OneStream, Inc. (OS) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with a 24% revenue growth and a record free cash flow margin of 26%. Product developments like CPM Express and SensibleAI show promising market reception and potential for scaling. Despite some macroeconomic uncertainties and vague responses on specific financial impacts, overall guidance remains optimistic with reiterated revenue growth. Positive customer feedback and expanding international business further support a positive sentiment. Given these factors, the stock is likely to experience a moderate positive movement in the near term.
Key Financial Performance
Total Revenue $148 million, a 26% year-over-year increase, driven by strong subscription revenue growth.
Subscription Revenue $134 million, a 30% year-over-year increase, attributed to SaaS conversions and customer adoption of version 9 of the platform.
License Revenue Declined by $900,000 compared to last year, primarily due to the success in driving SaaS conversions.
Professional Services and Other Revenue Increased by $500,000 compared to last year.
Free Cash Flow (Q2) $29 million, up 281% year-over-year, reflecting strong revenue growth and scaling of operating expenses.
Free Cash Flow (First Half of 2025) $65 million, up 100% year-over-year.
International Revenue Growth 34% year-over-year, now contributing 33% to total revenue, driven by strong performance in international markets.
Customer Growth Nearly 1,700 customers, up 14% year-over-year, with more than 60% of bookings from new customers.
Billings $151 million, a 20% year-over-year increase, and 23% growth on a trailing 12-month basis.
12-Month cRPO Up 29% year-over-year, indicating strong bookings momentum.
Total RPO $1.2 billion, a 21% year-over-year increase.
Non-GAAP Gross Margin 70%, up from 69% last year, due to higher software revenue as a percentage of total revenue.
Non-GAAP Software Gross Margin 76%, flat compared to last year.
Non-GAAP Operating Income $1.6 million, an increase of $10.3 million compared to the prior year, driven by strong revenue growth and scaling of operating expenses.
Non-GAAP Net Income $9 million, compared to a loss of $5 million in the prior year.
Non-GAAP Earnings Per Share $0.05, reflecting improved profitability.
Equity-Based Compensation Expense $31 million for the second quarter.
Cash and Cash Equivalents $652 million at the end of the quarter.
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Operating Highlights
SensibleAI Forecast: Enhanced AI-driven forecasting tool introduced at Splash conference, achieving up to 95% forecast accuracy.
SensibleAI Studio: Moved to general availability in June, offering algorithms for anomaly detection and trending analysis. Customers can access these routines through embedded solutions, Genesis blocks, or REST APIs.
SensibleAI Agents: Introduced in private preview, includes finance analyst, operations analyst, search analyst, and deep analysis agents to automate tasks and deliver insights.
Genesis Architecture: Plug-and-play architecture now generally available, simplifying and personalizing customer experience with reusable functionality.
CPM Express: Early momentum with this offering, enabling faster implementation (8-12 weeks) and targeting legacy system replacements.
European and North American market growth: Strong growth in European and North American commercial business despite challenges in U.S. federal public sector.
Public sector expansion: Landmark win with a major U.S. government institution and FedRAMP High certification achieved, opening doors for future public sector opportunities.
International revenue growth: International revenue grew 34% year-over-year, contributing 33% to total revenue.
Revenue growth: Total revenue grew 26% year-over-year to $148 million in Q2 2025. Subscription revenue increased 30% year-over-year to $134 million.
Free cash flow: Free cash flow for Q2 was $29 million, up 281% year-over-year.
Customer base: Customer base grew to nearly 1,700, up 14% year-over-year.
AI-driven strategy: Focus on integrating advanced AI solutions into core finance functions to enhance efficiency and decision-making.
Agile Financial Analytics (AFA): Introduced to harmonize transactional and operational drivers with financial intelligence for integrated planning.
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Risk or Challenges
U.S. Federal Public Sector Uncertainty: The company is navigating near-term uncertainty in the U.S. federal public sector market, which is expected to impact Q3 revenue growth. This is the largest quarter for the U.S. federal government business, and spending and restructuring challenges in this sector are creating headwinds.
Public Sector Spending and Restructuring: The public sector, particularly the U.S. federal government, is experiencing spending and restructuring challenges, which could affect the company's ability to secure contracts and revenue in this segment.
SaaS Conversions Impact on License Revenue: The company's success in driving SaaS conversions has led to a decline in license revenue, which could impact overall revenue growth if not offset by other revenue streams.
Competitive Pressures in AI and Finance Solutions: The company faces competitive pressures in the AI and finance solutions market, as it seeks to differentiate its offerings and maintain its market leadership.
Economic and Market Uncertainty: The company is navigating economic and market uncertainties, particularly in certain regions, which could impact its growth and financial performance.
Dependency on New Customer Acquisition: Over 60% of bookings come from new customers, indicating a dependency on acquiring new clients to sustain growth. This could pose a risk if customer acquisition slows.
Stock-Based Compensation Expense: The company has significant stock-based compensation expenses, which could impact profitability and shareholder value.
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Guidance & Outlook
Q3 2025 Revenue Guidance: Total revenue is expected to be between $147 million to $149 million. Subscription revenue is expected to grow at least 25% year-over-year. Billings are expected to be between $160 million to $162 million. Free cash flow is expected to be breakeven to slightly negative, in line with historical seasonality trends. Non-GAAP operating margin is expected to be between 0% to 2%. Non-GAAP net income per share is expected to be between $0.01 to $0.03. Stock-based compensation expense is expected to be approximately $30 million.
Full Year 2025 Revenue Guidance: Total revenue is expected to be between $586 million to $590 million. Non-GAAP operating margin is expected to be between 1% to 3%. Non-GAAP net income per share is expected to be between $0.07 to $0.15. Stock-based compensation expense is expected to be between $120 million to $125 million.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you talk about the go-to-market steps to drive expansion outside the office of the CFO and any recent success stories?
A:Thomas Shea explained the strategy of their platform, focusing on three core pillars: core financial capabilities, operational planning, and productization. He highlighted their focus on fast-changing operational data and targeted use cases, such as their ESG product. He emphasized their plug-and-play architecture and AI platform integration to drive scale and new value to customers.
Q:What is your visibility on 3Q guidance for the federal government, considering fiscal year-end uncertainties?
A:William A. Koefoed stated that the guidance is based on current visibility, balancing near-term prudence with optimism about their best-ever pipeline for the second half of the year. He mentioned three factors: the federal government’s IT modernization, migration to SaaS, and prioritization of projects. He acknowledged uncertainties but expressed long-term optimism due to their FedRAMP High status.
Q:What are you seeing broadly across the macro environment, given deal delays and ERP migration slowdowns?
A:William A. Koefoed noted strong Q2 performance and a robust pipeline for the second half of the year. He acknowledged macroeconomic uncertainties but expressed confidence in their ability to execute the pipeline.
Q:Can you discuss CPM Express, its market reception, and its financial contribution?
A:Thomas Shea described CPM Express as part of their productization strategy, emphasizing its plug-and-play architecture for faster value delivery. He noted its validation in Q1 and increasing interest and sales cycles. He highlighted its ability to scale from small to large enterprises without compromises.
Q:How does the third-quarter guidance consider SaaS migration and CPM Express pricing?
A:William A. Koefoed confirmed that SaaS migration for federal contracts was considered in the guidance. He explained that CPM Express offers the same product with faster implementation, targeting customers who value preconfigured solutions and best practices.
Q:What are the early learnings and adjustments in AI monetization since the launch of SensibleAI solutions?
A:Thomas Shea outlined their hybrid pricing strategy, combining usage-based and platform-tiered pricing. He mentioned ongoing validation of pricing for SensibleAI Agents and emphasized their goal of low-friction, predictable pricing for customers.
Q:What is OneStream’s competitive moat in CPM against potential AI model disruptions?
A:Thomas Shea highlighted the platform’s financial intelligence and audit capabilities, which are not easily replicable by AI. He emphasized the trust and transparency required by CFOs and the role of AI in enhancing development efficiency rather than replacing applications.
Q:How is OneStream addressing CFO trust in AI models and accelerating adoption?
A:Thomas Shea emphasized productization and predictable outcomes for AI solutions. He noted the importance of trust and transparency, ensuring deterministic results that CFOs can understand and rely on.
Q:How did the North American enterprise business perform relative to expectations?
A:William A. Koefoed reported strong performance, with significant wins in North America and Europe. He noted that over 60% of new business came from new customers and highlighted a 10% increase in sales per customer year-over-year.
Q:What is the long-term opportunity for OneStream’s agentic AI roadmap?
A:Thomas Shea emphasized the value of highly curated data in enabling sophisticated and useful agents. He highlighted the integration of core operational data and AI as a key differentiator for delivering value to enterprises.
Q:How is the federal business pipeline evolving, and what are the expectations for year-end and beyond?
A:William A. Koefoed noted a strong overall pipeline but acknowledged uncertainties in federal project prioritization. He highlighted their FedRAMP High status and strong relationships with agencies. Thomas Shea added that they are also focusing on state, local, and higher education markets.
Q:What is the FX impact on revenue and billings, and what is included in the guidance?
A:William A. Koefoed explained that the strengthening dollar in Q4 of last year impacted ARR and 2025 revenue. He noted that the recent weakening of the dollar could provide a tailwind for 2026 revenue if current rates persist.
Q:What feedback have you received on the new agentic offerings, and which agents are seeing the most interest?
A:Thomas Shea reported positive feedback, particularly for finance and operations analysts in structured data and search agents for unstructured data. He highlighted their ability to provide rapid insights and harmonized value across use cases.
Q:Review of Unclear Management Responses
A:Management appeared to avoid directly addressing the specific financial contribution of CPM Express and the exact impact of SaaS migration on guidance. Additionally, while they acknowledged uncertainties in the federal pipeline, they did not provide detailed insights into the timing or scale of potential impacts.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AFA driver
AFA planning
AI Number
AI booking
AI innovation
Agents
CEO President
Co Research
Genesis
Inc Research
LLC Research
OneStream Conference
OneStream core
OneStream finance
OneStream solution
Research Division
Scott
SensibleAI Studio
account reconciliation
algorithm
analysis
anomaly detection
collection
core finance
dynamic
finance process
finance team
legacy CPM
platform finance
play architecture
precision
product AI
routine
sector
value OneStream
value finance
OS Transcript
OneStream, Inc. (OS) Q3 2025 Earnings Call Transcript
Positive11-7
The earnings call highlights strong financial performance, optimistic guidance, and promising product developments, particularly in AI. The company is expanding in key markets, has a robust pipeline, and anticipates strong growth in revenue and billings. Despite some uncertainties, such as government shutdown risks, the overall sentiment is positive. The company's strategy to enhance shareholder returns and the positive feedback on new offerings further support a positive outlook.
OneStream, Inc. (OS) Presents At Goldman Sachs Communacopia + Technology Conference 2025 Transcript
Neutral9-10
OneStream, Inc. (OS) Presents At Citi's 2025 Global Technology, Media And Telecommunications Conference (Transcript)
Neutral9-4
OneStream, Inc. (OS) Q2 2025 Earnings Call Transcript
Positive8-8
The earnings call reveals strong financial performance with a 24% revenue growth and a record free cash flow margin of 26%. Product developments like CPM Express and SensibleAI show promising market reception and potential for scaling. Despite some macroeconomic uncertainties and vague responses on specific financial impacts, overall guidance remains optimistic with reiterated revenue growth. Positive customer feedback and expanding international business further support a positive sentiment. Given these factors, the stock is likely to experience a moderate positive movement in the near term.
OS Slides
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