OneStream, Inc. (OS) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Subscription Revenue Increased 27% year-over-year to $141 million. The growth was attributed to strong billings growth and international revenue momentum.
Total Revenue Grew 19% year-over-year to $154 million. This was driven by subscription revenue growth and professional services demand.
License Revenue Declined 64% year-over-year to $4 million. The decline was due to contract rationalization and success in driving SaaS conversions.
Professional Services and Other Revenue Increased 38% year-over-year to $9 million. The increase was due to demand for consulting services.
International Revenue Grew 37% year-over-year, representing 34% of total revenue. The growth was driven by strong legacy replacement momentum in Europe.
Billings Increased 20% year-over-year to $178 million. This included $4 million of accelerated billings from Q4 due to early renewals and add-ons.
Free Cash Flow For the third quarter was $5 million, exceeding expectations. For the first 9 months of the year, it was $70 million, up 107% year-over-year.
Customer Count Ended the quarter with 1,739 customers, up 13% year-over-year. Growth was driven by exceptional new business in EMEA and strong add-on business in the U.S.
AI Bookings Increased 60% year-over-year, reflecting strong demand for AI-driven solutions.
12-Month cRPO Increased 29% year-over-year, indicating strong subscription revenue growth.
Total RPO Increased 24% year-over-year to $1.2 billion, reflecting strong long-term customer commitments.
Non-GAAP Gross Margin For the third quarter was 69%, compared to 71% last year. The decline was primarily due to lower license revenue.
Non-GAAP Software Gross Margin For the third quarter was 75%, compared to 78% last year. The decline was primarily due to lower license revenue.
Non-GAAP Operating Income For the third quarter was $9.3 million, or 6% of revenue, up 69% year-over-year. The increase was due to strong revenue growth and scaling of operating expenses.
Non-GAAP Net Income For the third quarter was $15.2 million, up $3.9 million year-over-year. Non-GAAP earnings per share was $0.08, flat with last year.
Cash and Cash Equivalents Ended the quarter with $654 million, reflecting strong cash management.
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Operating Highlights
SensibleAI Studio: Doubled the number of algorithms to 60 since May launch. Studio enables customers to access a library of algorithms and apply them to workflows. Demonstrated flexibility with AI-powered benchmarking and outlier detection routine.
SensibleAI agents: Moved from private preview to limited availability. Embedded into OneStream solutions, allowing tasks like natural language queries, dynamic visualizations, and contract data analysis.
AI-powered ESG: Enhanced solution linking ESG reporting to core platform using real-time operational drivers and SensibleAI Forecast. Plans to embed SensibleAI agents for data interrogation and reporting.
CPM Express: Expanded with IFRS compliance and management for international customers. Offers rapid deployment and preconfigured templates for financial processes.
International revenue growth: Revenue grew 37% year-over-year, driven by strong legacy replacement momentum in Europe.
Federal business: Renewed all Q3 agency customers except one. Added a new federal customer and began multiple SaaS conversions.
New customer wins: Secured deals with a Swiss multinational healthcare leader and a leading residential real estate services company, highlighting modernization and rapid deployment capabilities.
Subscription revenue: Increased 27% year-over-year to $141 million.
Total revenue: Grew 19% year-over-year to $154 million.
Professional services revenue: Increased 38% year-over-year due to demand for consulting services.
Free cash flow: Achieved $5 million in Q3, exceeding expectations.
AI adoption: AI bookings up 60% year-over-year. SensibleAI Forecast improved forecast accuracy and reduced processing time significantly for customers.
Product differentiation: Positioned as a leader in finance AI with a unified platform offering contextualized data and applied AI solutions.
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Risk or Challenges
Federal Business Challenges: Facing headwinds and contract rationalization in the U.S. Federal business, including a decline in license revenue by 64% year-over-year due to contract rationalization and SaaS conversions.
Customer Retention and Acquisition: Renewed all Q3 agency customers except one at a discontinued agency, indicating challenges in retaining all federal customers.
Economic and Market Conditions: Tough federal government environment in the U.S. impacted new business growth, partially offset by strong add-on business.
Revenue Growth Dependency: International revenue growth of 37% year-over-year highlights dependency on international markets for growth, which may pose risks if global economic conditions change.
Operational Efficiency: Non-GAAP gross margin declined from 71% to 69% year-over-year, and software gross margin declined from 78% to 75%, indicating potential challenges in maintaining operational efficiency.
Stock-Based Compensation: High stock-based compensation expense of $25 million in Q3, which could impact profitability.
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Guidance & Outlook
Q4 2025 Revenue Guidance: Total revenue is expected to be between $156 million to $158 million.
Q4 2025 Non-GAAP Operating Margin: Expected to be between 4% to 6%.
Q4 2025 Non-GAAP Net Income Per Share: Expected to be between $0.04 to $0.07.
Q4 2025 Stock-Based Compensation Expense: Expected to be approximately $25 million.
Q4 2025 Billings Growth: Expected to grow roughly 20%, taking into account the $4 million of accelerated billings in Q3.
Full Year 2025 Revenue Guidance: Total revenue is expected to be between $594 million to $596 million.
Full Year 2025 Non-GAAP Operating Margin: Expected to be between 2% to 3%.
Full Year 2025 Non-GAAP Net Income Per Share: Expected to be between $0.15 to $0.19.
Full Year 2025 Stock-Based Compensation Expense: Expected to be between $115 million to $120 million.
2026 Revenue and Non-GAAP Operating Income Outlook: The company is comfortable with current Wall Street consensus for full year 2026 revenue and non-GAAP operating income, with formal guidance to be provided in February.
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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 elaborate on the federal dynamics this quarter, particularly regarding renewals and license rationalization?
A:The federal government had many moving pieces in Q3, including SaaS conversions at major agencies, which impacted license revenue but will flow into subscription revenue in future quarters. Only one federal agency was lost due to a merger, and a new federal customer was added. Optimism remains for federal opportunities heading into 2026.
Q:What are the key AI use cases being deployed by customers, and how is OneStream positioned in the finance AI era?
A:Key AI use cases include SensibleAI Forecast for predicting business outcomes, outlier and benchmarking analysis, and autonomous financially intelligent coworkers (agents). OneStream is positioned to lead the finance AI era due to its platform's ability to handle highly contextualized, high-value information.
Q:What are the main drivers of growth stabilization and confidence in 2026?
A:Growth drivers include strong performance in EMEA with significant wins, growing momentum in Asia Pacific, opportunities in the U.S. commercial business, and a robust enterprise pipeline. New products like IFRS Express and CPM Express, along with AI innovations, also contribute to confidence in 2026.
Q:How are pipeline assumptions and conversion rates factored into the 2026 guidance?
A:Pipeline and conversion rates are key drivers of growth. The company is enthusiastic about new products like Agile Financial Analytics and SensibleAI Forecast, which have shown strong growth. A strong product portfolio and pipeline provide confidence in the 2026 outlook.
Q:What is the demand environment for billings growth and NRR trends?
A:The demand environment is strong, with early renewals driven by customers adding new products. NRR trends are positive, supported by a multiproduct strategy and strong add-on sales. Billings growth is expected to accelerate, reflecting robust demand.
Q:What is driving momentum in EMEA, and how does the replacement cycle factor in?
A:Momentum in EMEA is driven by increased scale, legacy application replacements, and enthusiasm for OneStream's product portfolio. The replacement cycle of 20-year-old systems and expanded field sales coverage are key contributors.
Q:What is the outlook for AI adoption and pipeline growth heading into 2026?
A:The current pipeline validates momentum in AI adoption. SensibleAI Forecast is driving adoption, and AI Studio opens up additional use cases. The rollout of agentic offerings is expected to build on this momentum, with strong customer interest in AI-driven workflows.
Q:What is the revenue opportunity for agentic offerings, and how do they impact the seat-based model?
A:Agentic offerings are priced on a usage basis and are seen as incremental revenue rather than replacing seats. They aim to enhance efficiency and allow finance teams to focus on high-value work.
Q:What traction is being seen in emerging applications outside the core, and what are the strongest growth vectors?
A:Emerging applications like AI-powered account reconciliations and supplier analytics are gaining traction. Agile Financial Analytics and verticalized solutions are strong growth vectors, supported by OneStream's platform capabilities.
Q:What feedback has been received on agentic offerings, and which agents are driving interest?
A:Feedback highlights the value of structured workflows and task automation. The finance analyst agent, search agent, and deep analysis agent are generating high interest due to their ability to provide contextualized insights and repetitive task automation.
Q:How important are legacy displacements in achieving 2026 growth targets?
A:Legacy displacements remain a significant and consistent opportunity. However, the company also focuses on onboarding companies with growing needs for CPM solutions, expanding beyond legacy replacements.
Q:What are the key sales pipeline trends and opportunities for 2026?
A:Key trends include growth in EMEA, opportunities in Asia Pacific, and strong AI sales in the U.S. The company is excited about its core business, Agile Financial Analytics, and AI portfolio, all of which present significant growth opportunities.
Q:How do OneStream's agents interact with other software agents, and what is the long-term vision?
A:OneStream aims to be the leading agent in the financial realm due to its highly contextualized data. In the future, multi-agent orchestration and agent-to-agent communication are expected, with OneStream focusing on delivering value within the CFO's domain.
Q:What is the outlook for the U.S. federal market, considering FedRAMP High authorization and government shutdown risks?
A:The company is well-positioned with FedRAMP High authorization, enabling it to serve high-security agencies. AI FedRAMP High certification is also in progress. While the government shutdown poses risks, the company remains optimistic about federal opportunities.
Q:What is the expected balance of license, services, and subscription revenue in the future?
A:License revenue is expected to decline as SaaS migration continues, with minimal license revenue remaining in the future. Professional services revenue is expected to see slight growth, stabilizing at current levels.
Q:What changes or priorities are expected in the sales and marketing strategy?
A:The focus will be on scaling across product lines, maintaining a strong core business focus, and positioning new innovations like AI and CPM Express effectively. The strategy emphasizes meeting customer needs with use case-oriented solutions.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the potential impact of the government shutdown on Q4 guidance, providing only general optimism about navigating through it. Additionally, while discussing the future of agent-to-agent communication, the response was speculative and lacked concrete details.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI ESG
AI Finance
AI Today
AI announcement
AI approach
AI battle
AI benchmarking
AI era
AI finance
AI forefront
AI journey
AI office
AI tool
Accounting
CEO President
IFRS
SensibleAI agent
SensibleAI portfolio
Splash EMEA
access
accuracy percentage
agency customer
algorithm
architecture
business
conference today
context
contract
finance team
flexibility
framework
healthcare division
improvement
leader
percentage point
platform finance
process
productivity
reconciliation
routine
transaction
value AI
value product
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
Frequently Asked Questions
Where does this earnings call transcript come from?
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