10-Q: OneStream Q3: Subscription Soars, Losses Narrow Significantly

OneStream, Inc. reported robust subscription revenue growth and a substantial reduction in net losses for the third quarter and first nine months of 2025, driven by new customer acquisition and a strategic shift to a SaaS-based model.

Summary

• Total revenue for the three months ended September 30, 2025, increased by 19% to $154.3 million, up from $129.1 million in the same period of 2024.
• Subscription revenue grew by 27% to $140.9 million in Q3 2025, representing 91% of total revenue, compared to 86% in Q3 2024.
• License revenue decreased by 64% to $4.2 million in Q3 2025, reflecting the company's continued shift to a SaaS-based model.
• Professional services and other revenue increased by 38% to $9.2 million in Q3 2025.
• Net loss attributable to OneStream, Inc. significantly decreased to $(8.85) million in Q3 2025 from $(171.94) million in Q3 2024.
• For the nine months ended September 30, 2025, total revenue increased by 23% to $438.2 million from $356.9 million in the prior year period.
• Nine-month subscription revenue grew by 29% to $399.7 million, comprising 91% of total revenue.
• Nine-month net loss attributable to OneStream, Inc. decreased to $(51.30) million from $(184.75) million in the prior year period.
• Gross profit for Q3 2025 increased by 62% to $105.1 million, with gross margin improving to 68% from 50% in Q3 2024.
• Operating expenses for Q3 2025 decreased by 62% to $122.5 million, primarily due to lower equity-based compensation expense related to the Option Modification in Q3 2024.
• Net cash provided by operating activities for the nine months ended September 30, 2025, was $70.9 million, up from $36.0 million in the same period of 2024.
• The company had 1,739 customers as of September 30, 2025, representing a 13% year-over-year growth from 1,534 customers in 2024.
• Remaining performance obligations as of September 30, 2025, were $1,238.0 million, with approximately 40% expected to be recognized as revenue in the next 12 months.
• The company's cash and cash equivalents stood at $653.9 million as of September 30, 2025, with an undrawn revolving credit facility of $150.0 million.

Sentiment

Score: 7

Explanation: The company shows strong operational improvements, particularly in reducing losses and increasing subscription revenue, driven by a successful SaaS transition. However, it still faces intense competition, ongoing operating losses, and significant risks related to its organizational structure and potential TRA liabilities. The positive financial trends and strategic focus on growth and AI are strong, but the inherent risks and the derivative action temper the overall sentiment.

Positives

• Subscription revenue demonstrated strong growth of 27% in Q3 2025 and 29% for the nine months, indicating successful adoption of the SaaS model and customer expansion.
• Net loss attributable to OneStream, Inc. significantly improved, reducing from $(171.94) million to $(8.85) million in Q3 2025, and from $(184.75) million to $(51.30) million for the nine months.
• Gross profit increased by 62% in Q3 2025, with gross margin improving to 68% from 50% in Q3 2024, reflecting enhanced operational efficiency and a favorable sales mix.
• Operating expenses decreased substantially by 62% in Q3 2025, primarily due to lower equity-based compensation, which was a key factor in reducing overall losses.
• Net cash provided by operating activities increased to $70.9 million for the nine months ended September 30, 2025, from $36.0 million in the prior year, indicating stronger cash generation from core operations.
• The customer base grew by 13% year-over-year, reaching 1,739 customers, demonstrating continued market penetration.
• International revenue growth is strong, with non-U.S. revenue accounting for 34% of total revenue in Q3 2025, up from 29% in Q3 2024.
• The company completed an acquisition of three partner-developed solutions for $3.7 million to enhance platform features and capabilities.
• OneStream maintained compliance with all financial covenants under its revolving credit facility, indicating sound financial management.

Negatives

• The company continues to report operating losses, with a loss from operations of $(17.46) million in Q3 2025 and $(89.57) million for the nine months, and expects to incur net losses for the foreseeable future.
• License revenue decreased significantly by 64% in Q3 2025 and 44% for the nine months, although this is part of a strategic shift, it represents a decline in a traditional revenue stream.
• An estimated unrecorded Tax Receivable Agreement (TRA) liability of $195.2 million as of September 30, 2025, could result in substantial future cash payments.
• Voting control is concentrated with holders of Class C and Class D common stock (including KKR and the co-founder/CEO), which limits the influence of other Class A common stockholders.
• A stockholder derivative action was filed on September 19, 2025, alleging breach of fiduciary duties and unjust enrichment by KKR and certain officers/directors, which could lead to significant costs and reputational harm.
• Foreign currency translation resulted in a net expense of $(0.9) million in Q3 2025, a negative shift from a net income of $0.8 million in Q3 2024.

Risks

• Rapid growth may not be sustainable or indicative of future growth, and the company may struggle to attract new customers, retain existing ones, or increase platform adoption.
• Failure to effectively manage operations to support rapid growth and potential future expansion could strain managerial, administrative, operational, and financial resources.
• The company has a history of operating losses and may not achieve or sustain profitability in the future, with expectations of continued net losses.
• Intense competition from established legacy players (e.g., Oracle, SAP) and specialized providers (e.g., Anaplan, Blackline, Workday) could lead to market share loss.
• If the industry does not develop as anticipated or if potential customers do not continue to adopt the platform, sales growth could be slower than expected or cease entirely.
• Serious errors or defects in the platform or applications could result in lost revenue, reputational damage, and potential product liability claims.
• Dependence on customer renewals and expansion of platform use; failure to renew or renew on less favorable terms would adversely affect the business.
• Long and unpredictable sales cycles, particularly with large enterprises, require considerable time and expense without guaranteed sales outcomes.
• Revenue growth is partly dependent on successful strategic relationships with third parties, including go-to-market and implementation partners; failure to maintain these could be detrimental.
• Revenue recognition from SaaS subscriptions over contract terms means that increases or decreases in new sales are not immediately reflected in operating results.
• The continued transition to a SaaS-based model could cause operating results to fluctuate.
• Changes in the pricing model could harm the business, operating results, and financial condition.
• Quarterly results might fluctuate, and failure to meet analyst or investor expectations could cause the stock price to decline substantially.
• Long-term success depends on international expansion, which exposes the business to risks such as foreign laws, exchange rate fluctuations, and political instability.
• Security controls or those of vendors could be breached, leading to unauthorized access to customer data, loss of customers, and significant liabilities.
• Privacy, data protection, and cybersecurity concerns, along with data collection and transfer restrictions and related domestic or foreign regulations, may limit platform use and adoption.
• The company's principal asset is its interest in OneStream Software LLC, and it depends on OneStream Software LLC for operating results, cash flows, and distributions.
• The company might be required to pay the TRA Members for certain tax benefits, and these payments could be substantial and potentially exceed actual tax benefits realized.
• The organizational structure, including the TRA, confers certain benefits upon the TRA Members (including KKR) that do not benefit Class A common stockholders to the same extent.
• Class C and Class D common stock, with ten votes per share, concentrate voting control with KKR and the co-founder/CEO, limiting other stockholders' ability to influence corporate matters.
• KKR controls the company, and its interests may conflict with the company's or Class A common stockholders' interests.
• The company's certificate of incorporation contains provisions renouncing its interest in certain corporate opportunities identified by KKR or its affiliates, which could create conflicts of interest.
• Unfavorable macroeconomic conditions (e.g., tariffs, inflation, interest rates, geopolitical tensions, labor strikes) could adversely affect the business and customer demand.
• The company may need additional capital, and there is no certainty that additional financing will be available on favorable terms or at all.
• Acquisitions or investments in other businesses, products, or technologies could divert management's attention, result in dilution, and disrupt operations.
• Legal proceedings, regulatory disputes, and government investigations (e.g., the 2025 Derivative Action) could incur significant expenses and divert management's attention.
• Indemnification obligations and limitations of director and officer liability insurance may have a material adverse effect on operating results, financial condition, and cash flows.
• Governmental export and import controls could impair the company's ability to compete in international markets and subject it to liability for non-compliance.
• Exposure to foreign currency exchange rate fluctuations could impact financial results.
• Interruptions or performance problems associated with the platform and technology might harm the business, operating results, financial condition, and reputation.
• Reliance on a limited number of third-party data centers (Microsoft Azure) means any disruption of service at these centers could harm the business.
• Failure to ensure the platform interoperates with a variety of third-party software applications could reduce competitiveness.
• Incorrect or improper implementation or use of the platform could result in customer dissatisfaction.
• Failure to attract and retain additional qualified personnel or to maintain the company culture could harm the business.
• Inability to successfully develop, implement, and offer AI-enabled solutions or use AI technology could harm the business.
• The requirements of being a public company might strain resources, divert management's attention, and affect the ability to attract and retain executive management and qualified board members.
• The company may be required to collect taxes in jurisdictions where it has not historically done so, potentially leading to substantial tax assessments.
• International operations subject the company to potentially adverse tax consequences, including transfer pricing regulations and global minimum tax initiatives.
• The disparity between the U.S. corporate tax rate and the U.S. tax rate applicable to non-corporate members of OneStream Software LLC might complicate the ability to maintain the capital structure.
• Substantial future sales of shares of Class A common stock, or the perception of such sales, could cause the market price to decline.
• If securities or industry analysts do not publish research or reports about the business, or if they downgrade the stock or sector, the stock price and trading volume could decline.
• Anti-takeover provisions in governing documents could make an acquisition difficult, limit attempts by stockholders to replace management, and depress the market price of Class A common stock.
• Bylaws designate a state or federal court in Delaware as the exclusive forum for substantially all disputes, which could limit stockholders' ability to choose the judicial forum.

Future Outlook

The company expects to continue incurring net losses for the foreseeable future as it scales its business, with costs and expenses anticipated to increase. It plans to invest significantly in research and development, sales and marketing, and international expansion, while remaining focused on positive cash flow. The company anticipates subscription revenue to contribute an increasing portion of total revenue over time and expects gross profit and software gross profit to increase in absolute dollars. Gross margin and software gross margin are also expected to increase over time, though they may fluctuate. The company will be deemed a large accelerated filer as of December 31, 2025, and will no longer qualify as an emerging growth company, leading to increased compliance costs.

Management Comments

• "We are focused on our long-term revenue potential. We believe that our market opportunity is large, and we will continue to invest significantly in scaling across organizational functions to grow our operations, both domestically and internationally."
• "Our continued growth will depend, in part, on our ability to grow a productive workforce across all departments of our organization to support our expanding operations, and, in part, on our ability to successfully introduce new and enhanced core solutions and applications on our platform."
• "We therefore intend to continue to invest efficiently in growing our business to take advantage of our expansive market opportunity, while remaining focused on positive cash flow."
• "Our goal is 100% customer success and it drives everything we do."
• "We intend to continue to invest in our research and development to expand and enhance our platforms features and capabilities to drive further adoption, both within the Office of the CFO and by users outside the finance organization."
• "We expect revenue from SaaS contracts to contribute an increasing portion of total revenue over time."
• "We expect our cost of professional services and other revenue to fluctuate as we continue to invest in our growth, but we expect it to decrease as a percentage of revenue due to our software revenue growth and our strategy of leveraging our growing partner network to provide implementation services."
• "We expect our gross profit and software gross profit to increase in absolute dollars as total revenue and software revenue increases. We also expect our gross margin and software gross margin to increase over time, although they may fluctuate from period to period."
• "We plan to increase our investment in sales and marketing over the foreseeable future as we continue to grow our business, primarily driven by increased headcount and increased spending on promotional events and product-marketing efforts. However, we expect our sales and marketing expenses to decrease as a percentage of our total revenue over time as we benefit from scale in our business."
• "We plan to increase our investment in research and development over the foreseeable future as we continue to grow our business, although research and development expenses may fluctuate as a percentage of our total revenue from period to period. This expected increase in research and development expenses is primarily driven by a focus on further developing our platform."
• "We expect that our general and administrative expenses will increase as our business grows but will decrease as a percentage of our total revenue over time as we benefit from scale in our business."

Industry Context

OneStream operates in the intensely competitive and rapidly evolving market for financial consolidation, reporting, planning, and analytics software, often referred to as Enterprise Performance Management (EPM). The company is positioning its "Digital Finance Cloud" as a modern, AI-enabled, unified platform to replace multiple legacy systems, competing with established players like Oracle and SAP, as well as specialized providers such as Anaplan, Blackline, Wolters Kluwer, and Workday. The industry is seeing a shift towards SaaS-based models and increasing demand for AI and machine learning capabilities, which OneStream is actively investing in. The company's strategy of leveraging a partner ecosystem for implementation and go-to-market is a common approach in the enterprise software sector to scale operations and customer reach.

Comparison to Industry Standards

• The filing does not provide specific global benchmarks or direct comparisons to comparable companies' projects and results. It mentions competing with "legacy players such as Oracle and SAP and point product providers such as Anaplan, Blackline, Wolters Kluwer and Workday" but does not offer a detailed assessment against their specific performance metrics or project outcomes.
• The company's gross margin of 68% for Q3 2025 and 75% software gross margin are generally strong for a SaaS company, indicating efficient delivery of its core software services, potentially comparable to leading SaaS providers in the EPM space.
• The 13% year-over-year customer growth to 1,739 customers suggests a healthy, though not hyper-growth, expansion in its target market of large and medium-sized enterprises.
• The significant reduction in operating losses and net loss, primarily driven by lower equity-based compensation, indicates an improvement in cost management and a move towards profitability, which is a positive trend compared to many high-growth tech companies that prioritize market share over immediate profits.

Corporate Governance

Legal Proceedings

• On September 19, 2025, a stockholder derivative action, "Ayers v. Shea, et al., Case No. 2025-1071-PAF," was filed in the Delaware Court of Chancery against certain officers and directors of OneStream, Inc. and KKR.
• The plaintiff alleges that KKR and certain officers/directors breached their fiduciary duties and were unjustly enriched by selling shares in a November 2024 secondary offering and non-dilutive secondary transaction based on adverse material non-public information regarding financial growth metrics.
• The complaint further alleges that the individual defendants breached their fiduciary duties by permitting the stock sales to occur and by issuing materially misleading disclosures in the registration statement for the secondary offering.
• The complaint seeks, among other things, disgorgement of all profits derived from the challenged stock trades, other unspecified damages, and an award of costs and fees incurred by the derivative plaintiff.
• The company is not presently a party to any other litigation the outcome of which, if determined adversely, would individually or taken together have a material adverse effect on its business, operating results, cash flows, or financial condition.

Related Party Transactions

• Prior to the acquisition of DataSense LLC in Q2 2024, the company had consulting and software development services agreements with DataSense. Thomas Shea, the company's co-founder, chairman, CEO, and president, is the father of Andrew Shea, who was the CEO and an equity holder in DataSense until its acquisition.
• The company paid $1.9 million in 2024 through May 1, 2024, under these consulting and software development services agreements, which were included in research and development expenses.
• DataSense Holdings LLC (DataSense Holdings) held LLC Units and corresponding Class C common stock, some of which vested during the nine months ended September 30, 2025. As of September 30, 2025, 706,511 LLC Units and corresponding Class C common stock issued to DataSense Holdings remained unvested.
• KKR Dream Holdings LLC (KKR) is both a Former Member and a Continuing Member, and a party to the Tax Receivable Agreement (TRA). KKR holds a majority of the voting power and has significant control over the company's operations and board nominations.
• The TRA requires the company to pay KKR and other TRA Members 85% of certain tax savings, which could be substantial and may conflict with Class A common stockholders' interests.
• The company's certificate of incorporation renounces interest in certain corporate opportunities identified by KKR or its affiliates, potentially creating conflicts of interest.

Stakeholder Impact

• Shareholders (Class A Common Stockholders): Positive impacts from reduced net losses, strong subscription revenue growth, and improved gross margins. Negative impacts from concentrated voting control, potential substantial TRA payments, and risks from the ongoing derivative action. Dilution risk from future equity sales or conversions. No dividends expected in the foreseeable future.
• Employees: Potential for job growth and development opportunities due to continued investment in R&D and sales/marketing. Equity-based compensation plans provide incentives. Competition for talent and potential diversion of resources due to legal proceedings are challenges.
• Customers: Expected improvements in product value and support from continued investment in platform enhancements and AI-enabled solutions. Risks include platform errors/defects, security breaches, service interruptions, and potential impacts from changes in pricing models.
• Partners (Go-to-market, Implementation, Development): Growing opportunities due to increased reliance on partners for services and investment in partner training. Risks include partners not prioritizing OneStream's platform or working with competitors, and potential negative impact from customer dissatisfaction with partner services.
• Creditors: Strong liquidity with $653.9 million in cash and $150.0 million undrawn credit facility, and compliance with financial covenants, indicate a healthy credit profile. Ongoing operating losses and potential TRA payments could impact future liquidity if not managed effectively.

Next Steps

• Continue to invest significantly in scaling across organizational functions, both domestically and internationally.
• Grow a productive workforce across all departments to support expanding operations.
• Successfully introduce new and enhanced core solutions and applications on the platform.
• Invest efficiently in growing the business while remaining focused on positive cash flow.
• Attract, retain, and train sales personnel, domestically and internationally, especially those with experience selling to larger enterprises.
• Grow, educate, and nurture the partner ecosystem to support customer acquisition and platform implementation.
• Continue to invest in customer success efforts to help customers realize the full potential of the platform and expand use cases and users.
• Expand sales of the platform to customers located outside of the United States, investing in personnel, office space, marketing, and data center capacity for international growth.
• Invest in research and development to expand and enhance platform features and capabilities, including AI-enabled solutions.
• Monitor legislative and regulatory developments regarding global minimum tax (Pillar Two) and other OECD rules to assess potential impacts.
• Comply with new cybersecurity risk management and disclosure rules adopted by the SEC.
• Prepare for being deemed a large accelerated filer as of December 31, 2025, which will require compliance with auditor attestation reports on internal control over financial reporting.
• Continue to monitor and upgrade controls and procedures as necessary or appropriate for the business.

Key Dates

Recommendation

The filing presents a mixed but generally improving financial picture. The significant reduction in net losses, strong subscription revenue growth, and improved gross margins are very positive indicators of operational efficiency and successful execution of the SaaS transition strategy. The company's focus on AI and international expansion also points to future growth potential. However, the company still operates at a loss, faces intense competition, and has substantial unrecorded liabilities under the Tax Receivable Agreement (TRA) which could impact future cash flows. The ongoing stockholder derivative action adds a layer of legal and reputational risk. Given the strong operational improvements but also the inherent risks and the controlling shareholder structure, a "hold" recommendation is appropriate. Investors should monitor the company's progress towards sustained profitability, the resolution of the derivative action, and the impact of TRA payments, while acknowledging the positive momentum in its core business.

Keywords

Cloud Software, Financial Performance Management, SaaS, Enterprise Performance Management (EPM), Digital Finance Cloud, AI-enabled solutions, Corporate Governance, SEC Filing, 10-Q, Subscription Revenue, Operating Losses, KKR, Stockholder Derivative Action