Ladies and gentlemen, thank you for standing by. My name is Desiree, and I will be your conference operator today. At this time, I would like to welcome everyone to OneStream's Third Quarter Fiscal Year 2025 Earnings Conference Call. Now I would like to introduce your host for today's program, Anne Leschin, Vice President of Investor Relations and Strategic Finance. You may begin.

Thank you, operator. Good afternoon, everyone, and welcome to OneStream's third quarter 2025 earnings conference call. Joining me on the call today is our Co-Founder and CEO and President, Tom Shea; and our CFO, Bill Koefoed. The press release announcing our third quarter 2025 results issued earlier today is posted on our Investor Relations website at investor.onestream.com, along with an earnings highlights presentation. Now let me remind everyone that some of the statements on today's call are forward-looking, including statements related to guidance for the fourth quarter and 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 September 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 their most directly comparable GAAP measures. 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 the call over to Tom. Tom?

Thank you for joining us this afternoon. Third quarter was a story of focused execution. Facing headwinds and contract rationalization in our U.S. Federal business, the team exceeded expectations with strong billings growth in the quarter. More recently, at our sold-out Splash EMEA user conference, I was incredibly energized by the enthusiasm we received for our purpose-built finance AI. As we usher in the finance AI era, we remain one of the most innovative vendors in the CPM space, and we're not stopping there. We are constantly pushing forward and anticipating the growing demands of the office of the CFO. Let me start with some highlights of our third quarter performance. Year-over-year subscription revenue grew 27% and billings grew 20%. International revenue grew 37% year-over-year, particularly due to strong legacy replacement momentum in Europe. In the federal business, we renewed all of our Q3 agency customers with only one exception at a discontinued agency. We added one new federal customer and began multiple SaaS conversions, including one at our largest agency customer. CPM Express and our SensibleAI portfolio continue to show early momentum with customers. We are attracting new and existing customers by leveraging the proven customer ROI from SensibleAI Forecast. Additionally, OneStream was recognized as the exemplary leader in the 2025 Record to Report Buyers Guide by ISG Research, covering financial close, consolidation, and overall record to report, achieving the highest scores in both customer and product experience. With AI at the forefront across all facets of business today, the drivers of our industry have never been more important for the office of the CFO. Number one, finance is in the initial phase of its transformation. Legacy financial systems often more than 20 years old, simply do not have the agility required for today's CFOs to effectively steer their businesses, never mind to maximize the value of AI. Finance organizations continue to look to modernize by unifying corporate data and moving core financial operations to the cloud. Number two, the role of the CFO is evolving and expanding. CFOs are being asked to do more than ever by becoming a strategic partner for the business. An integral part of that is helping them proactively look around corners, to anticipate challenges and opportunities and produce more timely and accurate forecasts. Number three, the use of AI is enabling finance teams to drive more business performance, not only measure it. In many cases, CFOs are the executive leaders taking responsibility for the AI evolution at their companies. They are being tasked with identifying key functions that can leverage these AI tools for productivity improvements and cost efficiencies. We believe platforms that provide purpose-built applied AI solutions will win the AI battle given the need for a single consistent data model and security framework. At OneStream, we have always challenged ourselves to raise the bar. Our approach to AI has been both forward-thinking and deliberate. Since we began this journey a decade ago, we have gained a foundational understanding of what AI can bring to the office of the CFO by combining powerful quantitative, generative, and agentic capabilities throughout our SensibleAI portfolio. We understood early on that AI for finance must run on clean data, provide context, and solve specific use cases because 80% accurate is 0% useful for finance. Ultimately, we believe OneStream provides the key that unlocks the value of AI for finance through unified, secure, transparent, and most importantly, contextualized information. Through our many AI announcements this year, customers are beginning to realize the growing power of our platform to drive better and faster decision-making and enhance their productivity. By modernizing the financial close process, customers are now able to, number one, unify their data on a common platform. And number two, interrogate that data using financially intelligent embedded AI; and number three, enhance and optimize the close process, enabling finance teams to focus on strategic high-value priorities such as integrated planning and forecasting. Just a few weeks ago at Splash EMEA, we again pushed the boundaries of applied AI for finance. We showed real package solutions designed specifically for finance, which we expect to deliver significant value for our customers. Let me recap some of our exciting product announcements. Since we introduced SensibleAI Studio in May, we have roughly doubled the number of algorithms currently available to 60. As you recall, Studio enables customers to quickly access a library of algorithms and routines and apply them to their own workflows. We showcased an example of this power and flexibility at Splash EMEA. Just one month after Studio's launch, our forward-deployed engineers rapidly built our AI-powered benchmarking and outlier detection routine based on real-time customer specifications. Studio allows us to meet customers where they are in their AI journey, and we believe we are just scratching the surface of Studio's potential. We also took a big step with our SensibleAI agents, moving them out of private preview and into limited availability. So now our customers can begin to take advantage of them. Our agents are unique because they do not act alone. What's important is that they have financial context. They are embedded into solutions within OneStream, giving them direct access to all the customers' secured data stored on the platform. This allows finance teams to do tasks like ask questions in natural language, generate dynamic visualizations, query financial models and analyze contract data. Agents provide the ability to help automate repetitive work, reveal insights, and help every analyst operate more like a strategic partner. We also unveiled AI-powered ESG. This enhanced solution is the culmination of our three strategic pillars: core finance, operational analytics, and finance AI. With AI-powered ESG, finance teams are able to link ESG reporting back to the core platform using real-time operational drivers while automating quantitative forecasting by using SensibleAI Forecast. Further, we plan to embed our SensibleAI agents throughout the workflow to assist with data interrogation and reporting. Lastly, we continue to advance our best-in-class core finance capabilities by expanding our rapid deployment CPM Express with IFRS compliance and management. This includes a number of confirmation and validation rules adhering to IFRS Accounting Standards for our international customers. This is but one example of how we plan to expand our Express offer, leveraging our plug-and-play architecture to bring a variety of rapid deployment productized use cases to our customers. Both at Splash EMEA and during the quarter, we had several noteworthy examples of how customers are seeing increased value from our strong and growing product line. Continuing the trend in recent quarters, OneStream is quickly becoming the CPM vendor of choice for companies transitioning from legacy systems nearing their end of life. One of the largest deals this quarter came from a Swiss multinational healthcare leader and a global leader in cancer treatments. A long-time customer of a competitive legacy CPM solution, the organization moved to OneStream to better unify financial consolidation, reporting, and tax processes. They chose OneStream for our extensibility and flexibility. This significant legacy replacement marks our first big pharma win, highlighting how leading enterprises are modernizing with our unified platform. Additionally, with CPM Express, commercial customers are gaining access to the full power of OneStream with rapid deployment and best practice templates, workflows, and frameworks all built in. Today, companies that are earlier in their financial journeys are starting to recognize just how valuable it can be to access our single unified platform with a preconfigured offering that can be implemented in as little as 8 to 12 weeks. One significant CPM Express win this quarter was with a leading residential real estate services company. Having recently centralized its finance and other core functions under a shared services model, the company needed greater visibility, agility, and standardization across the business. Facing a legacy system infrastructure across their environment, we leveraged CPM Express to give the customer confidence in a faster, best practice-driven implementation with rapid time to value. Ultimately, they chose OneStream for our superior data integration, flexibility, and finance-focused architecture. This empowered the finance team to streamline and modernize account reconciliations and transaction matching, all while reducing their dependency on IT. Lastly, we wanted to provide an update on a few major multinational customers that have gone live with SensibleAI Forecast and the remarkable ROI that they are realizing with the product. One of the great stories comes from the domestic healthcare division of a leading global logistics provider. They implemented SensibleAI Forecast across their U.S. operations to enhance financial forecasting. As the company is developing an AI-powered approach, they reported that OneStream's SensibleAI Forecast is delivering measurable results. Gross revenue forecast accuracy has improved by 5 percentage points. Payroll forecast accuracy has improved by 8 percentage points. Forecast generation time has been reduced by 94%, freeing up more than 13,000 labor hours annually and eliminating the need for third-party specialized tools and staff augmentation. With these strong results, the organization is now expanding its use of SensibleAI Forecast to the healthcare division's international operations. Another long-time U.S. customer that builds systems and technology solutions deployed SensibleAI Forecast earlier this year. The customer was looking to transform its forecasting process for key financial metrics, including revenue, margin, and SG&A, using OneStream's single unified data model. SensibleAI Forecast has taken their forecasting and planning cycles from 20 days to less than 2 days, a greater than 90% reduction. Additionally, the customer saw a noticeable improvement in forecast accuracy. One of the key features that led to the selection of SensibleAI Forecast was its ability to provide clear insights into how internal and external factors drive forecast outcomes. It is this level of transparency that is strengthening their trust in OneStream across its finance organization. In summary, the overarching drivers of the office of the CFO remain front and center today. OneStream has always looked to the future to anticipate and invest in what our customers will need and want to run their businesses more effectively. We have consistently been ahead in recognizing industry trends and emerging technologies as we have demonstrated with AI. Today, our customers are realizing the value that a unified and infinitely extensible platform delivers. Our SensibleAI provides insights and actions that are quantifiable and supercharged because of the high-quality and contextualized data controlled in OneStream. Our comprehensive platform has positioned us to lead the finance AI era and become the operating system for modern finance. Together with our exceptional team, we believe we have built a solid foundation to grow and scale the business. This gives me confidence in our ability to deliver unparalleled value for our customers, partners, and shareholders over the long-term. I will now turn the call over to Bill to provide details on Q3 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 third quarter, which proved stronger than expected as the team executed well, particularly in EMEA, while managing through a tough federal government environment in the U.S. Subscription revenue increased 27% year-over-year to $141 million, while total revenue grew 19% year-over-year to $154 million. License revenue of $4 million declined 64% compared with last year due to contract rationalization and our success in driving SaaS conversions, including at our largest federal agency customer. Professional services and other revenue was $9 million, up 38% year-over-year due to demand for our consulting services. Our international business had another strong quarter with revenue growth of 37% year-over-year, representing 34% of total revenue. Billings increased 20% year-over-year to $178 million and 21% on a trailing 12-month basis, which we believe is the best indicator of our billings momentum. This included roughly $4 million of accelerated billings from Q4 due to early renewals and add-ons. Free cash flow for the third quarter was $5 million and exceeded our expectations. We ended the quarter with 1,739 customers, up 13% year-over-year. We saw exceptional new business growth in EMEA, while in the U.S., we had particularly strong add-on business, partially offsetting the federal new business weakness and illustrating the value of our multiproduct strategy. For the first 9 months of the year, subscription revenue has increased 29% year-over-year to $400 million. Total revenue grew 23% year-over-year to $438 million. AI bookings were up 60% year-over-year, and our free cash flow for the first 9 months of the year was $70 million, up 107% over last year. Our 12-month cRPO was up 29% year-over-year and total RPO was up 24% year-over-year to $1.2 billion. Non-GAAP gross margin for the third quarter was 69% compared to 71% last year, and our non-GAAP software gross margin for the third quarter was 75% compared with 78% last year, primarily due to lower license revenue in the third quarter. Non-GAAP operating income for the third quarter was $9.3 million or 6% of revenue and increased significantly by $3.8 million or 69% compared with the prior year. This increase was due to a combination of strong revenue growth and the scaling of our operating expenses. Non-GAAP net income of $15.2 million in the third quarter increased $3.9 million from the prior year, and non-GAAP earnings per share was $0.08, flat with last year. Total equity-based compensation expense for the third quarter was $25 million. We ended the quarter with $654 million in cash and cash equivalents. Now let me turn to guidance. Given our Q3 outperformance, we are raising our 2025 growth and profitability outlook. Together with our strong pipeline, we entered Q4 with a growing and more differentiated product portfolio than ever. With that, we are offering the following outlook, including an update to a one-time measure that we gave last quarter. In Q4, we expect total revenue to be between $156 million to $158 million. We expect non-GAAP operating margin to be between 4% to 6%. We expect non-GAAP net income per share to be between $0.04 to $0.07. We expect stock-based compensation expense to be approximately $25 million. Taking into account the roughly $4 million of accelerated billings in Q3, we expect billings growth of roughly 20% for the fourth quarter. For the full year 2025, we expect total revenue to be between $594 million to $596 million. We expect non-GAAP operating margin to be between 2% to 3%. We expect non-GAAP net income per share to be between $0.15 to $0.19. We expect stock-based compensation expense to be between $115 million to $120 million. While we plan to give formal 2026 guidance in February, the combination of our Q3 outperformance, strong pipeline, and innovative product portfolio make us comfortable with current Wall Street consensus for full year 2026 revenue and non-GAAP operating income. In conclusion, Q3 was a strong quarter. Our results underscore the power of the OneStream platform to bring the office of finance into the AI era. Now let's turn it over to the operator for Q&A.

Our first question comes from John DiFucci with Guggenheim Securities.

Listen, on the federal dynamics this quarter, first, I want to say we really appreciate your transparency here, both last quarter and this quarter. In fact, we factored it into guidance. But your overall results really didn't skip a beat, and it's great to see subscription still growing at a really healthy clip here. It sounds like you only lost one federal contract because that agency was discontinued, but you also added a new federal customer. But I'd really like to better understand the remaining account, the renewals. And Bill, you mentioned the license rationalization. Anything you can add to help us better understand renewals in the September quarter and what this means for the future? It would be great. We're just trying to better understand the federal opportunity going forward within the context of the overall beat and raise this quarter.

Yes. Thanks for that, John. I'll take that and appreciate the commentary on the transparency. That's certainly something that we aspire to do and appreciate the comments. Look, the federal government, obviously, there were a lot of moving pieces as we went into the third quarter. We had SaaS conversions at a couple of our biggest agencies, and that obviously impacted license revenue, but obviously will flow through our subscription revenue in future quarters. And as you noted, we only lost one federal agency that actually doesn't exist anymore. It actually got merged into another agency. And obviously, we added a new one, as you noted. So we're really optimistic about our federal government opportunity as we turn the corner into 2026 now that I think we've gotten through this quarter, and we'll hopefully execute on that as we enter the year.

Our next question comes from the line of Chris Quintero with Morgan Stanley.

Tom and Bill, congrats on a solid quarter here. I want to ask about AI. We've seen some data points that suggest that finance and accounting is actually one of the top areas that organizations are looking to deploy their AI budget dollars over the next 12 months. So I'm curious, like is that aligning with kind of what you're hearing from your customer base? And what are some of those kind of initial most important use cases that you're seeing them deploy some of your technology into?

Thanks, Chris. I’ll take that question. As I mentioned earlier, we’re very optimistic about our position in AI, and we believe we are well-positioned to lead the finance AI revolution. There is significant opportunity in finance, particularly with a platform like OneStream that offers highly contextualized, high-value information. For instance, we've discussed SensibleAI Forecast, which predicts key quantitative outcomes for businesses, such as demand and various cost components, directly impacting business management. However, that's just the start. Our comprehensive AI platform, including Studio, enables various additional use cases, such as outlier detection and benchmarking analysis, allowing companies to evaluate and manage their operations more effectively than ever before and take immediate action. Additionally, we have developed autonomous financially intelligent agents within our platform, which have generated substantial interest among our customers due to their ability to interpret information, facilitate action, and perform repetitive tasks. We believe the finance sector is fully embracing this opportunity, and our deep understanding of the deterministic nature of AI needed for finance puts us in an excellent position to meet our customers' needs and interests.

Next question comes from the line of Adam Hotchkiss with Goldman Sachs.

I think you made the comment, Bill, about being comfortable with Street estimates for '26. And I think what's notable about that is there's less of a deceleration baked into numbers for '26 relative to '25. And so you're exuding some confidence and some growth stabilization. So if you could just maybe rank order for us qualitatively what the big drivers are there that are helpful.

Yes. Let me discuss the overall performance of our business, which should address your question. This last quarter, EMEA performed exceptionally well. As Tom mentioned, we achieved some significant wins there. We experienced strong growth and momentum, and we are very optimistic about the opportunities in EMEA. Asia Pacific remains a small but growing segment of our business, and we anticipate that growth will persist. In the U.S., Tom has talked about CPM Express and the potential in the commercial sector, which is just beginning, and we see strong opportunities as we tap into more verticals. Additionally, although I didn't mention it for EMEA, we just launched IFRS Express, which presents a great opportunity for us there. On the enterprise side in the U.S., Q4 is our largest quarter. As I noted earlier, we are very positive about the pipeline, and the team is focused on execution. We actually signed a significant deal today, which excites us, especially considering the strong competition, and this all contributes to our optimism for 2026.

Next question comes from the line of Koji Ikeda with Bank of America.

I wanted to double-click on the 2026 guide and really about pipeline assumptions and conversion assumptions in the fourth quarter guide and heading into 2026. How are you thinking about those assumptions? I guess, more specifically around conversions? Is it more conservative heading into 2026? Is it the same? I mean, I just wanted to understand what is giving you the confidence to level set 2026, but also kind of express a lot of confidence there at the same time.

Yes, I'll address that. Each quarter and year, when we begin our forecasting and budgeting processes, we focus on two main factors: our pipeline, which is a significant driver of growth, and our conversion rate. This conversion rate can vary from quarter to quarter, but it's something we closely monitor as we approach each quarter and year. Additionally, beyond our core business, we're very excited about our new products. Tom has highlighted our Agile Financial Analytics, which is generating strong interest from customers. Our SensibleAI Forecast has seen a 60% year-over-year growth, and we're observing a robust pipeline as customers experience better forecasting accuracy and faster forecasting speeds, among other benefits. Tom has also mentioned AI Studio, which is part of the solution that our new customer has acquired. Recently, we announced the limited availability of our agents at Splash a few weeks ago. As I mentioned in my closing remarks, we have the strongest product portfolio we've ever had as we approach this year, accompanied by a solid pipeline. This gives us the confidence to provide our outlook for 2026. We'll share more detailed figures in February, but we wanted to give you a brief update like I did.

Next question comes from the line of Alex Zukin with Wolfe Research.

I appreciate that incremental color about the pipeline. I guess to that point, it sounds like, Bill, billings growth is going to accelerate if you take the fact that you pulled in or you had some early in Q3 and yet you're still kind of calling for really strong billings numbers in Q4. So maybe just comment on the demand environment as you kind of sit here in October? And also a metric that we haven't talked about at length previously, but like as you continue to see a lot of expansion opportunities from Sensible as well as moving into other parts of the finance workflow or outside of the core finance workflow, how should we think about NRR trends from here kind of moving forward as well?

So Alex, to address the last part of your question, we did have an excellent quarter for add-ons, which contributed to the positive results we reported. This demonstrates that our multiproduct strategy is effective. A few years ago, we didn't have the variety of new products that we're now introducing. As Tom pointed out, we're just beginning to innovate around our offerings. On the billing front, we exceeded expectations this quarter, partly due to early renewals tied to your NRR point, as customers were eager to add new products. We noticed some of that in the third quarter. I want to clarify that while I don't plan to provide billing guidance every quarter, I felt it was vital to share insights as we transition from Q3 to Q4. We are excited about the upcoming quarter.

Next question comes from the line of Terry Tillman with Truist Securities.

Bill, it's always nice to hear about a deal closing, an important deal closing like in real time.

Terry, it's pretty exciting when we have a deal close on the day of earnings. I have to tell you, Tom and I were high-fiving at each other.

Well, if one closes before the end of the call, we'd appreciate another update.

We'll keep our eyes out.

My one question relates to EMEA. It does sound like you're firing on all cylinders there, and there's a lot more potential. I'm curious if there is something happening with the replacement cycle. We know there’s a lot of technical debt in these 20-year-old systems. Is there anything suggesting that this replacement cycle is accelerating? Additionally, your field sales coverage is likely expanding, so maybe that’s making it more productive, or perhaps it’s due to partners. It would be helpful if you could rank some of the drivers contributing to that momentum.

Thanks, Terry. I'll take that. And you pretty much hit on it. It's the fact that we're getting more scale in the region. So we are seeing that ability to have more coverage across the different countries. Secondarily, there is the opportunity of legacy applications that are coming up. And just to remind everybody, as I've mentioned in other calls, the foundation of getting access or being trusted to take those legacy replacements is that we've had prior success. And so when we think about that and we think about that opportunity, we're building on those foundational wins in that segment and some of those transformations that are happening. And then ultimately, when we look at the product portfolio and we look at the enthusiasm for our product, that is sort of the third component that I see driving it. But I definitely want to call out the execution of the team over there and the growth that we're seeing, and there's a lot of excitement.

Next question comes from the line of Steve Enders with Citi.

I guess I want to follow up on the AI side of it. I think the bookings growth you called out there, I would say it was 60%. But I guess what are you seeing maybe in the pipeline? Like are you starting to see incremental builds there from the sales build-out that you've been talking about for the past year or so? And then just how do you kind of view the future pipeline opportunity as we kind of go into '26?

We see our current pipeline as a strong indicator of the momentum we are generating. Our AI product strategy begins with SensibleAI Forecast, which is facilitating adoption based on the validation I mentioned earlier. Looking ahead, there's growing enthusiasm for AI Studio, which allows us to explore numerous additional use cases. AI Studio is designed to integrate AI across our platform, enabling meaningful workflows for our customers' diverse use cases. We are also very pleased with the feedback and collaborations we have had with our clients in the agentic space, as this is a developmental journey for us. It involves combining quantitative, generative, and agentic elements on a contextualized platform. As we move toward 2026 and continue the rollout of our agents in limited availability, we are eager about this opportunity and committed to maintaining the momentum we've observed with SensibleAI Forecast.

Next question comes from the line of Scott Berg with Needham.

Really nice quarter here. Tom or Bill, I just wanted to see if you could maybe comment on what you're seeing early with the revenue opportunity for the agents. I know they're not fully released in general availability yet. But I think a key question we've all kind of had is, as you release those, I guess, what's the uplift there? And does it impact any of your seat-based model at all?

Sure, I can address that. As we consider the agents, we are still in the initial stages of transitioning from private preview to limited availability. You can anticipate that pricing will be more usage-based, similar to how we price our other AI services. We believe we have a robust applied approach, which is crucial, and this is shown by the demonstrated value of our finance analyst agent. We view this as an autonomous coworker that helps customers gain more value, work efficiently, and allows their team members to engage in more high-value tasks. Thus, we see this as a source of incremental revenue rather than a replacement or displacement of existing roles. That's the perspective we have for the financial sector. While there are certainly optimizations, our studies indicate that finance teams are often overworked and stressed. They don't necessarily need more personnel; they want their teams focused on the most critical areas of the business to act as true partners. We believe we can enable that by providing the efficiency they need to handle essential tasks and enhance their role as business partners.

Next question comes from the line of Mark Murphy with JPMorgan.

Can you comment on traction in some of the emerging applications that sit outside of the core, maybe shed some light on where you see the strongest growth vectors? For instance, noticing you have account reconciliations now that are driven by SensibleAI. And then the supplier analysis, I'm wondering if there's any more interest there in the wake of the tariffs? And any brief mention on the big pharma win? Congrats on that. Just wondering if you see that as a linchpin to going a little deeper in a new vertical?

Thanks, Mark. I’d like to provide an overview of our platform and its messaging, which is crucial for establishing a baseline. We view the platform as comprised of three main components: core, operational, and AI, which can be thought of as a triangle. The core consists of essential functions that every large business must handle efficiently. We aim to enhance our customers' efficiency, and as you mentioned, they are keen on leveraging fast-changing operational data to create actionable insights. We have consistently noted a strong interest in this area. Our Agile Financial Analytics allows for real-time analytics directly on operational sources without the need for ETL, enabling our agents to interact with that data, and this is a key focus for us. These operational use cases, such as AI-powered account reconciliations, fall under what we call the modern financial close, presenting an opportunity for us to focus on specific roles, like controllers, ensuring they are equipped with the vital capabilities for financial planning, reporting, and improving efficiency in their closing processes. We see multiple opportunities ahead and will continue to develop productized use cases in areas like supplier analytics, all of which align with our ongoing strategy to verticalize our focus.

Next question comes from the line of Jake Roberge with William Blair.

I just wanted to follow up on the new agentic offerings entering limited availability. Could you talk a little bit more about the feedback you've gotten from customers and if there are any specific agents that you're seeing drive outsized interest for the platform right now?

Sure. Let me first discuss the agent set we currently have. We have our finance analyst agent, which acts as a structured data analyst familiar with the OneStream data architecture and repository. It provides highly contextualized data and assists with analytics, reporting, and education, helping those who may not understand some customer-built data models access that information. This agent is of significant interest to our customer base. Additionally, our search agent and deep analysis agent are generating considerable interest as well. These agents enhance and contextualize the insights provided by the finance analyst agent. For example, if there are compelling analytics from finance analysts, but further context is needed, such as contract-based analysis, our agents can facilitate an integrated workflow. The feedback from our customer interactions has led us to create a workflow-based interaction model rather than just chat-oriented exchanges. This development enables us to assign repetitive tasks effectively. Our AI engineering team is actively working on this feedback loop to innovate quickly and ensure we are meeting customer needs in real time with these agents.

Next question comes from the line of Siti Panigrahi with Mizuho.

This is Phil on for Siti. Can you talk about what you're seeing in terms of competitive displacements like Hyperion and SAP? And how important are these legacy displacements in achieving the preliminary FY '26 growth targets?

When we examine the historical replacement of legacy systems, we see a significant and ongoing opportunity that we are committed to pursuing. This aspect is crucial for our overall performance and sales strategy. It is essential to emphasize that any business facing complexities in its financial operations greatly benefits from OneStream's platform. This understanding drives our focus on CPM Express and our productized approach since we consider any company with these needs as potential customers. We aim to prioritize the replacement of legacy systems and assist clients who have been using CPM solutions for many years, while also ensuring we attract and onboard any business that is experiencing a rising demand for comprehensive CPM solutions. I want to highlight my perspective on this broad opportunity that includes both legacy systems and companies that are evolving.

Next question comes from the line of Brian Peterson with Raymond James.

This is John on for Brian. Maybe following up a bit on that earlier question on sales pipeline and as we think about customer sizes. You mentioned an acceleration in legacy CPM replacement, but then CPM Express also accelerating adoption in the commercial side of the equation there. So how have those been tracking in 2025? And as we look towards 2026, realizing that both might be the answer here, what are you most excited about? And what opportunity do you see creating the most potential upside in 2026?

Yes, I'll take this. It's Bill. I would go back a little bit to some of the commentary that I made earlier. We're really excited about EMEA's growth and continued trajectory. Again, I think Tom mentioned CPM Express. I mentioned IFRS Express specifically for EMEA on the commercial side, and we see that as being a really big opportunity. We see EMEA enterprise as well as a big opportunity, obviously, with the legacy replacement opportunity there. And again, there's a lot of change going on, on the ERP stack there, too, which is actually a tailwind in our favor. I mentioned Asia Pacific. And in the U.S., they've been our biggest driver of AI sales so far. I think that will continue to extend to other geographies. And then as Tom mentioned, just the whole opportunity that we have to continue to grow the core, to continue to offer capabilities around Agile Financial Analytics, and then as I mentioned earlier, our AI portfolio. So it's hard to choose your favorite child. We love them all, and we think they're all great opportunities for us to grow.

Next question comes from the line of Brett Huff with Stephens Inc.

On a nice quarter. I wanted to follow up on the Agentic AI comments you made. But first, given the market is still anxious on how long it will take enterprise AI to get ROIs, congrats on those really good proof points in the forecasting business. I thought those are notable. But the follow-up question is talking more about how your agents will or won't or how they'll interact with agents from other software firms. Do you view a world where there'll be kind of Uber software or Uber agents that coordinate things across workflows? Do you aspire to have that particular position? Or is this a battle or more of a cooperation as you look beyond the 4 walls of just your data architecture?

Thank you. I appreciate that question. It's a topic I think about frequently, and my perspective is that OneStream has the potential to be one of the leading agents in the financial sector. Because we provide highly contextualized data, our aim is to become the most reliable choice for CFOs. If a CFO relies on a generic agent that lacks financial insight, the results can be significantly inaccurate, rendering them unhelpful. Therefore, we believe we have the right to be the preferred agent in this area. Regarding agent-to-agent protocols and coordination with multiple agents, we recognize that other vendors with well-developed platforms and contextual information also have a stake in creating similarly aware agents. I envision that those of us with advanced platforms and contextual data will collaborate through a multi-agent protocol. This could lead to competition among leading companies over who controls the key entry point into the agent ecosystem and how to best match agents to specific queries. As we move forward, our focus is on establishing effective protocols for agent communication and multi-agent orchestration. However, our immediate priority is to deliver exceptional value to our customers from our agents, specifically tailored to the needs of CFOs.

Next question comes from the line of Derrick Wood with TD Cowen.

Bill, can you share your perspective on the risks associated with the government shutdown as you provided guidance for Q4? Additionally, now that we have achieved FedRAMP High authorization with DOGE, how do you feel about regaining momentum in the U.S. Federal sector? Do you anticipate they will have a greater willingness to invest in modernization or increase spending? What is your view on the visibility in that area?

Yes, that's a great question. I'll address your second part first. Q3 posed challenges, especially as many software companies were approaching the end of the government's fiscal year. We're pleased with our SaaS conversions, which are core to our business, and it's reassuring to have that accomplished. Looking ahead, as you noted, we are the only cloud CPM provider with FedRAMP High certification, allowing us to cater to government agencies that require that security level. We are well positioned to capitalize on this opportunity. Additionally, we are working towards getting our AI capabilities FedRAMP High certified, as there is significant demand from the government for those capabilities, which we uniquely provide. Regarding the government shutdown, we all hope it resolves quickly. We are collaborating with our customers to navigate the situation, and we all hope for a swift conclusion.

Next question comes from the line of Andrew DeGasperi with BNP Paribas.

I just wanted to ask without getting a guide for next year, like in terms of the balance of license and services and subscription, would you say that the license revenue sort of decline, is it going to be reflective of what happened this year? Or are you expecting a more muted kind of deceleration there? And I have a follow-up.

Yes, you are our last caller, so you can go ahead with your follow-up. It seems the operator may have interrupted you. This past year, especially in the third quarter, marked a significant transition from licenses to SaaS for us, arguably our most transformative year yet. You should anticipate continued SaaS migration in the coming years, at which point we may see minimal license revenue left. Regarding our PS&O segment, I expect there to be slight growth, although it was a strong growth quarter this year. Last year's third quarter was challenging, but I believe our PS&O business is generally in good shape moving forward.

And our last question comes from the line of Mark Schappel with Loop Capital Markets.

I have a question around the sales team. Just a question around the sales team, which has been obviously executing very well here. Could you just comment on any changes or fine-tuning to the sales and marketing strategy that maybe we could expect in the coming quarter or two? And also where maybe you plan to just prioritize additional sales investments?

Sure. As we've discussed, I want to revisit the opportunity we have ahead of us. Our sales team is well-versed in the legacy market, which we've been selling for many years. Additionally, we are rolling out a consistent stream of new products. Moving forward, you can expect us to focus more on scaling our various product lines, while still keeping a strong emphasis on our core business. I see our investments in the sales and marketing team as a strategy to ensure we effectively position all of our AI innovations, including CPM Express. The positive aspect is that selling a more productized solution is simpler, and we are excited because it allows us to engage with customers in a more targeted, use case-oriented way.

Yes. I'd just like to say thanks, everybody, for joining us. We look forward to seeing you at upcoming events, and hope you have a great rest of your day.

Thank you.

Ladies and gentlemen, that concludes today's call. Thank you all for joining in. You may now disconnect.