Thank you for standing by, and welcome to OneStream's Second Quarter Fiscal Year 2025 Earnings Conference Call. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Anne Leschin, Vice President of Investor Relations and Strategic Finance. Please go ahead.

Thank you, operator. Good afternoon, everyone. Welcome to OneStream's Second Quarter 2025 Earnings Conference Call. Joining me on the call today is our Co-Founder, CEO and President, Tom Shea; and our CFO, Bill Koefoed. The press release announcing our second quarter 2025 results issued earlier today is posted on our Investor Relations website at investor.oneestream.com, along with an earnings highlights presentation. Before we get started, I'd like to let everyone know that we plan to participate in 2 conferences in the upcoming weeks. The first is Citi's Global TMT Conference in New York on September 4, and the second is Goldman Sachs Communacopia and Technology Conference in San Francisco on September 10. A live stream and replay of our presentations at the conferences will be made available on our Investor Relations website. Now let me remind everyone that some of the statements on today's call are forward-looking, including those related to guidance for the third quarter ending September 30, 2025, and the year ending December 31, 2025. Forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors. Some of these risks are described in greater detail in the documents we file with the SEC from time to time, including our quarterly report on Form 10-Q for the quarter ended June 30, 2025, that we filed today. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. During our call today, we will also reference certain non-GAAP financial measures. There are limitations to our non-GAAP measures, and they may not be comparable to similarly titled measures of other companies. The non-GAAP measures referenced on today's call should not be considered in isolation from or as a substitute for the most directly comparable GAAP measures. Our management believes that our non-GAAP measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses that may not be indicative of our ongoing core operating performance. Reconciliations of our historical non-GAAP measures to the most directly comparable GAAP measures can be found in this afternoon's press release and the earnings highlights presentation posted on our Investor Relations website. We are not able to provide reconciliations for forward-looking non-GAAP measures without unreasonable effort because certain adjustments cannot be predicted with reasonable certainty and could be significant, particularly related to equity-based compensation and employee stock transactions and the related tax effects. Now I'll turn it over to Tom. Tom?

Thank you for joining us this afternoon. The second quarter of 2025 built on the momentum of Q1 with strong subscription revenue growth and record attendance at our Splash user conference. We continue to focus and execute on our long-term vision to digitally empower the office of the CFO. We saw growth in our European business and our North American commercial business even as we navigate near-term uncertainty in certain markets, particularly the U.S. federal public sector. Our second half pipeline remains healthy as our message continues to resonate in the market. Our focus on product and AI innovations has positioned OneStream to capitalize on our momentum and build long-term value for shareholders, customers and employees. With that, let me recap our strong results for Q2. We had another quarter of solid execution as OneStream continues to replace legacy solutions worldwide. We achieved total revenue growth of 26% year-over-year, driven by strong subscription revenue growth of 30% year-over-year and a free cash flow margin of 20%. SaaS conversions continued as our customers adopt version 9 of our platform, which delivers advances in performance, scalability and capabilities. Our core finance platform continues to drive the majority of our revenue growth and the early momentum of our recently launched CPM Express offering is enabling customers to access the power of our platform with the ease and speed of its implementation. This is helping us capture more of the large legacy replacement opportunity that we believe is just in its early innings. The investments customers are making in our core capabilities will ultimately unlock the significant value that our finance AI brings. We introduced some of our most advanced AI innovations at our Splash conference in Nashville, including our enhanced SensibleAI Forecast, SensibleAI Studio and SensibleAI Agents. More and more, customers are beginning to realize the unique and transformational value that OneStream's finance AI delivers. This is reflected by our more than 60% year-over-year growth in AI bookings for the first half of 2025 and the ROI our customers are experiencing. Adding to our leading market rankings from Gartner and IDC, OneStream's market leadership was again recognized this quarter through our exceptional results in BARC's annual planning survey, where OneStream achieved 27 top rankings and 56 leading positions from the analyst firm. These proof points give us the confidence that our strategy is resonating with companies across the globe. These engines of our business continue to feed off 3 main drivers at the heart of our industry. Number 1, finance is in the initial phase of its digital transformation. Having utilized outdated legacy financial systems for decades, CFOs are recognizing the crucial need for a platform to provide a single view into financial and operational data across the enterprise to effectively steer the business. Number 2, the role of the CFO is evolving and expanding. CFOs are transitioning from focusing on reporting to providing more strategic insight and operational planning to help drive business execution. And number 3, the use of advanced tooling is enabling finance teams to drive business performance, not only measure it. We are seeing a shift in customers looking for applied solutions that are purpose-built for finance. Proven AI solutions have the potential to give finance teams greater predictability and visibility into their business with more speed and agility. Taken together, these industry trends remain at the heart of our market opportunity, guiding our product road map, shaping our innovation and expanding the value of our platform. And the second quarter was no different. Now let me recap our product innovations announced at Splash, including some of our most powerful advancements yet. We welcomed prospects and customers to the finance AI era and gave them a front-row seat to the future of finance and OneStream's role in shaping it. Fundamental to our platform is our plug-and-play architecture known as Genesis. As a refresher, Genesis consists of a no-code click-to-configure engine and a library of reusable functionality like dashboards, widgets, formulas and workflows that can easily be snapped together to dramatically simplify and personalize a customer's OneStream experience. Genesis is now generally available, and there was so much interest from customers and partners that we had to create additional sessions so they could get their hands on the product and learn more. Splash reinforced how transformational AI can be when connected to a company's financial and operational data. We highlighted a number of global brands having significant success with SensibleAI Forecast, pushing their forecast accuracy as high as 95% to date. SensibleAI Forecast is just the first step in our AI journey. We also unveiled several new applied finance AI solutions tailored to the office of the CFO. Number 1, SensibleAI Studio moved to general availability in June and is a collection of algorithms or routines built to solve key finance and business process issues such as anomaly detection and trending analysis. These routines can be accessed in 3 ways. First, OneStream embeds them directly into existing solutions, like we did with anomaly detection within OneStream account reconciliations. Second, customers and partners can access these routines as Genesis blocks, snapping them into their existing workflows. That means customers do not have to be programmers to build reports and applications on our platform. Third, developers can access the SensibleAI routine through REST APIs. SensibleAI Studio does all of this without the cost, complexity or risk of stand-alone deployments. Already, we are seeing customers purchase SensibleAI Studio given its quick time to value. A great early example of this in Q2 was an existing commercial customer who chose to adopt SensibleAI Studio just a month after its release. With nearly 1,000 dental centers, they wanted the ability to look across their portfolio to benchmark each one based on performance, key attributes and other metrics. By harnessing our advanced machine learning algorithms delivered through SensibleAI Studio, they can now automatically flag outliers, whether unusually high expenses or unexpectedly low collection rates. This capability, which was not possible before, is enabling them to move from time-consuming manual reporting and analysis to leveraging automated insights that enable strategic action. This reflects our vision of a single platform with a plug-and-play architecture seamlessly connecting the core finance functions with advanced AI. Number 2, we also introduced SensibleAI Agents, which are currently under private preview with several customers. These include 4 agents: finance analyst, operations analyst, search analyst and deep analysis. Embedded in OneStream, these agents can be operated within workflows, data models and security framework that our customers already know and trust. When asked the question, these agents can directly access validated financial and operational data within the platform to automate complex tasks, deliver deeper insights, and help organizations move faster with confidence. Perhaps the best way to describe our differentiated approach to finance AI is that we bring quantitative, generative and agentic AI capabilities together into solutions that target the specific needs of CFOs, something no other company does. Before I highlight a few customer wins in Q2, there is one other pillar of our platform strategy that we are just beginning to accelerate into the market. We call this agile financial analytics or AFA, which harmonizes transactional and fast-moving operational drivers with financial intelligence. This enables finance teams to, number 1, monitor performance and drivers on a daily, weekly and near real-time basis; number 2, model scenarios quickly; and number 3, respond to changing dynamics with precision. We are beginning to embed AFA into our advanced planning solutions to empower finance to drive integrated planning that links back to the financial objectives of the business. Once again, our customer wins this quarter reinforced the need for a modern unified platform to enable agility in financial reporting and planning that scales to meet the needs of the world's largest companies. A Q2 example of this was a leading motion and control technology company that still relied on legacy and homegrown systems after multiple acquisitions over 20 years. As they embarked on their financial modernization journey, they were surprised to learn that more than half of their peers were already OneStream customers. They will be using our core consolidation capabilities to unify consolidation, management reporting, account reconciliations and FP&A. While more customers embark on their journey with OneStream's core platform, some are beginning by also utilizing our advanced finance AI capabilities to realize efficiency gains and accelerate operational insights. Similar to Endeavor Energy, who is on stage at Splash, we saw another global industrial manufacturer add SensibleAI Forecast to its initial purchase of our core platform, replacing its legacy CPM solution. Under the direction of the CFO and CEO, AI-driven forecasting has become central to their strategy, providing the accuracy and agility needed to manage new tariff pressures and shifting global trade dynamics. We also had a significant core win with a major U.S. government institution. This highlights the opportunity that exists for us in the public sector, even as the current purchasing environment at the federal level remains dynamic. This organization was looking to modernize and streamline its legacy homegrown budgeting tool that could not meet its needs to scale and consolidate key processes. OneStream will allow their teams to move away from Excel, automating key reporting processes to drive efficiency and stronger team satisfaction. This is a landmark win for OneStream, which together with our recent FedRAMP High certification opens the door for future public sector expansion. This quarter, our North American commercial business performed well, driven in part by the growth of our CPM Express product. By reaching customers early in their financial journeys and getting them up and running in as little as 8 to 12 weeks, we are resetting historical expectations that CPM implementations are a heavy lift. CPM Express has given them a solid foundation from which to expand and gain access to OneStream's advanced solutions and AI technologies more quickly. One such customer was a fire protection and suppression provider that needed to transition from its former parent company's legacy CPM system. They chose our CPM Express platform to modernize their finance processes in a condensed timeline. Within just 2 days, the company extracted metadata from the legacy environment and loaded it into CPM Express. The solution enabled them to complete the implementation within 8 weeks and subsequently to expand their use cases within months of the initial deployment. These examples reinforce one simple truth. The OneStream platform is not only a catalyst for efficiency, precision and proactive decision-making across the enterprise, but together with our embedded finance AI portfolio, it can be a game changer by delivering even more powerful insights at scale. In closing, it has been a year since we took the company public. Today, I'm even more excited about our future and the clear value OneStream brings to finance teams. We have made incredible progress and our customers are beginning to see the value of our growing applied finance AI portfolio. And we are just getting started. We have a clear vision, strong momentum and a team that is more energized than ever to take finance further. Thank you. Now I will turn the call over to Bill to provide details on Q2 financials and our financial guidance.

Thanks, Tom. Good afternoon, everyone, and thank you for joining today's call. We are pleased to discuss the results of our second quarter of 2025. Total revenue grew 26% year-over-year to $148 million. Subscription revenue increased 30% year-over-year to $134 million. License revenue declined $900,000 compared with last year, primarily due to our success in driving SaaS conversions. Professional services and other revenue was up $500,000 compared to last year. Free cash flow for the second quarter was $29 million, up 281% compared with last year. For the first 6 months of the year, total revenue grew 25% year-over-year to $284 million. Subscription revenue increased 30% year-over-year to $259 million. And our free cash flow for the first half of the year was $65 million, up 100% compared with last year. Our international business had another particularly strong performance in Q2 with revenue growth of 34% year-over-year, now contributing 33% to our total revenue. We continue to see more than 60% of our bookings come from new customers as we capitalize on the digital transformation of finance and the AI evolution at some of the world's most important companies. We ended the quarter with nearly 1,700 customers, up 14% year-over-year. Billings increased 20% year-over-year to $151 million and 23% on a trailing 12-month basis. I would like to remind everyone that we view the trailing 12 months as the best indicator of billings momentum as it normalizes lumpiness in any single quarter. Our 12-month cRPO was up 29% year-over-year. Total RPO grew 21% year-over-year to $1.2 billion. Our Q2 non-GAAP gross margin was 70% compared with 69% last year due primarily to higher software revenue as a percent of total revenue. Our non-GAAP software gross margin was 76%, flat with last year. Our non-GAAP operating income of $1.6 million in the quarter increased $10.3 million compared with the prior year due to a combination of strong revenue growth and the scaling of our operating expenses. Non-GAAP net income was $9 million in the quarter compared with a loss of $5 million in the prior year, and non-GAAP earnings per share was $0.05. Total equity-based compensation expense for the second quarter was $31 million. We ended the quarter with $652 million in cash and cash equivalents. In summary, we were pleased with our strong performance in the second quarter and first half of 2025. Now let me turn to guidance. Consistent with last quarter, we have the largest pipeline we have ever had at this point of the year and feel very good about our product portfolio and innovation momentum. Our leading indicators remain positive. As such, we are increasing our full year 2025 revenue guidance to be between $586 million to $590 million. Now let's turn to Q3. As Tom mentioned, we are positive about the long-term outlook for the U.S. federal and the public sector business. Near term, the uncertainty in the spending and restructuring environment in the public sector is likely to impact our Q3 revenue growth as this is the largest quarter for the U.S. federal government business. In addition, we continue to see opportunities to convert on-premise government contracts to SaaS, which we have contemplated in our guidance. Based on these factors, we are offering the following outlook, including some one-time measures to give additional color to our guidance. In Q3, we expect total revenue to be between $147 million to $149 million. We expect subscription revenue to grow at least 25% year-over-year. We expect billings to be between $160 million to $162 million. We expect billings growth to revert to 20% plus year-over-year in Q4. In Q3, we expect free cash flow to be breakeven to slightly negative, in line with our historical seasonality trends. We expect non-GAAP operating margin to be between 0% to 2%. We expect non-GAAP net income per share to be between $0.01 to $0.03. We expect stock-based compensation expense to be approximately $30 million. For full year 2025, we expect total revenue to be between $586 million to $590 million. We expect non-GAAP operating margin to be between 1% to 3%. We expect non-GAAP net income per share to be between $0.07 to $0.15. We expect stock-based compensation expense to be between $120 million to $125 million. All in all, we had a strong Q2 and first half performance. Despite the specific dynamics in the U.S. federal public sector market in the third quarter, our business outlook remains strong. Our unique platform, innovative product roadmap, our pipeline and most importantly, our unwavering commitment to customer success, all make us confident in our ability to realize the long-term opportunity we see ahead. Now let's turn it over to the operator for Q&A.

And our first question for today comes from the line of John DiFucci from Guggenheim Securities. John, please go ahead.

I have a question for Tom, but I also have a follow-up for Bill, if that's okay. Tom, we appreciate that OneStream has performed very well in selling financial consolidation close to the office of the CFO. You've also leveraged those relationships into successful Phase 2 expansions for FP&A, as noted in your remarks. We recognize that OneStream can be and is being used for significant opportunities in operational planning, which goes beyond the office of the CFO. Can you discuss the go-to-market strategies you have implemented to drive expansion outside the office of the CFO? Additionally, any recent success stories in that area would be appreciated.

Sure, thanks, John. I'd be happy to discuss that. First, let me outline the strategy of our platform, which consists of three core pillars. The first is the essential financial capability that every business requires, including monthly, quarterly, and yearly reporting, as well as planning and management of the business. As companies become more efficient with our unified platform, they express interest in expanding into operational planning, an area we've been actively engaged in with our customers for many years. I referenced AFA in my earlier comments because we're concentrating on integrating rapidly evolving operational data. When comparing operational planning to financial planning, we're dealing with data that changes more dynamically and requires enhancement to extract financial insights. Our platform capabilities allow us to identify those generalizations. Specifically, we are targeting use cases that we can present to the market based on our customers' requests. One upcoming product that exemplifies these capabilities is our ESG product, which leverages AFA technologies and our core technologies to address rapidly changing operational data. You can expect us to uncover various use cases that we will present to customers in a manner similar to how we approach marketplace products or exchange products, and possibly in the format of an Express product. This represents a significant opportunity for us moving forward. Additionally, this is all supported by our plug-and-play architecture, which reflects our emphasis on productization and scaling our offerings. Ultimately, all of this is powered by our fully integrated AI platform. In summary, our focus on productization is designed to deliver new value to our customer base.

That makes it easier for the customer to understand, as they start with a framework you provide for specific use cases, which is quite sensible. Bill, as you mentioned, you had a strong second quarter. We also know that the third quarter marks the federal government's fiscal year-end. You have been more transparent than many companies about what this entails, and I'm trying to grasp the implications. Given that it is the fiscal year-end, we are aware that federal government contracts can be canceled or altered annually, as is typical for these types of contracts. We expect there will be more renewals in the fiscal fourth quarter. I'm curious about your visibility—are you providing guidance for the third quarter with the understanding that these contracts may be reduced more than anticipated? Or are you uncertain and choosing to be cautious based on everything I've mentioned? I apologize for the lengthy question, but I believe you understand my concern.

Thank you, John. We're providing our best outlook based on what we can see today. We're balancing short-term caution with the strongest pipeline we've ever had for the second half of the year, so we're very optimistic. However, there are three key considerations regarding the federal government. First, they are looking to modernize their IT infrastructure, and we believe we can contribute significantly to that effort. Second, the government prefers to migrate to SaaS, opting for software vendors to manage their on-premise systems instead of handling it themselves. Third, they are prioritizing projects based on current circumstances, but we don't have a clear picture of what that entails. They have existing projects they are focusing on, and some restructuring has occurred within the government. While we're excited about the long-term prospects in the federal sector, we need to remain cautious in the short term. We are the only cloud-based CPM vendor with FedRAMP High certification, and we are optimistic about our long-term opportunities while maintaining a careful approach in the short run. Thank you for allowing me to clarify our perspective.

And our next question comes from the line of Chris Quintero from Morgan Stanley. Chris, please go ahead.

Really appreciate the call out here on the federal uncertainty, but I wanted to ask around what you're seeing more broadly across the macro environment. We've seen some of your peers call out some deal delays and a slowdown in ERP immigration. So just curious kind of what you're seeing more broadly out there in the macro environment today.

I'm going to take that. We had a really strong Q2 performance with solid conversion rates and executed our plan very well. We saw strong execution overall. There is some uncertainty ahead, but we have a strong pipeline. Tom and I have reviewed it with our go-to-market team, and we feel confident in our ability to execute that pipeline in the second half. We've handled uncertainty before, and we will continue to do so. Thank you for that.

And our next question comes from the line of Adam Hotchkiss from Goldman Sachs. Adam, please go ahead.

Tom, why don't you talk a little bit about CPM Express? I know that was recently made generally available. I know that time to value is something that customers are really focused on in this environment. Maybe just talk about how you're working with your reps to pitch that product and how that's resonated over the last number of months relative to your expectations. And then maybe just how you think about contribution of CPM Express to your financials.

Sure, thanks for the question. I'd like to elevate the discussion a bit because CPM Express is central to our productization strategy. It represents the first of many initiatives leveraging our plug-and-play architecture. You're absolutely right that it focuses on delivering value more quickly to our customers. We believe we have the capability and sophistication to serve the largest companies globally, and now we're aiming to simplify the process even further. With CPM Express, based on our Genesis architecture, customers can enjoy a completely integrated CPM experience. If they're looking to transition to OneStream's platform as quickly as possible, CPM Express serves as an ideal entry point without any compromises. This product is suitable for any company, no matter how large, including those aspiring to be among the very best in their industry. Regarding sales enablement, we validated our product market fit in the latter half of last year, confirming our ability to deliver within the timelines promised to customers. We've noticed increased interest and more sales cycles in Q1. We're advancing further in our enablement efforts, which we've highlighted during our recent sales kickoff. We're optimistic about the progress and the positive feedback we've received.

And our next question comes from the line of Koji Ikeda from Bank of America. Koji, please go ahead.

Maybe 2 from me. First one, just kind of digging in a little bit deeper on the third quarter guidance. I fully appreciate all the commentary from the federal side. But I wanted to ask about 2 additional levers if those are in consideration in the guide, too. And so number 1 would be a higher propensity for SaaS, just kind of given the ratable nature versus upfront rev rec on your license products. I know there's a higher propensity for SaaS. Did that play a factor into the guide? And maybe a follow-up with the previous question, CPM Express coming in cheaper, right, a cheaper option. Is that playing an additional lever into kind of the guidance consideration?

Koji, this is Bill. I'm going to address those questions. Thanks for seeking clarification. As I mentioned earlier, we have indeed considered the possibility that our federal government contracts could transition to SaaS, which seems sensible. We want to avoid any surprises at the end of the quarter, so we are preparing for that possibility, even though we can't say for certain if that will happen. Regarding CPM Express, as Tom pointed out, it is essentially the same product, with the main difference being the speed of implementation. Our customers appreciate the best practices we offer, which they can easily integrate. CPM Express provides a solid option for various companies, especially those who haven't experienced the benefits of a OneStream platform combined with the straightforward implementation that CPM Express offers through preconfigured chart accounts and reporting. We launched this product in January and have seen a strong start, with good momentum so far, and as Tom mentioned, we are quite excited about it.

And our next question comes from the line of Alex Zukin from Wolfe Research. Alex, please go ahead.

This is Ryan Krueger on for Alex. I just had a quick one around AI. Obviously, at Splash, there was a lot of discussion around AI monetization. You guys talked about how you're really happy with this hybrid model, but we're still fine-tuning the AI monetization side. So now that some of those AI solutions have been out there, what are some early learnings on the AI monetization side since that event? What adjustments maybe have you made? And maybe how do you envision it changing in the near and long term?

Thanks for that. First, let me provide a brief overview of our AI platform to ensure everyone is aligned on the product aspects. Our SensibleAI Forecast has been available for approximately 18 months, and we have established a pricing strategy focused mainly on usage, reflecting how we train models for our customers. This hybrid pricing structure is foundational to our overall pricing and packaging strategy. Additionally, we offer SensibleAI Studio and SensibleAI Agent. SensibleAI Studio is currently available and operates on a tiered-based pricing model. Overall, the AI platform features a combination of both usage and platform-oriented pricing. We are now in the third phase, running a private preview program with agents, and that pricing strategy is in development. We are validating it at this time and it will likely resemble a usage model similar to what we have with the SensibleAI Forecast, possibly a prepaid approach. Our aim is to create a low-friction process for our customers to utilize the powerful AI tools we provide while ensuring they have the pricing predictability they desire. We believe we are getting very close to where we want to be with pricing for these capabilities.

And our next question comes from the line of Brent Bracelin from Piper Sandler. Brent, please go ahead.

Sticking with the AI thread here. Tom, we watched live demos of OpenAI's new GPT-5 model today after 2.5 years of training and tuning. This resurfaced investor fears around AI models disrupting the traditional app layer. Can you remind us what the OneStream competitive moat is within CPM specifically around the calculation engine and maybe why CPM might be more insulated from AI model disruption than less specialized applications?

Sure. Thanks, Will. Let me respond in a few ways. First, regarding the OneStream platform, it has very specific capabilities in financial intelligence that make it complex and sophisticated. You won’t see AI simply step in and create OneStream. I'm very confident of that. If it were possible, I would be launching many more products immediately. Our AI team is actively integrating AI into our development process, influencing our core platform team as well. We measure our use of AI in code generation, and our teams consider AI a part of their Sprint teams, but it's still not a strong contributor. It's giving us some advantages and speeding things up, but it cannot independently manage or deliver features we need. I appreciate the interest sparked by Mr. Altman’s comments, but we're not close to replacing the application layer. That said, I expect AI to enhance our efficiency as a development team, which is essential for software creation. AI may eventually be sophisticated enough to assist in developing complete systems, but for now, delivering a robust system with audit trails and transparency is crucial. CFOs are understandably cautious about relying on AI-generated code they don't fully understand. Throughout OneStream's history, there has been hesitance from CFOs to move to the cloud, and this is a further step that will take time for them to adapt to. However, we believe we are positioned to lead in this area, which is why we emphasize finance AI. We recognize that CFOs need trust and transparency.

And our next question comes from the line of Steve Enders from Citi. Steve, please go ahead.

Okay. Great. Maybe just following up on the last point around taking time for us as the CFO to get trust with AI models and in-systems. Just how do you kind of apply that, I guess, go-to-market approach with your AI portfolio and what you're doing with Sensible ML in the agent side to, I guess, try to progress that further to try to, I guess, quicken the pace of adoption there? And I guess, what do you feel like is controllable under your purview to make that happen?

That's a great question. There are two main points. First, when we talk about applied solutions, we mean that we are productizing them to provide predictable and defined outcomes. Focusing on specific use cases and showcasing their measurable value is crucial for introducing advanced technologies like artificial intelligence to the market. Second, regarding agents, trust and transparency are key. Our journey over nearly a decade has shown us that even though our early neural network integrations demonstrated better predictability and accuracy, CFOs and finance teams were hesitant to accept them because they didn't fully understand how they worked. Success hinges on this understanding, and we anticipate more of this focus in the coming year. It’s important to note that deterministic challenges with AI can be tough to address. Our customers expect clear and definable results. For instance, if a CFO poses a question, they expect a direct answer. If they don’t get one, they either need proof of accuracy or must conduct their own research. If they have to research, AI becomes ineffective for them. We recognize this and have designed our entire AI platform to meet the need for trust and transparency. That's why we're taking a careful approach to bringing these products to market; we know they won't be accepted without these elements.

And our next question comes from the line of Scott Berg from Needham & Company. Scott, please go ahead.

Tom, I wanted to start with, I guess, your North American kind of enterprise business. You really called out the outperformance on CPM Express in the quarter. You didn't really touch much on the domestic kind of upmarket segment. How did that perform relative to your all expectations?

I'm going to take that one. As Tom mentioned, we had several significant wins in North America, and Europe also had an outstanding quarter. To highlight a couple of points, we are excited that over 60% of our new business is coming from new customers. This is crucial for us because acquiring new customers creates more opportunities for expansion in the future. Additionally, we had a strong quarter in terms of add-ons, especially in the North American enterprise sector. Overall, we're selling more to each customer than we ever have, with a 10% increase per customer compared to last year. This indicates that our multiproduct strategy is effective, and we are enthusiastic about it.

And our next question comes from the line of Mark Murphy from JPMorgan. Mark, please go ahead.

This is Sonak Kolar on for Mark Murphy. Tom, I wanted to double-click on the SensibleAI Agents. Across our survey work, we're continuing to pick up these indications that CIOs are leaning into the SaaS providers to actually deliver these prebuilt agents rather than building custom ones in-house. So I'm just curious, are you seeing that trend manifest in your customer conversations as well? And how can we think about that long-term opportunity for OneStream's agentic AI roadmap relative to some of these other AI innovations you brought to market over the years?

Thank you for the question. I appreciate the opportunity to address this, as I've mentioned over the last six months. It's important to connect this back to the essence of OneStream. We collect core data that is rich, validated, audited, and managed throughout the OneStream platform. We're working with external data for Wall Street plans and operational data, all of which is carefully curated. When considering agents and their value, OneStream has a unique advantage. We are all impressed by the capabilities of LLMs and agentic technology, which can perform remarkable tasks. However, without access to your highly curated data in a secure manner, their value diminishes significantly. We believe that as we continue to strengthen our data for customers, we will enhance the functionality of agentic AI for them. For instance, when a finance analyst agent queries OneStream data, it can not only retrieve the relevant number but also provide evidence for its accuracy, ensuring it is reliable and trustworthy. Overall, while there will be a vast ecosystem of agents, with varying usefulness, we are confident in our ability to offer some of the most advanced and effective agents for our customers. This aligns with our integrated strategy of combining core operational data and AI, which we believe will unlock significant value for enterprises in the long run.

And our next question comes from the line of Terrell Tillman from Truist Securities. Terrell, please go ahead.

Tom, Bill, and Anne, this might be a two-part question, so be prepared. Genesis appears to be strategically significant. Do you view it as a real revenue opportunity? And Bill, regarding your comments about the fourth quarter billings, can you clarify if that's a quarterly billing figure or a trailing twelve-month analysis? Any additional insights would be appreciated.

I'll start, Terry. Thanks for the question. Yes, I mentioned Genesis. Fundamentally, Genesis will create pathways to revenue. You should view Genesis as foundational, consisting of three main components. Our existing customers can develop new OneStream workflows and experiences, gaining value visualization across the board due to our expanding library of content blocks. These content blocks can also lead to our AI Studio and AI services, providing another way to drive revenue through Genesis. Additionally, we see Genesis enabling new solutions. For instance, as we discuss the development of CPM Express and consider additional Express-type applications, such as a higher education solution or other industry verticals, all these will be powered by Genesis. This means Genesis will indirectly create new market routes through its productization capabilities. Ultimately, all developments within our marketplace or exchange framework will be based on the Genesis foundation, allowing for plug-and-play functionality for any application developed by our OneStream engineering team as well as by any independent software vendors involved in our platform development. Thus, there are several pathways through which Genesis can lead to revenue generation.

Yes. Terry, regarding the second part of your question, I provided extensive guidance in my prepared remarks that we don't plan to offer every quarter due to the unique circumstances we faced in Q3. The billings guidance I mentioned included expectations for Q3 and Q4, where we anticipate billings growth to return to over 20% year-over-year in Q4. I hope this information is helpful and serves your needs.

And our next question comes from the line of Rob Oliver from Baird. Rob, please go ahead.

My question is on the federal business, recognizing you guys gave a lot of color, Tom, both you and Bill, on the dynamics around Q3, which I get. I was wondering if you could just provide some additional color just around how pipeline is and what you're hearing from your fed sales team. Clearly impressive you guys were able to close a large federal deal this quarter. And you guys are in a unique position according to our work versus your competitors to capitalize on this opportunity. Has pipeline continued to build through this period? Are you seeing a pickup in indications of interest potentially? In other words, has the freeze kind of thought a bit? And how should we think about that relative to, I guess, both year-end and as we start to kind of plan '26?

Thank you, Rob. I'll address that. To begin with, I want to say that our pipeline at this stage of the year is the strongest it has ever been in the company's history. Regarding federal business, there is some uncertainty due to the three factors affecting it. The federal government is working to prioritize their projects. We certainly have a solid pipeline, but it may not all translate into this year's results; some could extend into next year. Nevertheless, we maintain strong relationships with various agencies. As you pointed out, we were thrilled to close a significant deal with a large government institution in Q2. We remain optimistic about being FedRAMP High and have many satisfied customers. I want to be open with you; we haven't lost any government agencies, but we are taking a cautious approach as we look ahead to this quarter.

I would like to add that we are also focusing on state and local government as well as higher education as part of a broader public sector initiative. We feel optimistic about our ability to expand into these markets as we advance our position in the public sector.

And our next question comes from the line of Brian Peterson from Raymond James. Brian, please go ahead.

This is John on for Brian. Bill, really healthy results and great to hear about the pipeline there that you've been building. But given the ramping international business and the outperformance you've seen there, we're getting a question on the FX impact on revenue and billings. And also, if you could share what's contemplated in guidance from an FX perspective?

Thank you for the question. To remind you, after Q4 of last year, we saw a significant strengthening of the dollar, which affected our billings during this period. This, in turn, had an impact on our ARR that we disclosed at that time. As we recognize revenue from those billings into 2025, the currency fluctuations will influence that revenue. Recently, the dollar has weakened, especially in late Q1 and Q2, with some fluctuations in Q3, but it is generally at similar levels. If this trend continues and we bill at these levels in Q4, it could provide a beneficial impact for 2026. While we haven’t provided guidance for 2026 yet, the impact of the dollar's weakening will play a significant role in how we recognize revenue in that year.

And our final question for today comes from the line of Jake Roberge from William Blair. Jake, please go ahead.

Just on the new agentic offerings, could you talk about the feedback you've gotten for those solutions coming out of Splash? And then for customers that are in private preview, would you call out any specific agents that are seeing outsized interest for an interesting ROI?

Sure. As we progress through our private preview, we are focusing on quickly validating product-market fit. The feedback we have received so far has been very encouraging. You can categorize our agents into two groups: finance analysts and operations analysts, who work with structured data and can effectively communicate with the data we've gathered on the platform. Additionally, we have search and deep analysis agents that enable customers to gather and utilize relevant unstructured information in a proprietary RAG system developed by OneStream. These two components work in tandem to deliver maximum value. When we uncover quantitative data, we can help customers rapidly generate reports, insights, and various visualizations using both finance and operational analysts while also enhancing their results with narratives, plans, and contract interpretations. We are investigating a range of use cases and happen to be utilizing our own solutions, experiencing value across all areas involved. As we enter the next phase and expand the program's participants, I will be glad to share more details. For now, the feedback has been quite positive regarding agentic AI for finance.

Yes, Tom, I'd just reinforce my team uses it every day. So we look forward to sharing it, obviously, with more of the world as we take it into general availability. Okay. For everybody, I'd just like to say thank you. Awesome questions, and we look forward to seeing you at our upcoming events that Anne noted at the beginning of the call, and have a great day.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.