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Investing.com -- Shares of OneStream, Inc. (NASDAQ: OS) plummeted 20% following the release of the company’s fourth quarter financial results, which fell short of market expectations. The enterprise finance management platform reported a significant year-over-year increase in revenues but also disclosed a substantial GAAP operating loss, leading to downgrades by several analysts.
OneStream’s fourth quarter revenue rose to $132.5 million, marking a 29% increase compared to the same period in the previous year. Subscription revenue also grew by 35% to $118.6 million. Despite these gains, the company reported a GAAP operating loss of $47.4 million, a stark contrast to the $0.2 million income from the same quarter last year, with GAAP operating margin plummeting to (36%) from 0%. The loss included a substantial equity-based compensation expense of $52.6 million, up from $1.2 million in the fourth quarter of 2023. Non-GAAP figures were more favorable, with operating income at $8.7 million and margin at 7%.
For the fiscal year 2024, total revenue climbed by 31% to $489.4 million, and subscription revenue surged by 41% to $428.2 million. However, the GAAP operating loss widened significantly to $319.5 million from $30.5 million the previous year, with equity-based compensation expenses contributing heavily to the loss.
CEO Tom Shea highlighted the year’s achievements, including a 35% YoY subscription revenue growth in the fourth quarter, positive free cash flow, and non-GAAP profitability. He also underscored the introduction of 15 new products, particularly in the Finance AI portfolio, as transformative for the company.
Despite these developments, OneStream’s stock took a hit after JPMorgan analyst Mark Murphy downgraded the stock from Overweight to Neutral, with a reduced price target of $26.00. Murphy cited "cautious data points relating to OneStream" and confirmed "deal slippage" as reasons for the downgrade, suggesting the stock may remain range-bound in the $20s until certain overhangs are resolved. His full comment: "recent weeks we have published cautious data points relating to OneStream, and its Q4 results provide confirmation of deal slippage, which causes us to think the stock may remain range-bound in the $20s until some overhangs can clear up."
Other analysts also adjusted their outlooks, with Goldman Sachs and Raymond (NSE:RYMD) James lowering their price targets while maintaining their respective Buy and Outperform ratings, citing the strong core business and growth opportunities despite near-term challenges.
For the first quarter of 2025, OneStream provided guidance with total revenue expected between $130 million and $132 million, and a non-GAAP operating margin ranging from (9%) to (7%). For the fiscal year 2025, the company anticipates total revenue between $583 million and $587 million, with a non-GAAP operating margin between (1%) and 1%.
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