Thank you everybody for joining us today, for day two of the Citi Global TMT Conference. I'm Steve Enders, part of the software research team here. And with us this morning, we have Bill Koefoed, CFO of OneStream. Bill, thank you so much for being here. Yeah, thanks for including us. Yeah. Maybe just to start, you've been public about a year now, maybe a little over a year. Just what has the first year been like, and what's kinda been the learnings of the first year being public? Yeah. I t's been what we had expected and hoped for. W hile the visibility of the public light i s sometimes interesting, it's always important to be. F irst of all, it's given us more visibility as a company, and second of all our performance is in people's radar every day, that makes us a stronger and better company, and drives more rigor into the business. Our strategy, is working, and obviously it creates liquidity for our employees, which has been a good thing. So overall, it's been great. Okay. That's good to hear. I wanna talk a little bit about Q2. Y ou had record commercial pipeline come in, coming off of the quarter. W hat's really resonating right now with your customers? W ith you've had a ton of innovation that's come out with new products, the Sensible AI portfolio, Express, and that kind of broader strategy. But w hat's resonating, how has the pipeline composition changed over the past couple of years? Yeah. You hit on a few things, so I'll try to hit 'em. I'd say generally, our strategy is working. We're, we're really pleased with where our innovation has led us. We're really excited about the AI innovation that we've made. We have obviously, more coming out. But having one platform that allows you to do kind of close consolidation, planning, reporting, all one single security, one data model, like, no one else has that. And so we find that to be really resonating. And then, as we've built out we have o ur core, and then we have what we call Agile Financial Analytics. Tom talked a little bit about it on the earnings call. But we have customers that want that are wanting to do more. They're wanting to do not just monthly, quarterly reporting, but daily, weekly. And some of our Agile Financial Analytics, which allows people to do more real-time analytics into their business and tap into some of the other resources that we've been able to do, has. T here's been a lot of momentum toward that. Again, still s uper early innings on that, but there's a lot of demand for that. We have some big customers that are already using us for that. And then AI, as I mentioned Sensible Machine Learning, which we now call Sensible AI Forecast continues to see really great momentum. Candidly, I got a case study from a customer two days ago that saved $2.5 million in cost in doing their forecast. They're getting their forecast done in one day rather than in a week, and then or maybe it's even ten days. But being able to do better forecasting, better forecast accuracy, again, we're in the early innings of that. We have big customers that are using us for we almost call it touchless forecasting. And there's a lot of really great opportunity there. And then you extend that into some of the anomaly detection that we're doing around things like account reconciliations, which I think customers are just starting to realize the benefits from. from. T hen just agents is obviously a popular theme. W e think you have to remember, we serve as a book of record for our customers. This is arguably the most important record for them. So being able to have security, workflow, curated data, all tied in with agents, and being able to access and leverage information to allow you to do your job better, we really think that we have a unique value proposition there, and we don't see. I love to use this term, foreign agents. I don't think people want foreign agents in their financial system. They want our agents, and they want our capabilities to be able to help them do their job better and access that through OneStream. No, that's, that's great to hear. I do wanna dig into the AI opportunity, how you're thinking about that a little bit more, in a bit. But, before that, I do wanna touch on the federal side of the house get a little bit better understanding for what you're seeing there versus maybe how you're thinking about the guidance for 3Q, and just kind of the assumptions you're making within that vertical specifically, versus what that means for the rest of the business. Yeah. I'd say a few things about the federal government. Y ou've seen s ome announcements from other software companies. With DOGE, they are really pushing for modernizing the government infrastructure. I think we can all agree that there's a big opportunity there. There's a lot of legacy systems, candidly, that are written in programming language that was either things that were before some of the people in this room were born, or certainly when I was just starting my career. So, and a bunch of people are retiring, and so they want. They really wanna modernize. Number two, they are. T he government's also been a little bit reluctant to move to the cloud, and so we still have some legacy OneStream that's on-prem at the government. O bviously, the accounting for that, if they move to the cloud there's obviously a bit of revenue uplift if we get that, but the accounting for that is different. So the license revenue that you've seen for us in Q3 in prior years, over time will certainly go away. And then the third area is obviously the government's focusing on cost savings, like are you using all the consumption or all everything that you've acquired? So those are the three things that really went into the guidance that I offered. We're still working through it with them, so I don't have anything kind of new to add, but I'd say we are fairly prudent in our guidance to make sure that under whatever the scenario is that ends up happening that our guidance will have been thoughtful and address those situations. Okay. That makes sense. That makes sense. And if there are questions in the room, we want to make sure to get to those. So p lease raise your hand, and we'll make sure to get to that. I do want to ask on just the financial transformation market, and there's this big upgrade cycle that we keep hearing about of the on-prem ERP vendors pushing customers to the cloud. Just how do you think about how that maybe plays out from here, and how do you kinda think about the legacy replacement market and going in and capturing some of those traditional on-prem consolidation solutions? Yeah, we've been waiting for this for a few years, right? I t's important to just again reflect back that the last big finance transformation cycle was, pre-Y2K. So there's a lot of legacy ERP, a lot of legacy CPM that's out there that is again, to your point, still on-prem and pretty old. W e are seeing it. We're still in the early innings. When we did the IPO roadshow, we assessed that as a $10 billion TAM for the legacy replacement market. C ertainly we're a year and a half into our process of being public, and have addressed some of those. But we still see the opportunity as being quite big and we're chipping away at it. Part of our European success has been some of the legacy kind of Business Objects. W hich was Cartesis and OutlookSoft, and so some of those replacements are actually happening a little bit faster than they had been in prior years, so we're benefiting from that for sure. Okay. That's, that's great to hear. I guess competitive environment, SAP, Oracle, kind of where, how are they kind of competing today with, and how are they thinking about their kind of like, go-forward approach in, in this, in this space versus what OneStream is doing? And how are you kind of viewing the, the ability to take that versus them able to push that solution into the cloud? Yeah. T he competitive environment really hasn't changed for us. Oracle still remains our largest competitor, just given the big Hyperion install base that they have. O ur win rates against the big competitors hasn't changed. W e continue to compete on a similar ground to what we had in the past. J ust in terms of adding on to that, obviously, Anaplan bought Fluence. W hatever, two years ago now, maybe? Yeah. We don't see them very much. I think maybe once or twice. But again, back to my prior statement, they don't, they don't have a single platform. They 're really good. They f ocus a lot on the planning side of it, but they don't, they don't think about it holistically across close consolidation, planning, reporting, and analysis like we do in a single data model, in a single platform. Okay, that makes sense. That makes sense. Last question from me on the competitive side. W e sometimes hear concerns from investors around w ith the push to the cloud from the ERP vendors and them consolidating finally, hopefully, down onto one ERP platform instead of it being fragmented, that maybe limits some of the opportunity for OneStream, or at least changes some of that book-of-record approach that you have. Just how would you kind of combat that statement, or how does OneStream think abou maybe where that thinking is wrong and that there's still a ton of opportunity for you in that situation? Yeah. L et me start by saying, t he aspiration to get onto one ERP system breaks anytime you do an acquisition, anytime you've got multiple different divisions. C ompanies, certainly big ones. T hat's clearly an aspiration, but it's also quite hard. But what I would say, even absent that, like, let's assume that you're on a single ERP system. You have to remember, let's take Hyperion back because it was invented in the late nineties, where there was a decent amount of ERP consolidation. What happens is, an ERP is like the electricity in your house. It's hardwired in. You made that decision when you built the house. You've decided: This is how I want to run the business. Well, all of a sudden, you get somebody new that says, "I don't really want to look at the business by geography. I'd really like to look at it by product line," or, "I'd like to look at it by different types of product lines. Your ERP system's not gonna allow you to do that. Sure, you can download stuff, you can put it in Excel, but you end up in the same mess that you had before there was CPM. With CPM, this whole concept of a cube was always put on top of an ERP system so that you can run the business how you wanna run the business. And that's the most. I t's a really important thing for investors to understand, which is CPM's all about. It's reporting and planning and all those things, but it's also giving you the agility to run your business. Let's use Citi as an example, right? You have multiple different business lines. You have wealth management, you've got investment banking, you've got commercial banking. Like, each one of the leaders of these businesses all want to be able to run their business how they want to run their business. They don't want somebody sitting up on top saying: "Hey this is how I'm gonna tell you to run the business," 'cause that wouldn't work. And so that's really the benefit that CPM gives you, and particularly as you start adding the Agile Financial Analytics, and you start adding a bunch of these other capabilities on top. So, yeah, I feel good about our position in however whether you have one ERP system or you have a dozen. Yep. Okay, that makes a ton of sense. Maybe shifting gears a little bit, let's go back to the AI side. You know very much the topic of the past couple of years in software and definitely this conference. But let's talk about the Sensible AI portfolio first. Just how are you thinking about the use cases that that can address, and maybe what is the future of OneStream and AI strategy look like? Yeah, well, let's go back a little bit to my comment that I made earlier. Our Sensible AI forecasting, we've got more than a couple dozen of the world's most important companies that are using Sensible AI Forecast. These are, again, historically, they had been spending a bunch of money on data scientists, on some arguably big projects to help them do a better job on forecasting. W hen you're a billion-dollar company and your forecast is off by 1% or 2%, that extends out into hundreds of millions of dollars, if not billions at scale. And so the ROI for that is really great. As I mentioned earlier, this company that's a Fortune 500 company saved $2.5 million on just annual people spend t heir forecast is more accurate s o they're able to run their business better, and it's all being done on OneStream. And they're a historical kind of core customer as well. So you're able to take that forecast and leverage that right into your OneStream plan. And so that, again, obviously, nobody else can do that. So we're really excited and we continue to make innovation on that to make our models better, but I'm not aware that anybody... Like, we really don't have a competitor in that space other than kind of people. W e feel really great about that. On the generative AI side, as I mentioned earlier, there's some areas like anomaly detection that work right in with our core business to help you basically leverage OneStream and the capabilities that we have better. And then the agents are in the early days, and our customers are really seeing the early ones are seeing some benefit from that, in that t hey can do the analysis, they can get access to information. But again, the thing that, as I mentioned earlier, that's super important is you want accurate results. As we all know, if you go ask AI, it's not, the results aren't always accurate. K ind of pick your favorite LLM model. But if you're gonna use that for your core financials, it has to be accurate. So things like curated data, the workflow, security models, those all matter a lot, and we, again, we feel like we have a unique capability there. Okay. No, that's great to hear. Maybe taking it connecting the portfolio to the financial side for you all, how do you think about t he monetization angle for those solutions? How do you think about disclosures around the AI dynamics for your business? Just what does that look like? Let me start by addressing the first part of your question, which is we have a hybrid pricing model. W e have always wanted to sell how our customers want to buy. T hat's really important. I know investors have their point of view on, h ow they want customers to buy, but it actually turns out that when our teams are engaging, we wanna reduce the friction, we wanna sell to them how they wanna buy. In some cases, they wanna buy based on a seat-based model. In some cases, they wanna buy based on a consumption model. How much do I use? So that's an example of that is, like, transaction matching for us, which we have some pretty strong capabilities. They wanna buy based on, like, number of transactions. We sell based on that. In our AI forecasting, people buy based on targets. So again, it's somewhat of a consumption model. There are other things that we sell that are based on kind of a platform fee. Like we have a thing called a product called, or a solution called the Power BI Connector, and so that allows customers to use Power BI, Microsoft Power BI, to access OneStream data, so they can leverage that in their environment. And so that tends to be more of a platform fee. So we've got, again, a hybrid model that allows us to kind of sell to a customer, however they wanna buy. Y ou're seeing a bit more of a shift to the consumption. We'll call it kind of prepackaged consumption as opposed to like, how much electricity did I use? Just pay the bill. And so far, that's actually really resonated with customers. Okay. Maybe it's a good time to start asking about some of the pricing and packaging changes that you have gone through this year. Just what has changed from the prior approach? Are there certain things that you're trying to incentivize more on the usage or consumption side and move away from the seat-based side? Just how do you think about kind of what that change in approach is, and how that maybe shifts the model from here? Yeah. In addition to what I just talked about in terms of some of that, what I would say is, particularly in that area of our portfolio called Agile Financial Analytics, that tends to be one that is very consumption driven. Because it's a lot of data, it's a lot of compute usage. P art of it, t he good news is some of it is we're not having to educate customers on this. There's other some of their other software vendors are educating them on consumption, and so it just kind of follows the trend of what other software companies. 'Cause it's always hard to kind of do something completely different from what somebody's, 'cause they'll turn their head, and they'll say, "Huh?" But CFOs are now starting to be used to some of these models. And so we sit down with them and say, "Hey, this is what we think the consumption's gonna be for this type of product or this type of of consumption." Again, a lot of the data. What we're finding, particularly as we talk to some of our CFOs, is they're putting so much more data in OneStream, and obviously it's expensive for us to be able to consume that. But they're, rather than putting it in a Databricks or a Snowflake or something like that, they're kind of keeping that in OneStream. And again, it's, it's awesome for us, but it's also expensive for us. So we just have to, like, figure out how to monetize that in a way that's a win-win for us and for our customers. Okay. To that point, w hat does that negotiation look like for customers? H ow long does it maybe take to kind of play out from here to kind of go back into the base and try and make that shift? So, I've got a spreadsheet of every single one of our customers, and it won't shock you, we're leveraging OneStream to do that. Yeah. Kind of look at profitability by customer, and it's like, it's a, it's an honest, real conversation, which is, "Hey, look, you're putting a lot of data in our system," and we're having to turn around and obviously pay Microsoft for that 'cause we use Azure as our platform. I t ends up just being a pretty transparent. If you're honest with your customers, and they trust you, and as we've talked about before, and anybody in this room who's done research on OneStream, we have very passionate customers. They love OneStream, and so we want to continue to maintain that trust, and that's really important, and just having an honest conversation with our customers has worked out well. Yeah. Okay, that makes sense. I wanna ask about CPM Express, and maybe just talk us through the approach of that. W hat does that mean from cycle times, what that means for ARR for those customers versus if they were taking it on the full kind of platform approach before? Just what does a CPM Express customer look like that's different than a traditional OneStream customer? Yeah, I'm sorry, you had asked about that earlier, and I didn't address that part of that question, but we're really excited about CPM Express, and just as a reminder, it's our same product, but it's just pre-configured for customers. So rather than for some of our bigger customers, which we have to go back and understand what they're using in their legacy environment, legacy Hyperion or Business Objects environment and basically kind of model that over to OneStream. These are cases where somebody typically hasn't used a legacy environment. They want best practices, so they want a pre-configured chart of accounts. They want pre-configured reports, and so we've used best practices with these customers, and we've actually seen some really good momentum, particularly here over the summer. The price point, obviously, given that these are smaller customers than the bigger ones, is gonna tend to be more in the, call it $100,000-$150,000 range, but the big savings for a customer is the implementation costs to implement the software, so it's a faster speed to implementation, so call it 8 to 12 weeks. So you get your results faster. If you wanna do what, the other thing that we're finding is that customers can get their software in faster, so then they can do add-ons faster. Again, it's a super small group at this point but we're seeing some really great results there. T he other thing that we're just in the early innings on is we're starting to see either we're doing it or we're having partners do industry-based solutions. So call it CPM Express for state and local government, CPM Express for higher ed, those things. And so we can get a faster implementation time. And some.. Sorry to take another pivot, but sometimes they start with the idea that they want to do CPM Express, and then they decide, "Well, I don't really want to use those pre-configured reports." And so then it ends up, it's, you're not gonna get it done in eight to 12 weeks, but it's certainly a faster implementation time, and so we're seeing a lot of momentum and enthusiasm in that, in this space. And, again, super early days, but we're really excited about it. Sure. To the point around... I understand it's still early, but does it change maybe the expansion opportunity within that customer or what are kind of t he longer term like NRR kind of impacts for an Express customer versus a traditional one? Yeah, no, it's a great question. The exciting thing is it, it'll because they're getting the software in faster expansion opportunities are already happening faster. Again, it's a small sample size, but the big implementations that we do that can take a year or longer. Yeah. What we've seen in our cohort analysis is people are consumed with doing that for some period of time. If you can get the software in, you can get people starting to see the benefits of AI. You're starting to see people be able to get the benefits of Agile Financial Analytics. Those things can add value faster. Okay. Which is actually partly what's exciting to our partners, is that they can. They feel like they can get more while obviously 8 to 12 weeks is less time than other types of implementations, that they can start to do more value-added services faster. Okay. They're excited about that. Interesting. I know it's still new, but does this change how you think about maybe further opportunities for Express? Like, would we ever see a Sensible AI portfolio kind of put on that, on that motion? I think so. Okay. Look, our AI capabilities are relevant, whether or not it's an Express customer or a large customer a kind of legacy replacement customer. W e had some examples of that that we shared at Splash with some. S ome of these customers are pretty small and relative to the big Fortune 500, and they're seeing great benefit from our AI capabilitie s. Sure. I do want to ask about some of the changes on the sales side. I know there was some change in sales leadership earlier this year. Colby's role changing a bit. Just what has changed there first, and then what does that kind of enable for the rest of the sales organization? Yeah. We announced that change because we were going through the proxy process, and y ou obviously have to disclose your Section 16 officers, but in a practical way, it really didn't change- Okay. Ken Hohenstein has been our CRO. He's still our CRO. He happens to report directly to Tom now. Tim Minahan was our Chief Marketing Officer. He just happens to report to Tom now, and Craig's super focused on customer success and CPM Express. So I wouldn't say that there was a ton of change other than, again, we had to do it to some degree for regulatory reporting. Okay. O n the dedicated AI sales force, what does that kind of build-out look like for you all? What does that mean for. Is it more of an overlay model? Just what does that look like compared to the rest of the organization, and how has the success of that group kind of looked like as it's been built out? They're all in and all at it. The AI team, and they kind of think about themselves kind of sales all the way through, kind of the engineering team, is really energized by their capabilities, and they really high-performing team. The AI overlay, it's an overlay for right now, and, that team continues to grow at kind of a gradual pace. I don't know that we'll have to figure out kind of how and at what point does it grow to and kind of how we think about it over time. But the other important one is we started, we announced at Splash, it was just last year, but a sales performance management capability, and we're starting to see some traction there. We've hired a sales rep who had experience at some of our competitors building that out, and we're really excited about the ability. I t's a decent, it's a pretty good TAM on sales performance management. We've got a few customers at this point, but we see a lot of opportunity there, and so we're starting to build out that overlay capability as well. Okay, and this is coming from the Infinity product. T here was a partnership there, and so this is something that you're building out your own sales force for that? Yeah, they're an ISV. T echnically, the sales are written on their paper. T he partnership between our team and their team is actually quite good, and then I would also say that their kind of parent organization is looking at other capabilities that they can build in a similar way as an ISV on OneStream. 'Cause there's a few. I'm not, I don't want to go into them, but there's a few other kind of logical opportunities to go into there that continues to extend. J ust as a reminder, like, the infinitely extensible in OneStream is such a powerful, 'cause you can continue to create these new ISV capabilities on OneStream, and we're going to continue to pursue that. That makes sense. We only have a few minutes left here. If there's any questions in the room, want to make sure we get to those. S hifting gears a little bit m aybe still kind of on this AI theme, but how is OneStream leveraging AI internally? Like, what are you doing? How is that kind of flowing through to margin, and where do you find kind of the efficiencies in the business from that? Yeah, I'd say there's three areas, and I'm going to save the best for last. But obviously, on our engineering side, they leverage LLM models to help them write code. I think we're getting somewhere, but I can't remember the exact number, but somewhere between 30%-50% more productivity from our engineering team by leveraging s ome of these. I won't use brand names, but some of these capabilities. The second area is really in our support and customer success organizations, and it's whether it's access to information, whether it's helping people to solve problems. We're leveraging efficiency there t o help our not only to help our customers get answers faster, but obviously there's some cost savings there. And then within our own finance organization that we'll call the best for last. W e, I don't know, some people love to use dog food, some people use drink your own champagne, but our team uses every. It's one of the most fun things about being in finance for a company that builds financial capabilities, is we not only use the capabilities, but we give feedback into the product group to say, and there's a woman on my team who has spoken at a bunch of our user conferences who's been really quite an advocate, as we leverage some of our capabilities. So whether it's forecasting, whether or not it's. W e're using all the previewing all the agents, using those, giving feedback into the product group obviously using it in our team to be more efficient. And then obviously, things like the anomaly detection and s ome of the other analysis tools that we have, we're leveraging. So it's a fun part of s itting where we sit within this company. But yeah, I think I've told you before, but Pam McIntyre, who's our Senior Vice President and Corporate Controller, was a customer before she came to OneStream, and so she's been just such a good advocate for all the innovation that we're developing for finance. Yeah, it's high praise right there if you're converting customers to employees, so It's good to hear. I want to ask on the other part of the question is around like how you find efficiencies, how you think about that flowing through to the bottom line versus reinvesting that. S imilarly how do you think about top line trying to drive growth versus the margin side of the equation? Yeah. W e can and should do both. I'd say obviously, AI has been part of the growth engine for us, SPM, which we've talked about. There's some new geographies that we are likely to pursue. T he part of the problem when you go into a new geography is there's an investment associated with it, but we feel like kind of the time's right for that, and that'll continue to help the top line for sure. On the bottom line, and look, we've talked about this. Our gross margin has kind of slowly increased. We see a big opportunity there. During the IPO roadshow, we talked about the fact that over the kind of, call it near to midterm, we want to get that number up to 80%. We're doing a lot of investment in that area to get that, to push that number in that direction. W e did an eight upgrade, which had a lot of infrastructure improvements, but there were some costs with moving people from six and seven to eight. We've released nine, which has some also incremental infrastructure savings. And then we've got kind of obviously some more investment to go, but, but that's, that's really our goal, and obviously, that, that will. All the COGS savings will more or less drop to the bottom line. So t hat's our approach as we go forward. That makes sense. I think we're at time, but Bill, I want to thank you so much for being here and in OneStream for being here. I want to thank everyone in the audience for listening in today. Thank you.