $136,309K in Q1 2025) | Incremental revenue growth is driven by robust recurring subscription sales at $125,100K, which offset the decline in license revenue. This reflects a continuation of the strategic shift toward a SaaS-based model, building on the previous quarter’s performance. |
License Revenue | -47% (declined from $6,961K in Q4 2024 to $3,698K in Q1 2025) | A pronounced decline in license revenue is evident, indicating an accelerated move away from traditional license-based contracts to SaaS, consistent with prior period initiatives to focus on recurring revenue models. |
Subscription Revenue | – | Subscription revenue remained the dominant segment at $125,100K, underscoring stability and consistent customer adoption compared to previous periods, which buttressed overall revenue growth despite declines elsewhere. |
Operating Loss | – | The operating loss of $39,873K reflects higher operational expenditures and ongoing investments; while gross profit reached $92,731K, the increased cost pressure and investment cycle have continued from previous periods, affecting profitability. |
Net Loss | – | The net loss of $32,651K, with OneStream’s attributable net loss at $24,016K, indicates that despite revenue gains, the company’s transitional costs and growth investments continue to weigh on bottom-line performance as seen in previous results. |
Operating Cash Flow | – | A turnaround to positive operating cash flow ($36,197K) is primarily driven by significant noncash charges and favorable working capital adjustments, a contrast to past losses, reflecting improved liquidity management. |
Balance Sheet Metrics | – | Strong liquidity and balance sheet positions (Cash & Equivalents at $593,866K, Total Assets at $867,332K, Liabilities at $355,117K, and Equity at $512,215K) confirm financial resilience and provide a stable foundation amid the revenue mix transition from license to SaaS, building on previous quarters’ stability. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Revenue | Q1 2025 | no prior guidance | Expected to be between $130 million to $132 million | no prior guidance |
Non-GAAP Operating Margin | Q1 2025 | no prior guidance | Expected to be between minus 9% to minus 7% | no prior guidance |
Non-GAAP Earnings Per Share | Q1 2025 | no prior guidance | Expected to be between minus $0.04 to minus $0.02 | no prior guidance |
Equity-Based Compensation | Q1 2025 | no prior guidance | Expected to be between $45 million to $50 million | no prior guidance |
Total Revenue | FY 2025 | no prior guidance | Expected to be between $583 million to $587 million | no prior guidance |
Non-GAAP Operating Margin | FY 2025 | no prior guidance | Expected to be between minus 1% to plus 1% | no prior guidance |
Non-GAAP Earnings Per Share | FY 2025 | no prior guidance | Expected to be between $0.01 to $0.09 | no prior guidance |
Equity-Based Compensation | FY 2025 | no prior guidance | Expected to be approximately $125 million to $135 million | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Total Revenue | Q1 2025 | $130 million to $132 million | $136,309 | Beat |
Equity-Based Compensation | Q1 2025 | $45 million to $50 million | $37,909 | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Legacy Systems Modernization | Q2 2024 discussed modernizing legacy systems through digital transformation, replacing multiple outdated systems and enabling CFOs to drive strategic insights. Q3 and Q4 2024 had no mention of this topic. | Q1 2025 reintroduced legacy systems modernization in the context of a shifting macro environment (changing tariffs, trade policies, currency variability) and highlighted its importance in federal government modernization. | Renewed emphasis after a period of absence. |
International and Regional Growth | Q2 2024 noted international revenue contributing about 31% with a strong European focus; Q3 2024 maintained roughly 30% contribution; Q4 2024 detailed robust revenue growth figures along with FX impacts. | Q1 2025 reported 40% YoY international revenue growth, underscored strategic foundational deals and introduced tailored product strategies for regional markets. | Consistently strong growth with enhanced strategic investments and regional focus. |
CPM Express and Tailored Regional Offerings | Q2 2024 and Q3 2024 introduced CPM Express as a simplified, prepackaged version aimed at mid-market customers, with early market testing and mention of product efficiency; Q4 2024 discussed CPM Express in terms of faster implementation and hinted at tailored regional needs via ESG-related requirements. | Q1 2025 officially released CPM Express and explicitly discussed tailoring it for regional markets, further integrating it with AI enhancements. | Maturation and strategic tailoring of the core product offering. |
SaaS Business Model Transformation and ARR Growth | Q2 2024 emphasized the transition from term-based licenses to a subscription model with predictable revenue; Q3 2024 noted significant SaaS conversions and ARR growth (over 30% YoY increase); Q4 2024 focused on a near-complete transformation to SaaS, reporting strong ARR milestones. | Q1 2025 continued the shift to a SaaS business model, highlighting ongoing customer conversions and material ARR growth driven in part by the adoption of the Sensible product. | Consistent focus with continued positive impact on recurring revenue expansion. |
AI, R&D, and Product Innovation | Q2 2024 discussed Sensible ML as a purpose-built Finance AI tool along with an expanding AI portfolio and several product innovations (including ESG reporting, Power BI connectors, and advanced narrative capabilities); Q3 2024 expanded on finance AI integration, anomaly detection, and innovative solutions via the Solutions Exchange; Q4 2024 detailed Finance AI, Sensible ML, and product innovation with new ESG features and increased R&D spending. | Q1 2025 showcased strong growth in SensibleAI Forecast bookings (over 50% YoY), the launch of an ESG reporting solution, and ongoing R&D investments to reduce COGS and further integrate Finance AI across the platform. | Enhanced integration and market adoption of AI-driven innovations, with broader product enhancements. |
Margin Pressure and Cost Structure Concerns | Q2 2024 highlighted margin improvements (69% gross margin, operating loss narrowed by 800 bps) amid increased investments; Q3 2024 noted slight margin pressures with increased R&D and operating expense growth; Q4 2024 described margin pressure related to migration costs and infrastructure demands while maintaining a high retention rate. | Q1 2025 provided improved margin guidance citing slower-than-expected hiring and targeted investments to reduce COGS, while expecting narrow non-GAAP operating margins for the coming quarter and full year. | Managed cost structure with cautious optimism and slight margin improvements. |
Macroeconomic and Geopolitical Uncertainties (including FX Headwinds) | Q2 2024 briefly mentioned an "improving but still challenging macro environment"; Q3 2024 noted persistent uncertainties without specific FX discussion; Q4 2024 detailed macro uncertainties and significant FX headwinds due to a 6% strengthening of the U.S. dollar impacting revenue metrics. | Q1 2025 continued to acknowledge macro uncertainties driven by changing tariffs and trade policies but introduced the idea that if current FX trends persist, they could become a tailwind for revenue, signaling a potential shift in FX impact. | Steady uncertainty with emerging potential for FX conditions to improve. |
Government Sector Opportunities | Q2 2024 mentioned the shift from on-prem to SaaS deals in the public sector; Q3 2024 emphasized a sizable opportunity and early wins in marquee agencies across defense and public sectors; Q4 2024 focused on certifications (FedRAMP High and DoD Impact Level 5) and highlighted public sector wins. | Q1 2025 reiterated OneStream’s role in modernizing government financial systems, citing federal efficiency and referencing ongoing federal spending renewals, alongside positioning the company as an efficiency play through its FedRAMP High certification. | Sustained and optimistic focus on government opportunities with strong long-term prospects despite short-term restructuring. |
Partner Ecosystem Expansion | Q2 2024 noted revenue leverage through an expanding partner ecosystem; Q3 2024 detailed increased partner activity, creation of over 100 partner-developed solutions on the exchange, and strategic work with Global System Integrators. Q4 2024 did not mention this topic specifically. | Q1 2025 highlighted robust partner ecosystem expansion, emphasizing strategic collaborations—including the acquisition of partner-generated solutions and deepening ties with GSIs—as integral to driving market innovation and growth. | Growing strategic importance and enhanced collaboration within the partner ecosystem. |
Competitive Landscape Dynamics | Q2, Q3, and Q4 2024 did not include notable discussion on competitive dynamics. | Q1 2025 included a brief discussion on competitive dynamics, particularly noting that foundational deals in international markets reinforce OneStream’s strong positioning. | Emerging topic with increased focus in Q1 2025 after previous periods offered little detail. |
-
Margin Outlook
Q: Drivers behind margin upgrade?
A: Management cited lower hiring growth and improved operational efficiency—investing in product innovations to reduce COGS and lift margins—thus justifying the upgraded profitability outlook amid uncertainty. -
Revenue Guidance
Q: Growth assumptions in revenue?
A: They reiterated a 20% revenue growth guidance based on a strong sales pipeline and disciplined execution, even as caution remains due to macro factors. -
AI Forecast
Q: When material will AI Forecast impact be?
A: Management highlighted that SensibleAI Forecast is demonstrating improved accuracy and significant time savings, with expanding use cases expected to add materially to ARR over time. -
Bookings Mix
Q: Legacy vs. non-core bookings mix?
A: The team mentioned a strong legacy revenue base while rapidly expanding into non-core areas like AI and CPM Express, supported by more than 60% new customer contributions. -
Sales Pipeline
Q: Cause of pipeline recovery?
A: Improved sales discipline and deal execution clarity corrected earlier delays, leading to a recovered and robust pipeline momentum following Q4 pushouts. -
Pricing Strategy
Q: What are the pricing changes?
A: They are shifting to a user- and usage-oriented pricing model that simplifies contracts and better aligns with the value of new innovations. -
Macro Playbook
Q: Adjustments for macro conditions?
A: Management stressed consistent, disciplined execution focused on efficient growth regardless of economic headwinds, sticking to their long-term strategic fundamentals. -
Customer Growth
Q: Cadence of new customer growth?
A: Multiple vectors—including heightened AI demand and expanded commercial offerings—are expected to sustain a steady pace in adding net new customers, bolstered by strong market interest. -
Federal Order
Q: Impact from federal modernization order?
A: They are optimistic about government modernization; with their FedRAMP High certification, they are well positioned, even though specifics of the order remain unclear. -
Europe Outlook
Q: How is European demand performing?
A: Demand in Europe remains stable, driven by strategic foundational deals and regional customization, with no significant shifts in the competitive mix observed. -
CPM Express
Q: How is CPM Express performing?
A: Early customer feedback on CPM Express has been very positive, delivering rapid time-to-value for emerging customers and paving the way for broader market adoption. -
ESG Feedback
Q: What is the feedback on ESG solution?
A: Initial traction for the integrated ESG solution is positive as it enhances core capabilities and meets new statutory compliance needs. -
Solution Exchange
Q: Role of the Solution Exchange?
A: It reinforces the notion of an infinitely extensible platform, enabling rapid innovation and a continuously evolving suite of solutions for diverse customer needs. -
Partner Ecosystem
Q: How active are partner initiatives?
A: Engagement is robust with selected partners advancing CPM Express and AI deployments, adding significant value to the overall ecosystem. -
Federal Spending
Q: How is federal spending trending?
A: Short-term government downsizing and restructuring persist, but management remains optimistic about efficiency plays in modernization, bolstered by their unique cloud capabilities.