OneStream, Inc. Class A Common Stock Price & Performance (OS)

The press release announcing our fourth quarter and full year 2024 results issued earlier today is posted on our Investor Relations website. At investor.onetstream.com. Along with an earnings presentation. Now that we let me remind everyone that some of the statements on today's call are forward looking. Including statements related to guidance for the first quarter ending 03/31/2025, and the year ending 12/31/2025. Forward looking statements are subject to known and unknown risks uncertainties, assumptions and other factors Some of these risks are described in greater detail in the documents we file with the SEC from time to time including our quarterly report on Form 10 Q for the quarter ended 09/30/2024, which we filed with the SEC on November 7, 2024. We undertake no obligation to update any forward looking statements whether as a result of new information, future events, or otherwise, except as required by law. During our call today, we will also reference certain non GAAP financial measures. These are limitations to our non GAAP measures, and they may not be comparable to similarly titled measures of other companies. The non GAAP measures referenced on today's call should not be considered in isolation from or substitute for their most directly comparable GAAP measures, Our management believes that our non GAAP measures provide meaningful [indiscernible] regarding our performance, and liquidity, excluding certain expenses that may not be indicative of our ongoing core operating performance.

Reconciliations of our non GAAP measures to the most directly comparable GAAP measures can be found in this afternoon's press release and in the earnings presentation posted on the Investor Relations website. Before I turn it over to Tom, just wanted to let you know that we will be attending Morgan Stanley's Technology, Media and Telecom Conference on 03/04/2025. A OneStream and replay of our presentation at the conference will be made available on our Investor Relations website. Now I'll turn it over to Sam.

Welcome everyone and thank you for joining us today.

I'm going to touch on our results what we're seeing in the market, and provide our outlook for 2025. 2024 was a milestone year that ended with a solid fourth quarter performance with 29% year over year revenue growth and strong cash flow.

This was a testament to the strength of the OneStream platform and our incredible innovation engine, including our finance AI portfolio. Reflecting the significant business value we provide to our customers. Our solid finish once again demonstrates resilience in the year that presented new opportunities and challenges. A combination of events including the U. S. Election, the ongoing geopolitical climate, and the sudden strength of the U. S. Dollar affected our business at year end.

First, macro uncertainty around tariffs, regulations, and reporting requirements impacted two of our primary markets, large multinational companies and the public sector. This caused additional deal scrutiny and pushed some deals into the New Year.

The vast majority of which have closed. Included a significant public sector deal.

Second, the significant change in foreign exchange rates also impacted some of our financial metrics in the quarter. As Bill will talk about shortly. And third, even with this, we reported solid results and are excited about the momentum of two important areas of focus. The commercial sector and finance AI.

Overall, despite some near term headwinds, demand for OneStream remains strong, and we are optimistic heading into the year remain confident in our long term opportunity. Now let me give you some highlights from twenty twenty four. Was one of the most transformative years in OneStream's history. We grew total revenue 31% year over year driven primarily by strong subscription revenue growth of 41% year over year. We were free cash flow positive in 2024 generating 59,000,000 during the year. While also achieving non GAAP operating profitability. We once again reported 98% gross retention this year. Reinforcing the value and stickiness of our platform. Which is the bedrock of our company. Yet, our strong financial results were only part of the story. We introduced 12 new innovations at our U. S./User Conference, in May and another three at our European slash user conference September. Unlocking additional utility and value for customers. Creating more on ramps to the OneStream platform and providing more in the installed base. More recently, at sales kickoff in January, we rolled out our solution based packaging that is aligned to how the market wants to buy supporting the value the customers derive from our offerings and simplifying initial expansion sales OneStream OneStream and our partner ecosystem.

We quadrupled bookings and the number of customers using our Finance.ai solution. Including Sensible Machine Learning. For the third consecutive year, we were recognized as a leader in Gartner's Magic Quadrant for Financial Planning Software. And a leader in IDC's worldwide office of the CFO record to report vendor assessment. And just last month, OneStream was named leader in business planning by ISG formerly Ventana Research. Illustrating the power of our platform to support more operation And finally, we completed a successful IPO and secondary offering in the second half of the year. All of this speaks to the market trends that are driving the need to modernize finance. Three trends underpin our business and further reinforce the confidence we have in OneStream's long term opportunity. Number one, the digital transformation of finance. A CFO has recognized the need for a unified cloud based platform to provide a single view of financial and operational data across the enterprise, This trend was reinforced by our Finance 02/1935 initiative study, which found that more than three quarters of CEOs and CFOs are prioritizing the need for a unified single source of truth for corporate data as essential future business success. Number two, the expanding scope of the CFO transitioning from reporting on task to driving real strategic value becoming an embedded partner to the business.

And number three, the growing need for applied AI and ML solutions to advance finances impact and ability to plan faster, forecast with greater accuracy, and empower every employee to make quicker more informed decisions.

These trends continue to drive our platform development and inform our new product roadmap. The breadth and depth of our platform is truly comprehensive and unique in the industry. Enabling customers to unified financial and operational data, and reporting on one common accelerate and improve planning, forecasting and decision making with AI solutions purpose built for finance. And extend the platform to address new use cases as their needs evolve without adding technical debt. Windstream has a real competitive advantage allowing us to meet the data, analytics and processing needs of even the most complex environments at scale. I'm really excited about the progress that we made in 2024 which I believe was the most innovative year in our history. Our new offerings include centralized report assembly and data gathering with advanced narrative reporting. Delivering rich financial data to a broader set of users was our certified Microsoft Power BI connector. Improvement in implementation time and project success with CPM Express. Providing customers with the ability to do ESG reporting on the OneStream platform. Elevating and empowering sales planning with a fully integrated sales performance management solution built on top of the OneStream platform. And overarching all of this is our industry leading finance AI solutions, purpose built for the office of the CFO We had a positive initial reception in the market for these new offerings which combined with our updated pricing and packaging, reflect the incredible value we are delivering to customers.

Let me provide some details on a couple of these important new initiatives.

TPM Express is a prepackaged version of our core CPM capability. That enables significantly faster implementation and time to value. This solution comes with pre built functionalities predefined reports, and guided configuration. It simplifies core activities and speeds up processes across finance with customers fully up and running on core financial planning, reporting and close, in six to eight weeks. All for a predictable cost.

We expect CPM Express to drive new core platform customer growth globally going forward. Another area of innovation we've talked about is ESG. This has become a critical need for multinational organizations. Particularly in Europe. These companies must account not only for their own operations, but for their entire value chains. To do this, they need accurate and complete information to align ESG reporting with the rest of their reporting and planning. Given OneStream's role as the core book of record, we are well positioned to help CFOs meet ESG reporting Additionally, we plan to enhance this offering to be even more robust by launching new elements in 2025. Turning to our Finance AI portfolio.

You've heard us talk a lot about our Sensible Machine Learning product.

Otherwise known as AI driven forecasting. In 2024, SML offered customers the potential to revolutionize planning and forecasting. Delivering significant value to early adopters ranging from Fortune 500 manufacturers retailers and banks [indiscernible] By harnessing the power of SML, customers on average have reported initial forecast accuracy improvements of over 20%. While speeding forecast cycles by more than 80%. This allows customers to fundamentally rethink their planning approach enabling them to plan at higher frequency with higher accuracy and adapt to changing market dynamics to maximize profits. Customers have reported that these outcomes have consistently outperformed custom data science projects. Crediting our applied finance AI approach and the ability to leverage our proprietary financial formulas and platform capabilities. SML's ability to adapt to dynamic business conditions And macroeconomic factors, while providing insights into their impact has established it as a transformative solution for businesses. OneStream's AI accelerates time to value, enhances forecast accuracy, and improves efficiency. While offering the transparency and explainability needed for end user trust, and adoption. We believe our combined enhancements are poised to further strengthen our competitive edge and dry growth in 2025. We had a number of important wins in the fourth quarter with enterprise and commercial customers across a wider way of geographies and verticals.

We added three new major banks including a leading investment bank and financial services company. We landed our first customer in Brazil a global multibillion dollar consumer products company. We had another takeaway at one of the largest legacy installations in which is transitioning to OneStream to support its FP and A Tax Pillar two and ESG reporting for its multibillion dollar global business. We currently have over 40 customers leveraging the OneStream platform for their ESG reporting. And we have additional product enhancements coming in 2025 to offer even more value to customers. And we saw continued growth in our public sector and education business. Including a win with a well known higher education institution in the Speaking of the public sector, I'm thrilled to announce that effective January 25, the OneStream platform has received FedRAMP high authorization. The highest level of security standards by the federal government This significant milestone addition to our Department of Defense Impact Level five certification, enables us to work with all levels of state, local and federal agencies. Including those who handle the most sensitive mission critical and highly classified data. There's a long road to these certifications requiring considerable investment engineering and operating cycles as well as close coordination with government agencies and officials.

We continue to land many great customers each with unique needs and drivers. Both immediate and long term. Let me just dive into a bit more detail on a few that stood out in the fourth quarter. We added a leading investment bank and financial services company to our Not unlike other banks, they have separate financial systems for each division. Severely limiting the view of their overall financials. They plan to use OneStream for consolidation of their multiple businesses in order to have a single unified and more accurate view of the entire organization. This will unify their data across various cubes and relational data storage, for more accurate reporting, planning and analysis on operational and financial data to every level of the organization. We also had the first sale of our sales performance management product. That was built on the OneStream platform by Infinity SPM. An independent software vendor. An existing OneStream customer, Generac, is a large acquisitive company using OneStream for consolidation, planning, profitability and account reconciliations. The quality and visibility of the data on our single unified platform with a robust dashboard has been game changing for Generac. Saving as much as two point five weeks for each forecast.

This helped create a seamless process that allows them to do dynamic forecasting compare scenarios, and have better visibility into how the business is doing. This success played a pivotal role their decision to adopt and deploy Infinity's integrated SPM. As a natural extension of the platform. With SPM, they are now able to have consistent sales territory management and improve the efficiency of their incentive compensation and dispute resolution processes. We signed a multiyear deal with a large multinational manufacturer specializing in display, environmental and other technologies. Several years in the making, this customer was a long time legacy system user that had been migrating to a global footprint. In need of a modern CPM system, the company was impressed by the depth of OneStream's capabilities and the fact that we do so much on a single platform. Including multiple solutions for tax reporting, ESG, SML and account reconciliations. This was crucial in their ability to see the value of our platform. While simultaneously reducing their technical debt. Beginning with nearly 900 users, and replacing two large systems, Phase one will focus on consolidations, account reconciliations financial reporting.

From there, Phase two looks to move on to planning and forecasting. Finally, I'd like to share how OneStream's OneStream solution is transforming forecasting for a global leader in technology distribution. This customer operates across multiple countries and business lines providing their customers with cutting edge technologies from cloud providers and device manufacturers. Their prior forecasting process was complex time consuming and often biased. They first used the OneStream platform for consolidation, close and planning. They elected to expand with SML to ensure higher accuracy in their forecasting and to reduce their cost to serve. We helped this customer harness the power of their internal data while incorporating external drivers and leading indicators to produce a fifty two week revenue forecast. With SML, they achieved over 90% forecast accuracy which is a 15% reduction in forecast error They reduced their effort in producing this forecast by over 75% The data driven precision of the SML forecast removed bias at the country level and gave management the confidence to make faster, smarter decisions across each line of business.

What sets SML apart is its ability to seamlessly integrate machine learning, into financial processes without introducing technical complexity. It empowers finance teams to focus on insights, and decision making to steer the business. Rather than spending countless hours wrestling with data to develop, suboptimal forecasts. What I know from experience is what resonates with customers. Our 98% gross retention is at the heart of OneStream's continued success and a key component of our growth. We entered 2025 excited about our multi product We are bringing to market our 15 new innovations announced last year along with our new pricing and packaging to enable customers to derive the greatest value from our platform. We're excited about the early demand we've seen for CPM Express and our infinitely extensible solution exchange. With applications like SPM In addition, we continue to differentiate our Finance AI core and build out new products including our AI library By adding these multiple levers of growth, we are effectively executing against our strategy to become the operating system for modern finance. And finally, I want to send a heartfelt thank you to our dedicated hardworking employees around the world for their tireless efforts in making all of this possible.

Now let me turn the call over to Bill for the financials. Thanks, Tom.

Afternoon, everyone, and thank you for joining today's call.

As Tom mentioned, we had a solid Q4 with both strong revenue growth and free cash flow capping an impressive year.

I'd like to start today with some commentary on our 2024 results and then dive into Q4 and end with our guidance for Q1 and 2025.

Before I begin, it is important to note that 32% of our business is international and we bill most of our international customers annually in local currency and convert to U. S. Dollar for revenue recognition.

The sudden strengthening of the U. S. Dollar by roughly 6% from September 30 to December 31 negatively impacted some of our financial growth metrics by approximately 2%.

These include ARR, RPO and Q4 billings.

Let us start with some key 2024 accomplishments.

We surpassed $500,000,000 in ARR to end the year at $568,000,000 We grew revenue 31% year over year to $489,000,000 subscription revenue 41% to $428,000,000 and international revenue 38% to $155,000,000 We increased RPO to greater than $1,000,000,000 We achieved non GAAP operating profitability and we generated $59,000,000 of free cash flow which represents 12% free cash flow margin. Turning to the fourth quarter, grew total revenue 29% year over year to $132,000,000 Subscription revenue increased 35 to $119,000,000 and license revenue came in at $7,000,000 for the quarter.

We continue to see strong conversions from term license and we expect that trend to continue into 2025 as we progress toward a 100% SaaS business model.

Professional services and other revenue was $7,000,000 the quarter.

As we continue to transition more implementations of OneStream software to we expect professional services to remain at a similar run rate going forward. This quarter, international revenue grew 49% year over year to $46,000,000 We're thrilled with the progress we've made with our international business representing 32% of our total revenue in 2024. For the year, we saw over 60% of our business come from new customers and we ended the year with sixteen oh one total customers up 15% year over year.

We continue to retain and expand our base of existing customers with 98% gross retention, and 113% net dollar retention. Billings grew to a record $167,000,000 in the fourth quarter, up 18% year over year and 24% on a trailing twelve month basis.

Our twelve month CRPO was up 36% year over year and our total RPO increased 23% year over year to $1,100,000,000 As noted, Q4 billings, CRPO and RPO were negatively impacted by FX. Our Q4 non GAAP gross margin was 70% consistent with last year and non GAAP software gross margin was 76% compared with 78% last year due to license mix versus the [indiscernible] We continue to work to optimize our infrastructure costs and expect margin improvement over the long term.

Fourth quarter non GAAP operating expenses increased 19% year over year primarily due to higher R and D spending as we continue innovating on our core platform and finance AI solutions for the opportunities we see ahead.

Non GAAP operating income was $9,000,000 or 7% operating margin in the quarter, For the full year non GAAP operating income, was $1,000,000 We were non GAAP profitable for the quarter with net income of $12,000,000 and non GAAP earnings per share For the full year, non GAAP net income was $14,000,000 zero point one four dollars Total equity based compensation expense for the and for the full year, equity based compensation expense was $316,000,000 For the fourth quarter, we generated $25,000,000 of free cash our fiscal year twenty twenty four free cash flow to $59,000,000 We ended the year with $544,000,000 of cash and cash equivalents.

In summary, we delivered on our key objectives for 2024 achieving strong top and bottom line results while continuing to invest for the future.

Customers continue to choose the OneStream platform to provide a unified view of financial and operational data with analytical, AI and performance management capabilities, Now let me move on to guidance and review the key factors driving our outlook.

We remain enthusiastic about our market opportunity and expect strong subscription revenue growth while launching new products to the market and generating robust cash flow, Importantly, our strong 98% gross retention continues to drive compounding growth highlighting our continued investment in customer success.

As we discussed last quarter, continued to see strong SaaS conversion rates in the fourth quarter.

While this is a near term headwind for the license component of total revenue, It is a focus for the long term success of our company.

Also as a reminder, we expect our professional service revenue to be roughly flat going into 2025. We expect subscription revenue growth to outpace total revenue growth The continued strength of the U. S. Dollar 6% higher than Q3, coupled with roughly 32% of revenue coming from our international business which is transacted predominantly in foreign currency, is impacting our outlook for 2025. With that, our guidance fiscal year 2025 is total revenue is expected to be between $583,000,000 to $587,000,000 Non GAAP operating margin is to plus 1%.

Non GAAP earnings per share is expected to be between $0.01 to $0.09 Equity based compensation will be approximately hundred and $25,000,000 to $135,000,000 Guidance for Q1 twenty twenty five is [indiscernible] Total revenue for Q1 is expected to be between $130,000,000 to $132,000,000 Non GAAP operating margin is expected to be minus 9% to minus 7%.

Non GAAP earnings per share is to minus $0.02 Equity based compensation expected to be between $45,000,000 to $50,000,000 In closing, the strength of our core CPM business and new innovations wrapped in a more streamlined pricing and packaging is driving new on ramps to the OneStream platform and enabling our ability to drive efficient growth.

We are pleased with our 2024 results and excited about the opportunities ahead 2025. Now let's turn it over to the operator.

Certainly. And ladies and gentlemen, we'd like to ask that you please limit yourselves to one question each. Our first question comes from the line of Don John DiCucci from Guggenheim Securities. Your question please. Hi. Thanks for taking my question. So I actually have one for Tom.

Did he say limit yourself to one question and one follow-up? I want to be respectful to you guys. Or just one question.

We said one question.

Okay. I'm going to ask Tom a question. Bill, I can ask you this later if no one asked it. So Tom, listen, hey, thanks for those examples with customers.

Our field work this quarter, we do a lot of it. We picked up on improving demand for modern consolidation planning solutions.

Which was really surprising to us. Like you guys have been doing well, but to hear like a general statement like that from some people especially considering the more challenged new normal that many enterprise [indiscernible] to us about why that might be happening, especially in the context of other back office applications. More broadly that don't seem to be like high on many enterprise customers priority list when you talk to like global SIs?

Sure. Thanks, John. So I'll start off by just providing a little bit of a foundation. I'll answer this question with three main points. And first to cover off is, our core solution, we're at the heart of providing capabilities that every finance team needs.

Every time you are on a call talking to a company, they have to produce that company has to manufacture financial statements with confidence. And so we're at the heart of that discussion. However, at the same time, when I talk to this these are transformative decision making processes. And so when you think of large enterprises making a decision to to onboard these either systems and implementations that have to go the right way, they're critical. But as we've talked about in the past and as I mentioned in 2024 on a lot of the calls, there's been a realization that you can't keep kicking the can down the road. You have to keep working to simplify your ecosystem as a CFO and make sure that you have reliable data So all in all for us, we look at that that core and are really focused on it. That's been foundation of our business. And again, as we talk about forming that bedrock, that high degree of customer success and retention 98% that is really, really important and foundational to us and that hasn't changed from day one. And we're really looking at growing that core customer base and retaining it as a very, very valuable asset to our business Underpinning number two our growth model.

When I really think about that growth model, by having that foundation, then being able to show up to those customers and I think this gets at the heart of the question that you're asking is once we've established and help them do the hard work that they have to do, we have the ability to leverage that durable and expanding customer we're talking about lifetime value type of customers where we're forming relationships that exceed ten years in many cases. So we're really, really focused on being that partner, but also showing them that we can adapt with our marketplace and with our solution exchange and also with our evolving pricing and packaging and faster on ramps to get more value out of the platform. So that is really, really an important message and foundation and then ultimately saying, showing up with we have an AI portfolio and an AI solution. We actually have a journey these customers and that's that's the focus. But as I was saying, these are large transformative projects that we're involved in. And we talk about CPM Express and some of the other examples that we gave, that's about creating faster ramps for those customers.

The one thing that I would like to say to complete this, so the third thing is that if you think about what I just mentioned, 98% growth retention plus these long term relationships They really equal a massive opportunity for us going forward. That's what underpins my optimism continuing optimism about the future for OneStream OneStream. But another piece that I don't think that we've talked about enough is the amount of raw data and very important information that we're that we are holding for these customers and that works curating and developing for these customers So this financial information is very important. And if we play this out and we think about all the talk and chatter around AI, what's this going to look like in five years Customers have to have a unified platform to get the most value out of out of their investments and out of AI and to actually have the ability to take advantage of it. And so we really feel that we're building an asset that will help power CFO's AI driven applications.

Thanks, John. Operator, let's move to the next question.

Certainly. And our next question comes from the line of Adam Hochskew from Goldman Sachs. Your question please. Great.

Thanks so much for the question. Bill, you talked a little bit about near term headwinds and I know you mentioned FX a number of times. Could you maybe delineate how much of that comment was meant as an FX comment versus some of these other non currency headwinds we hear from software companies today like deal closings and sales cycle elongations. I just want to understand those comments adjusting for some of the currency pieces. Thanks so much.

Yes. No, thank you. About 32% of our business is international.

And FX as you know, between September and December, '31, the dollar strengthened about 6%. Candidly, it strengthened a little bit more probably know into January. But that the FX impact and I mentioned some of our of our financial metrics roughly impacted by about 2% Operator, let's go to the next question.

Certainly. And our next question comes from the line of Chris Quintero, from Morgan Stanley. Your question please.

Hey, Tom. Hey, Bill. Thanks for taking the questions here. I wanted to follow-up on your comments around the packaging changes. Just curious kind of more details there what specific changes you're making and was that any impact to NRR in the quarter? And expectations of what that can mean for NRR on a go forward basis?

Thanks, Chris. So the reason we wanted to bring price and packaging and really in delivery because you hear us talking about CPM Express is that we're really we've really embarked on a multi solution, multi product strategy. As you've heard us, we've introduced sensible machine learning, sales performance management, ESG We've alluded to this and talked about it throughout 2024 and it really is an evolution in our pricing. This isn't a reset or a complete redo. It's about how do we have this durable understandable package that allows customers to buy these new offerings in a reliable way.

And so, is this all geared towards and we've launched this at our sales kickoff already this year. It's just geared towards having an efficient mechanism that allows us to bring to market the new innovations that we've been working on. And so in 2024, I talked a lot about the how strong of an innovation year that is and we were pressure testing, if you will, or market testing some of those new products such as CPM Express, SPM and now those are being operationalized into this pricing and packaging structure for 2025. So we're we're it's part of it's been part of a long term strategy that we've been working towards a number of years. Operator, next question please.

Certainly. Our next question comes from the line of Mark Murphy from JPMorgan. Your question please.

Thank you very much. I'm curious what is the rough dollar value of the business that you referenced Tom, that was forecasted to close, but pushed out of Q4.

Should we be thinking something like $15,000,000 or $20,000,000 dollars there. And as well, just as a Part B on the same question, if the tariffs were one of the headwinds to those deals, and caused them to push, why are they closing I think you said a vast majority of those have closed. In January. So why would that be? I mean, what is giving these organizations a feeling that there's clarity now around tariffs to come in and close the business?

I'll start and then I'll let Bill follow-up on that. So if you think about the pushes that we saw or the headwinds, I think we alluded after the last earnings call So look, we're cautiously optimistic about what's happening in the market or in the geopolitical spectrum and just in general. In terms of macroeconomic conditions. So we're not specifically alluding to tariffs, but we're talking about multinational businesses that see a great deal of uncertainty. And governments which is another significant market that have uncertainty in spend. And so when you think about that, Mark, those are definite headwinds And so again, if you're looking at deltas in ARR as you're alluding to changes in that revenue, you're really talking about And I'll let Bill dive into this in a bit more depth. As you're really looking at the difference between there were a strong 2023 Q Q3 and then I'm sorry, a weak 2023 Q3 and a strong twenty four twenty twenty three, sorry, there was a week 23. Week '23. Q3 and a strong '23 Q4. Q4, exactly. If you take those two together, you're going to bring that delta a lot closer and you're going to see that it aligns to the numbers that the movement that we have.

So we had again, we had the inverse of that in this quarter. Or in this year. And so as you look at that, these are legitimate and evidence of that is our $1,000,000 deals were up 35% this year.

We're selling, we're still seeing demand, we're very Excited about the prospect of the business, but there are certainly economic headwinds that we hope clear up.

Yes. I would just add that as Tom mentioned, it wasn't it wasn't one thing specific to tariffs, just general uncertainty. And generally Mark, what we saw was just required an additional signature It just require there wasn't kind of the urgency to get deals kind of signed. By our customers in some cases with some of these large customers, particularly in Q4 and thankfully we got them done in January and actually the February including that public sector deal that that Tom referenced. So, no, thanks for the question and appreciate clarification that we were able to offer. Operator, next question please. Certainly, our next question comes from the line of Koji Ikeda from Bank of America. Your question please.

I wanted to ask on the growth potential for 2025, and so when I look at kind of your key growth items here, like subs revs and ARR and to an extent total revenue too. I really want to focus on subscription revenue and ARR. And when I look at the deck, I think you could extrapolate that SaaS ARR, that component grew 40% in 2024 and is 80% of total ARR. So really trying to understand some of the puts and takes here for ARR growth, total ARR growth to accelerate In 2025, off the it looks like 23% growth for 2024. And subscription revenue to grow high 20s, if not 30%. The end of the day for 2025. Thank you.

Hey, Koji. No, thanks for that.

Look, I would I'm going to start by saying we offer new guidance on total revenue, on op margin, etcetera, at at the quantitative level. I would say on the ARR side, a great degree of what we've been working on obviously is growing net new ARR, which I think you appropriately referenced. But some of the some of the SaaS revenue growth was conversions And as I mentioned, we've been really working hard on that. So as I mentioned in my remarks, we do expect subscription revenue to grow faster than total revenue, but we don't offer specific guidance on that number. And we're obviously working really hard to grow subscription revenues as we can. So, no thanks for that.

Operator, next question please. Certainly. Our next question comes from the line of Scott Berg from Needham and Company.

Your question please. Hi, this is Ian Black on for Scott Berg.

How are you guys looking at the federal government opportunity this year given both spending pressure and the FedRAMP high authorization?

Thanks, Scott. So we really look at FedRAMP as as a big opportunity still for us, right? We've invested long term for our FedRAMP moderate for quite some time and then recently achieving high. And because we're an efficiency play, we really feel that we have a strong offering and right to win and continue to offer more value to the government. So there's certainly headwinds out there, but that does not change at all our long term strategy and investment and and the potential that we see in that market.

Thank you. Operator, next question please.

Certainly, our next question comes from the line of Alex Zukin from Wolfe Research. Your question please.

This is Ivan here for Alex. Thanks for taking my question. Maybe just in context of the bad drop that you've given around geopolitical uncertainty, and the macro. Can you calibrate a little bit more on the buy environment? And more importantly, help us understand how has that been taken into account how much conservatism has been embedded in the guidance? [indiscernible] So I'll start off and if Bill wants to add any commentary, he can. When we think about the general buy where I think Bill said it said it well for Q4. We didn't see any abrupt halt, but we saw a little bit what I would consider in large multinationals and in government a lack of urgency is maybe the way to think. So I think it reflects some of the uncertainty that multinationals are in particular feeling around around trade and around what their own cost profile might look like. And I think you see we sell to a we sell room to the CFO who is a pretty sensitive buyer. And so if you're coming into a CFO in particular, and if there's a growing sense of uncertainty in their own business, we're probably going to feel it a little bit first.

So I just wanted to kind of point that out. That's something that's a reality. So we are giving we're offering prudent guidance and feel positive again about our product our strategy. We're keeping our heads down and executing our game. So we feel great about all the innovations and the products and the things that we have lined up to bring and deliver to the market this year. So ultimately, we're just going to focus on our strategy and execution and but also offer some prudent guidance for the things that we can't control.

Thank you. Operator, next question please.

Certainly. Our next question comes from the line of Terry Tillman from Truist Securities. Your question please.

Yes. Thanks, Tom, Bill and Annie. So my question relates to go to market, primarily the Microsoft relationship both technologically and then go to market and anybody else you could talk about from a go to market standpoint that seems like they're at an inflection point in helping the business? Thank you.

Thanks, Trey. I'll take that. So we continue obviously to be a really big Microsoft customer and partner and we're really thrilled about that relationship and our ability to, as you see, we brought our Power BI, certified Power BI connector to market At the same time, we are seeing that combination as we expand from the core financial and we're looking to sell broader solution set in our AI and operational analytics. The Microsoft relationship becomes increasingly important and opportunistic for us there as well in the sense that you can bring in that CIO connectivity as well. So we have multiple initiatives jointly from a marketing perspective and in that partnership not only marketing, but technical. And so we're really leaning into that and Mike we're thrilled that Microsoft is as well. And so I would say that's an important foundational relationship we're looking to use as a channel multiplier, if you will. And then we're always investing in our core markets in terms of the GSIs, in terms of the what I can what I always refer to as our artisan partners, those are the product experts that are CPM experts historically. They're leaning in. As you can see, the partners that have developed solutions on our solutions exchange like Infinity SPM who was also an implementation partner prior to that as well.

So you're seeing more and more as again, I alluded to this at the beginning, but I think it's really worthwhile As we continue to increase this asset of successful customers, and I say asset in the sense that it's an asset to us and our customers that we're delivering value to them and they're remaining a customer and giving us that 98% gross retention that's very attractive. That's what powers the ecosystem and powers opportunity for all of [indiscernible] we're investing and facilitating and leaning in on all of those fronts.

Thanks, Terry. Operator, next question please. Certainly. Our next question comes from the line of Steve Enders from Citi.

Your question please.

Okay, great. Thanks for taking the questions here. Or question here. I guess I wanted to ask on the margin side of it. It looks like that's maybe coming in a little bit lower as well for for the year. So can you just maybe help us think through maybe where incremental investments are coming from or maybe what's being accounted for on the margin outlook? Yes. Hey, thanks, Steve. I'll take that one.

So, a couple of things. One is, from a technology perspective, we've been migrating people, migrating [indiscernible] I think we announced a little bit under two years ago.

Which has driven performance improvements and some efficiency for our customer That migration, there's some costs associated with it. We're also, as Tom mentioned, we've got a strong relationship and strong partnership with Microsoft. And we continue to innovate on the platform to drive value for for our customers.

One of the drivers that Tom talked about before that we're working through is just the massive amount of data that our customers are seeking to store on the One Street platform. Which is both a huge benefit asset as Tom talked about, but does have some and we think it's important obviously for the long term success of the company. But does have some gross margin implications. So So we're working through it. We think that I mentioned on my remarks, that there's opportunities to continue to to be more efficient, but we want to take advantage of the assets that we think are driving long term value for our customers.

Keeping that 98% gross retention that Tom talked about. So great question.

Operator, next question.

Certainly. Our next question comes from the line of Brian Peterson from Raymond James. Your question please.

Hi guys. Thanks for taking the question. So Bill, maybe you could update us on the conversion of the customer base. I know that's going pretty well. Any sense for where we are in terms of customers that are still on older versions and how we should think about that migration through 2025?

Yes, thanks for the question. I did as you all had asked for, last summer, I did in the slide deck, Brian, give you the number of customers buy legacy In here, it's actually on annual ARR by contract type on Page seven. So you can get a sense there's 5%, there's still on perpetual, there's 15% that are on term based The percent that's on SaaS. So we're happy that it's on that it's 80% on SaaS. But we still have some work to do to get the conversion so that we're 100% and we're going to work on that over the next few years. So [indiscernible] hopefully, I'll appreciate the responsiveness that we gave to your question from last summer. Operator, next question? Certainly, our next question comes from the line of Brent Bracelin from Piper Sandler. Your question please. Thank you. Good afternoon. Bill, I have appreciate the bullish commentary on commercialFinance.ai products. Going into this year. But I wanted to double click on public sector That seems to be an area a little more uncertainty What portion of revenue comes from government public sector? Can you remind us that? And are you expecting that to grow remain flat or actually decline this year given the uncertainty?

Thanks.

Yes. Thanks for the question. I mean, we're super bullish on the opportunity that we have ahead with being Fed ramp high. Tom mentioned this is a multiyear very significant investment that we made along with the government to get to be FedRAMP high. There's not that many companies that are actually FedRAMP And so we think this unlocks additional opportunity for us within the federal government. Obviously, back to our earlier comments, [indiscernible] But we do think that OneStream offers efficiency and can really be effective at helping support overall government efficiency there [indiscernible] look, as Tom mentioned earlier, we had a public sector win here in early twenty twenty five and we're going to continue to work hard to play off the advantages that we have with the software and the benefits that we have with our with our overall offering. But no, thanks for that question. Operator, next question? Certainly. Our next question comes from the line of Mark Chappell from Loop Capital Markets. Your question please.

Hi. Thank you for taking my question. Bill, I was wondering if you could just discuss the attach rate you're seeing for your SensibleML solutions directionally? Is it increasing, staying the same?

I'm going to let Tom take that. This is he's excited to offer to answer this one. Well, thank you for the question. I will say that we as we look at this, we launched the product over a year ago and we were really pleased with the performance of the business of that progression of that business in 2024. As we continue to do market validation and you could hear from the statistics that we're collecting Part of OneStream's OneStream thesis as a business is that every customer has to be a reference and that the products that we bring to market have to do what they say they're going to do. So eventually, as we look at this and continue to prove those use cases across multiple industries, got a good sample set going. We feel that every customer is going to this is that's why we refer to it as a transformative product. Every customer is going to want to use this in some way, shape or form in the long term. So we'll keep working on that. And again, I want to just keep reiterating it. That's why we're so fanatical about gross retention because if I delight these customers, they stay on our product and we keep innovating, we're going to have that opportunity to help them become better in their finance processes and actually more advanced once they get their core capabilities done, they ultimately want to be more advanced and use our AI products as well.

So I'm excited about the potential of the attach rate for that product, very excited. Operator, let's go to our final question.

Certainly, our final question for today then comes from the line of Derek Wood from TD question please. Hi, Talam and Bill. This is Jared Jungwiel on for Derek Wood.

On legacy displacement and Greenfield Dale activity, you provide an update on any changes you're seeing in the market? Thank you.

Sorry, in terms of legacy replacement?

Displacing legacy vendors and then on the Greenfield side as well. Thank you. So as we look through this, again, reiterating that the we are not seeing any change in sort of that. That is a core mark that we go after and we're continuing to see lots of opportunity as businesses look to rationalize. And you can hear from the examples in my remarks of the number of multiple products that we're pulling out. And those those include in almost all cases some shape or form of a legacy product being replaced. And then at the same time, as we talk about CPM Express, what that's aimed at is a lot of the new greenfields That's aimed at companies that are earlier in their maturity, not necessarily it doesn't have as much to do with their size of the business as much as it has to do with their maturity as a finance team. And looking for us to be prescriptive to take what we've learned by working with some of the biggest businesses in the world and give them a faster on ramp with a packaged solution What's really important about that is the idea that you don't it's a faster on ramp to our platform, but you don't have to get off the platform.

It's the same software that if you wanted to grow all the way to Fortune one. So we're really excited. We're covering off on continuing to innovate. In summary, we're continuing to innovate in a way that allows us to be as attractive as ever to our replacement kind of legacy markets and show that value of being able to rush [indiscernible] And at the same time, provide an easier on ramp for newer customers. When I say an easier on ramp, it's to help those individuals show them the best way to use the CPM product if they're new to CPM and get onto our [indiscernible] it is and has been part of our long term growth plan.

So that's going to wrap up our call. I really appreciate everybody participating. We will be at the Morgan Stanley Conference in early March. So please, we hope to see you there. Please obviously reach out to them if you'd like to set up time with us. And we appreciate everybody's support of our company and hope you have a great rest of the week. Thank you. This does conclude the program. You may now disconnect. Good day.