OneStream IPO jumps 30%, as company's long wait to go public pays off

By Steve Gelsi and Ciara Linnane

KKR-backed cloud-services provider for chief financial officers raises $490 million

OneStream Inc.'s wait for its initial public offering finally paid off Wednesday as the stock debut for the provider of performance-management software generated a double-digit gain.

Birmingham, Mich.-based OneStream (OS) was trading at $26, which is 30% above the IPO price of $20 a share.

OneStream's financial chief, Bill Koefoed, said the 14-year-old company considered going public in 2021 and in 2022 but decided to step back during that time of loftier valuations followed by drastically lower multiples.

After passing the $500 million mark in annual recurring revenue, the company offered a stronger story to prospective investors than it did two or three years ago, he said.

"It's been a long journey, and now is the start of the next phase," Koefoed said.

The reception from investors was "quite warm," as demand for OneStream's IPO shares outpaced supply several times over, he said.

While OneStream competes with products from Oracle Corp. (ORCL) and SAP (SAP), it has few direct competitors offering software products that help chief financial officers do their job, he said.

Signs of a strong kickoff for the company came as its stock priced above its proposed range of $17 to $19.

The company offered 18 million shares, while selling shareholders offered another 6.5 million, to raise $490 million.

OneStream's IPO comes during a busy week for initial public offerings, which have been picking up steam from last year but are still below historical averages.

Also read: Lineage anchors busiest dollar-volume week for IPOs so far in 2024

With 230.5 million shares to be outstanding once the deal closes, OneStream had a valuation of $4.6 billion at its IPO price of $20 a share.

That's about 12.3 times OneStream's full-year 2023 revenue of $374.92 million.

In the three months that ended March 31, OneStream reduced its net loss to $4.96 million on revenue of $110.29 million, from a year-ago loss of $23.08 million on revenue of $78.82 million.

The company runs the Digital Finance Cloud, which provides tools for chief financial officers.

KKR & Co. (KKR) is a controlling shareholder of OneStream. It bought a majority stake in the company in 2019 at a valuation of $1 billion at the time.

KKR continues to own a majority of the voting power of the company's common stock, while OneStream founder Thomas Shea holds about 7.9% of the voting power.

Two KKR executives sit on OneStream's board: Bradley Brown, managing director on the private-equity firm's software investment team, and John Kinzer, a senior adviser at KKR.

Morgan Stanley, JPMorgan and KKR were lead underwriters in a team of 20 banks that worked on the deal.

Proceeds will be used to purchase stock from certain existing shareholders.

The company will have four classes of stock, with Class A and Class B shares carrying one vote each and Class C and Class D shares carrying 10 votes each.

The Renaissance IPO exchange-traded fund (IPO) has gained 10% in the year to date, while the S&P 500 has gained 16.5%.

-Steve Gelsi -Ciara Linnane

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07-24-24 1345ET

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