ON24 Announces Second Quarter 2022 Financial Results

Rhea-AI Summary

ON24 reported its second-quarter financial results for 2022, highlighting total revenue of $48.2 million, a 7% decline year-over-year. The company achieved an Annual Recurring Revenue (ARR) of $167.8 million, up 2% year-over-year. Professional Services revenue dropped 33% to $5.2 million. ON24 recorded a GAAP net loss of $16.2 million, or $(0.34) per diluted share. Outlook includes a revenue guidance of $191 to $195 million for 2022, with an expected Non-GAAP operating loss between $(27.5) to $(24.5) million.

Positive

• Achieved the largest deal in company history with a top customer.
• ARR increased by 2% year-over-year to $167.8 million.
• Reaffirmed 2022 revenue guidance of $191 to $195 million.

Negative

• Total revenue decreased by 7% year-over-year.
• GAAP operating loss increased to $16.0 million from $2.5 million in 2021.
• Professional Services revenue declined by 33% year-over-year.

• 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 digital engagement, 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 activity with a number of our top customers increasing their investments with us,” said Sharat Sharan, co-founder and CEO of ON24. “The breadth of our platform along with its ability to capture first-party engagement data and insights helps our customers 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 are well-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 $2.5 million in the second quarter of 2021.
• Non-GAAP Operating Loss was $6.2 million, compared to non-GAAP operating income of $2.5 million in the second quarter of 2021.
• GAAP Net Loss attributable to common stockholders was $16.2 million, or $(0.34) per diluted share, compared to GAAP net loss attributable to common stockholders of $2.5 million, 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 of 2021.
• Cash Flow: Net cash used in operating activities was $2.7 million, compared to $6.9 million provided by operating activities in the second quarter of 2021. Free cash flow was negative $3.4 million for the quarter, compared to $5.7 million provided in the second quarter of 2021.
• Cash, Cash Equivalents and Marketable Securities totaled $344.9 million as of June 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

• Strong expansion with a number of our top customers with the highest level of ARR coming from multiyear commitments, including the largest multi-year contract in our history 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 leading American auto-parts distributor and a top medical association.
• Received strong acknowledgements from peer-review sites and two leading independent research firms for the Company’s innovation in a number of sales and marketing categories, including webinar software, account-based marketing (ABM), conversation automation 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 $1.3 million. 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 million basic 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 million basic 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 the United 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 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 and amortization of acquired intangible assets. We define non-GAAP net income (loss) as net income (loss) excluding cumulative preferred dividends allocated to preferred shareholders, stock-based compensation and amortization of acquired intangible assets. 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.

© 2022 ON24, Inc. All rights reserved. ON24 and the ON24 logo are trademarks owned by ON24, Inc., and are registered in 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

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 (benefit from) income taxes		(16,171	)			(2,799	)			(31,568	)			(5,380	)
Provision for (benefit from) income taxes		41				(282	)			123				(33	)
Net loss		(16,212	)			(2,517	)			(31,691	)			(5,347	)
Cumulative preferred dividends allocated to preferred stockholders		—				—				—				(558	)
Net loss attributable to common stockholders	$	(16,212	)		$	(2,517	)		$	(31,691	)		$	(5,905	)
Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.34	)		$	(0.05	)		$	(0.67	)		$	(0.15	)
Weighted-average shares used in computing net loss per share attributable 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 dividends allocated to preferred stockholders		—				—				—				(558	)
Net loss attributable to common stockholders, basic and diluted	$	(16,212	)		$	(2,517	)		$	(31,691	)		$	(5,905	)
Weighted average common stock outstanding, basic and diluted		47,187,586				46,570,195				47,408,479				39,664,436
Basic and diluted net loss per share of common stock	$	(0.34	)		$	(0.05	)		$	(0.67	)		$	(0.15	)

Non-GAAP Net Income (Loss) Per Share

	Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Non-GAAP basic and diluted net income (loss) per share:
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
Non-GAAP weighted-average shares used to compute non-GAAP 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 income (loss) per share, diluted		47,187,586				54,993,297				47,408,479				48,646,614
Non-GAAP net income (loss) per share of common stock:
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

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 operating activities:	$	(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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220809005505/en/

Media Contact:

Roger Villareal

press@on24.com



Investor Contact:

Lori Barker, The Blueshirt Group for ON24

investorrelations@on24.com

Source: ON24

FAQ

What were ON24's total revenues for the second quarter of 2022?

ON24 reported total revenues of $48.2 million for the second quarter of 2022.

What is ON24's Annual Recurring Revenue (ARR) for June 30, 2022?

The ARR for ON24 as of June 30, 2022, is $167.8 million.

What is the financial outlook for ON24 for the full year 2022?

ON24 expects a revenue range of $191 to $195 million and a Non-GAAP operating loss between $(27.5) to $(24.5) million.

What challenges did ON24 face in the second quarter of 2022?

ON24 experienced a 7% decline in total revenue and a significant increase in GAAP operating loss.