To The Moon

1. Company Description

$OneStream, Inc.(OS)$ Software is a company focused on providing software solutions for corporate finance departments and CFO's. Founded in 2012 and headquartered in Birmingham, Michigan.Founded in 2012 and headquartered in Birmingham, Michigan, OneStream provides a unified, intelligent financial platform that simplifies and integrates financial consolidation, planning, reporting, analytics, and financial data quality management functions, and is designed to replace multiple legacy systems with an all-in-one solution for complex organizations.

The company has offices in several U.S. states, as well as locations in Australia, France, the Netherlands, Germany, Singapore, Sweden and the United Kingdom.Currently, OneStream has over 1,400 customers in more than 45 countries and employs 1,300 people worldwide.

2. Business analytics

OneStream's core product is its Digital Finance Cloud platform, known as the operating system for the CFO's office.The platform consists of three core modules.

1. Financial close and consolidation: automate tasks and manage complex financial reporting and consolidation processes.

2. Financial and operational planning analytics: Support financial and operational planning, budgeting, forecasting, and results analytics across business units and synchronize these plans across the organization.

3. Financial and Operational Reporting: Provides end-to-end visualization of analytics and key metrics for all stakeholders.

In addition, OneStream offers more than 90 first- and third-party applications covering transaction matching, tax preparation, account reconciliation, cash flow forecasting and more.The platform also integrates with hundreds of data sources, including ERP, CRM, SCM and HCM systems.

3. Performance analysis

For the year ended March 31, 2024, OneStream reported annual recurring revenue (ARR) of $480 million, up 34% year-over-year. The company has maintained strong growth momentum over the past few years. 2019: revenues of more than $130 million, up more than 50% year-over-year; 2022: net loss of $65.5 million on total revenues of $279 million; 2023: net loss of $28.9 million on total revenues of $375 million.

Through Q1 2024, it had 1,423 customers, including 75 Fortune 500 companies, up from 1,190 customers a year earlier.By Q2 2024, it rose to 1,482 clients.

Even more impressive, customers with an ARR of more than $250,000 have grown 91% since Q1 2022, from 278 to 531, and customers with an ARR of more than $1 million have grown 166% since Q1 2022, from 29 to 77.

OneStream's ARR increased 34% year-over-year from $358.4 million to $480.0 million in Q1 2024, and revenue increased 44% year-over-year from $70.9 million to $101.9 million over the same period.The growth in ARR and revenue is primarily attributable to new customers, as they accounted for 74% and 72% of the ARR and revenue growth, respectively.

OneStream's ability to attract new customers is particularly promising given its strong customer retention rates.Currently, the company claims a net retention rate (NRR) of 118% and a gross retention rate (GRR) of 98%, underscoring the value proposition of its platform.

On the global front, OneStream is expanding its international presence as the share of revenue generated outside the U.S. was 31% in Q1 2024 compared to 30% in Q1 2023.The company has also diversified its revenue base as no customer will account for more than 5% of its total revenue in FY2022, FY2023 and Q1 2024.This means that if it loses any customer, the company will not be affected much.

Thanks to its SaaS business model, the company has good margins, with its gross margins at 66.88% in FY2022, 69.46% in FY2023, and 69.15% in Q1 2024.However, the majority of OneStream's costs are spent on sales and marketing, which accounted for 54.88%, 46.89%, and 43.8% of total revenues in fiscal 2022, fiscal 2023, and the first quarter of 2024, respectively.

General and administrative expenses accounted for 17.79%, 15.96% and 14.88% in fiscal 2022, fiscal 2023 and the first quarter of 2024, respectively, while research and development expenses accounted for 15.44%, 14.75% and 15.34% in each of these periods.

By doing so, OneStream's operating margin improved from -21.22% in FY2022 to -8.14% in FY2023, and currently stands at -4.88% as of the end of the first quarter of 2024.

Although the company remains in the red, revenues are growing rapidly. oneStream expects to continue to incur losses for the foreseeable future as the company continues to scale its business.

4. Valuation Analysis

Based on the IPO pricing, OneStream is valued at approximately $4.6 billion.Given the company's high growth rate and positioning in the enterprise financial software market, this valuation reflects investors' optimistic expectations for the company's future prospects.

At the current share price of $28 per share, OneStream has a market capitalization of nearly $6.5 billion and an enterprise value of approximately $6 billion.

The current valuation is relatively high, with OneStream's enterprise value/sales multiple (EV/Sales) estimated at 11.53 on 2024 revenues, while major peer competitors $Workday(WDAY)$ $ Oracle (ORCL)$</a5> , $SAP SE(SAP)$, $IBM(IBM)$ and $Blackline Inc.(BL)$ have an average of 6.0.

It should be noted that OneStream is currently unprofitable, which could impact its long-term valuation.Investors will closely monitor the company's ability and timeline to achieve profitability.

5. IPO Performance

• IPO Date:July 24, 2024

• Symbol:OS (NASDAQ Global Select Market)

• IPO Price:$20 per share (above initial price range of $17-$19)

• Number of Shares Issued: 24.5 million Class A common shares

• Proceeds: approximately $490 million (excluding shares sold by existing shareholders)

6. Market feedback

OneStream's IPO was well received by the market.

• Shares rose more than 30% on the first day of trading, demonstrating strong investor demand.

• Company successfully raised approximately $490 million, exceeding initial expectations

• Investors showed strong interest in OneStream's growth potential in the enterprise financial software market.

The positive market response to OneStream may be attributed to several factors.

1. The company's leading position in the fast-growing enterprise financial software market

2. Strong revenue growth and customer expansion

3. Potential challenge to traditional competitors (e.g. Oracle, SAP, etc.)

4. Backing from leading private equity firms such as KKR