Digital Transformation Fuels OneStream's $200 Million Funding Round

Currently, digital transformation is a primary focus for businesses, and companies facilitating this shift by addressing complex operational challenges are experiencing substantial growth. OneStream, a provider of enterprise-level financial operation tools – encompassing areas like reporting, planning, and tax management – has recently secured $200 million in primary equity funding.

Funding Details and Valuation

This funding round brings OneStream’s valuation to $6 billion. D1 Capital Partners spearheaded the financing, with significant participation from Tiger Global and the Investment Group of Santa Barbara (IGSB). Notably, Tiger Global and D1 Capital share a common investor, Tiger Management, potentially influencing their collaborative investment strategy.

Strategic Use of Funds

The newly acquired capital will be allocated towards expanding the company’s existing toolkit of services. Furthermore, OneStream intends to meet the increasing demand for its solutions as organizations transition away from outdated applications and rudimentary, spreadsheet-dependent processes.

“We are dedicated to delivering innovative planning, reporting, and analysis solutions that empower our clients in today’s dynamic and intricate business landscape,” stated Tom Shea, CEO of OneStream Software.

Rapid Growth and Investor Confidence

OneStream’s valuation represents significant progress; the company was valued at $1 billion just two years prior, when KKR made a majority investment exceeding $500 million. Bill Koefoed, OneStream’s CFO, confirmed that KKR will remain the company’s largest shareholder and a continued supportive investor.

Despite potential considerations for an initial public offering (IPO), OneStream is presently prioritizing customer access, business expansion, and stakeholder value creation. Koefoed indicated that an IPO remains a potential future exit strategy, but no specific timeline has been established.

Pandemic-Driven Acceleration

The company’s impressive valuation growth mirrors the surge in business experienced over the past two years, particularly within the last 12 months. The COVID-19 pandemic compelled organizations to modernize their systems for enhanced efficiency and flexibility, driving demand for OneStream’s offerings.

In 2020, OneStream’s annual recurring revenue increased by 85%, with its customer base expanding by 40% to reach 650 enterprises.

Focus on Corporate Performance Management

OneStream specializes in corporate performance management (CPM), encompassing the core financial operations essential for business continuity. Traditionally, these functions were served by a diverse range of software vendors.

Many tasks were previously handled through on-premise solutions dominated by companies like SAP, Oracle Hyperion, and IBM. Others, such as Anaplan and Blackline, offered point solutions addressing specific aspects of these functions.

Cloud-Based Solutions and Enhanced Efficiency

Technological advancements have enabled the migration of these functionalities to the cloud, facilitating streamlined processes and improved analytics. This shift has created opportunities for companies like OneStream to provide integrated solutions.

The pandemic underscored the importance of OneStream’s software, which supports collaboration across distributed teams and provides a clear link to improved financial management. Notably, OneStream’s customer base extends beyond the typical technology sector, including organizations like Fruit of the Loom, McCain, AAA, Takeaway.com, and the Carlyle Group.

Koefoed explained that the pandemic served as a catalyst for companies to digitally transform their key finance processes, leading to increased demand for OneStream’s solutions. The software enables better collaboration and more frequent forecasting, crucial during times of economic uncertainty.

Investor Perspective

Investors were particularly impressed by OneStream’s ability to gain customers from competitors in the past year. Andrew Wynne, a principal at D1 Capital Partners, highlighted the platform’s exceptional customer value.

“OneStream’s focus on customer success has allowed them to capture significant market share from established players, while simultaneously achieving strong growth in revenue and customer acquisition,” Wynne stated. “We are confident that OneStream possesses the vision and product necessary to become a leading force in its industry.”

Future Expansion Plans

Looking ahead, OneStream plans to build upon its current success. This includes expanding into the Asia Pacific region, alongside its existing operations in North America and Europe. The company also intends to leverage its expertise in finance to extend its services into related areas such as HR, IT, sales, marketing, and supply chain management, optimizing resource allocation.