Executive Summary / Key Takeaways

• OneStream is modernizing the Office of the CFO with its unified, AI-enabled, and extensible Digital Finance Cloud platform, positioning it as a critical solution amidst increasing macroeconomic uncertainty and the expanding scope of the CFO role.
• The company demonstrated solid performance in Q1 2025 with total revenue growth of 24% year-over-year, driven by a 31% increase in subscription revenue, reflecting strong customer acquisition and expansion despite a 40% decline in license revenue due to the ongoing SaaS transition.
• Strategic investments in Finance AI, particularly SensibleAI Forecast, are yielding significant results, with bookings growing over 50% year-over-year in Q1 2025 and customers reporting substantial improvements in forecast accuracy and efficiency, highlighting a key competitive differentiator.
• OneStream is expanding its market reach through initiatives like CPM Express for the commercial sector (contributing to >50% bookings growth in Q1 2025) and achieving FedRAMP High authorization for the public sector, leveraging a robust partner ecosystem to drive adoption and implementation.
• While macroeconomic headwinds and the SaaS transition present near-term challenges, management reiterated its full-year 2025 revenue growth guidance of 20% and slightly raised its profitability outlook, supported by a strong pipeline and positive leading indicators.

The Mandate for Modern Finance

In an era defined by rapid shifts in global markets, geopolitical tensions, and evolving regulatory landscapes, the demands placed upon the Office of the CFO have never been more complex. Beyond traditional financial reporting and consolidation, CFOs are increasingly tasked with providing dynamic, predictive insights to steer business strategy and execution. This expanding mandate necessitates a fundamental modernization of financial systems, moving away from disparate legacy applications towards unified, agile, and intelligent platforms. OneStream (NASDAQ:OS) has emerged as a key player in this transformation, offering its Digital Finance Cloud as a single source of truth designed to unify core financial and broader operational data.

The company's journey began with the formation of OneStream Software LLC in 2012, evolving to OneStream, Inc. through an IPO and reorganization in July 2024. A pivotal strategic shift occurred in Q3 2020 with the introduction of a SaaS-based model, which now accounts for the majority of total revenue and over 90% of new customers. This transition, while impacting the mix of revenue recognized in any given period, is foundational to building a predictable, recurring revenue stream and maximizing customer lifetime value.

OneStream operates within a highly competitive enterprise performance management (EPM) market. Competition is intense, coming from established legacy players like Oracle (ORCL) and SAP (SAP), as well as point solution providers such as Anaplan, BlackLine (BLNK), Workday (WDAY), and Wolters Kluwer. These competitors often possess significant advantages, including greater name recognition, larger customer bases, and more extensive resources. For instance, Oracle's broad ecosystem and Workday's integrated HCM/Finance offerings present formidable challenges, particularly in large enterprise and specific vertical markets. BlackLine maintains a strong position in financial close and reconciliation, while Anaplan is known for its connected planning capabilities. Despite this competitive intensity, OneStream has carved out a distinct position through its differentiated technology and strategic focus.

At the core of OneStream's offering is its unified, AI-enabled, and extensible platform. Unlike many competitors that offer modular, disconnected applications, OneStream's architecture allows for the unification of financial close, consolidation, reporting, planning, and analytics within a single environment. This unified data model provides a single source of truth, enabling greater accuracy and efficiency. The platform's extensibility is a critical differentiator, allowing customers and partners to build and deploy additional solutions and applications through the OneStream Solution Exchange without adding technical debt. This contrasts with the complexity and higher integration costs often associated with stitching together multiple point solutions or modules from competitors.

The company's investment in AI is a central pillar of its technological differentiation. The acquisition of DataSense in May 2024 was explicitly aimed at accelerating AI/ML capabilities. OneStream's SensibleAI portfolio, particularly SensibleAI Forecast (formerly Sensible Machine Learning), leverages quantitative AI and is expanding to include generative and agentic AI capabilities. This technology offers tangible benefits: customers using SensibleAI Forecast have reported average forecast accuracy improvements exceeding 20% and reductions in forecast cycle time by over 80%. One customer achieved over 90% forecast accuracy and reduced effort by over 75%. These quantifiable improvements in speed and accuracy are critical for CFOs needing to react quickly to dynamic market conditions and represent a significant competitive advantage over rivals with less mature or integrated AI offerings. The company continues to invest heavily in R&D, which, while increasing operating expenses, is crucial for maintaining this technological edge and driving future growth.

Performance and Strategic Momentum

OneStream's recent financial performance reflects the impact of its strategic focus and the broader market environment. In the first quarter of fiscal year 2025, total revenue grew 24% year-over-year to $136.3 million. This growth was primarily fueled by a robust 31% increase in subscription revenue to $125.1 million, demonstrating continued success in acquiring new customers and expanding existing relationships. The ongoing strategic shift to a SaaS-based model resulted in a 40% decrease in license revenue to $3.7 million, a trend expected to continue as the company moves towards a 100% SaaS business. Professional services and other revenue decreased by 11% to $7.5 million, consistent with the strategy to increasingly leverage the partner ecosystem for implementation services.

Gross profit increased by 22% year-over-year to $92.7 million in Q1 2025. However, the total gross margin slightly decreased to 68%, primarily due to the impact of post-IPO equity-based compensation expense and changes in sales mix. Software gross margin also saw a slight decrease to 76%, influenced by the lower license revenue mix. Operating expenses saw significant increases across the board, with Sales and Marketing rising 40% to $67.6 million, Research and Development increasing 107% to $35.0 million, and General and Administrative growing 83% to $30.0 million. These increases were largely driven by higher headcount and substantial post-IPO equity-based compensation expense.

Despite the increased operating expenses, the company generated strong cash flow from operations, with net cash provided by operating activities reaching $36.2 million and free cash flow totaling $35.8 million in Q1 2025, representing a healthy 26% free cash flow margin.

Liquidity remains strong, with $593.9 million in cash and cash equivalents and an undrawn $150 million revolving credit facility as of March 31, 2025. A significant portion of liquidity is derived from deferred revenue, which stood at $259.8 million, with $255.3 million expected to be recognized within the next 12 months. Management believes current liquidity is sufficient to meet projected operating requirements for at least the next 12 months, although future growth and potential acquisitions may necessitate additional financing. The company's organizational structure, including the Tax Receivable Agreement (TRA), introduces complexity and potential future obligations, with an estimated unrecorded TRA liability of $140.4 million as of March 31, 2025, that could become payable upon certain events, potentially impacting future liquidity.

Strategic initiatives continue to drive momentum. The customer base grew 16% year-over-year to 1,646 customers as of March 31, 2025. International expansion is a key focus, with international revenue growing 40% year-over-year in Q1 2025 and representing 35% of total revenue. The commercial sector is also seeing strong momentum, with bookings growth exceeding 50% year-over-year in Q1 2025, partly driven by the introduction of CPM Express, a pre-packaged solution designed for faster implementation and broader accessibility. The company's commitment to the public sector was underscored by achieving FedRAMP High authorization in January 2025, positioning it to serve agencies with the most sensitive data, despite potential short-term government spending pressures. The partner ecosystem, comprising over 300 go-to-market, implementation, and development partners, remains critical for lead generation, implementation scale, and innovation, including the recent acquisition of partner-developed solutions.

Outlook and Considerations

Looking ahead, OneStream's management provided guidance reflecting both confidence in their strategy and awareness of the current macroeconomic climate. For the full fiscal year 2025, the company reiterated its prior guidance of 20% year-over-year total revenue growth, projecting revenue between $583 million and $587 million. The profitability outlook was slightly raised, with expected non-GAAP operating margin between 0% and 2% and non-GAAP net income per share between $0.05 and $0.13. For the second quarter of 2025, revenue is guided between $140 million and $142 million, with non-GAAP operating margin between 0% and 2% and non-GAAP net income per share between $0.00 and $0.02.

This guidance is underpinned by management's assessment of positive leading indicators, including the largest sales pipeline in the company's history at this point in the year, and the strength of their product portfolio, particularly the growing demand for Finance AI solutions. However, the outlook explicitly incorporates potential headwinds from macroeconomic uncertainty, which could lead to deal scrutiny, longer sales cycles, and potential downsells as budgets tighten. The ongoing SaaS transition will continue to impact license revenue, while FX rates, which have recently turned favorable, could provide a tailwind if the trend persists. Management also noted that slower-than-expected hiring in R&D and the timing of marketing expenses contributed to the slightly improved profitability outlook.

Key risks to monitor include the impact of prolonged macroeconomic uncertainty on customer spending, the ability to effectively compete against well-resourced rivals, the successful execution of the SaaS transition and adoption of new products, the ability to attract and retain talent in a competitive market, and potential challenges related to the company's organizational structure and TRA obligations. The complexity of implementing the platform, particularly for large enterprises, and reliance on third-party cloud infrastructure also present operational risks.

Conclusion

OneStream is executing a clear strategy to become the operating system for modern Finance, leveraging a unified, AI-enabled, and extensible platform to address the evolving needs of CFOs. The company's recent performance demonstrates solid growth, particularly in its core subscription business and key strategic areas like Finance AI and the commercial sector. While macroeconomic headwinds and the ongoing SaaS transition introduce near-term volatility and impact the revenue mix, the company's strong customer retention, expanding product portfolio, and growing partner ecosystem provide a durable foundation for future growth. The reiterated revenue guidance and slightly raised profitability outlook signal management's confidence in their ability to navigate the current environment and capitalize on the significant long-term opportunity in modernizing enterprise finance. Investors should focus on the company's continued execution on its strategic initiatives, particularly the adoption and impact of its AI offerings and the expansion of its market reach, as key indicators of its ability to sustain growth and enhance profitability in a competitive landscape.