OneStream, Inc. (OS)·Q2 2024 Earnings Summary

Executive Summary

• Q2 2024 revenue was $117.5M (+36% YoY) with subscription revenue $103.1M (+44% YoY); gross margin expanded to 69% (+200 bps YoY) as mix tilted further to recurring software .
• Non-GAAP operating margin improved to -7% (from -15% YoY); free cash flow was $7.7M (third consecutive positive quarter), underscoring improving operating leverage .
• Management guided Q3 total revenue to $123–$125M and FY24 to $476–$480M; non-GAAP operating margin expected at -2%–0% (Q3) and -5%–-1% (FY24) as the model scales post-IPO .
• Strategic wins and AI momentum were emphasized, including multiple seven‑figure deals and a beachhead at Groupe BPCE; billings rose 23% to $126M, RPO reached $972M (+37% YoY) and 12‑month CRPO grew 41% .

What Went Well and What Went Wrong

What Went Well

• Strength in recurring revenue: “Total GAAP revenue in Q2 increased 36% year-over-year to $118 million. Subscription revenue grew 44% year-over-year to $103 million” (software growth and mix improvement) .
• Operating leverage and cash discipline: “For the third consecutive quarter, we were free cash flow positive having generated $8 million in Q2” .
• Strategic platform consolidation and AI differentiation: “On average, we replaced 2 to 6 point solutions with every new customer… platform vision, including Sensible ML, is an increasingly important differentiator” .

What Went Wrong

• Services softness and partner mix: Professional services revenue fell 7% YoY as implementation shifted further to partners, pressuring services gross margin to -40% .
• Cost pressure in cloud infrastructure: Cost of subscription rose 48% YoY driven by third‑party server/storage costs (+$7.2M) to support higher demand .
• Near‑term license headwinds: Q3 total revenue faces term license renewal timing effects (U.S. government fiscal year), while stock‑based comp in Q3 is expected at $275–$280M (including ~$260M IPO‑related nonrecurring), creating GAAP optics .

Financial Results

Income Statement and Margins (comparisons)

Notes: Q1 2024 figures are derived from six‑month totals less Q2 results (as reported), to show sequential trajectory. Non‑GAAP definitions and reconciliations per company disclosures .

Revenue Breakdown by Category and Geography

KPIs

Cash Flow (quarter)

Guidance Changes

Note: Company did not provide prior guidance; this is initial public guidance post-IPO. Forward-looking reconciliation withheld per Reg S‑K Item 10(e) .

Earnings Call Themes & Trends

Management Commentary

• “We were cash flow positive for our third consecutive quarter” (discipline while scaling recurring revenue) .
• “Our platform… provides a single source of truth across the enterprise” via extensible dimensionality and unified workflow/presentation/data integration .
• “More than 60% of our business came from new customers this quarter… coupled with strong gross retention” (new logo engine and expansion) .
• “We replaced 6 point solutions with our platform” in a large medical device manufacturer win; similar seven‑figure wins in defense and Groupe BPCE .
• “We are seeing [Sensible ML] be a significant competitive advantage… and an upsell opportunity” (AI driving both logo capture and expansion) .

Q&A Highlights

• AI/Sensible ML adoption and pipeline: growing attach in net‑new deals and upsell in installed base; emphasis on trusted/auditable/repeatable AI products .
• International and banking momentum: France banking beachhead expected to unlock broader EMEA growth; continued hiring across Europe .
• Mid‑market strategy and CPM Express: dedicated commercial GTM, expect increased customer count with prepackaged core CPM while sustaining enterprise million‑dollar deals .
• Public sector and revenue recognition: ongoing mix shift from term licenses to SaaS ratability; Q3 seasonality tied to government fiscal calendars .
• Cost consolidation/value proposition: customers seek to rationalize multiple tools for licensing savings and productivity gains (reduced technical debt) .

Estimates Context

• S&P Global consensus EPS and revenue estimates were unavailable at time of retrieval due to provider limits; therefore estimate‑vs‑actual comparison cannot be shown. Where estimate comparisons are required, note that Wall Street consensus (S&P Global) was not accessible during this session.
• Management stated actual Q2 revenue came in at the high end of previously disclosed preliminary ranges in the IPO filings, implying execution exceeded internal pre‑close expectations .

Key Takeaways for Investors

• Recurring model scaling: Subscription +44% YoY with 69% gross margin and improved non‑GAAP operating margin to -7% signals operating leverage as mix continues to shift to SaaS .
• Durable demand drivers: Platform consolidation (2–6 tools replaced) and AI differentiation are driving seven‑figure deals and billings/RPO growth (+23% billings to $126M; RPO $972M) .
• Near‑term optics: Expect Q3 term license seasonality and a large nonrecurring SBC charge tied to IPO; focus on subscription growth (>35%) and non‑GAAP margin improving to -2%–0% .
• Cash generation turning: Third consecutive positive FCF with $7.7M in Q2; post‑IPO cash adds (~$350M net to company) strengthen balance sheet for growth investments .
• International expansion: Banking beachhead and ~31% non‑U.S. revenue position EMEA as a growth vector; continued investment in regional talent .
• Trading lens: Watch for AI attach/upsell disclosures and partner‑led implementations (services revenue volatility) as catalysts; monitor Q3 license timing and subscription growth vs guidance for narrative reinforcement .

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Additional references read in full for Q2 2024:

• 8‑K 2.02 and Exhibit 99.1 press release: OneStream Announces Second Quarter 2024 Financial Results .
• Press release (PR Newswire) duplicating financials/guidance and full reconciliation tables .
• Earnings call transcript Q2 2024: full prepared remarks and Q&A –.
• 10‑Q for quarter ended June 30, 2024: detailed financials, MD&A and cash flow .