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ON24 Announces Second Quarter 2022 Financial Results

August 9, 2022

  •  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: 

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Cost of revenue

Subscription and other platform

$

823

$

346

$

1,691

$

583

Professional services

166

77

340

139

Total cost of revenue

989

423

2,031

722

Sales and marketing

3,697

1,571

7,389

3,263

Research and development

1,925

862

3,906

1,644

General and administrative

3,087

2,114

5,879

4,335

Total stock-based compensation expense

$

9,698

$

4,970

$

19,205

$

9,964

(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