ON24 Announces Third Quarter 2022 Financial Results

SAN FRANCISCO–(BUSINESS WIRE)– ON24 (NYSE: ONTF), a leading sales and marketing platform for B2B digital engagement, today announced financial results for the third quarter ended September 30, 2022.

“In the third quarter, we saw exciting expansions with some of our customers, meaningfully improved our cost structure, and deepened our leadership bench with the appointment of two new go-to-market executives,” said Sharat Sharan, co-founder and CEO of ON24. “While the economic outlook remains uncertain, we are optimistic on returning to top-line growth in 2023 with line of sight to break-even Non-GAAP EPS by Q4 2023. We are focused on capturing more of our TAM by continuing to add more products and use cases to our platform while driving efficient and durable growth.”

Third Quarter 2022 Financial Highlights

• ARR of $165.6 million as of September 30, 2022, a decrease of 1% year-over-year. Foreign currency had an approximate $0.5 million negative impact in the quarter to ARR.
• Revenue:
  • Total revenue was $47.6 million, a decrease of 4% year-over-year.
  • Subscription and Other Platform Revenue was $43.3 million, a decrease of 1% year-over-year.
  • Professional Services Revenue was $4.3 million, a decrease of 25% year-over-year.
• GAAP Operating Loss was $14.8 million, compared to GAAP operating loss of $9.3 million in the third quarter of 2021.
• Non-GAAP Operating Loss was $3.6 million, compared to non-GAAP operating loss of $1.4 million in the third quarter of 2021.
• GAAP Net Loss attributable to common stockholders was $14.4 million, or $(0.30) per diluted share, compared to GAAP net loss attributable to common stockholders of $9.4 million, or $(0.20) per diluted share in the third quarter of 2021.
• Non-GAAP Net Loss was $3.3 million, or $(0.07) per diluted share, compared to a non-GAAP net loss of $1.6 million, or $(0.03) per diluted share in the third quarter of 2021.
• Cash Flow: Net cash used in operating activities was $3.5 million, compared to $0.9 million used in operating activities in the third quarter of 2021. Free cash flow was negative $4.2 million for the quarter, compared to negative $1.6 million in the third quarter of 2021.
• Cash, Cash Equivalents and Marketable Securities totaled $341.8 million as of September 30, 2022.

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

Recent Business Highlights / Industry Recognition

• Appointed two new leaders to ON24’s management team; Jason Olkowski as Chief Customer Success Officer and Callan Young as Chief Marketing Officer.
• Experienced strong expansion with a number of customers and average ARR per customer near record high.
• Introduced new capability and features across the ON24 platform to increase audience engagement, capture more buyer insights, enhance analytics and data, and provide advanced data integrations with leading CRM and marketing automation solutions.

Financial Outlook

For the fourth quarter of 2022, ON24 expects:

• Total revenue of $45.7 to $46.7 million.
• Non-GAAP operating loss of $4.5 to $3.5 million.
• Non-GAAP net loss per share of $(0.08) to $(0.06) using approximately 48.3 million basic and diluted shares outstanding.
• Restructuring charge of $1.0 to $1.3 million, excluded from Non-GAAP amounts above.

For the full year 2022, ON24 expects:

• Total revenue of $190 to $191 million.
• Non-GAAP operating loss of $20.1 to $19.1 million.
• Non-GAAP net loss per share of $(0.41) to $(0.39) using approximately 47.7 million basic and diluted shares outstanding.
• Restructuring charge of $2.1 to $2.4 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 the United States can access the call by dialing +1 (786) 496-5601, and Canadian parties can access the call by dialing +1 (778)-800-8219, using the conference ID 7305243#.

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

Definitions of Certain Key Business Metrics

Annual Recurring Revenue (“ARR”): ARR is calculated as the sum of the annualized value of our subscription contracts as of the measurement date, including existing customers with expired contracts that we expect to be renewed. Our ARR amounts 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 evaluating our operating performance. We define non-GAAP operating income (loss) as net income (loss) excluding, interest expense, other (income) expense, net, income tax, stock-based compensation, amortization of acquired intangible assets, and restructuring costs. We define non-GAAP net income (loss) as net income (loss) excluding cumulative preferred dividends allocated to preferred shareholders, stock-based compensation, amortization of acquired intangible assets, and restructuring costs. We define free cash flow 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 for internal planning and forecasting purposes, and we use free cash flow to measure and evaluate cash generated through normal business operations. We believe non-GAAP operating income (loss) and non-GAAP net income (loss) may be helpful to investors because they provide consistency and comparability with past financial performance. We believe free cash flow may be helpful to investors because it reflects that some purchases of property and equipment are necessary to support ongoing operations, while providing a measure of cash available to acquire customers, expand within existing customers and otherwise pursue our business strategies.

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

Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measure are included 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 identified by words such as: “outlook,” “expect,” “convert,” “believe,” “plan,” “future,” “may,” “should,” “will,” and similar references to future periods. Forward-looking statements include express or implied statements regarding our expected financial and operating results, the size of our market opportunity, the success of our new products and capabilities, the impact of the COVID-19 pandemic and vaccines on the way people do business, and other statements regarding our ability to achieve our 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 and technological development in our markets and any decline in demand for our solutions; our ability to expand our sales and marketing capabilities and otherwise manage our growth; the impact of the COVID-19 pandemic; disruptions or other issues 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, along with 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 not place undue reliance on them. All statements herein are based only on information currently available to us and speak only as 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. ON24 serves more than 2,100 customers worldwide, including 3 of the 5 largest global technology companies, 3 of the 6 largest US banks, 3 of the 5 largest global healthcare companies, and 3 of the 5 largest global industrial manufacturers. Through interactive webinars, virtual events, and personalized content experiences, ON24 provides a system of engagement powered by AI for businesses to scale engagement, conversions, and pipeline to drive revenue growth. The ON24 Platform supports millions of professionals a month who are totaling billions of engagement minutes per year. ON24 is headquartered in San Francisco with global offices in North America, EMEA, and APAC. For more information, visit www.ON24.com.

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