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01/11 17:35
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance, optimistic guidance, and promising product developments, particularly in AI. The company is expanding in key markets, has a robust pipeline, and anticipates strong growth in revenue and billings. Despite some uncertainties, such as government shutdown risks, the overall sentiment is positive. The company's strategy to enhance shareholder returns and the positive feedback on new offerings further support a positive outlook.
Subscription Revenue Increased 27% year-over-year to $141 million. The growth was attributed to strong billings growth and international revenue momentum.
Total Revenue Grew 19% year-over-year to $154 million. This was driven by subscription revenue growth and professional services demand.
License Revenue Declined 64% year-over-year to $4 million. The decline was due to contract rationalization and success in driving SaaS conversions.
Professional Services and Other Revenue Increased 38% year-over-year to $9 million. The increase was due to demand for consulting services.
International Revenue Grew 37% year-over-year, representing 34% of total revenue. The growth was driven by strong legacy replacement momentum in Europe.
Billings Increased 20% year-over-year to $178 million. This included $4 million of accelerated billings from Q4 due to early renewals and add-ons.
Free Cash Flow For the third quarter was $5 million, exceeding expectations. For the first 9 months of the year, it was $70 million, up 107% year-over-year.
Customer Count Ended the quarter with 1,739 customers, up 13% year-over-year. Growth was driven by exceptional new business in EMEA and strong add-on business in the U.S.
AI Bookings Increased 60% year-over-year, reflecting strong demand for AI-driven solutions.
12-Month cRPO Increased 29% year-over-year, indicating strong subscription revenue growth.
Total RPO Increased 24% year-over-year to $1.2 billion, reflecting strong long-term customer commitments.
Non-GAAP Gross Margin For the third quarter was 69%, compared to 71% last year. The decline was primarily due to lower license revenue.
Non-GAAP Software Gross Margin For the third quarter was 75%, compared to 78% last year. The decline was primarily due to lower license revenue.
Non-GAAP Operating Income For the third quarter was $9.3 million, or 6% of revenue, up 69% year-over-year. The increase was due to strong revenue growth and scaling of operating expenses.
Non-GAAP Net Income For the third quarter was $15.2 million, up $3.9 million year-over-year. Non-GAAP earnings per share was $0.08, flat with last year.
Cash and Cash Equivalents Ended the quarter with $654 million, reflecting strong cash management.
SensibleAI Studio: Doubled the number of algorithms to 60 since May launch. Studio enables customers to access a library of algorithms and apply them to workflows. Demonstrated flexibility with AI-powered benchmarking and outlier detection routine.
SensibleAI agents: Moved from private preview to limited availability. Embedded into OneStream solutions, allowing tasks like natural language queries, dynamic visualizations, and contract data analysis.
AI-powered ESG: Enhanced solution linking ESG reporting to core platform using real-time operational drivers and SensibleAI Forecast. Plans to embed SensibleAI agents for data interrogation and reporting.
CPM Express: Expanded with IFRS compliance and management for international customers. Offers rapid deployment and preconfigured templates for financial processes.
International revenue growth: Revenue grew 37% year-over-year, driven by strong legacy replacement momentum in Europe.
Federal business: Renewed all Q3 agency customers except one. Added a new federal customer and began multiple SaaS conversions.
New customer wins: Secured deals with a Swiss multinational healthcare leader and a leading residential real estate services company, highlighting modernization and rapid deployment capabilities.
Subscription revenue: Increased 27% year-over-year to $141 million.
Total revenue: Grew 19% year-over-year to $154 million.
Professional services revenue: Increased 38% year-over-year due to demand for consulting services.
Free cash flow: Achieved $5 million in Q3, exceeding expectations.
AI adoption: AI bookings up 60% year-over-year. SensibleAI Forecast improved forecast accuracy and reduced processing time significantly for customers.
Product differentiation: Positioned as a leader in finance AI with a unified platform offering contextualized data and applied AI solutions.
Federal Business Challenges: Facing headwinds and contract rationalization in the U.S. Federal business, including a decline in license revenue by 64% year-over-year due to contract rationalization and SaaS conversions.
Customer Retention and Acquisition: Renewed all Q3 agency customers except one at a discontinued agency, indicating challenges in retaining all federal customers.
Economic and Market Conditions: Tough federal government environment in the U.S. impacted new business growth, partially offset by strong add-on business.
Revenue Growth Dependency: International revenue growth of 37% year-over-year highlights dependency on international markets for growth, which may pose risks if global economic conditions change.
Operational Efficiency: Non-GAAP gross margin declined from 71% to 69% year-over-year, and software gross margin declined from 78% to 75%, indicating potential challenges in maintaining operational efficiency.
Stock-Based Compensation: High stock-based compensation expense of $25 million in Q3, which could impact profitability.
Q4 2025 Revenue Guidance: Total revenue is expected to be between $156 million to $158 million.
Q4 2025 Non-GAAP Operating Margin: Expected to be between 4% to 6%.
Q4 2025 Non-GAAP Net Income Per Share: Expected to be between $0.04 to $0.07.
Q4 2025 Stock-Based Compensation Expense: Expected to be approximately $25 million.
Q4 2025 Billings Growth: Expected to grow roughly 20%, taking into account the $4 million of accelerated billings in Q3.
Full Year 2025 Revenue Guidance: Total revenue is expected to be between $594 million to $596 million.
Full Year 2025 Non-GAAP Operating Margin: Expected to be between 2% to 3%.
Full Year 2025 Non-GAAP Net Income Per Share: Expected to be between $0.15 to $0.19.
Full Year 2025 Stock-Based Compensation Expense: Expected to be between $115 million to $120 million.
2026 Revenue and Non-GAAP Operating Income Outlook: The company is comfortable with current Wall Street consensus for full year 2026 revenue and non-GAAP operating income, with formal guidance to be provided in February.
The selected topic was not discussed during the call.
The earnings call highlights strong financial performance, optimistic guidance, and promising product developments, particularly in AI. The company is expanding in key markets, has a robust pipeline, and anticipates strong growth in revenue and billings. Despite some uncertainties, such as government shutdown risks, the overall sentiment is positive. The company's strategy to enhance shareholder returns and the positive feedback on new offerings further support a positive outlook.
The earnings call reveals strong financial performance with a 24% revenue growth and a record free cash flow margin of 26%. Product developments like CPM Express and SensibleAI show promising market reception and potential for scaling. Despite some macroeconomic uncertainties and vague responses on specific financial impacts, overall guidance remains optimistic with reiterated revenue growth. Positive customer feedback and expanding international business further support a positive sentiment. Given these factors, the stock is likely to experience a moderate positive movement in the near term.
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