OneStream, Inc.   OS   $17.00-$19.00 24.5 million shares Underwriters: Morgan Stanley, J.P. Morgan,, KKR, BofA Securities, Citigroup, Guggenheim Securities   Co-Managers: Raymond James, ScotiaBank, Truist Securities, BTIG, Needham & Co., Piper Sandler TD Cowen, Wolfe | Nomura Alliance, AmeriVet Securities, Blaylock Van LLC, Cabrera Capital Markets, Drexel Hamilton, Loop Capital  Proposed trade date of 7/24  Their platform unifies core financial and broader operational data and processes within a single platform, with solutions that maintain the integrity of corporate reporting standards for Finance while providing operationally significant insights for business users.

OneStream, Inc.  OS

• 24,500,000 shares to be offered between $17.00 and $19.00 per share
• Underwriters: Morgan Stanley, J.P. Morgan,, KKR, BofA Securities, Citigroup, Guggenheim Securities  Co-Managers: Raymond James, ScotiaBank, Truist Securities, BTIG, Needham & Co., Piper Sandler TD Cowen, Wolfe | Nomura Alliance, AmeriVet Securities, Blaylock Van LLC, Cabrera Capital Markets, Drexel Hamilton, Loop Capital 
• Proposed trade date of 7/24
• Rating = 4

Click here to view the prospectus.

https://www.sec.gov/Archives/edgar/data/1889956/000095017024083395/onestream_s-1a.htm

Company Overview

OneStream delivers a unified, AI-enabled and extensible software platform—the Digital Finance Cloud—that modernizes and increases the strategic impact of the Office of the CFO.

Their platform unifies core financial and broader operational data and processes within a single platform, with solutions that maintain the integrity of corporate reporting standards for Finance while providing operationally significant insights for business users. With embedded applied AI and machine learning technologies built specifically for Finance, their platform automates and streamlines workflows, accelerates analysis and improves forecast accuracy, equipping the Office of the CFO to report on, predict and guide business performance. Their platform’s extensible architecture also enables customers to rapidly adopt and develop new solutions that meet the unique and continually evolving needs of their business. The Digital Finance Cloud empowers the Office of the CFO to form a comprehensive, dynamic and predictive view of the entire enterprise, providing corporate leaders the control, visibility and agility required to proactively adjust business strategy and day-to-day execution.

Their unified platform’s highly differentiated capabilities enable them to deliver a comprehensive set of solutions for the Office of the CFO that eliminates the need for their customers to use multiple disparate legacy products, applications and modules. Their solutions include the following:

• Financial Close and Consolidation. Streamlines financial processes with advanced capabilities designed to automate tasks and manage the immense complexity and strict standards of financial reporting and consolidation.
• Financial and Operational Planning and Analysis. Enables financial and operational planning, budgeting, forecasting and results analysis for individual business functions and the synchronization of those plans across the entire organization.
• Financial and Operational Reporting. Provides end-to-end visibility of analytics and key metrics to all stakeholders, including executives, Finance professionals, line-of-business leaders and other business partners.

In addition to expanded finance use cases, customers can also unify operational planning and analytics with applications built on their platform. Operational applications available today include capital planning, sales planning, workforce planning and profitability analysis, as well as machine learning-enabled demand forecasting, labor planning and merchandise financial planning. Additionally, their partners have built industry-specific applications atop their platform, such as Automotive Planning Factory.

As a result, the Digital Finance Cloud can power insights and workflows for a diverse set of business users, including Finance, sales, marketing, operations, human resources and IT professionals, embedding their platform more deeply in their customers’ organizations and their critical business processes. By unifying those business processes within their platform and data model, enterprises can eliminate departmental silos, enable cross-functional collaboration and further enrich enterprise-wide visibility while reducing technical debt.

Their customers include global enterprises, mid-market organizations and government entities. They had 1,423 customers as of March 31, 2024, increasing from 1,148 customers as of December 31, 2022. Their customers are in a broad range of industries, including industrials and manufacturing, healthcare and life sciences, consumer and retail, financial services, construction and real estate, government and education, as well as technology, media and communications. They believe their ability to address the needs of the world’s most complex organizations is evidenced by the fact that more than 75 of the Fortune 500 companies rely on OneStream as of March 31, 2024. As of March 31, 2023 and 2024, 6% and 5% of their total customers were Fortune 500 companies and collectively accounted for 14% and 15% of their software revenue in the periods then ended.

They primarily employ a direct sales model to sell into and expand within their customers’ organizations. Their sales force has extensive experience, industry knowledge and domain expertise of traditional financial and EPM market segments. Their sales and marketing organization engages with prospective customers across multiple in-person and virtual channels and provides them with user conferences, platform demonstrations, application guides, whitepapers, webinars, presentations and other content to accelerate their understanding of their platform and drive greater adoption. To further expand their sales channels, they have obtained government certifications, including FedRAMP Moderate, which allow them to sell their cloud-delivered offerings into the public sector. Their platform’s ability to solve the most complex challenges within the Office of the CFO provides them with a distinct advantage in their efforts to acquire new customers.

In addition, their global ecosystem of more than 250 go-to-market, implementation and development partners provides them with a significant source of lead generation and implementation support. They partner with boutique consulting firms and dedicated teams within larger consulting firms that have built their entire services practices around designing and implementing their platform for their clients. They also partner with global strategic consulting firms and global systems integrators, such as Accenture, IBM, KPMG and PwC, which introduce their platform to their clients as part of large-scale digital transformation projects as well as finance and business projects where their platform can help accelerate business initiatives and improve user experience.

IPO Detail

This is the initial public offering of OneStream, Inc. and no public market currently exists for its common stock. OneStream, Inc. is offering 24,500,000 shares of common stock as described in the prospectus. The company expects the initial public offering price of its common stock to be between $17.00 and $19.00 per share. The company has applied to list its common stock on the NASDAQ Global Market under the symbol “OS.”

Following this offering, OneStream, Inc. will have four series of authorized common stock: Class A common stock, Class B common stock, Class C common stock and Class D common stock. Each share of their Class A common stock and Class B common stock will entitle its holder to one vote per share, and each share of their Class C common stock and Class D common stock will entitle its holder to ten votes per share. Immediately following the completion of this offering and the Synthetic Secondary (as defined below), shares of their Class C common stock and Class D common stock beneficially owned by entities affiliated with KKR Dream Holdings LLC, or KKR, and Thomas Shea, their co-founder and chief executive officer, will represent approximately 52.2% and 7.9%, respectively, of the voting power of their outstanding common stock, assuming no exercise of the underwriters’ option to purchase additional shares. No shares of their Class B common stock will be outstanding immediately following the completion of this offering.

Certain funds and accounts advised or sub-advised by T. Rowe Price Investment Management, Inc., which are collectively referred to herein as the Cornerstone Investors, have indicated a non-binding interest in purchasing up to 15% of the base offering shares of their Class A common stock in this offering at the initial public offering price. The shares of Class A common stock to be purchased by the Cornerstone Investors will not be subject to a lock-up agreement with the underwriters. Because this indication of interest is not a binding agreement or commitment to purchase, the Cornerstone Investors may determine to purchase more, less or no shares in this offering or the underwriters may determine to sell more, less or no shares to the Cornerstone Investors.

Use of Proceeds

They estimate that the net proceeds to them from the sale of shares of their Class A common stock in this offering will be approximately $300.1 million (or approximately $362.6 million if the underwriters exercise their option to purchase additional shares in full.) They intend to use the net proceeds to them from the sale of 15,048,296 shares of Class A common stock in this offering to purchase an equal number of newly issued LLC Units of OneStream Software LLC. They intend to use the remaining net proceeds to them from the sale of an additional 3,006,037 shares of Class A common stock in this offering to purchase an equal number of issued and outstanding LLC Units (and an equal number of shares of Class C common stock) from KKR and certain other Continuing Members (as defined herein) in the Synthetic Secondary. In both cases, the purchase price per LLC Unit will equal the initial public offering price per share of Class A common stock in this offering, net of underwriting discounts and commissions. The aggregate number of LLC Units purchased by them from OneStream Software LLC and in the Synthetic Secondary will equal the aggregate number of shares of Class A common stock sold by them in this offering. They in turn intend to cause OneStream Software LLC to use the net proceeds paid to it for the newly issued LLC Units to (1) pay the unpaid expenses of this offering and (2) for general corporate purposes, including working capital, operating expenses and capital expenditures. Additionally, they may cause OneStream Software LLC to use a portion of the net proceeds to acquire or invest in businesses, products, services or technologies.

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Competition

Market Opportunity

They believe that transforming the Office of the CFO into a key driver of strategy and execution is critical for many organizations operating in today’s highly complex and constantly changing business environment. They estimate their total addressable market opportunity across all enterprises and mid-market organizations to be approximately $50 billion as of December 31, 2023. Their cloud-based platform enables a modern and expanded approach to finance and EPM, which is sometimes also referred to as corporate performance management, or CPM. As such, they believe they are well-positioned relative to their competitors to take advantage of this opportunity.

They believe that the Office of the CFO is one of the few areas within the enterprise software space that has yet to be modernized and digitized. The market for financial and EPM applications has historically been dominated by large, legacy incumbents, including IBM, Infor, Oracle and SAP, which have failed to adapt their offerings to support the strategic evolution of the Finance function. The product offerings from these vendors include decades-old technologies with limited financial process capabilities, and many have become obsolete through recent end-of-life announcements. According to IDC, the aggregate revenue generated by IBM, Infor, Oracle and SAP from financial applications and enterprise performance management applications in 2022 was approximately $9.8 billion. They believe that this spend by enterprises on legacy applications represents a sizeable, tangible and near-term market opportunity, which they are well-positioned to address via their Digital Finance Cloud platform. 

Consolidated Statements of Operations Data

(1)

Includes equity-based compensation expense as follows:

Consolidated Balance Sheet Data

Target Markets

Acquire New Customers. The broad digital transformation efforts in the Office of the CFO, as well as the ongoing replacement cycle in the large installed base of legacy finance systems, provide them with a natural entry point to engage with prospective customers. 

Expand the Number of Finance Users on Their Platform. They typically land with customers as the primary system of record for finance functions. As the system of record, they often become the center of gravity within Finance organizations and organically consolidate adjacent tasks on their platform, adding additional Finance users and use cases in the process. Given their broad platform capabilities and their large customer base, they believe expanding the number of users within the Office of the CFO of their existing customers represents a significant opportunity. 

Expand Their International Footprint. They believe there is a significant opportunity to grow their international business. Revenue generated from customers outside of the United States accounted for 27% and 30% of their total revenue in 2022 and 2023, respectively, and 30% and 31% in the three months ended March 31, 2023 and 2024, respectively. 

Grow Their Partner Ecosystem. They have built a robust partner ecosystem, and they believe that expanding their partner network will allow them to more efficiently target large enterprises and mid-market organizations. Their partnership network expands their coverage footprint, creates attractive go-to-market channels, facilitates opportunities for product differentiation by building applications on their platform and helps speed the adoption of their platform.

Extend Further Into Operations. By leveraging a single, unified data model for both finance and operations, their customers are able to realize the full value of their platform approach. They intend to work closely with their customers and partners to extend their use of their platform beyond the Office of the CFO, allowing them to grow the number of users and use cases on their platform.

Extend Their Technology Leadership. They intend to make substantial investments in research and development, including in the areas of applied machine learning and AI technologies, to expand and strengthen their offerings. For example, in May 2024, they acquired the remaining equity interests of DataSense LLC, or DataSense, to continue their development of AI-enabled solutions. In addition, they will continue to expand their engagement with the OneStream developer community to improve the value proposition of their platform, including vertical-specific applications and functionality in areas such as healthcare, manufacturing and financial services.

Company's Unique Strengths

Single Source of Truth. The Digital Finance Cloud acts as the single source of truth for an organization’s critical financial and operational data and workflows. With the ability to aggregate enterprise-wide business data, powered by their unique relational blending capability, customers can analyze the financial impact of operational decisions in real-time and proactively adjust business strategies accordingly. By leveraging this unified data model, their platform enables Finance and operating teams to implement function-specific applications that deliver data that meet both corporate and external reporting standards, while remaining immediately relevant to daily business operations. The combination of these capabilities enables their customers to access reporting and insights across every level of the organization.

Streamlined Workflows. With their platform, customers can accelerate financial and operational workflows with greater consistency, accuracy and transparency. Consolidating data and business processes onto a single platform eliminates the need for users to integrate, validate or reconcile data and metadata across systems. Their platform’s unified data model, guided workflows and collaboration capabilities enable organizations to further streamline their business processes and seamlessly integrate their predictive AI tools directly into their existing financial and operational processes. This in turn allows enterprises to increase organizational efficiency, reduce the potential for errors and enhance the security of critical financial and operational data.

Actionable Insights. Their platform ingests, processes and interprets vast amounts of financial and operational data to enable real-time insights into the entire enterprise. With interactive dashboards and guided reporting, business users and executives can visualize key trends and modify variables to analyze the impact of changes to models, plans and forecasts under different scenarios. These capabilities provide corporate leaders with real-time access to aggregated financial and operational results within a single pane of glass, significantly enhancing the decision-making process.

AI and Machine Learning-Enabled Predictive Capabilities. Their modern Finance-focused applied AI and machine learning engines are purpose-built to enhance key financial and operational analyses and processes. This empowers users to accelerate and increase accuracy of auditable forecasts, which can be fed directly into existing financial and operational processes to create data-driven and dynamic plans. Their platform’s AI and machine learning capabilities allow organizations to anticipate business trends in real-time, vastly improving upon existing planning and forecasting techniques. The actionable insights provided by these capabilities allow corporate leaders to understand how strategic decisions translate into business outcomes, enabling them to be agile, forward-looking and data-driven in aligning operational decisions to financial outcomes.

Extensible Platform. Their highly extensible platform enables customers to deploy OneStream- and partner-developed applications across several layers of their organization. Via the OneStream Solution Exchange, customers can discover, download and deploy additional industry- and function-specific applications developed by them and their partners to extend the value of their core OneStream investment. As these extended applications are built natively on their platform, they leverage their common data model and shared platform services, allowing their customers to simplify deployment and realize rapid time to value. Additionally, their platform’s integrated development tools allow customers to develop and implement new applications directly, further enhancing the strength of their offering. This extensibility ultimately reduces IT complexity, increases the long-term value of their platform and allows their platform to seamlessly evolve with their customers.

Enterprise-Grade and Highly Scalable. They have built their platform, data model and analytics and AI engines to provide the reliability and scale required for the world’s largest and most complex enterprise environments. Their platform is capable of efficiently processing enterprise-scale data sets and workloads. Their platform’s cloud architecture provides customers with the flexibility to increase consumption of their services on-demand to meet the needs of their organization. The Digital Finance Cloud empowers enterprises to address the most complex challenges facing the Office of the CFO.

Lower Total Cost of Ownership. As an end-to-end platform, they enable customers to consolidate workflows that historically occurred across numerous legacy systems, eliminating the need to maintain multiple disparate applications and data sets. This allows them to rationalize the costs and time associated with integrating, maintaining and upgrading these systems. In addition, by operating within a single unified framework, Finance and business unit teams are able to increase their productivity and efficiency.

Company's Unique Risks

Their recent rapid growth may not be sustainable or indicative of their future growth.

They have a history of operating losses and may not achieve or sustain profitability in the future. They generated net losses of $65.5 million and $28.9 million in 2022 and 2023, respectively, and $23.1 million and $5.0 million in the three months ended March 31, 2023 and 2024, respectively, and they expect to continue to incur net losses for the foreseeable future as they continue to scale their business

If their industry does not continue to develop as they anticipate or if potential customers do not continue to adopt their platform and applications, their sales will not grow as quickly as expected, or at all, and their business, operating results and financial condition would be harmed.

Their sales cycles can be long and unpredictable, particularly with respect to large enterprises, and their sales efforts require considerable time and expense.

Their revenue growth depends in part on the success of their strategic relationships with third parties, including go-to-market and implementation partners, and if they are unable to establish and maintain successful relationships with them, their business, operating results and financial condition could be adversely affected.

Changes in their pricing model could harm their business, operating results and financial condition. As the markets for their platform grow, as new competitors introduce new products that compete with theirs or as they enter into new international markets, they may be unable to attract new customers at the same price or based on the same pricing model as they have historically used.

Sales to government entities and highly regulated organizations are subject to a number of challenges and risks. They sell their platform to U.S. federal, state, local and foreign governmental agency customers, as well as to customers in highly regulated industries such as financial services, telecommunications and healthcare. Sales to such entities are subject to a number of challenges and risks. Selling to such entities can be highly competitive, expensive and time-consuming, often requiring significant upfront time and expense without any assurance that their efforts will generate a sale.

If they are unable to successfully develop, implement and offer AI-enabled solutions on their platform or use AI technology in their business, their business, operating results, financial condition and growth prospects could be harmed.

They rely on a limited number of third-party data centers to deliver their cloud-based platform, and any disruption of service at these centers could harm their business.

If they are unable to ensure that their platform interoperates with a variety of third-party software applications, they may become less competitive and their business, operating results and financial condition may be harmed.

Their long-term success depends, in part, on their ability to expand the sales of their platform to customers located outside of the United States, and thus their business is susceptible to risks associated with international sales and operations.  They currently maintain offices in the United States and in Australia, Europe and Singapore, and they intend to continue to expand their international operations. Revenue generated from customers outside of the United States accounted for 27% and 30% of their total revenue in 2022 and 2023, respectively, and 30% and 31% in the three months ended March 31, 2023 and 2024, respectively.

Privacy, data protection and data security concerns, and data collection and transfer restrictions and related domestic or foreign regulations may limit the use and adoption of their platform and adversely affect their business, operating results and financial condition.

Their organizational structure, including the TRA, confers certain benefits upon the Former Members and the Continuing Members, including KKR, which will not benefit Class A common stockholders to the same extent as it will benefit the Former Members and the Continuing Members and will impose additional costs on them.

Their Class C common stock and Class D common stock are entitled to ten votes per share, which will have the effect of concentrating voting control with the holders of their Class C common stock and Class D common stock, including KKR and their co-founder and chief executive officer. This will limit or preclude your ability to influence corporate matters and may have a negative impact on the price of their Class A common stock. After this offering, the holders of their Class C common stock and their Class D common stock, including KKR (which is one of the TRA Members entitled to the payments under the TRA) and their co-founder and chief executive officer, will collectively hold approximately 98.8% of the voting power of their outstanding capital stock (or 98.7% if the underwriters’ exercise in full their option to purchase additional shares). As a result, the holders of their Class C common stock and their Class D common stock will have the ability to control or significantly influence any action requiring approval of their stockholders.

Participation in this offering by the Cornerstone Investors could reduce the public float for their shares of Class A common stock.

Bottom Line

They have achieved rapid growth since first launching their platform. For 2022 and 2023, their software revenue was $245.5 million and $343.4 million, respectively, representing year-over-year growth of 40%. Their ARR was $335.9 million and $460.4 million as of December 31, 2022 and 2023, respectively, representing year-over-year growth of 37%. Of the growth in ARR in 2023, 72% was attributable to new customers and the remaining 28% was attributable to existing customers. They had 1,148 and 1,388 customers as of December 31, 2022 and 2023, respectively, representing year-over-year growth of 21%, and the average number of users per new customer grew by 19% from 2022 to 2023. They incurred net losses of $65.5 million and $28.9 million in 2022 and 2023, respectively, representing a year-over-year decrease of 56%. For the three months ended March 31, 2023 and 2024, their software revenue was $70.9 million and $101.9 million, respectively, representing year-over-year growth of 44%. Their ARR was $358.4 million and $480.0 million as of March 31, 2023 and 2024, respectively, representing year-over-year growth of 34%. Of the growth in ARR between March 31, 2023 and 2024, 74% was attributable to new customers and the remaining 26% was attributable to existing customers. They had 1,190 and 1,423 customers as of March 31, 2023 and 2024, respectively, representing year-over-year growth of 20%, and the average number of users per new customer grew by 16% during the same period. They incurred net losses of $23.1 million and $5.0 million in the three months ended March 31, 2023 and 2024, respectively, representing a year-over-year decrease of 79%.

With embedded applied AI and machine learning technologies built specifically for Finance, their platform automates and streamlines workflows, accelerates analysis and improves forecast accuracy, equipping the Office of the CFO to report on, predict and guide business performance. Their solutions streamline financial processes with advanced capabilities designed to automate tasks and manage the immense complexity and strict standards of financial reporting and consolidation. It also enables financial and operational planning, budgeting, forecasting and results analysis for individual business functions and the synchronization of those plans across the entire organization, and provides end-to-end visibility of analytics and key metrics to all stakeholders, including executives, Finance professionals, line-of-business leaders and other business partners. Operational applications available today include capital planning, sales planning, workforce planning and profitability analysis, as well as machine learning-enabled demand forecasting, labor planning and merchandise financial planning. Their customers include global enterprises, mid-market organizations and government entities. They had 1,423 customers as of March 31, 2024, increasing from 1,148 customers as of December 31, 2022. Their customers are in a broad range of industries, including industrials and manufacturing, healthcare and life sciences, consumer and retail, financial services, construction and real estate, government and education, as well as technology, media and communications. They primarily employ a direct sales model to sell into and expand within their customers’ organizations. Their sales force has extensive experience, industry knowledge and domain expertise of traditional financial and EPM market segments. To further expand their sales channels, they have obtained government certifications, including FedRAMP Moderate, which allow them to sell their cloud-delivered offerings into the public sector. Their platform’s ability to solve the most complex challenges within the Office of the CFO provides them with a distinct advantage in their efforts to acquire new customers. In addition, their global ecosystem of more than 250 go-to-market, implementation and development partners provides them with a significant source of lead generation and implementation support. They partner with boutique consulting firms and dedicated teams within larger consulting firms that have built their entire services practices around designing and implementing their platform for their clients. They also partner with global strategic consulting firms and global systems integrators, such as Accenture, IBM, KPMG and PwC, which introduce their platform to their clients as part of large-scale digital transformation projects as well as finance and business projects where their platform can help accelerate business initiatives and improve user experience.

They estimate their total addressable market opportunity across all enterprises and mid-market organizations to be approximately $50 billion as of December 31, 2023. Their cloud-based platform enables a modern and expanded approach to finance and EPM, which is sometimes also referred to as corporate performance management, or CPM. As such, they believe they are well-positioned relative to their competitors to take advantage of this opportunity. According to IDC, the aggregate revenue generated by IBM, Infor, Oracle and SAP from financial applications and enterprise performance management applications in 2022 was approximately $9.8 billion. They believe that this spend by enterprises on legacy applications represents a sizeable, tangible and near-term market opportunity, which they are well-positioned to address via their Digital Finance Cloud platform.

The broad digital transformation efforts in the Office of the CFO, as well as the ongoing replacement cycle in the large installed base of legacy finance systems, provide them with a natural entry point to engage with prospective customers. Given their broad platform capabilities and their large customer base, they believe expanding the number of users within the Office of the CFO of their existing customers represents a significant opportunity. They believe there is a significant opportunity to grow their international business. Revenue generated from customers outside of the United States accounted for 27% and 30% of their total revenue in 2022 and 2023, respectively, and 30% and 31% in the three months ended March 31, 2023 and 2024, respectively. They have built a robust partner ecosystem, and they believe that expanding their partner network will allow them to more efficiently target large enterprises and mid-market organizations. They intend to work closely with their customers and partners to extend their use of their platform beyond the Office of the CFO, allowing them to grow the number of users and use cases on their platform. They intend to make substantial investments in research and development, including in the areas of applied machine learning and AI technologies, to expand and strengthen their offerings.

With the ability to aggregate enterprise-wide business data, powered by their unique relational blending capability, customers can analyze the financial impact of operational decisions in real-time and proactively adjust business strategies accordingly. With their platform, customers can accelerate financial and operational workflows with greater consistency, accuracy and transparency. Consolidating data and business processes onto a single platform eliminates the need for users to integrate, validate or reconcile data and metadata across systems. Their platform ingests, processes and interprets vast amounts of financial and operational data to enable real-time insights into the entire enterprise. . Their platform’s AI and machine learning capabilities allow organizations to anticipate business trends in real-time, vastly improving upon existing planning and forecasting techniques. Their highly extensible platform enables customers to deploy OneStream- and partner-developed applications across several layers of their organization. Additionally, their platform’s integrated development tools allow customers to develop and implement new applications directly, further enhancing the strength of their offering. Their platform is capable of efficiently processing enterprise-scale data sets and workloads. Their platform’s cloud architecture provides customers with the flexibility to increase consumption of their services on-demand to meet the needs of their organization. As an end-to-end platform, they enable customers to consolidate workflows that historically occurred across numerous legacy systems, eliminating the need to maintain multiple disparate applications and data sets.

Their recent rapid growth may not be sustainable or indicative of their future growth. They generated net losses of $65.5 million and $28.9 million in 2022 and 2023, respectively, and $23.1 million and $5.0 million in the three months ended March 31, 2023 and 2024, respectively, and they expect to continue to incur net losses for the foreseeable future as they continue to scale their business. If their industry does not continue to develop as they anticipate or if potential customers do not continue to adopt their platform and applications, their sales will not grow as quickly as expected. Their revenue growth depends in part on the success of their strategic relationships with third parties, including go-to-market and implementation partners, As the markets for their platform grow, as new competitors introduce new products that compete with theirs or as they enter into new international markets, they may be unable to attract new customers at the same price or based on the same pricing model as they have historically used. Sales to government entities and highly regulated organizations are subject to a number of challenges and risks. If they are unable to successfully develop, implement and offer AI-enabled solutions on their platform or use AI technology in their business, their business, operating results, financial condition and growth prospects could be harmed. They rely on a limited number of third-party data centers to deliver their cloud-based platform. If they are unable to ensure that their platform interoperates with a variety of third-party software applications, they may become less competitive and their business, operating results and financial condition may be harmed. Their long-term success depends, in part, on their ability to expand the sales of their platform to customers located outside of the United States, and thus their business is susceptible to risks associated with international sales and operations.  Revenue generated from customers outside of the United States accounted for 27% and 30% of their total revenue in 2022 and 2023, respectively, and 30% and 31% in the three months ended March 31, 2023 and 2024, respectively. Privacy, data protection and data security concerns, and data collection and transfer restrictions and related domestic or foreign regulations may limit the use and adoption of their platform. Their organizational structure, including the TRA, confers certain benefits upon the Former Members and the Continuing Members, including KKR, which will not benefit Class A common stockholders to the same extent as it will benefit the Former Members and the Continuing Members and will impose additional costs on them. . After this offering, the holders of their Class C common stock and their Class D common stock, including KKR (which is one of the TRA Members entitled to the payments under the TRA) and their co-founder and chief executive officer, will collectively hold approximately 98.8% of the voting power of their outstanding capital stock (or 98.7% if the underwriters’ exercise in full their option to purchase additional shares). Participation in this offering by the Cornerstone Investors could reduce the public float for their shares of Class A common stock.

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