Q1 2025 OneStream Inc Earnings Call
125 in the year ending December 31 2025.
Forward looking statements are subject to known and unknown risks uncertainties assumptions and other factors.
Some of these risks are described in greater detail in the documents, we filed with the SEC from time to time, including our quarterly report on Form 10-Q for the quarter ended March 31 2025.
We undertake no obligation to update any forward looking statements, whether as a result of new information future events or otherwise.
Such as required by law.
During our call today, we will also reference certain non-GAAP financial measures.
There are limitations to our non-GAAP measures and they may not be comparable to similarly titled measures of other companies.
The non-GAAP measures referenced on todays call should not be considered in isolation from or as a substitute for the most directly comparable GAAP measures are management believes that our non-GAAP measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core.
<unk> performance.
Reconciliations of our non-GAAP measures to the most directly comparable GAAP measures can be found in this afternoon's press release and the earnings highlights presentation posted on our IR website.
Tom: Now I'll turn the call over to Tom Tom.
Tom: Thank you for joining us this afternoon.
Speaker Change: 2025 got off to a strong start with our first quarter results.
Speaker Change: While the rapid shift in sentiment around the macro has brought increasing budget scrutiny the need the CFO and finance departments remains front and center in today's market.
Speaker Change: We have seen macro turbulence in the past and we are confident in our ability to navigate through it and execute our long term strategy.
Speaker Change: From what we know from experience is that the increased uncertainty leads to more focused on system modernization.
Speaker Change: With that let me recap our strong results in Q1 amidst a highly dynamic environment.
Speaker Change: We achieved total revenue growth of 24%.
Speaker Change: And free cash flow margin of 26%.
Speaker Change: We saw increasing customer interest and strong momentum for our sensible AI and machine learning product as well as strength in our commercial business.
Speaker Change: Continuing our trend over the last few years, our unified platform was recognized by leading third party industry analysts as a leader in software for the office of the CFO.
Speaker Change: For the third year in a row, one thing was named as a leader in financial close and consolidation solution.
Speaker Change: And Gartner Magic quadrant and.
Speaker Change: And for the fifth consecutive year bark ranked one stream as a leader in financial performance management solutions.
Speaker Change: And we officially brought some of last year's new product innovations to market this quarter at our sales kickoff.
Speaker Change: This included our ESG reporting and planning.
Speaker Change: And our pre packaged CPM express offering for rapid implementation.
Speaker Change: We also launched our new pricing and packaging.
Speaker Change: All in all a solid start to the year.
Speaker Change: Since then the world has changed dramatically.
Speaker Change: Ranging tariffs and trade policies are causing currency variability impacting supply chain.
Speaker Change: And tightening enterprise and government budgets leave.
Speaker Change: Leaving businesses globally to navigate the ongoing uncertainty.
Speaker Change: While the macro may initially pause from digital transformation efforts events such as these have historically also has the potential to drive opportunity for us.
Speaker Change: The changing conditions can expose the shortcomings of outdated legacy systems.
Speaker Change: And cause a renewed focus on technology upgrades and modernization of old Tech stacks.
Speaker Change: More than ever this landscape underscores the importance of agility and financial operations.
Speaker Change: Ultimately this can be an opportunity for finance leaders to look for systems with greater accuracy and efficiency, along with more dynamic forecasting and planning.
Speaker Change: In our view the current environment further amplifies the drivers at the heart of <unk> value proposition.
Speaker Change: Number one it's still early in the digital transformation of finance finding.
Speaker Change: <unk> finance departments have been slow to fully embrace and trust the cloud.
Speaker Change: Anything the current landscape is highlighting the need for the modernization of the office of the CFO and a unified view of corporate financial data.
Speaker Change: Number two.
Speaker Change: The scope of the CFO role continues to expand especially in times like these that are even higher expectations on CFO to provide strategic insights and operational planning to drive business strategy and execution.
Speaker Change: This requires financial tools like dynamic reporting to complement the static nature of traditional ERP systems.
Speaker Change: Number three AI.
Speaker Change: AI is an incredible opportunity to increase the value of finance knowledge workers and business performance.
Speaker Change: Strong proven and applied AI solutions have the potential to give CFO, even greater visibility agility and predictability into their business.
Speaker Change: Today, a growing volume of economic and other business drivers are changing so quickly that.
Speaker Change: But the speed and accuracy of AI is becoming vital to be able to forecast and plan the business.
Speaker Change: Business calibration is demanding greater forecast accuracy more quickly than ever before.
Speaker Change: We built the one stream platform to help companies respond to any market environment, the breadth and depth of our platform enables customers to number one.
Speaker Change: Unified financial and operational data into one common data model to serve as a single source of truth for real time scenario planning.
Speaker Change: Number two to accelerate and improve planning forecasting and decision, making with AI solutions purpose built for finance.
Speaker Change: A category, we refer to as finance AI.
Speaker Change: And number three.
Speaker Change: Extend the platform through rapid and innovative product development, all without adding technical debt.
Speaker Change: These core tenants continue to serve as the north star of our product roadmap.
Speaker Change: And how we innovate and expand the value of our platform for customers.
Speaker Change: We see great opportunity ahead, and continue to invest for growth, including strategic investments to build out our finance AI portfolio, which you will hear more about at Splash next week.
Speaker Change: During the first quarter, we officially released our CPM express product designed to democratize the accessibility.
Speaker Change: Of our enterprise level platform for companies of all sizes and sophistication level.
Speaker Change: <unk> added to the solid bookings growth of over 50% year over year, we saw in our commercial business this quarter.
Speaker Change: We launched our ESG reporting and planning solutions, enabling customers to collect.
Speaker Change: <unk> analyzed report and plan for ESG requirements, including scope, one two and three emissions and link sustainability efforts with financial performance.
Bill: Finally, bill.
Bill: Building off last year's strong results.
Bill: <unk> Q1 bookings for our AI product, which we are now calling sensible AI forecast.
Bill: Grew over 50% year over year.
Bill: As customers are putting a greater premium on our differentiated finance AI capabilities.
Bill: We continue to create solutions that are purpose built for finance using our proven quantitative AI capabilities along with.
Bill: Standard generative and agenda AI capabilities.
Bill: Now let me give you some examples of how our customers are modernizing their core financial systems, and utilizing sensible AI forecast with one stream.
Bill: We saw great momentum in our international business this quarter with 40% year over year revenue growth.
Bill: One of the foundational wins, we had was with a new customer that chose <unk> to replace a decades old legacy system.
Bill: A large European retail group signed a multi year engagement with 500 users and.
Bill: And plans to leverage <unk> core financial consolidation.
Bill: Reporting.
Bill: Tax cash flow and ESG.
Bill: After a thorough evaluation the customer saw the power and breadth of our unified platform together with our sensible AIG forecast and planning capabilities is more than capable of supporting its growing complexity and scale.
Bill: As well as the evolving reporting demands of its global business.
Bill: As I mentioned, we now have many of the world's most important companies using our sensible AI forecast solutions to help them better plan their business and drive efficiencies.
Bill: More and more AI has become a part of virtually every customer conversation.
Bill: Prospects and customers are now approaching us about the potential of AI in their workflows earlier and earlier.
Bill: With some even beginning their one stream relationship with our sensible AI forecast solution.
Bill: Which incorporates our proven machine learning based time series forecasting.
Bill: And scenario modeling capabilities.
Bill: Generative AI capabilities.
Bill: An example of this comes from a large energy utility company in Asia Pacific called Endeavour energy.
Bill: That recently selected one screen to lead a transformative finance driven growth strategy.
Bill: The very first thing they wanted was a demand forecast using our sensible AI forecast solution.
Speaker Change: Cause of the outsized value that a more accurate forecast of energy consumption with Brian.
Speaker Change: Within eight weeks, they were leveraging sensible AI forecast to predict demand across regions and pricing structures, including.
Speaker Change: Flat rate and time of day tariffs they achieved over 95% forecast accuracy and reduce the effort required to re forecast by 90%.
Speaker Change: This highlights why customers, both new and existing are embracing sensible AI forecast is an important strategic lever in their financial transformation journey.
Speaker Change: Many companies have only just begun to supplement their use of <unk> core platform with these quantitative AI capabilities.
Speaker Change: Not only are we seeing adoption from our existing core customers to facilitate their demand forecasting where we're starting to see customers that have previously purchased sensible AI forecast expand their use of the product.
Speaker Change: Last year, one of the world's largest retailer deployed six use cases of our sensible forecast product across four business segments.
Speaker Change: They realized significant time savings and higher forecasting accuracy during the year.
Speaker Change: Fast forward to Q1 of this year and that same customer purchased more than seven additional use cases nearly doubling their initial investment.
Speaker Change: Insensible AI forecast.
Speaker Change: They plan to use it to drive both daily short term outlooks as well as monthly long term outlooks for sales SG&A head count and cash.
Speaker Change: The combination of our comprehensive core capabilities with our growing finance AI portfolio is helping one stream become a one stop shop, where companies can navigate todays complexities.
Speaker Change: In summary.
Speaker Change: CFO are recognizing the need for a more dynamic unified cloud platform to react to changes in today's unpredictable environment.
Speaker Change: This is not the first time, we have seen a macro disruption of this magnitude.
Speaker Change: What we know from experience is that often this is when some of the greatest opportunities emerge.
Speaker Change: And for the one stream platform continues to gain momentum as.
Speaker Change: As we add more brand name companies to our customer base.
Speaker Change: Our uniquely unified AI powered.
Speaker Change: Extensible platform is highly aligned to the financial and operational information needs of modern businesses.
Speaker Change: And next week at our Splash user conference nearly 50 customers will tell their stories of just how significantly the <unk> platform has impacted their business.
We believe one stream has never been more relevant to today's environment and our speed to value is only increasing with the result are sensible AI forecast technology delivers.
Speaker Change: One thing was engineered to help customers steer their business in moments like these.
Speaker Change: <unk> may take some time to sort out.
Speaker Change: And we will manage accordingly, we're.
Speaker Change: But make no mistake, we plan to continue to grow and invest in our mission to be the operating system for modern finance.
So we can capture the enormous opportunity that we see ahead.
Speaker Change: Before I wrap up.
Speaker Change: As you saw recently, we made a few organizational changes so that our primary innovation and growth functions now report directly to me.
Speaker Change: Including our CRO, Ken Horn spine.
Speaker Change: Our CMO and strategy officer, Tim Minahan, and Craig Colby, who will be our chief success officer, focusing on building strategy around customer success and expansion, including CPM Express.
Speaker Change: I believe these changes cement our leadership for the next phase of growth.
Speaker Change: Lastly, I want to thank all of our employees.
Speaker Change: Customers and partners for their continued support and trust in US we are confident we have the right team.
Speaker Change: And product to navigate this environment now.
Bill: Now, let me turn the call over to Bill.
Bill: Thanks, Tom Good afternoon, everyone.
Bill: We had a strong first quarter of revenue growth and free cash flow generation.
Bill: Total revenue grew 24% year over year to $136 million.
Bill: Subscription revenue increased 31% year over year to $125 million.
Bill: We had license revenue of $4 million, which is down 40% compared with last year due to customer SaaS conversions as we had signaled previously.
Bill: Professional services and other revenue was $8 million slightly above expectations.
Bill: We had a record quarter of free cash flow at $36 million, which represents a 26% free cash flow margin.
Bill: Our international business had a particularly strong quarter with revenue growth of 40% year over year and continues to represent more than 30% of total revenue.
Bill: We continue to see more than 60% of our business come from new customers as we continue to capitalize on finance and AIG transformation opportunity at some of the world's most important company.
Bill: We ended the quarter with 1646 total customers.
Bill: 16% year over year, a slight acceleration from Q4.
Bill: Billings had a strong quarter, increasing 30% year over year to $154 million and 24% on a trailing 12 month basis.
Bill: I would like to remind everyone that we view our trailing 12 months as the best indicator of billings momentum as it normalizes lumpiness in any single quarter.
Bill: Our 12 months <unk> was up 35% year over year.
Bill: Total <unk> grew 24% year over year to $1 1 billion.
Bill: Our Q1, non-GAAP gross margin was 70% compared to 69% last year as our services margin improved over last year.
Bill: Particularly partially offset by lower software license revenue.
Bill: Our non-GAAP software gross margin was 76% compared with 77% last year due to the lower software license mix.
Bill: Our non-GAAP operating loss was <unk> $5 million in the quarter exceeding our expectation this.
Bill: This statement ability was due in part to lower R&D hiring and timing of marketing expenses relative to beginning of the year expectations.
Bill: Total non-GAAP operating expenses increased 19% year over year.
Bill: non-GAAP net income was $6 7 million and non-GAAP earnings per share was <unk>.
Bill: Total equity based compensation expense for the first quarter was $38 million.
Bill: We ended the quarter with $594 million in.
Bill: Cash and cash equivalents.
Bill: Now, let me move on to our outlook.
Bill: We're coming off a strong quarter and have the largest pipeline we have ever had at this point of the year.
Bill: Additionally, we believe our product portfolio, including announcements, we will make a splash next week is well positioned for market needs.
Bill: As we looked at our business signals are leading indicators are positive.
Bill: That being said we are all living through a period of heightened uncertainty in the broader markets, where we may see companies and government agencies slow or even pause spending for a time.
Bill: This may result, NGL headwinds and potential down cells as budgets tightened and government restructuring continues.
Bill: Additionally, ongoing customer conversions to SaaS will continue to impact license revenue.
Bill: At the same time in addition to our strong pipeline and product road map FX rates have turn and if that trend continues FX will be a tailwind for 2025 revenue.
Bill: When all of this has taken together we are reiterating our prior 2025 guidance of 20% year over year revenue growth and slightly increasing our profitability outlook.
Bill: For Q2, 2025, we expect total revenue to be between $140 million.
Bill: Third $42 million.
Bill: We expect non-GAAP operating margin to be between minus 2% to zero percent.
Remember that our North America Splash user conference is in Q2, which is a considerable sales and marketing investment.
Bill: We expect non-GAAP net income per share to be between <unk> to <unk>.
Bill: And we expect stock based compensation to be between 30 million to $35 million.
Bill: For full year 2025, we expect total revenues to be between $583 million to $587 million.
Bill: We expect non-GAAP operating margin to be between zero percent to 2%.
Bill: We expect non-GAAP net income per share to be between <unk>.
Bill: The 13th.
Bill: And we expect stock based compensation to be between $120 million.
Bill: $130 million.
Bill: All in all we were pleased with our strong performance in Q1 more than ever companies need the ability to run real time financial scenario is to respond to today's dynamic environment.
Bill: In times of uncertainty Cfos in particular focus on driving efficiency, maximizing ROI and reducing costs.
Bill: At one stream that.
Bill: Is what our platform enables every day.
Bill: We are focused on managing our business in a thoughtful way during these uncertain times and confidence that we can realize the long term opportunity we see ahead.
Bill: Now, let's turn it over to the operator for Q&A.
Bill: Certainly.
Speaker Change: First question for today comes from the line of John Fucci from Guggenheim Securities. Your question. Please.
Speaker Change: Thank you.
Nice job.
Speaker Change: Quarter with a lot of uncertainty out there guys.
Speaker Change: My question I have a bunch of them, but I'm going to ask one decent respectful here it's on your comments.
Speaker Change: Still about the sort of potential demand issues out there, but you also talked about leading indicators being positive. So I just wanted to clarify.
Speaker Change: Put up really good numbers this quarter, but you didn't raise for the year is that based on sort of just your prudence.
<unk> been around a while.
Speaker Change: What could happen or are you currently seeing demand sort of trail off a little bit at this time.
Bill: Hey, John It's bill Thanks for the question and thanks for the nice comments.
Bill: As I mentioned in my prepared remarks, our leading indicators are positive we've got as I mentioned, the strongest sales pipeline at this point of the year that we've ever had.
Bill: We've got an exciting product pipeline that you'll see.
Bill: It's more about or hear more about.
Bill: From Tom and the team next week, its flash, including obviously things you already know about.
Bill: But look there is as you know uncertainty out there.
Bill: We to your point, we haven't seen it.
Bill: In our current results, but I think to your point it is prudent to be.
Bill: Cautious as we look towards the rest of the year.
Chris: Thank you and our next question comes from the line of Chris question.
<unk> from Morgan Stanley Your question. Please.
Speaker Change: Chris Your line is open and you might have your phone on mute.
Chris: Okay.
Speaker Change: Let's come back to Chris.
Speaker Change: Certainly and our next question comes from the line of Adam Hotchkiss from Goldman Sachs.
Adam Hotchkiss: Great. Thanks, so much for taking the question I know you've talked a lot about CCM express and that seems to be a product. That's growing really quickly are you seeing that resonate, particularly well in a time where time to value is incrementally important for customers. Just curious how that's been tracking for you.
Adam Hotchkiss: Thanks for the question and yes, we are as I've mentioned in prior quarters.
Adam Hotchkiss: Throughout our whole Investor Education, we are really excited and interested in serving the.
Adam Hotchkiss: The emerging customer.
Adam Hotchkiss: Faster onramp to the one stream platform. So CPM expressed as a strategy that we're we're really focused on to make sure that we're delivering this comprehensive CPM experience for customers of all sizes and scale and we're definitely.
Adam Hotchkiss: We're in the early innings of that product, but the feedback has been very very exciting that we're getting in terms of the value the time to value.
Adam Hotchkiss: Results that customers are seeing with the platform and the completeness of the offering so all in all we're really excited about the investments that we've been making there and thinking about the long term.
Adam Hotchkiss: In addition.
Adam Hotchkiss: Really opens up the door for us to onboard additional customer or additional capabilities like AI faster time to value is all part of our larger plant and really looking to bring that sort of product position methodology to customers of all shapes and sizes.
Adam Hotchkiss: And be able to deliver on these really exciting opportunities around artificial intelligence as well.
Speaker Change: Thank you. Our next question comes from the line of <unk> <unk> from Bank of America. Your question. Please.
Speaker Change: Hey, guys. Thanks for taking the questions.
Speaker Change: Wanted to ask another question on the revenue guidance.
Speaker Change: Maybe maybe in a different way and so I do understand the broad conservatism.
Speaker Change: But when I look at the growth drivers in the revenue build there is a lot of SaaS theres on Prem single instance, et cetera, and so when you constructed the guide this quarter versus last quarter were there any changes in the assumptions and the growth of the deployments and.
Speaker Change: Why would anything change.
Speaker Change: Was there any change at all.
Speaker Change: I would just.
Speaker Change: Thanks Koji.
Speaker Change: I'd, just say I mean.
Speaker Change: There's certainly been some.
Speaker Change: Some macroeconomic announcements that have happened.
Speaker Change: Since we last talked back in February, which I think not just us but other companies are looking at a lot of those companies that are that you've heard from our customers and so.
Speaker Change: Look we're just we're just being we're just being cautious then.
Speaker Change: As I mentioned before our leading indicators are.
Speaker Change: Our are quite positive.
Speaker Change: Like I said, we have that we have the largest sales.
Speaker Change: Sales pipeline, we've ever had we have an exciting product pipeline.
Speaker Change: Going to execute to the best of our ability in the macroeconomic environment that we have ahead of us.
Speaker Change: Thank you and our next question comes from the line of Alex <unk> from Wolfe Research. Your question. Please.
Speaker Change: Hey, guys. Thanks for taking the question Ryan Krueger on for Alex I, just wanted to ask about end market bookings trends just given it sounds like it was quite strong here in <unk>. So.
Speaker Change: I think in 2023 and 2020 for about two thirds of bookings was whats coming from legacy replacement. So curious if youre continuing to see that level of mix here in early 2025.
Speaker Change: And then I think in fourth Q1 third of bookings was coming from non core solution. So just given the strength youre seeing in SMA. All CPM Express coming online are you seeing any tick up in that mix as well. Thanks.
Speaker Change: Great question, and I'm going to start and then I'll turn it over to Tom and Ts.
Speaker Change: This quarter.
Speaker Change: Yes.
Speaker Change: A couple a couple.
Speaker Change: Tidbits that I would give you.
Speaker Change: And again this.
Speaker Change: I Love that you guys ask the question 60 over 60% of our business came from new customers. This is a metric that we continue to really be excited about especially as we continue to scale the business.
Speaker Change: As I talked about with this whole group as we land more new logos than we have opportunities to upsell from there, which I think we've had some pretty good successfully I think as Tom Tom mentioned.
Speaker Change: AI is a really big opportunity as well as some of the other things that we've talked about so.
Speaker Change: And we continue to see a huge legacy market and our legacy Tam week, we've talked about.
Speaker Change: Obviously some of the lighthouse wins that we've had.
Speaker Change: Obviously, the less overtime that globally, we are starting to get some really nice ones and and that's certainly been a driver of bookings growth for us, but why don't I turn it over Tom.
Speaker Change: Rob a lot so maybe maybe give some color. Thanks, Bill and yes. There is really just three common themes that I'm hearing from customers in general matters.
Speaker Change: And these are these equate to what you might consider legacy, but theyre not every company has.
Speaker Change: <unk> to manage their core financial requirements, and especially there is a real focus on those core financial requirements. During these more volatile are turbulent times in financial planning financial reporting.
Speaker Change: Any insights as you can get and that's.
Speaker Change: Traditionally would've been the job of more more legacy types of solutions. So thats number one thats still there and what people are looking through what CFO theyre looking to do is to do that as quickly and as efficiently as possible. So they can get into the things that they really want to be which is steer the business. During these volatile times and thats more operational analytics. So we're seeing.
Speaker Change: Those discussions continue on sort of in this order in all cases, and then ultimately.
Speaker Change: It's about taking those operational insights and forecasting them better and getting as much insight as you can out of those with artificial intelligence and Thats a full circle for us.
Speaker Change: Then flows back to the core so our goal and you mentioned CPM expresses getting as many people as many customers into that loop as we can and help them become efficient with the core and then let them really start to become a partner to the business and get the most advanced forecasting possible with AI and <unk>.
Speaker Change: That's a continuing trend thats resonating with our customers.
Speaker Change: And it's a consistent theme that I hear from customers as Emil presenting and meeting with CFO.
Speaker Change: Thank you. Our next question comes from the line of Brent <unk> from Piper Sandler Your question. Please.
Speaker Change: Thank you good afternoon.
Speaker Change: Right to seek solid execution this quarter I wanted to double click into the sales pipeline I guess you had a few deal delays exiting the year. It sounds like youre not seeing that now what would you attribute to driving the recovery in the sales pipeline is a pretty broad based is it any further.
Speaker Change: Michael standing out is there a couple of large deals just walk through what youre seeing on the sales pipeline.
Speaker Change: Pipeline, specifically in the recovery you're seeing there. Thanks.
Speaker Change: Yes.
Brian: Brian Thanks for the question I would say.
Brian: Look Q4 with a bit of a surprise for us in terms of some of the deals that ended up pushing into Q1 and I think our sales team has become a lot more focused on making sure that they've got all that.
Brian: And Ts crossed.
Brian: Long.
Brian: Along the sales journey I think.
Brian: They are.
Brian: Sure.
Brian: Excellent team in and I think they've got.
Brian: A lot more focused and disciplined on making sure that we've got.
Brian: That we've got everything buttoned up as we ended the quarter and I think that was a good a nice execution quarter from those guys for sure.
Speaker Change: Thank you and our next question comes from the line of Mark Murphy from Jpmorgan. Your question. Please.
Speaker Change: Hi, This is <unk> on for Mark Murphy. Thanks for taking the question I just wanted to follow up on that point actually.
Speaker Change: It seems like Theres been some signals out there that the <unk> optimization efforts, maybe a bit closer to their peak now with some of our partner conversations sending a little bit more hopeful for stabilization in the second half around U S. Federal so understanding there's a lot of moving pieces. There but is there any update you can give us on how you view federal spending progressing through the year.
Speaker Change: Perhaps noticeable changes occurring over the last last 90 days.
Speaker Change: Yes, I'll take that one as well I would say I'd say like if we just step back and think about one stream and the federal government.
Speaker Change: We're an efficiency play we helped to drive.
Speaker Change: Efficiency for the federal government, we provide information and we're the only cloud based CPM.
Speaker Change: Vendor who's fed ramp high so we're quite optimistic about our federal business.
Speaker Change: Overtime.
Speaker Change: There's a lot of legacy software that's that's in the federal.
Speaker Change: Men and where the modernization play so we're really bullish about about the federal government over time.
Speaker Change: In the short run obviously theres a lot of government downsizing restructuring et cetera.
Speaker Change: Q3 is the quarter that that government renewals happen and so.
Speaker Change: We will see we will see what happens as we get into Q3.
Speaker Change: Thank you and our next question comes from the line of Steve Enders from Citi. Your question. Please.
Speaker Change: Okay, great. Thanks for thanks for taking the question here.
Speaker Change: Asked about the pricing and packaging changes that you're rolling out right now too to the basis I guess, what's the.
Speaker Change: What are the big changes were the highlights.
Speaker Change: I guess, what's kind of the intent for the change in behavior that.
Speaker Change: You're anticipating customers too to take with us.
Speaker Change: Sure. So this is.
Speaker Change: This is Tom I'll take that question and really as you can tell we're introducing a lot of new innovations to the market and the entire pricing and packaging strategy that we've had is about make sure that we have a.
Speaker Change: <unk> durable pricing structure for.
Speaker Change: For ourselves and for our customers was a couple of different goals make sure that we're easy to do business with a contract with so that customers know what they are buying from us on how theyre buying from us and that we're actually making sure that we're getting the value for those for those new offerings.
Speaker Change: And our value oriented way for our customers and that really comes down to like I said this is not a.
Speaker Change: This is an evolution of our pricing structure, which is we started with our core products and the more user oriented approach, which is what how CPM was traditionally so move down into a platform orientation as well as consumption and so we now have this broad based approach.
Speaker Change: User platforms and.
Speaker Change: And consumption oriented pricing or usage oriented pricing and so we feel like we have the right strategy that facilitates.
Speaker Change: And this will allow us to bring these new innovations to market quickly and efficiently.
Speaker Change: And so that it can be consumed by both customers and our go to market teams.
Speaker Change: Thank you and our next question comes from the line of Terry Tillman from true Securities. Your question. Please.
Speaker Change: Yeah, Hey, Tom Bill and Andy Congratulations on the free cash flow margin.
Speaker Change: Yes. So my question is actually back to sensible.
Speaker Change: Okay.
Speaker Change: It's a multi parter I'm curious I think last quarter, Tom you were talking a little bit about proof of value concepts and maybe that could resonate get people up and running faster.
Speaker Change: Whether it was that are just getting more comfortable being able to kind of pitch the story.
Speaker Change: Maybe you could share a little bit more on what seems like kind of a tipping point there and then the second part of this question is I think 50% growth in bookings.
Speaker Change: I'm going to go with us.
Speaker Change: When does this start to become kind of material to the bookings overall thank you.
Speaker Change: Thanks, Terry I'll start with that and then I'll, let I'll, let bill comment as well so.
Speaker Change: We're really excited about our early investments in artificial intelligence and when you think of sensible AI forecast youre looking at our flagship product <unk>.
Speaker Change: To your point, Terry we're seeing more and more validation of our customers as we talked about in my script.
Speaker Change: Demonstrated improvements in accuracy as well as reductions in the effort and energy that goes into creating those Florida, which ultimately means you can do more frac more forecast at a higher quality.
Speaker Change: And that is why we are starting to see the growth in.
Speaker Change: And interest in that product I did mentioned last quarter and I think it's worth mentioning.
Speaker Change: The market is still learning how to buy artificial intelligence. So we are really able and excited about being able to stand on these results that we're producing which are defined repeatable.
Speaker Change: And things that are really catching the interest of customers and I think youre going to continue to see us lean into this and invest in it not only as we grow our go to market motion, which includes not only positioning. These the successes we've had but making sure that we are educating customers as quickly as we can to help scale that opportunity. In addition, I'm really.
Speaker Change: Excited and I know us.
Speaker Change: A number of you will be at our conference next week, we'll be continuing to expand and develop.
Speaker Change: Some great announcements and our AI portfolio, what youre going to further demonstrate <unk> commitment to finance AI and the value that we see really starting to accumulate not only from sensibly I forecast, but also from the core is very important as well because some of these other capabilities in terms of generative AI.
Speaker Change: And agents depend on solid financial information, so stay tuned for that and excited to share share with all of you some of the great things we're doing.
Speaker Change: Further.
Speaker Change: Enhanced.
Speaker Change: The potential of our AI offering to our customers.
Speaker Change: So.
Speaker Change: I think you said it well.
Speaker Change: [laughter].
Speaker Change: Thank you and our next question comes from the line of city grocery from Mizuho. Your question. Please.
Speaker Change: Thank you.
Speaker Change: I wanted to ask on the international side that was pretty strong.
Speaker Change: Are you seeing.
Speaker Change: How is the pipeline invested last year in the international side.
Speaker Change: Are you seeing any signs of strength or weakness in any particular industry.
Speaker Change: Geopolitical or any particular ratio given the geopolitical situation and how should we think about.
Speaker Change: Loan growth going forward.
Tom Tom: Sure I'll take I'll take that one this is Tom.
Speaker Change: We're really excited about the performance in our.
Speaker Change: Outside of the United States are in our in our global market and it really comes down to a couple of different characteristics first and foremost we're getting more scale in terms of size. So we're able to invest and those investments that we've been making that up on multi year are paying off and also over the prior calls I have mentioned that we've been landing strategic what I'll call.
Speaker Change: <unk> deals in particular markets, which are really market building deals that become critical references of one stream success in those markets. Those are all areas that I think those investments are kind of long term investments that you need to make them. They are starting to pay off and so that enables us to invest more to continue to grow.
Speaker Change: Ultimately I think as Bill said, we really see this as an important market and we hope that someday it grows to a similar size as the unit.
Speaker Change: I would say.
Speaker Change: Thank you and our next question comes from the line of Scott Berg from Needham <unk> Company. Your question. Please.
Speaker Change: Hi, everyone nice quarter I apologize for any background noise on the airports.
Speaker Change: Tom you've talked a lot about.
Speaker Change: Essentially use case and I know you guys have extended about since you released it.
Speaker Change: But you shouldn't be talking more about customers using it for more and more use cases.
Speaker Change: And what we've heard in the past just in general how do we think about.
Speaker Change: The uplift of customers paying what these additional use cases, knowing this project wanted consumption basis for the pure subscription.
Speaker Change: This was just trying to get a gauge as customer uses it 5678 use cases, what are the number is what type of benefits is one St. James Thanks.
Speaker Change: Great. Thanks. So so yes. There is there is significant upside at this point the sample size increases we will be able to share more of that but to this point. We are seeing this as this is a material.
Speaker Change: Opportunity for us in terms of IRR growth and Youre right as we get more and more success and demonstrate successful specific use cases.
Speaker Change: And we demonstrate the agility to actually deliver on those use cases and bring the value to the customer they want to explore more use cases that sort of a self fulfilling prophecy. If you will and so for US we're at that point, we're demonstrating the success learning from the use cases that we're exploring with those customers and then generalizing those to bring to other customers is.
Speaker Change: How are you sort of build the market and then continue to evaluate like I said.
Speaker Change: So really exciting announcements coming up at splash.
Speaker Change: In the rounding out or the completion of our AI platform that open up even more use cases that are interesting for us to continue that momentum in investments that we've already made so.
Speaker Change: All in all.
Speaker Change: This is an exciting area for one of them and we're well positioned because of our early investments to be a leader in enterprise finance AI.
Speaker Change: Thank you and our next question comes from the line of Chris question.
Speaker Change: <unk> from Morgan Stanley Your question. Please.
Speaker Change: Hey, Tom Hey, Bill Thanks for taking my questions here.
Speaker Change: I apologize this is already already answered, but just curious around the new ESP solution that you all rolled out recently, what's been some of that early customer feedback as you develop that solution and start putting into the marketplace.
Speaker Change: Sure. So so ESG is a great example of the Internet extensibility of one streams platform. So when we think about this this is something kind of taking this back full circle to the conversations that I have with CFO.
Speaker Change: There's always this focus on core and doing what you have to what you have to do on a regular basis, a monthly quarterly yearly planning of the business, but there's always these unforeseen whether it's new statutory requirements or new capabilities that are required our new operational demands.
Speaker Change: She is a great example of a new statutory type of requirement that businesses have to contend with they do it for both.
Speaker Change: The reasons of being good corporate citizens as well as corporate compliance and so as we look at as we look at our ESG solution, we're committed to making sure that we're offering a comprehensive solution that is integrated into the platform that gives the customer leverage on the work theyre already doing within the core as well as.
Speaker Change: If they want to start with ESG or they want to come in and bring this as a new opportunity and bring them to the platform. We are using it in both in both ways. We're committed against so that was officially launched as a Gi product just in the last few months at our at our <unk> and we're excited about the future of that product and we can.
Speaker Change: To investors.
Speaker Change: Thank you. Our next question comes from Brian Peterson from Raymond James Your question. Please.
Speaker Change: Hi, Thanks for taking the question Tom I know you mentioned that AI is coming up much earlier and customer conversations, but I'm curious with the solutions exchange may be trending in that customer journey, how frequently is that coming up as a differentiator with new logos or is that more of an expansion driver post launch.
Speaker Change: The great question that the solution exchange is really part of this term that I just used in the last response on I'll use it again internet extensibility and what the reason that it comes up.
Speaker Change: It's always.
Speaker Change: Part of the conversation because it represents leverage for a customer they're never going to run out of software with one stream.
Speaker Change: And what I mean by that is.
Speaker Change: No matter, what the challenges that's coming up in the market or in the customers.
Speaker Change: <unk> business, we have the opportunity with the solution exchange, if we don't already have a solution in the market or our partner Hasnt created one theres always an opportunity for us to rapidly innovate and bring that capability or for the customer to self serve because of once youre being a true platform that you can develop on.
Speaker Change: So all in all when I think of solution exchange. It really is just another way of saying imminently extensible and it's part of every single sales pitches.
Speaker Change: Foundational to the one stream message.
Speaker Change: Thank you and our next question comes from the line of Nick Goldman from Scotiabank. Your question. Please.
Speaker Change: Awesome. Thank you.
Speaker Change: Tom you and your leadership team have been end market through various macro cycles, what have been some of your past learnings and can you maybe just walk us through how you're thinking about adjusting the playbook to offset some of the macro ambiguity I mean is it leaning more into the commercial side, where maybe you have shorter sales cycles focusing more on.
Speaker Change: Upsell and cross sell versus new logos, just any details on.
Speaker Change: Some of your past learnings and how youre thinking about any adjustments would be helpful. Thanks.
Speaker Change: Sure so to start off I would just say that we always try to run the business from a from a position of discipline no matter what the economic conditions are and really focus on the things that we can control and that means being I think you've heard bill say this and myself say this in the past, we're really focused on efficient growth at all times and.
Speaker Change: This is something that.
Speaker Change: I. Appreciate this question because for those of you that are getting to know us in our history.
Speaker Change: Did I did bootstrap both of these companies and I typically have a conservative stance when it comes to running the business, but the reason I bring a boot strapping is because.
Speaker Change: We've all I've always had a growth mindset and growing the company as well as a disciplined mindset to make sure that we're growing efficiently in funding ourselves and being capital efficient. So in general our playbook does not change no matter, what we see here and that is were comfortable operating the business.
Speaker Change: In this in this mindset, whether the mindset is plentiful or scarcity and focusing on our long term objectives.
Speaker Change: And right now.
Speaker Change: And my message to our team is let's focus on what we can control unless execute and when the sky is clear we're just in that much better position.
Speaker Change: Thank you and our next question comes from the line of Patrick Scholes from Baird. Your question. Please.
Patrick Scholes: Hey, Thanks for taking my question just on the updated guidance. It looks like you reiterated revenue that raised the margin guide can you talk about some of the drivers behind that on the leverage you have at the margin. How are you thinking about balancing near term investments across product innovation and go to market relative to driving improved margins.
Speaker Change: Yes, no. Thanks, I'll take that one thank you.
Speaker Change: I mean as I mentioned in the in my.
Speaker Change: My prepared remarks.
Speaker Change: Have had slower hiring growth than we had expected when.
Speaker Change: When the year started.
Speaker Change: So certainly that's been a bit.
Speaker Change: A bit of a tailwind to operating margin.
Speaker Change: As Tom said, we are calibrating the business.
Speaker Change: <unk>.
Speaker Change: I had the opportunity to talk to.
Speaker Change: Our reporter actually a couple of weeks ago and in some ways. This is like the best time to be a CFO.
Speaker Change: When business is easy.
Speaker Change: Then then your job is easy, but but in today's world.
Tom Tom: Me and my peers as Tom talked about.
Speaker Change: We're helping Ceos to look around corners.
Speaker Change: We get are just kind of reiterate that finance.
Speaker Change: Finance 2035 report that we did a few months ago, whether when they talk about how the CFO is becoming more strategic.
Speaker Change: This is the time when cfos are becoming more strategic and.
Speaker Change: It's.
Speaker Change: It's a time when obviously our software is quite relevant we certainly do scenario planning and.
Speaker Change: Looking at the business leveraging our own software and so.
Speaker Change: I think we're continuing to manage the business. Accordingly, I would also just an addition, obviously leveraging our tools I would say we continue to make.
Speaker Change: Investments in our product to help us reduce cogs.
Speaker Change: They'll have a journey to go there and.
Speaker Change: Yes, all of those things give us confidence in the in the increase in profitability guidance that we gave you.
Speaker Change: Thank you and our next question comes from the line of Derrick Wood from TD Cowen Your question. Please.
Derrick Wood: Great. Thanks.
Speaker Change: Nice growth.
Derrick Wood: Order and net new customer count.
Speaker Change: How are you feeling about the potential cadence of new customer growth in 2025, I mean on one AD, we haven't gotten tougher macro but on the other end it sounds like Youre seeing nice strength out of the commercial side, where volumes could be higher so when you put these together.
Speaker Change: Do you think you can continue to drive growth on the net new customer count or how should we be thinking about assumptions there.
Speaker Change: Okay. Thanks I'll take this one we definitely are looking at this as having multiple vectors of growth. We've got these areas of strength within within the business as you pointed out.
Speaker Change: Obviously interest in artificial intelligence.
Speaker Change: Is fueling.
Speaker Change: New customers, we see customers starting with that use case, specifically and thats getting prioritize. So I think that's one avenue that can help us continue to drive and as you mentioned, though the commercial segment, which we are intentionally focusing on them and looking to.
Speaker Change: Really give the opportunity for like I said businesses of all sizes and sophistication and on ramp to an enterprise level CPM platform to help them manage these types of.
Speaker Change: Types of.
Speaker Change: Macro turbulence that they're seeing at the moment.
Speaker Change: Some of the other areas that we have in terms of we talked about the internet extensibility of the product offerings that we have within the marketplace all of those people all of those different.
Speaker Change: Solutions or vectors give us the opportunity to continue to add new customers.
Speaker Change: Really early days in the areas of CPM Express, where we're leaning into that at this point and we're really focused on continuing to invest in driving that opportunity. So I think all in all it's why I've sort of been mentioning that over time is that we see that as a significant opportunity for us to continue to invest and drive adoption.
Speaker Change: Thank you and our next question comes from the line of Daniel Jester from BMO capital markets. Your question. Please.
Daniel Jester: Great. Good evening, Thanks for taking my question.
Daniel Jester: We're going to see some of its firsthand next week, but maybe just an update in terms of what youre seeing from your partners in terms of the investments in their <unk> practices.
Daniel Jester: Any any teasers in terms of.
Daniel Jester: How many of them are participating in building you're building for the Swiss exchange. Thank you.
Daniel Jester: Sure. So we really are excited about the health of our of our partner communities. We're embracing.
Daniel Jester: A select set of partners around CPM Express to help us drive that into the market. We're excited about our GSI participation and interest in our AI solutions at the same time, we have our core artisan partners that are really focused on helping us drive and deliver success at the.
Daniel Jester: At the core side of the business or the financial analytics and operational we take all those things together each of those that cohort of partners.
Daniel Jester: On the ground implementing the software they are critical to our innovation engine and youre going to see more and more of them in fact.
Daniel Jester: Just recently announced and we will be announcing the acquisition of a partner generated solutions.
Daniel Jester: To provide more value to our customers, which is a great example of a win win for our.
Daniel Jester: For everybody in the <unk> community not only for one stream, but for customers and for the partner and Thats a signal.
Daniel Jester: For me in particular of the household that ecosystem. So.
Daniel Jester: Again, we'll continue to.
Daniel Jester: Invest in that area of the best in the community around one stream, which ultimately powers opportunity for all of us in the future.
Speaker Change: Thank you and our next question comes from the line of Matthew Andrew Gasperi from BNP Paribas.
Daniel Jester: Thanks.
Speaker Change: Had a question on the federal executive order that came out.
Speaker Change: <unk> about kind of modernizing financial accounting systems do you guys benefit from that and if so.
Speaker Change: And what would be the timeline for that thank you.
Speaker Change: Yeah, Hey, Andrew and.
Speaker Change: Nice to see you.
Speaker Change: Looking up coverage on us so thanks for that.
Speaker Change: I'd just reiterate as it relates to the federal government a few things that I think one stream helps to provide again.
Speaker Change: We do help modernize the government.
Speaker Change: Mentioned, they do have a number of legacy applications and so I'm not I'm not super familiar with the specifics of the executive order, but to the extent that it's relevant things.
Speaker Change: Things like modernization efficiency security, which obviously are fed ramp high.
Speaker Change: Certification.
Speaker Change: Helps to enable.
Speaker Change: We feel really well positioned as I mentioned earlier.
Speaker Change: To be able to serve the federal government over time, and we're quite optimistic about that.
Speaker Change: Thank you and our final question for today comes from the line of Mark Chappell from loop capital markets. Your question. Please.
Mark Chappell: Alright, Thank you for taking my question.
Speaker Change: Tom The international business continues to perform well I was wondering if you could just comment on what Youre seeing.
Speaker Change: Just regarding the demand environment, specifically in Europe, and then also competitively are you seeing a different mix of competitors over there.
Speaker Change: Sure. Thanks, Tobey, Yes, I actually recently did a trip to Europe. So I've got some firsthand customer interaction there and definitely.
Speaker Change: A common theme, whether I'm in Europe or Asia Pacific.
Speaker Change: There is there is an interest in modernizing and everybody realizes that the turbulence that says that theyre seeing and experiencing in the market.
Speaker Change: Requires thoughtfulness and optimization in the financial system space. So in general we feel that were positioned.
Speaker Change: Positioned wow, especially because of the investments that we have the multiyear investments that we've been making those regions again getting scale, but to your point there is not really to your question on.
Speaker Change: Competitive mix nothing has really changed in the competitive mix.
Speaker Change: Some of the foundational deals that we have been able to land and execute on our signaling to the market, though about one <unk> position and potential within those markets. So overall I like our positioning and with all of the product announcements that we have coming out splash again, we're really tailoring when you think about the faster onboarding.
Speaker Change: Wording of CPM Express the potential of CCM Express there is different flavors of CPM Express and some of them are even looking to tailor for on a regional basis. So again, focusing on competitiveness across the board and ease of use across the board.
Speaker Change: All part of our long term strategy and execution. So this is why I remain bullish and excited about really all regions for windstream.
Speaker Change: Thank you. This does conclude the question and answer session of today's program I'd like to hand, the program back to Andy Lee Chen for any further remarks.
Speaker Change: Thanks, very much operator, thank you everyone for joining us and we look forward to seeing a number of you next week at <unk>.
Speaker Change: Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
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