KKR-backed OneStream (OS) priced its IPO at $20.00 – $1.00 above the top of its $17.00-to-$19.00 range – and sold 24.5 million shares – the number of shares in the prospectus – to raise $490 million on Tuesday night, July 23, 2024. OneStream’s AI-enabled software platform caters to CFOs and other financial services professionals. OneStream’s stock opened at $26.00 – up $6.00 for a 30 percent gain from its IPO price – when it started trading at 11:37 a.m. EDT on Wednesday, July 24, 2024 – on the NASDAQ. Volume on that opening trade was about 1.5 million shares. (Editor’s Note: This column, published Tuesday night, was updated Wednesday morning with news of OneStream’s debut on the NASDAQ.)
OneStream’s stock closed on Wednesday at $26.85 – up $6.85 for a 34.25 percent gain from its IPO price – on NASDAQ volume of 10.9 million shares.
Morgan Stanley, J.P. Morgan and KKR led the team of joint book-runners. KKR disclosed a conflict of interest in the prospectus, due to its dual roles as a leading underwriter of the IPO and a selling shareholder.
BofA Securities, Citigroup and Guggenheim Securities rounded out the joint book-running team.
Of the 24.5 million shares in the IPO, OneStream offered 18.05 million shares and the selling shareholders offered 6.45 million shares.
KKR offered 4.96 million shares – representing about 77 percent of the shares offered by the selling shareholders.
Cornerstone investors – certain funds and accounts advised or sub-advised by T. Rowe Price Investment Management Inc. – had indicated an interest in buying up to 15 percent of the stock in the IPO. These shares will not be subject to a lock-up agreement, the prospectus says.
IPO investors focused on OneStream’s software revenue growth of 40 percent in the past year. OneStream has a history of net losses and accumulated deficits, according to the prospectus. But the Street heard that IPO investors were keeping their eyes on the revenue growth – and looking away from the red ink on the bottom line.
The company reserved 5 percent of the stock in the IPO for its Directed Share program for directors, officers, certain employees and partners.
After the IPO, private equity firm KKR will own a stake representing about 52.2 percent of the voting power of OneStream’s outstanding stock, the prospectus said.
“Empowering the CFO”
OneStream, based in the northern Detroit suburb of Birmingham, Michigan, says its AI-enabled software platform – the Digital Finance Cloud – “modernizes and increases the strategic impact of the Office of the CFO.” The company was founded in 2012, when it launched its platform. KKR acquired a majority stake in 2019, the prospectus says. The financial press reported that the 2019 transaction valued OneStream at over $1 billion at the time.
“Our vision is to be the operating system for modern Finance by unifying core financial functions and empowering the CFO to become a critical driver of business strategy and execution,” OneStream said in the prospectus.
As of Dec. 31, 2023, OneStream had 1,388 customers – up from 1,148 customers on that date in 2022 – an increase of 21 percent, the prospectus said.
“We have achieved rapid growth since first launching our platform,” the prospectus says. “For 2022 and 2023, our software revenue was $245.5 million and $343.4 million, respectively, representing year-over-year growth of 40 percent.”
OneStream is not profitable. For the 12 months that ended March 31, 2024, OneStream reported a net loss of $10.82 million on revenue of $406.39 million, according to the prospectus.
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