OneStream Q3 2025: Contradictions Emerge on Federal Revenue, CPM Express Momentum, and AI Monetization Strategies

Date of Call: November 6, 2025

Financials Results

• Revenue: $154M total revenue in Q3, up 19% YOY; subscription revenue $141M, up 27% YOY; billings $178M, up 20% YOY (21% TTM); license revenue $4M, down 64% YOY; professional services $9M, up 38% YOY.
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• EPS: $0.08 non-GAAP EPS, flat with prior year (non-GAAP net income $15.2M, up $3.9M YOY); Q4 guide $0.04-$0.07; FY2025 guide $0.15-$0.19.
• Gross Margin: Non-GAAP gross margin 69%, compared with 71% in the prior year; non-GAAP software gross margin 75% vs 78% prior year (decline primarily due to lower license revenue).
• Operating Margin: Non-GAAP operating income $9.3M, or 6% of revenue (up $3.8M or 69% YOY); Q4 non-GAAP operating margin guide 4%-6%; FY2025 guide 2%-3%.

Guidance:

• Q4 revenue expected $156M-$158M; non-GAAP operating margin 4%-6%; non-GAAP EPS $0.04-$0.07; stock-based compensation ~ $25M; billings growth ~20% (includes ~$4M accelerated Q3 billings).
• FY2025 revenue expected $594M-$596M; non-GAAP operating margin 2%-3%; non-GAAP EPS $0.15-$0.19; stock-based compensation $115M-$120M.
• Formal 2026 guidance to be provided in February; management stated it is comfortable with current Street consensus for 2026 revenue and non-GAAP operating income.

Business Commentary:

* Strong Financial Performance: - OneStream reported subscription revenue growth of 27% year-on-year and billings growth of 20% in Q3. - The increase was driven by strong legacy replacement momentum in Europe, particularly in the EMEA region, and the successful execution of federal customer renewals and new additions.

• AI Product Adoption:
• AI bookings increased by 60% year-on-year, with significant interest in AI-powered forecasting and ESG capabilities.

• The growth is attributed to the validation of AI's value demonstrated by improved forecast accuracy and efficiency in key financial metrics.

• EMEA Market Expansion:

• Revenue from the EMEA region grew by 37% year-on-year, contributing 34% of OneStream's total revenue.

• This expansion is supported by legacy replacements, federal contract wins, and increased sales and marketing efforts in the region.

• Product Innovation and Market Positioning:

• OneStream introduced SensibleAI Studio and moved its SensibleAI agents to limited availability, indicating enhanced product offerings and market demand.
• The company's comprehensive AI platform and purpose-built AI solutions position it as a leader in finance AI, attracted by CFOs expanding roles and the need for strategic business support.

Sentiment Analysis:

Overall Tone: Positive

• Management called Q3 "a strong quarter" and said they are "raising our 2025 growth and profitability outlook." Key metrics cited: subscription revenue +27% YOY, billings +20% YOY, free cash flow and cash balance gains; management highlighted product momentum (AI, SensibleAI, CPM Express) and said they entered Q4 with a more differentiated portfolio and comfort with Street consensus for 2026.

Q&A:

• Question from John DiFucci (Guggenheim Securities): On federal dynamics — renewals, license rationalization and what this means for future federal opportunity?
  Response: SaaS conversions reduced license revenue but will convert to subscription over time; only one lost federal agency due to a merger and one new federal customer added; management is optimistic about federal recovery heading into 2026.

• Question from Christopher Quintero (Morgan Stanley): Is customer AI spend aligning with your pipeline and what are the initial use cases you're seeing?
  Response: Yes — customers are adopting SensibleAI Forecast for quantitative forecasting, Studio for algorithms/outlier detection and agents for automation; OneStream's contextualized finance data is driving adoption.

• Question from Adam Hotchkiss (Goldman Sachs): What are the primary drivers supporting growth stabilizing into 2026?
  Response: EMEA momentum (large replacements), Asia Pacific expansion, CPM Express commercial rollouts and enterprise deal pipeline in the U.S. are the key drivers.

• Question from Koji Ikeda (BofA Securities): How are you modeling pipeline and conversion assumptions into 2026; more conservative or same?
  Response: Forecasts are driven by pipeline and conversion rates; confidence stems from strong pipeline plus expanding AI/product portfolio (AFA, SensibleAI Forecast up 60% YOY, Studio and agents).

• Question from Aleksandr Zukin (Wolfe Research): Comment on the demand environment, billings acceleration and NRR trends given add-ons and product expansion?
  Response: Q3 add-ons and early renewals drove billings upside; multiproduct strategy is increasing expansion/NRR and supporting billings momentum into Q4.

• Question from Terrell Tillman (Truist Securities): What's driving EMEA replacement momentum — replacement cycle, coverage or partners? Rank the drivers.
  Response: EMEA momentum is driven by increased regional scale/coverage, a legacy replacement cycle (aging systems), strong local execution and product fit (including IFRS Express).

• Question from Steven Enders (Citi): Are you seeing incremental AI pipeline builds from sales effort and how does the AI pipeline look into 2026?
  Response: Pipeline validates momentum from SensibleAI Forecast; early customer enthusiasm for AI Studio and limited-availability agents supports growing AI opportunity into 2026.

• Question from Scott Berg (Needham): Early revenue opportunity from agents and any impact on seat-based model?
  Response: Agents will be usage‑priced and expected to produce incremental revenue and efficiency gains rather than displacing seat-based licensing.

• Question from Mark Murphy (JPMorgan): Traction in emerging applications outside core (reconciliations, supplier analytics) and significance of big pharma win?
  Response: Operational use cases (account reconciliations, supplier analytics) show strong traction via Agile Financial Analytics and AI; the big pharma legacy replacement validates vertical expansion opportunity.

• Question from Jacob Roberge (William Blair): Feedback on agentic offerings and which agents drive outsized interest?
  Response: Highest customer interest in the finance analyst agent (broad analytics/reporting), plus search and deep-analysis agents; focus is on workflow-based automation and repeatable task execution.

• Question from Unknown Analyst (Mizuho): Competitive displacements vs Hyperion/SAP and importance for FY26 growth?
  Response: Legacy CPM displacements remain a consistent, large opportunity and are central to growth; CPM Express broadens the addressable market beyond traditional legacy replacements.

• Question from Unknown Analyst (Raymond James): How are legacy replacements and CPM Express tracking in 2025 and which creates most upside for 2026?
  Response: Multiple vectors: EMEA legacy replacements and commercial IFRS/CPM Express, Asia Pacific growth and U.S. AI sales together create diversified upside for 2026.

• Question from Brett Huff (Stephens): Will your agents interoperate with other vendors' agents or will there be a single orchestration layer?
  Response: OneStream aims to be the finance-focused agent leader due to contextualized data while building agent-to-agent protocols and planning for multi-agent orchestration with other platforms.

• Question from James Wood (TD Cowen): How did you account for government shutdown risk in Q4 guidance and thoughts on rebuilding Fed momentum (FedRAMP High / DOGE)?
  Response: Q3 SaaS conversions were positive; FedRAMP High certification uniquely positions OneStream to serve agencies and they are pursuing AI FedRAMP High — management sees strong positioning to rebuild federal momentum while hoping shutdown ends quickly.

• Question from Andrew DeGasperi (BNP Paribas): Will license revenue decline persist or be muted going forward; balance of license/services/subscription?
  Response: Expect continued migration from license to SaaS over the next couple years with license revenue becoming minimal; professional services likely modest growth and stable run-rate.

• Question from Mark Schappel (Loop Capital): Any changes to sales/marketing strategy or prioritization of investments?
  Response: Plan to scale sales and marketing across product lines (AI, CPM Express) while maintaining focus on core legacy market, prioritizing productized use-case selling and expanded coverage.

Contradiction Point 1

Federal Government Revenue and Pipeline

It involves differing perspectives on the federal government's impact on revenue and the strength of the pipeline, which could influence investor expectations and strategic planning.

Can you explain how federal contract rationalization and customer renewals impact federal business dynamics and overall results? - John DiFucci (Guggenheim Securities)

2025Q3: The federal government had challenges with SaaS conversions, impacting license revenue. However, all Q3 agency customers were renewed except one discontinued agency. A new federal customer was added. - William Koefoed(CFO)

What are you seeing in the macro environment regarding deal delays and ERP immigration slowdowns? - Christopher Quintero (Morgan Stanley)

2025Q2: Our Q3 guidance balances near-term prudence with strong pipeline visibility. The uncertainty in the U.S. federal public sector is due to the government’s desire to modernize IT, migrate to SaaS, and prioritize projects. - William A. Koefoed(CFO)

Contradiction Point 2

CPM Express and Revenue Impact

It highlights differing expectations regarding the financial impact and market traction of CPM Express, which could affect revenue projections and strategic decisions.

What are the key drivers of your confidence in 2026 growth and stabilization? - Adam Hotchkiss (Goldman Sachs)

2025Q3: CPM Express is resonating very well in the marketplace and gaining traction. - Thomas Shea(CEO)

Can you discuss CPM Express's recent go-to-market activities and their impact on financials? - Adam Hotchkiss (Goldman Sachs)

2025Q2: CPM Express is a product leveraging Genesis, offering speed of implementation. It’s a good opportunity for companies, especially those without a previous OneStream platform, showing promising early momentum. - William A. Koefoed(CFO)

Contradiction Point 3

AI Monetization Strategy

It involves differing approaches to AI monetization, which could impact revenue and customer adoption.

Are you seeing incremental AI booking growth from the sales expansion? - Steven Enders (Citi)

2025Q3: We see strong pipeline excitement for AI Studio and agents, with AI everywhere in our platform. This is opening up new use cases, and we're building on the momentum from SensibleAI Forecast. - Thomas Shea(CEO)

What early insights have you gained on AI monetization since the Splash event? - Ryan Scott Krieger (Wolfe Research)

2025Q2: We're refining our hybrid pricing model across AI solutions. SensibleAI Forecast is usage-based, while SensibleAI Studio and agents are undergoing pricing validation. - Thomas Shea(CEO)