Q4 2024 Earnings Summary
- OneStream's SaaS Annual Recurring Revenue (ARR) grew by 40% in 2024 and now represents 80% of total ARR, indicating strong subscription revenue growth and successful transition to a SaaS business model.
- OneStream maintains a 98% gross retention rate, reflecting the value and stickiness of its platform, which supports long-term growth from an expanding customer base. ,
- Introduction of new products like Sensible ML solutions, CPM Express, and offerings in Finance AI and ESG reporting are creating new on-ramps for customers and expansion opportunities, positioning OneStream for future growth. ,
- Pressure on gross margins due to higher infrastructure costs and customer data storage requirements. The migration of customers to version 8 and the massive amount of data customers are storing on the OneStream platform have gross margin implications and may impact long-term margin improvement.
- Macroeconomic and geopolitical uncertainties are causing delays in deal closures, particularly among large multinational and public sector clients. This lack of urgency in the buying environment reflects spending uncertainties, presenting legitimate headwinds for the company's growth.
- Foreign exchange headwinds are negatively impacting financial metrics. The strengthening of the U.S. dollar has reduced ARR, RPO, and Q4 billings by approximately 2%, affecting international revenue, which makes up 32% of the business.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | Increased from $129,140K in Q3 2024 to $132,475K in Q4 2024 (≈ +2.6% sequentially) | The modest revenue increase reflects a continued shift toward a SaaS-based model, with more transactions occurring via subscription which offsets the declining license revenue; this trend builds on gains from the previous quarter. |
Subscription Revenue | Constituted roughly 90% of total revenue in Q4 2024 versus 86% in Q3 2024 | Subscription revenue remains strong thanks to accelerated customer acquisition and expansion of current accounts driving recurring revenue, underscoring a strategic shift from license-based contracts established in earlier periods. |
License Revenue | Dropped by about 41% from $11,734K in Q3 2024 to $6,961K in Q4 2024 | The significant decline is due to the ongoing transition away from license revenue to a SaaS model, emphasizing the company’s commitment to recurring revenue streams; this mirrors the shift observed in previous periods, now deepening in Q4. |
Gross Profit | Increased by approximately 37% from $64,739K in Q3 2024 to $88,550K in Q4 2024 | Gross profit improvement is primarily driven by cost reductions, as evidenced by the 32% drop in Total Cost of Revenue; the enhanced cost structure builds upon previous operational efficiencies and reflects a strong focus on managing expense ratios. |
Operating Loss | Reduced by 81% from $(255,171)K in Q3 2024 to $(47,406)K in Q4 2024 | Dramatic reduction in operating losses is attributed to stringent expense control measures, including lower equity-based compensation impacts, reflecting a turnaround from the previous period’s burdened cost base. |
Total Cost of Revenue | Declined by about 32% from $64,401K in Q3 2024 to $43,925K in Q4 2024 | The sharp decrease in costs demonstrates effective cost optimization, especially in areas related to subscription fulfillment and professional services, which has contributed directly to improved gross margins when compared with Q3 trends. |
Operating Cash Flow | Increased from $2,360K in Q3 2024 to $25,138K in Q4 2024 | A significant surge in operating cash flow is due to improved working capital management and better conversion of revenue into cash, building on prior operational adjustments that reduced losses and enhanced cash-generating capabilities. |
Liquidity Position | Improved from $495,458K in Q3 2024 to $544,174K in Q4 2024 | Enhanced liquidity resulted from strong cash inflows via operational improvements and residual IPO proceeds from the previous period, reinforcing financial flexibility and a robust cash position. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Total Revenue | Q1 2025 | no prior guidance | $130 million to $132 million | no prior guidance |
Non-GAAP Operating Margin | Q1 2025 | no prior guidance | minus 9% to minus 7% | no prior guidance |
Non-GAAP Earnings Per Share | Q1 2025 | no prior guidance | minus $0.04 to minus $0.02 | no prior guidance |
Equity-Based Compensation | Q1 2025 | no prior guidance | $45 million to $50 million | no prior guidance |
Total Revenue | FY 2025 | no prior guidance | $583 million to $587 million | no prior guidance |
Non-GAAP Operating Margin | FY 2025 | no prior guidance | minus 1% to plus 1% | no prior guidance |
Non-GAAP Earnings Per Share | FY 2025 | no prior guidance | $0.01 to $0.09 | no prior guidance |
Equity-Based Compensation | FY 2025 | no prior guidance | $125 million to $135 million | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
SaaS Business Model Transition | Emphasized in Q2 as the company’s effort to convert term‐based licenses to SaaS ; further highlighted in Q3 with notable conversions and innovation (e.g. Sensible ML driving SaaS adoption) | Q4 reinforced the transition with 80% of total ARR from SaaS and detailed remaining legacy structures (5% perpetual, 15% term) | Consistent and accelerating emphasis on SaaS conversion. |
ARR Growth | Q2 noted double-digit growth per customer and larger deal sizes ; Q3 reported >30% YoY growth from subscription revenue | Q4 reported reaching $568 million ARR, with SaaS ARR growing 40% and overall 23% YoY growth | Solid, steady growth with increased focus on subscription (SaaS) ARR. |
Gross Margin Pressure and Cost Structure Challenges | Q2 mentioned improved efficiency; Q3 noted a slight margin decline (71% vs. 72%) partly due to IPO‐related and R&D expenses | Q4 detailed the impact of costs associated with customer migration (including Microsoft data challenges) and a maintained gross retention, despite margin pressures | Heightened focus on cost challenges with mixed sentiment on near-term margins. |
New Product Innovation | Q2 highlighted emerging innovations (Sensible ML, Finance AI, CPM Express) driving new deals ; Q3 introduced additional innovations and enhancements (15 new innovations, improved AI routines) | Q4 further emphasized product performance, citing over 20% improvements in forecast accuracy with Sensible ML and additional innovations in ESG and CPM Express | Continued innovation momentum with enhanced product performance and increased positive sentiment. |
Heavy R&D and AI Investments with Mixed Sentiment | Q2 and Q3 both stressed heavy R&D and AI investments as part of long‐term strategy, acknowledging near-term margin impact (notably IPO and stock-based compensation costs) | Q4 reiterated heavy investment in R&D and Finance AI (e.g. Sensible ML improvements) while noting the associated near-term margin pressures | Steady strategic investment with a consistently mixed sentiment: an acceptance of near-term costs for long-term growth. |
Government Sector Opportunities and Public Sector Revenue Recognition Challenges | Q2 discussed the significant public sector presence and the revenue recognition issues from shifting from term licenses to SaaS ; Q3 emphasized government penetration without much focus on revenue timing | Q4 provided detailed discussion on achieving FedRAMP High, notable public sector wins, and acknowledged challenges (deal delays due to macro uncertainty) affecting revenue timing | Greater emphasis on expanding government opportunities tempered by increased caution over revenue recognition. |
International Growth Dynamics and Emerging FX Headwinds | Q2 mentioned international opportunities with significant European deals and Q3 noted international revenue as roughly 30% of total revenue | Q4 reported 49% YoY international revenue growth while also introducing concerns over emerging FX headwinds (approx. 2% impact) | Strong international growth now coupled with emerging FX headwinds creates a mixed outlook. |
Revenue Timing and Sustainability Concerns | Q2 detailed the impact of shifting from term‐based to SaaS contracts on revenue recognition and sustainability ; Q3 noted faster billing which boosted performance | Q4 highlighted deal delays and pull-forward issues due to macro uncertainty but reiterated a 98% gross retention rate and robust subscription growth | Increased caution over timing delays, although underlying subscription fundamentals remain strong. |
Partner Ecosystem Expansion and Intellectual Property Development | Q2 introduced partner-led solutions (e.g. Infinity SPM) and stressed the growth of IP via AI-driven products like Sensible ML ; Q3 underscored over 100 partner-developed offerings | Q4 expanded on the partner ecosystem with new global systems integrator collaborations and highlighted continued robust IP development around new innovations | Consistently positive outlook with an expanding ecosystem that has large future strategic impact. |
Legacy System Replacement Opportunity | In Q2, the market for replacing legacy systems was presented as a $10 billion opportunity driven by tech shifts ; Q3 reflected a subtle strategic shift towards integrated financial and operational planning | Q4 reaffirmed the legacy replacement opportunity, noting active migration and streamlined on-ramps to the platform | Stable opportunity with a slight realignment towards broader integrated planning. |
Shift in Key Performance Metrics (De-emphasis on Customer Count) | Q2 explicitly discussed moving focus from sheer customer count to customer quality (e.g. customers with >$1M in ARR) | No mention of this metric in Q3 or Q4 | Reduced emphasis in later periods, suggesting integration into broader performance assessments. |
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ARR and Subscription Revenue Growth Outlook
Q: Can you discuss ARR and subscription revenue growth for 2025?
A: While we don't offer specific ARR guidance, we expect subscription revenue to grow faster than total revenue in 2025. In 2024, SaaS ARR grew 40% and now represents 80% of total ARR. We're working hard to grow subscription revenue as fast as we can. -
Margin Outlook and Investments
Q: What's affecting margins, and where are investments being made?
A: Margins are slightly lower due to investments in migrating customers to version 8, which offers performance improvements. We're also innovating on the platform, particularly with Microsoft, to handle the massive data growth from customers. This impacts gross margin, but it's crucial for long-term customer value and maintaining our 98% gross retention rate. -
Macro Environment Impact on Buying and Guidance
Q: How is geopolitical uncertainty affecting buying and guidance?
A: Multinational customers face uncertainty due to economic and geopolitical factors, leading to a lack of urgency in deal closures. We're providing prudent guidance reflecting these headwinds but remain optimistic about our strategy and product innovations. -
Federal Government Opportunity and FedRAMP High
Q: What's the outlook for federal opportunities given FedRAMP High?
A: We're bullish on the federal sector after achieving FedRAMP High authorization, a significant investment. Despite spending pressures, we believe OneStream offers efficiency benefits that can drive growth in this market. -
Delayed Deals and Tariffs Impact
Q: What is the value of deals pushed from Q4, and why did they close in January?
A: Several large deals, valued at around $15–$20 million, were delayed due to general uncertainty, not specifically tariffs. These deals required additional signatures and lacked urgency in Q4 but closed in January as customers gained clarity. -
Microsoft Partnership and Go-to-Market
Q: How is the Microsoft partnership impacting go-to-market efforts?
A: Our strong partnership with Microsoft is key, especially as we expand into AI and analytics. We've introduced a certified Power BI Connector and are collaborating on multiple technical and marketing initiatives to leverage Microsoft's ecosystem as a channel multiplier. -
Customer Base Migration Progress
Q: Can you update us on customer migration to newer versions?
A: 80% of our ARR is now on SaaS, with 5% still on perpetual licenses and 15% on term-based licenses. We continue to work towards full conversion, aiming for 100% SaaS over the next few years. -
Attach Rate of Sensible ML Solutions
Q: How is the attach rate for Sensible ML solutions trending?
A: We're excited about the potential of Sensible ML. Launched over a year ago, we've seen positive market validation in 2024. We believe every customer will eventually use this transformative product, driving higher attach rates in the long term. -
Pricing and Packaging Changes
Q: What changes are you making to pricing and packaging?
A: We've embarked on a multi-solution, multi-product strategy, introducing offerings like Sensible ML, Sales Performance Management (SPM), and ESG solutions. The pricing evolution ensures customers can buy new innovations reliably, operationalized into a single packaging structure for 2025. -
Legacy Displacement and Greenfield Opportunities
Q: Any changes in legacy displacement and greenfield deals?
A: We're not seeing changes in this core market. We continue to replace legacy products and offer value through rationalization into a single data model with low technical debt. Our CPM Express targets greenfield customers, providing faster onboarding while allowing growth within the same platform. -
Impact of FX and Other Headwinds
Q: How much are FX and other headwinds impacting near-term outlook?
A: 32% of our business is international, and recent currency movements, like the 6% strengthening of the euro, impacted us by about 2%. Besides FX, customers required additional approvals, and there was less urgency in deal closures due to general uncertainty. -
Improving Demand for OneStream Solutions
Q: Why is there improving demand for your solutions amid challenges in back-office applications?
A: Our core solutions are essential for finance teams to produce financial statements confidently. Companies realize they can't keep delaying ecosystem simplification. Our high 98% customer retention and focus on customer success underpin our growth, especially as we offer AI-driven applications that leverage the vast financial data we manage for customers.