How OneStream, Backed by KKR, Plans to Capture Market Attention

In the ever-evolving landscape of financial software, OneStream Software is making a significant move. With the backing of private equity giant KKR, the company is aiming for a $4.38 billion valuation in its upcoming U.S. initial public offering (IPO). This article delves into the details of OneStream's strategic IPO, its implications for the market, and what investors need to know.

Key Takeaways:

  • OneStream Software targets a $4.38 billion valuation in its U.S. IPO.
  • The company plans to raise up to $465.5 million by selling 24.5 million shares priced between $17 and $19 each.
  • OneStream had previously raised capital at a $6 billion valuation in 2021.
  • The IPO is led by Morgan Stanley, J.P. Morgan, and KKR's capital markets arm.
  • OneStream's major investors include T. Rowe Price, D1 Capital Partners, and Tiger Global Management.

The Big Picture: OneStream's IPO Strategy

OneStream Software, a company specializing in financial software solutions for CFOs, is taking a bold step in its growth journey by targeting a $4.38 billion valuation in its upcoming U.S. IPO. This move comes at a time when the U.S. IPO market shows signs of revival, with investors regaining confidence in new offerings amid hopes of a soft economic landing.

OneStream's Financial Performance and Market Position

OneStream has demonstrated impressive growth over the years. In 2023, the company reported a net loss of $29 million on revenue of $375 million, a significant improvement from a loss of over $65 million on revenue of $279 million in 2022. This positive trajectory underscores the company's robust business model and its ability to scale effectively.

The company's clientele includes major corporations such as Toyota Motor, UPS, News Corp, and General Dynamics, showcasing its strong market presence and the trust it has garnered from industry giants. OneStream's comprehensive suite of financial software solutions, which includes applications for planning, budgeting, forecasting, and financial reporting, positions it as a key player in the financial software sector.

The Role of KKR and Other Major Investors

KKR acquired a majority stake in OneStream in 2019, valuing the company at over $1 billion at that time. Since then, KKR has played a pivotal role in OneStream's growth, providing both financial backing and strategic guidance. Other significant investors include D1 Capital Partners, Tiger Global Management, and T. Rowe Price, each of whom has contributed to OneStream's success.

According to Yahoo Finance, the company had raised capital at a $6 billion valuation in 2021 from these investors, indicating strong market confidence in OneStream's potential.

The IPO Details

OneStream plans to raise up to $465.5 million by offering 24.5 million shares priced between $17 and $19 each. The funds from the IPO will be used to increase the company's capitalization and financial flexibility, enabling it to pursue further growth opportunities and enhance its market position.

The IPO is being led by Morgan Stanley, J.P. Morgan, and KKR's capital markets arm. Additional underwriters include Bank of America Corp., Citigroup Inc., and Guggenheim Securities. OneStream's shares will be listed on the Nasdaq Global Select Market under the ticker symbol "OS."

Implications for Investors

For investors, OneStream's IPO presents an intriguing opportunity. The company's strong financial performance, backed by prominent investors and a robust business model, makes it a compelling investment prospect. However, it's important to consider the potential risks and market conditions that could impact the stock's performance post-IPO.

The U.S. IPO market has seen a resurgence in 2024, with listings raising over $21 billion in the first six months of the year—a 70% increase compared to the same period in 2023, according to Bloomberg. This positive trend suggests a favorable environment for OneStream's IPO.

The Future Outlook

OneStream's strategic move to go public is a testament to its growth ambitions and confidence in its market position. The funds raised from the IPO will provide the company with the necessary capital to invest in new technologies, expand its product offerings, and enhance its market reach.

As OneStream continues to innovate and deliver value to its clients, it is well-positioned to capitalize on the growing demand for sophisticated financial software solutions. The company's focus on providing comprehensive, integrated solutions for CFOs and finance teams sets it apart in a competitive market.

Final Thoughts: Navigating the IPO Landscape

OneStream's IPO is more than just a financial milestone; it's a strategic move that underscores the company's commitment to growth and market leadership. For investors, this IPO represents an opportunity to be part of a company with a strong track record, a compelling value proposition, and significant growth potential.

As OneStream embarks on this next phase of its journey, it will be crucial for investors to stay informed and monitor the company's performance closely. By understanding the broader market trends and the specific dynamics of OneStream's business, investors can make informed decisions and potentially benefit from the company's continued success.

Investors are encouraged to keep an eye on OneStream's IPO and consider the long-term growth prospects it offers. With the backing of KKR and other prominent investors, OneStream is poised to make a significant impact in the financial software industry. Stay tuned for more updates and insights on this exciting development.