S-1: OneStream Eyes Further Market Expansion with Secondary Offering

OneStream, Inc. files an S-1 for a secondary offering involving both the company and selling stockholders, aiming to repurchase LLC Units and Class C common stock.

Summary

• OneStream, Inc. has filed an S-1 registration statement for a secondary offering of 15,000,000 shares of Class A common stock.
• The offering includes 5,993,052 shares from the company and 9,006,948 shares from selling stockholders.
• The company intends to use the net proceeds to repurchase an equal number of LLC Units and Class C common stock from KKR Dream Holdings LLC in a synthetic secondary transaction.
• The offering will not change the total number of outstanding shares of common stock of OneStream, Inc. and LLC Units of OneStream Software LLC.
• KKR and Thomas Shea will beneficially own approximately 49.3% and 8.4%, respectively, of the voting power after the offering.
• OneStream, Inc. will cease to qualify as a controlled company under Nasdaq rules after the offering.
• The last reported sale price of OneStream's Class A common stock on November 11, 2024 was $34.33 per share.
• The underwriters have an option to purchase an additional 898,957 shares from the company and 1,351,043 shares from the selling stockholders.
• The company is an emerging growth company and will take advantage of reduced disclosure requirements.

Sentiment

Score: 6

Explanation: The document is largely factual, describing the terms of the secondary offering. The inclusion of risk factors tempers the overall sentiment.

Positives

• The company is using the proceeds to repurchase LLC Units, which could simplify its capital structure.
• The company will cease to be a controlled company, which may improve corporate governance.

Negatives

• The company will not receive any proceeds from the sale of shares by the selling stockholders.
• KKR will continue to have significant influence over the company after the offering.
• The company is incurring significant expenses related to the offering.
• The company has a history of operating losses and may not achieve or sustain profitability in the future.
• The company is an emerging growth company and will take advantage of reduced reporting requirements.

Risks

• Investing in OneStream, Inc.'s Class A common stock involves risk.
• The company's rapid growth may not be sustainable.
• The company faces intense competition.
• The company's business depends on customers renewing subscriptions.
• The company's sales cycles can be long and unpredictable.
• The company's revenue growth depends on strategic relationships with third parties.
• The company's quarterly results might fluctuate.
• The company's long-term success depends on international expansion.
• Security breaches could harm the company's business.
• Privacy and data protection concerns may limit the use of the company's platform.
• The company depends on OneStream Software LLC for its operating results.
• The company will be required to pay the TRA Members for certain tax benefits.
• The amounts that the company might be required to pay to the TRA Members might be accelerated.
• The company's organizational structure confers benefits upon the TRA Members.
• The company's Class C common stock and Class D common stock concentrate voting control.
• KKR currently controls the company and will continue to be able to significantly influence the company after the completion of this offering.
• The company's certificate of incorporation contains provisions renouncing the company's interest and expectation to participate in certain corporate opportunities identified by, or presented to, KKR or its affiliates.

Future Outlook

The company expects revenue from SaaS contracts to contribute an increasing portion of total revenue over time and intends to continue to invest efficiently in growing its business to take advantage of its expansive market opportunity, while remaining focused on positive cash flow.

Industry Context

The document highlights the trend of corporate leaders demanding strategic insights from the Office of the CFO, the historical under-investment in modernizing the CFO's office, the challenges in modernizing the CFO's office, and the limited successful implementation of AI across the Office of the CFO.

Related Party Transactions

• The company will use net proceeds to repurchase LLC Units and Class C common stock from KKR Dream Holdings LLC in a synthetic secondary transaction.
• The company is party to a Tax Receivable Agreement with KKR and other Continuing Members and certain Former Members.
• The company is party to a stockholders agreement with KKR Dream Holdings LLC.
• The company is party to a registration rights agreement with KKR and certain other parties.

Stakeholder Impact

• Existing shareholders may experience dilution.
• The company's capital structure may be simplified.
• The company will cease to be a controlled company, which may improve corporate governance.
• The company will incur significant expenses related to the offering.

Next Steps

• The company will complete the secondary offering and use the proceeds to repurchase LLC Units and Class C common stock.
• The company will continue to operate as a public company and comply with SEC reporting requirements.

Key Dates

Keywords

OneStream, Class A common stock, secondary offering, LLC Units, KKR, Synthetic Secondary, IPO, Reorganization Transactions, Digital Finance Cloud, financial consolidation, reporting, planning, analysis