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OI

OneStream, Inc. (OS)·Q3 2024 Earnings Summary

Executive Summary

  • Strong Q3 with total revenue $129.1M (+21% YoY) and subscription revenue $110.7M (+39% YoY); non-GAAP operating margin 4% and positive free cash flow of $1.3M, while GAAP results were impacted by ~$260M IPO-related equity comp .
  • Billings hit a record $149M (+25% YoY), 12‑month CRPO grew 41% YoY, total RPO reached $997M (+35% YoY), and customers grew to 1,534 (+18% YoY) — underscoring durable demand and visibility .
  • FY24 guidance raised: revenue to $484–$486M (from $476–$480M), non‑GAAP operating margin to −2% to −1% (from −5% to −1%), and non‑GAAP EPS to $0.06–$0.08 (from −$0.05 to $0.01); Q4 revenue guided to $127–$129M, margin 0–2%, EPS $0.01–$0.03 .
  • Stock catalysts: raised FY guide, accelerated SaaS conversions, partner-led implementations reducing services mix, and AI-driven product momentum (Sensible ML, anomaly detection) .

What Went Well and What Went Wrong

What Went Well

  • Subscription growth and cash generation: “We grew subscription revenue 39% year‑over‑year in the third quarter and were once again free cash flow positive” (Tom Shea) .
  • Pipeline and visibility strengthened: Billings $149M (+25% YoY), 12‑month CRPO +41% YoY, total RPO $997M (+35% YoY) (CFO) .
  • Product/AI innovation and market positioning: Sensible ML adoption and previewed AI‑Powered Anomaly Detection; narrative reporting and navigation center expanded; leadership in IDC’s Record to Report MarketScape .

What Went Wrong

  • GAAP optics: GAAP operating loss $(255.2)M and margin (198)%, driven by ~$260M equity‑based comp associated with the IPO; YoY comparator was +$7.0M GAAP operating income and 7% margin in Q3’23 .
  • Non‑GAAP profitability compression: Non‑GAAP operating income $5.5M (4% margin) vs $8.4M (8% margin) in Q3’23 .
  • Services revenue lighter: Professional services revenue $6.7M (vs $8.1M last year), “lower than expected due to the continued success of our partners” as OS transitions implementations to them (CFO) .

Financial Results

MetricQ3 2023Q2 2024Q3 2024
Total Revenue ($USD Millions)$107.0 $117.5 $129.1
Subscription Revenue ($USD Millions)$79.4 $103.1 $110.7
License Revenue ($USD Millions)$19.5 $6.9 $11.7
Professional Services & Other ($USD Millions)$8.1 $7.5 $6.7
GAAP Operating Income ($USD Millions)$7.0 $(11.6) $(255.2)
Non-GAAP Operating Income ($USD Millions)$8.4 $(8.7) $5.5
Non-GAAP Operating Margin (%)8% (7)% 4%
Non-GAAP Gross Margin (%)72% 69% 71%
Net (Loss) Income ($USD Millions)$6.8 $(7.9) $(249.3)
Free Cash Flow ($USD Millions)$(5.3) $7.7 $1.3

Segment breakdown:

Revenue Segment ($USD Millions)Q3 2023Q2 2024Q3 2024
Subscription$79.4 $103.1 $110.7
License$19.5 $6.9 $11.7
Professional Services & Other$8.1 $7.5 $6.7

KPIs:

KPIQ3 2024
Billings ($USD Millions)$149
ARR Growth YoY (%)>30%
Total Customers (Count)1,534
12‑month CRPO YoY Growth (%)41%
Total RPO ($USD Millions)$997 (+35% YoY)
International Revenue (% of total)~30%
New vs Upsell Mix (%)~60% new / ~40% upsell

Notes:

  • GAAP EPS in Q3 2024 was $(1.06); non‑GAAP net income was $11.3M (CFO), but per‑share non‑GAAP EPS was guided, not reported for Q3 actual .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total RevenueFY2024$476M – $480M $484M – $486M Raised
Non-GAAP Operating MarginFY2024(5)% – (1)% (2)% – (1)% Raised
Non-GAAP EPSFY2024$(0.05) – $0.01 $0.06 – $0.08 Raised
Equity-Based CompensationFY2024N/A$315M – $320M New
Total RevenueQ4 2024N/A$127M – $129M New
Non-GAAP Operating MarginQ4 2024N/A0% – 2% New
Non-GAAP EPSQ4 2024N/A$0.01 – $0.03 New
Equity-Based CompensationQ4 2024N/A$50M – $55M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Current Period (Q3 2024)Trend
AI/Sensible ML adoptionEarly but growing attach; net‑new differentiator; proof‑of‑value momentum More customer showcases; anomaly detection preview; education focus; ML driving SaaS conversions Accelerating
Public sector demandQ3 seasonality; shift from on‑prem to SaaS in agencies New wins incl. Defense Logistics Agency; multimillion‑dollar deal; consolidated processes Strengthening
SaaS conversionsStrategic push; conversions underway Several term→SaaS conversions incl. 3 >$500k ARR; ML availability in SaaS spurs moves Accelerating
Competitive landscape (Hyperion/legacy)Platform advantage, replacing multiple point solutions Single platform stance vs siloed clouds; consistent win rates; future‑proof architecture Stable advantage
International/EMEA momentumBeachhead win at Groupe BPCE in France; ~31% international revenue JCDecaux win; ~30% international revenue; EMEA growth highlighted Sustained
Pricing/packaging & marketingNew CMO; brand campaign; pricing work in early days Continued investments; pipeline building; framework evolving Building

Management Commentary

  • “We grew subscription revenue 39% year‑over‑year in the third quarter and were once again free cash flow positive.” — Tom Shea, CEO .
  • “Our subscription business model continued to show impressive growth at scale… ARR increased more than 30% year‑over‑year… billings increased 25% year‑over‑year to a record $149 million.” — Bill Koefoed, CFO .
  • “We introduced … Navigation Center… expanded Applied Finance AI to include AI‑powered anomaly detection… showcased expanded Solution Exchange offerings to support tax Pillar 2.” — Tom Shea .
  • “We are raising our full year guidance for both revenue and profitability.” — Bill Koefoed .

Q&A Highlights

  • ERP migration super‑cycle: OneStream positions as the flexible layer “to model how you manage or run your business” whether single or multi‑ERP (Tom Shea) .
  • Competitive stance vs Hyperion cloud: Consistent win rates; single‑platform architecture is “not easy to replicate,” maintaining high ground (Mgmt) .
  • AI opportunity depth: Early innings but outsized; focus on trusted, auditable, repeatable applied AI; education driving adoption (Mgmt) .
  • Partner ecosystem: Increasing implementation delivery by partners; >100 partner products on Exchange; scale and trusted referrals (Tom; Bill) .
  • Free cash flow seasonality: Expect to be FCF positive in Q4; typically Q1 is highest seasonal cash flow quarter (CFO) .

Estimates Context

  • S&P Global Wall Street consensus for Q3 2024 EPS and revenue was unavailable at the time of this analysis due to data access limits; as a result, a formal beat/miss vs Street cannot be determined here. The company raised FY24 revenue and profitability guidance, which typically prompts upward estimate revisions (directional), but specific consensus changes are not included in this recap .
  • Note: Where estimates are not shown, Street consensus via S&P Global was unavailable at this time.

Key Takeaways for Investors

  • Subscription engine and visibility are robust: +39% subscription growth, record billings, and strong CRPO/RPO metrics support durable revenue trajectories .
  • FY24 guidance raised across revenue, non‑GAAP margin, and EPS — a clear positive for near‑term sentiment and likely estimate adjustments .
  • GAAP optics were heavily distorted by IPO‑related equity comp (~$260M); underlying non‑GAAP margin at 4% and non‑GAAP profit generation reflect improving efficiency .
  • Services mix intentionally shifting to partners; expect lower professional services revenue run‑rate but improved scalability and margin focus over time .
  • AI productization (Sensible ML, anomaly detection) is becoming a differentiator and catalyst for SaaS conversions; watch attach rates in Q4 and FY25 .
  • Public sector momentum (e.g., DLA) and EMEA wins (JCDecaux) broaden end‑market exposure, supporting diversification and resilience .
  • Near‑term trading lens: Q4 is the largest seasonal bookings quarter; execution on SaaS conversions, AI attach, and partner‑led implementations are key narrative drivers into year‑end .