S-1: OneStream Files for IPO, Aiming to Modernize Corporate Finance

OneStream, a provider of corporate performance management software, has filed for an initial public offering to further its mission of modernizing the Office of the CFO.

Summary

• OneStream, Inc. has filed an S-1 registration statement for an IPO of its Class A common stock.
• The company aims to modernize the Office of the CFO with its Digital Finance Cloud platform.
• The IPO will involve both OneStream offering shares and selling stockholders offering shares; OneStream will not receive proceeds from the sale of shares by the selling stockholders.
• The company intends to list its Class A common stock on the Nasdaq Global Select Market under the symbol 'OS'.
• OneStream plans to use the net proceeds to purchase newly issued LLC Units from OneStream Software LLC and to purchase outstanding LLC Units from KKR and other Continuing Members in a synthetic secondary transaction.
• Following the offering, OneStream, Inc. will be a holding company whose principal asset will be LLC Units of OneStream Software LLC.
• The company's software revenue was $343.4 million in 2023, representing 40% year-over-year growth.
• OneStream had 1,423 customers as of March 31, 2024, including more than 75 of the Fortune 500 companies.

Sentiment

Score: 7

Explanation: The document presents a generally positive outlook with strong growth metrics, but also acknowledges risks and past losses. The sentiment is moderately positive.

Positives

• The company's software revenue grew 40% year-over-year to $343.4 million in 2023.
• The company's ARR was $480.0 million as of March 31, 2024, representing 34% year-over-year growth.
• The company incurred net losses of $65.5 million and $28.9 million in 2022 and 2023, respectively, representing a year-over-year decrease of 56%.
• The company expects total revenue to grow by 20% to 25% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Negatives

• The company has a history of operating losses and may not achieve or sustain profitability in the future.
• The company incurred net losses of $65.5 million and $28.9 million in 2022 and 2023, respectively, representing a year-over-year decrease of 56%.

Risks

• The company's recent rapid growth may not be sustainable or indicative of future growth.
• The company faces intense competition and could lose market share to its competitors.
• If the company's platform or applications contain serious errors or defects, it might lose revenue and market acceptance.
• Privacy, data protection and data security concerns, and data collection and transfer restrictions may limit the use and adoption of the platform.
• KKR controls the company, and its interests may conflict with the company's or Class A common stockholders' interests.

Future Outlook

The company expects total revenue to grow by 20% to 25% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Management Comments

• Our vision is to be the operating system for modern Finance by unifying core financial functions and empowering the CFO to become a critical driver of business strategy and execution.

Industry Context

The market for financial and EPM applications has historically been dominated by large, legacy incumbents, including IBM, Infor, Oracle and SAP, which have failed to adapt their offerings to support the strategic evolution of the Finance function.

Comparison to Industry Standards

• According to IDC, the aggregate revenue generated by IBM, Infor, Oracle and SAP from financial applications and enterprise performance management applications in 2022 was approximately $9.8 billion.
• OneStream competes with legacy players such as Oracle, SAP and Infor and point product providers such as Anaplan, Blackline, Wolters Kluwer and Workday.

Related Party Transactions

• The company is party to a lease agreement pursuant to which it rents office space in Rochester, Michigan from an entity owned by Mr. Shea.
• Andrew Shea, who is the son of Mr. Shea, is one of the founders of DataSense and, prior to our May 2024 acquisition, served as its chief executive officer and was a minority equity holder through the holding company mentioned above.
• Olivia Welsh, who is the daughter of Mr. Welsh and was an employee of DataSense prior to our acquisition, serves as our AI Solutions Consultant with aggregate compensation in 2024 of $197,167, inclusive of annual gross base salary, to be prorated for working days, and equity incentive compensation.
• Jeffrey DeGrieck, who is the brother-in-law of Mr. Shea, currently serves as our strategic advisor and previously served as our chief operating officer through the end of 2021.
• Terrance Shea, who is the brother of Mr. Shea, currently serves as our distinguished architect.
• Kyle Powers, who is the son of Mr. Powers, currently serves as one of our senior software engineers.
• Ryan Powers, who is the son of Mr. Powers, currently serves as one of our principal software engineers.

Stakeholder Impact

• Investors in this offering will hold their equity ownership in the form of shares of Class A common stock of OneStream, Inc.
• The UP-C structure provides the Continuing Members with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded.
• The TRA Members (as defined below) to receive 85% of the cash savings attributable to tax benefits under the terms of the TRA, and the payments of such amounts to the TRA Members, payable upon OneStream, Inc.'s actual or deemed realization of the tax benefits, are expected to be substantial.

Next Steps

• The company intends to list its Class A common stock on the Nasdaq Global Select Market under the symbol 'OS'.
• The underwriters expect to deliver the shares of Class A common stock to purchasers on , 2024.

Key Dates

Keywords

IPO, initial public offering, corporate performance management, SaaS, financial close, financial consolidation, financial reporting, financial planning, KKR, OneStream