ON24 Announces Second Quarter 2022 Financial Results

•  Total Revenue of $48.2 million
• ARR of $167.8 million
• Closed largest deal in company history with existing customer

ON24 Announces Second Quarter 2022 Financial Results

Total Revenue of $48.2 million

ARR of $167.8 million

Closed largest deal in company history with existing customer

SAN FRANCISCO–(BUSINESS WIRE)–ON24 (NYSE: ONTF), a leading sales and marketing platform for digitalengagement, today announced financial results for the second quarter ended June 30, 2022.

“In the second quarter, thanks to the hard work of our team, we exceeded our guidance and saw strong expansion activitywith a number of our top customers increasing their investments with us,” said Sharat Sharan, co-founder and CEO ofON24. “The breadth of our platform along with its ability to capture first-party engagement data and insights helps ourcustomers grow revenue more efficiently and effectively, which is even more important in today’s economic environment.Looking ahead, with the strong support of our customers and the actions we are taking to reduce our cost structure we arewell-positioned to return to growth in 2023 with an improved business model.”

Second Quarter 2022 Financial Highlights

ARR of $167.8 million as of June 30, 2022, an increase of 2% year-over-year.

Revenue:Total revenue was $48.2 million, a decrease of 7% year-over-year.

Subscription and Other Platform Revenue was $43.1 million, a decrease of 3% year-over-year.

Professional Services Revenue was $5.2 million, a decrease of 33% year-over-year.

GAAP Operating Loss was $16.0 million, compared to GAAP operating loss of $2.5million in the second quarter of 2021.

Non-GAAP Operating Loss was $6.2 million, compared to non-GAAP operatingincome of $2.5 million in the second quarter of 2021.

GAAP Net Loss attributable to common stockholders was $16.2 million, or $(0.34) perdiluted share, compared to GAAP net loss attributable to common stockholders of $2.5million, or $(0.05) per diluted share in the second quarter of 2021.

Non-GAAP Net Loss was $6.4 million, or $(0.14) per diluted share, compared to a non-GAAP net income of $2.5 million, or $0.04 per diluted share in the second quarter of2021.

Cash Flow: Net cash used in operating activities was $2.7 million, compared to $6.9million provided by operating activities in the second quarter of 2021. Free cash flow wasnegative $3.4 million for the quarter, compared to $5.7 million provided in the secondquarter of 2021.

Cash, Cash Equivalents and Marketable Securities totaled $344.9 million as of June30, 2022.

For more information regarding non-GAAP operating income (loss), non-GAAP net income (loss) and free cash flows, seethe section titled “Non-GAAP Financial Measures” below. For reconciliations of these non-GAAP financial measures to themost directly comparable GAAP financial measure, see the tables at the end of this press release.

Recent Business Highlights / Industry Recognition

Strong expansion with a number of our top customers with the highest level of ARRcoming from multiyear commitments, including the largest multi-year contract in ourhistory with a leading learning platform company.

Highest percentage of customers adopting multiple products, including a multimillion-dollar deal with one of the world’s biggest tech companies.

Significant traction with new products like ON24 Forums, including wins with a leadingAmerican auto-parts distributor and a top medical association.

Received strong acknowledgements from peer-review sites and two leading independentresearch firms for the Company’s innovation in a number of sales and marketingcategories, including webinar software, account-based marketing (ABM), conversationautomation technology, and event technology platforms.

Financial Outlook

ON24 is implementing a cost reduction plan, which will include a restructuring charge in the third quarter of $1.0 to $1.3million. ON24 is raising full year 2022 Non-GAAP operating profit (loss) and earnings (net loss) per share guidance.

For the full year 2022, ON24 expects:

ON24 is reaffirming our previous 2022 revenue guidance of $191 to $195 million.

Non-GAAP operating loss of $27.5 to $24.5 million.

Non-GAAP net loss per share of $(0.57) to $(0.51) using approximately 48.1 millionbasic and diluted shares outstanding.

For the third quarter of 2022, ON24 expects:

Total revenue of $47 to $48 million.

Non-GAAP operating loss of $8 to $7 million.

Non-GAAP net loss per share of $(0.17) to $(0.15) using approximately 47.4 millionbasic and diluted shares outstanding.

Restructuring charge of $1.0 to $1.3 million, excluded from Non-GAAP amounts above.

Conference Call Information

ON24 will host a conference call and live webcast for analysts and investors today at 2:00 p.m. Pacific Time. Parties in theUnited States can access the call by dialing (888) 220-8474, and international parties can access the call by dialing (323)794-2590, using the conference ID 5586465.

A webcast will be accessible on ON24’s investor relations website at investors.on24.com. Approximately one hour aftercompletion of the live call, an archived version of the webcast will be available on the Company’s investor relationswebsite.

Definitions of Certain Key Business Metrics

Annual Recurring Revenue (“ARR”): ARR is calculated as the sum of the annualized value of our subscription contracts asof the measurement date, including existing customers with expired contracts that we expect to be renewed. Our ARRamounts exclude professional services, overages from subscription customers and Legacy revenue.

Non-GAAP Financial Measures

In addition to our results determined in accordance with generally accepted accounting principles in the United States, or“GAAP”, we consider our non-GAAP operating income (loss), non-GAAP net income (loss) and free cash flow in evaluatingour operating performance. We define non-GAAP operating income (loss) as net income (loss) excluding, interestexpense, other (income) expense, net, income tax, stock-based compensation and amortization of acquired intangibleassets. We define non-GAAP net income (loss) as net income (loss) excluding cumulative preferred dividends allocated topreferred shareholders, stock-based compensation and amortization of acquired intangible assets. We define free cashflow as net cash provided by (used in) operating activities, less purchases of property and equipment.

We use non-GAAP operating income (loss) and non-GAAP net income (loss) to evaluate our ongoing operations and forinternal planning and forecasting purposes, and we use free cash flow to measure and evaluate cash generated throughnormal business operations. We believe non-GAAP operating income (loss) and non-GAAP net income (loss) may behelpful to investors because they provide consistency and comparability with past financial performance. We believe freecash flow may be helpful to investors because it reflects that some purchases of property and equipment are necessary tosupport ongoing operations, while providing a measure of cash available to acquire customers, expand within existingcustomers and otherwise pursue our business strategies.

However, these non-GAAP financial measures are each presented for supplemental informational purposes only, havelimitations as analytical tools and should not be considered in isolation or as a substitute for financial information presentedin accordance with GAAP. Non-GAAP financial measures have no standardized meanings prescribed by GAAP and arenot prepared under a comprehensive set of accounting rules or principles. In addition, other companies, includingcompanies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use othermeasures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measure as atool for comparison.

Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measure areincluded in the tables at the end of this press release.

Forward-Looking Statements

This document contains “forward-looking statements” under applicable securities laws. Such statements can be identifiedby words such as: “outlook,” “expect,” “convert,” “believe,” “plan,” “future,” “may,” “should,” “will,” and similar references tofuture periods. Forward-looking statements include express or implied statements regarding our expected financial andoperating results, the size of our market opportunity, the success of our new products and capabilities, the impact of theCOVID-19 pandemic and vaccines on the way people do business, and other statements regarding our ability to achieveour business strategies, growth, or other future events or conditions. Such statements are based on our current beliefs,expectations, and assumptions about future events or conditions, which are subject to inherent risks and uncertainties,including our ability to attract new customers and expand sales to existing customers, decline in our growth rate;fluctuation in our performance, our history of net losses and expected increases in our expenses; competition andtechnological development in our markets and any decline in demand for our solutions; our ability to expand our sales andmarketing capabilities and otherwise manage our growth; the impact of the COVID-19 pandemic; disruptions or otherissues with our technology or third-party services; compliance with data privacy, import and export controls, customs,sanctions and other laws and regulations; intellectual property matters; and matters relating to our common stock, alongwith the other risks and uncertainties discussed in the filings we make from time to time with the Securities and Exchange

Commission. Actual results may differ materially from those indicated in forward-looking statements, and you should notplace undue reliance on them. All statements herein are based only on information currently available to us and speak onlyas of the date hereof. Except as required by law, we undertake no obligation to update any such statement.

About ON24

ON24 is a leading sales and marketing platform for digital engagement, delivering insights to drive revenue growth. ON24serves more than 2,100 customers worldwide, including 3 of the 5 largest global technology companies, 3 of the 6 largestUS banks, 3 of the 5 largest global healthcare companies, and 3 of the 5 largest global industrial manufacturers. Throughinteractive webinars, virtual events, and personalized content experiences, ON24 provides a system of engagementpowered by AI for businesses to scale engagement, conversions, and pipeline to drive revenue growth. The ON24Platform supports millions of professionals a month who are totaling billions of engagement minutes per year. ON24 isheadquartered in San Francisco with global offices in North America, EMEA, and APAC. For more information, visitwww.ON24.com.

© 2022 ON24, Inc. All rights reserved. ON24 and the ON24 logo are trademarks owned by ON24, Inc., and are registeredin the United States Patent and Trademark Office and in other countries.

ON24, INC.Condensed Consolidated Balance Sheets(in thousands)(Unaudited)

	June 30, 2022				December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	79,914			$	164,948
Marketable securities		264,955				217,609
Accounts receivable, net		39,765				46,117
Deferred contract acquisition costs, current		12,212				11,921
Prepaid expenses and other current assets		9,945				8,467
Total current assets		406,791				449,062
Property and equipment, net		8,076				8,780
Operating right-of-use assets		6,199				—
Intangible asset, net		2,250				—
Deferred contract acquisition costs, non-current		19,947				20,887
Other long-term assets		1,928				1,760
Total assets	$	445,191			$	480,489
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	3,626			$	3,123
Accrued and other current liabilities		18,798				19,011
Deferred revenue		90,774				96,225
Finance lease liabilities, current		1,755				1,768
Operating lease liabilities, current		2,563				—
Total current liabilities		117,516				120,127
Finance lease liabilities, non-current		719				1,648
Operating lease liabilities, non-current		6,024				—
Other long-term liabilities		1,555				3,624
Total liabilities		125,814				125,399
Stockholders’ equity
Common stock		5				5
Additional paid-in capital		548,740				550,839
Accumulated deficit		(227,210	)			(195,519	)
Accumulated other comprehensive loss		(2,158	)			(235	)
Total Stockholders’ equity		319,377				355,090
Total liabilities and stockholders’ equity	$	445,191			$	480,489

Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	3,626	$	3,123
Accrued and other current liabilities	18,798	19,011
Deferred revenue	90,774	96,225
Finance lease liabilities, current	1,755	1,768
Operating lease liabilities, current	2,563	—
Total current liabilities	117,516	120,127
Finance lease liabilities, non-current	719	1,6

Operating lease liabilities, non-current	6,024	—
Other long-term liabilities	1,555	3,624
Total liabilities	125,814	125,399
Stockholders’ equity
Common stock	5	5
Additional paid-in capital	548,740	550,839
Accumulated deficit	(227,210	)	(195,519	)
Accumulated other comprehensive loss	(2,158	)	(235	)
Total Stockholders’ equity	319,377	355,090
Total liabilities and stockholders’ equity	$	445,191	$	480,489

ON24, INC.Condensed Consolidated Statements of Operations(in thousands, except share and per share data)(Unaudited) 

Three Months Ended June 30,	Six Months Ended June 30,
2022	2021	2022	2021
Revenue:
Subscription and other platform	$	43,064	$	44,377	$	86,541	$	87,287
Professional services	5,174	7,741	10,189	14,930
Total revenue	48,238	52,118	96,730	102,217
Cost of revenue:
Subscription and other platform (1)	9,958	8,179	19,560	15,664
Professional services (1)	3,343	3,694	6,685	6,903
Total cost of revenue	13,301	11,873	26,245	22,567
Gross profit	34,937	40,245	70,485	79,650
Operating expenses:
Sales and marketing (1)	28,850	25,465	58,043	49,390
Research and development (1)(2)	10,948	8,162	21,592	16,108
General and administrative (1)	11,158	9,100	22,035	18,868
Total operating expenses	50,956	42,727	101,670	84,366
Loss from operations	(16,019	)	(2,482	)	(31,185	)	(4,716	)
Interest expense	49	106	103	337
Other (income) expense, net	103	211	280	327
Loss before provision for (benefitfrom) income taxes	(16,171	)	(2,799	)	(31,568	)	(5,380	)
Provision for (benefit from) incometaxes	41	(282	)	123	(33	)
Net loss	(16,212	)	(2,517	)	(31,691	)	(5,347	)
Cumulative preferred dividendsallocated to preferred stockholders	—	—	—	(558	)

Net loss attributable to commonstockholders	$	(16,212	)	$	(2,517	)	$	(31,691	)	$	(5,905	)
Net loss per share attributable tocommon stockholders:
Basic and diluted	$	(0.34	)	$	(0.05	)	$	(0.67	)	$	(0.15	)
Weighted-average shares used incomputing net loss per shareattributable to common stockholders:
Basic and diluted	47,187,586	46,570,195	47,408,479	39,664,436

(1) Includes stock-based compensation as follows: 

(2) Research and development expense for the three and six months ended June 30, 2022 Includes amortization of acquired intangible asset of $137 in connection with the Vibbio acquisition in April 2022.

ON24, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Cash flows from operating activities:
Net loss	$	(16,212	)		$	(2,517	)		$	(31,691	)		$	(5,347	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		1,339				1,134				2,546				2,294
Stock-based compensation expense		9,698				4,970				19,205				9,964
Amortization of deferred contract acquisition cost		3,950				3,828				8,017				7,502
Provision for allowance for doubtful accounts and billing reserve		487				692				747				1,209
Non-cash lease expense		482				—				1,001				—
Other		76				25				330				25
Change in operating assets and liabilities:
Accounts receivable		1,866				5,995				5,645				8,517
Deferred contract acquisition cost		(3,741	)			(4,142	)			(7,368	)			(9,592	)
Prepaid expenses and other assets		1,978				(2,025	)			(1,577	)			(7,078	)
Accounts payable		(1,428	)			(2,042	)			314				(1,441	)
Accrued liabilities		1,007				2,653				255				3,026
Deferred revenue		(1,388	)			(1,663	)			(5,486	)			1,659
Other non-current liabilities		(782	)			(37	)			(1,376	)			(163	)
Net cash (used in) provided by operating activities		(2,668	)			6,871				(9,438	)			10,575
Cash flows from investing activities:
Purchase of property and equipment		(690	)			(1,214	)			(1,674	)			(1,734	)
Acquisition, net of cash acquired		(2,495	)			—				(2,495	)			—
Purchase of marketable securities		(51,349	)			(44,481	)			(111,620	)			(44,481	)
Proceeds from maturities and paydowns of marketable securities		47,390				3,164				62,098				3,164
Net cash used in investing activities		(7,144	)			(42,531	)			(53,691	)			(43,051	)
Cash flows from financing activities:
Proceeds from initial public offering, net of underwriting discounts		—				—				—				353,397
Proceeds from exercise of options		581				384				1,738				1,795
Proceeds from issuance of common stock under ESPP		833				—				833				—
Payment of tax withholding obligations related to net share settlements on equity awards		—				—				(1,756	)			(2,001	)
Payment for repurchase of common stock		(8,734	)			—				(21,808	)			—
Repayment of equipment loans and borrowings		(67	)			(71	)			(133	)			(22,478	)
Repayment of capital lease obligations		(555	)			(807	)			(972	)			(1,384	)
Payment of offering costs		—				(1,176	)			—				(3,481	)
Net cash (used in) provided by financing activities		(7,942	)			(1,670	)			(22,098	)			325,848
Effect of exchange rate changes on cash, cash equivalents and restricted cash		249				114				276				108
Net (decrease) increase in cash, cash equivalents and restricted cash		(17,505	)			(37,216	)			(84,951	)			293,480
Cash, cash equivalents and restricted cash, beginning of period		97,597				389,041				165,043				58,345
Cash, cash equivalents and restricted cash, end of period	$	80,092			$	351,825			$	80,092			$	351,825
Supplemental disclosures of cash flow information:
Cash paid for taxes, net of refunds	$	247			$	131			$	278			$	142
Cash paid for interest	$	41			$	147			$	87			$	403

ON24, INC.
Reconciliation from GAAP to Non-GAAP Results
(in thousands, except share and per share data)
(Unaudited)

Reconciliation of net loss to non-GAAP operating income (loss) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss $ (16,212 ) $ (2,517 ) $ (31,691 ) $ (5,347 ) Add: Interest expense 49 106 103 337 Other (income) expense, net 103 211 280 327 Provision for (benefit from) income taxes 41 (282 ) 123 (33 ) Stock-based compensation 9,698 4,970 19,205 9,964 Amortization of acquired intangible asset 137 — 137 — Non-GAAP operating income (loss) $ (6,184 ) $ 2,488 $ (11,843 ) $ 5,248 Reconciliation of net loss to non-GAAP net income (loss) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss $ (16,212 ) $ (2,517 ) $ (31,691 ) $ (5,347 ) Add: Stock-based compensation 9,698 4,970 19,205 9,964 Amortization of acquired intangible asset 137 — 137 — Non-GAAP net income (loss) $ (6,377 ) $ 2,453 $ (12,349 ) $ 4,617 Reconciliation of net loss available to common stockholders Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss attributable to common shareholders $ (16,212 ) $ (2,517 ) $ (31,691 ) $ (5,905 ) Add: Cumulative preferred dividends allocated to preferred shareholders — — — 558 Stock-based compensation expense 9,698 4,970 19,205 9,964 Amortization of acquired intangible asset 137 — 137 — Non-GAAP net income (loss) attributable to common stockholders $ (6,377 ) $ 2,453 $ (12,349 ) $ 4,617 GAAP net loss per share, basic and diluted $ (0.34 ) $ (0.05 ) $ (0.67 ) $ (0.15 ) Non-GAAP net income (loss) per share, basic $ (0.14 ) $ 0.05 $ (0.26 ) $ 0.12 Non-GAAP net income (loss) per share, diluted $ (0.14 ) $ 0.04 $ (0.26 ) $ 0.09 Shares Used in GAAP Per Share Calculations: GAAP weighted-average shares used to compute GAAP net loss per share, basic and diluted 47,187,586 46,570,195 47,408,479 39,664,436 Shares Used in Non-GAAP Per Share Calculations: Non-GAAP weighted-average shares used to compute non-GAAP net income (loss) per share, basic 47,187,586 46,570,195 47,408,479 39,664,436 Non-GAAP weighted-average shares used to compute non-GAAP net income (loss) per share, diluted 47,187,586 54,993,297 47,408,479 48,646,614

ON24, INC.Reconciliation of GAAP to Non-GAAP Net Income (Loss) Per Share(in thousands, except share and per share data)

GAAP Basic and Diluted Net Loss Per Share 

Three Months Ended June 30,	Six Months Ended June 30,
2022	2021	2022	2021
GAAP basic and diluted net loss per share:
Net loss	$	(16,212	)	$	(2,517	)	$	(31,691	)	$	(5,347	)
Less: Cumulative preferred dividendsallocated to preferred stockholders	—	—	—	(558	)
Net loss attributable to commonstockholders, basic and diluted	$	(16,212	)	$	(2,517	)	$	(31,691	)	$	(5,905	)
Weighted average common stockoutstanding, basic and diluted	47,187,586	46,570,195	47,408,479	39,664,436

Basic and diluted net loss per share ofcommon stock

$

(0.34

)

$

(0.05

)

$

(0.67

)

$

(0.15

)

Non-GAAP Net Income (Loss) Per Share

 

Non-GAAP basic and diluted net income (loss) per share:	Three Months 2022				Ended June 30, 2021				Six Months 2022				Ended June 30, 2021
Net loss available to common stockholders	$	(16,212	)		$	(2,517	)		$	(31,691	)		$	(5,905	)
Add:
Cumulative preferred dividends allocated to preferred stockholders		—				—				—				558
Stock-based compensation		9,698				4,970				19,205				9,964
Amortization of acquired intangible asset		137				—				137				—
Non-GAAP net income (loss) attributable to common stockholders, basic and diluted	$	(6,377	)		$	2,453			$	(12,349	)		$	4,617

 

 

 

ON24, INC.Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow(in thousands)(Unaudited) 

Three Months Ended June 30,	Six Months Ended June 30,
2022	2021	2022	2021
Net cash (used in) provided by operatingactivities:	$	(2,668	)	$	6,871	$	(9,438	)	$	10,575
Less: Purchases of property and equipment	(690	)	(1,214	)	(1,674	)	(1,734	)
Free cash flow	$	(3,358	)	$	5,657	$	(11,112	)	$	8,841

 

Contacts

Media Contact:

Roger Villareal

press@on24.com

Investor Contact:

Lori Barker, The Blueshirt Group for ON24

investorrelations@on24.com