Learnings from the latest SaaS IPO (Onestream)

Recently, and quietly, a SaaS company called OneStream went public.? They have great numbers, and below are learnings from their prospectus.?

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They’re focused.? “OneStream is modernizing and redefining the Office of the CFO through the Digital Finance Cloud, our AI-enabled and extensible software platform that unifies core financial functions and broader operational data and processes within a single platform.”

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Upsells drive a material level of growth.? “Our ARR was $335.9 million and $460.4 million as of December 31, 2022 and 2023, respectively, representing year-over-year growth of 37%.? Of the growth in ARR in 2023, 72% was attributable to new customers and the remaining 28% was attributable to existing customers. We had 1,148 and 1,388 customers as of December 31, 2022 and 2023, respectively, representing year-over-year growth of 21%, and the average number of users per new customer grew by 19% from 2022 to 2023. We incurred net losses of $65.5 million and $28.9 million in 2022 and 2023, respectively, representing a year-over-year decrease of 56%.”

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3 year contracts are the go-to.? “A majority of our SaaS contracts and term?based licenses have three-year terms, although terms currently range from less than one year up to ten years. Most of our contracts are non-cancellable.”

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To get this big, you’ve got to be international.? “customers outside of the United States accounted for 27% and 30% of our total revenue in 2022 and 2023, respectively”

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They have a partnership model, because they cant do it all.? “we have a strong ecosystem of more than 250 go-to-market, implementation and development partners globally. Our partners serve as a significant source of lead generation and provide us with a network of trained and OneStream-certified implementation professionals.? On top of our core solutions, we offer a growing number of OneStream- and third-party-developed applications through the OneStream Solution Exchange. These applications extend the value of our platform beyond core financial reporting and planning for the Office of the CFO out to the operational edge”

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They price per user.? “The average annual contract value for customers we acquired in 2022 and 2023 was approximately $257,000 and $300,000, respectively.? . Our list price per user for SaaS-based customers currently ranges from $200 to $660 per month. Contracts for certain large, complex deployments contain terms whereby the number of users increases over time.”? 77 customers pay more than $1mm annually.

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But upselling is done with additional product.? “Once customers realize the benefits and wide applicability of our platform, they typically phase in implementation of additional core solutions and applications for new use cases and additional users, including those outside the finance organization. As our customer base continues to expand, every successful adopter of our platform is an opportunity to add more users and generate incremental revenue.”

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You must have incredible retention.? “In 2023, we retained 99% of subscription and license ARR that was up for renewal that year. Our focus on customer success has contributed to our high dollar-based gross retention rate, which was 98% as of December 31, 2022 and 2023 and March 31, 2024.? Our dollar-based net retention rate was 116% as of December 31, 2022 and 2023, and 118% as of March 31, 2024.”

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