ON24, Inc.

Good day, everyone, and welcome to the ON24 Q1 2025 conference call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. You may register to ask a question at any time by pressing the star and 1 on your telephone keypad. You may withdraw yourself from the queue by pressing star and 2. Please note, this call may be recorded, and I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Emily Greenstein, Investor Relations. Please go ahead.

Thank you. Hello, and good afternoon, everyone. Welcome to ON24's first quarter 2025 earnings conference call. On the call with me today are Shirat Shiran, co-founder and CEO of ON24, and Steve Vattuoni, Chief Financial Officer of ON24. Before we begin, I would like to remind everyone that some information provided during this call will include forward-looking statements regarding future events and financial performance, including guidance for the second quarter and full fiscal year 2025, as well as certain second quarter and full year non-GAAP projections. These forward-looking statements are subject to known and unknown risks and uncertainties, that can adversely affect On24's future results and cause these forward-looking statements to be inaccurate, including our ability to grow our revenue, attract new customers, and expand sales to existing customers, the success of our new products and capabilities, other statements regarding our ability to achieve our business strategies, growth, or other future events or conditions, such as the impact of adverse economic conditions and macroeconomic deterioration. ON24 cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the company's periodic SEC filings and today's financial press release for factors that could cause our actual results to differ materially from any forward-looking statements. We'd also like to point out that on today's call, we will report both GAAP and non-GAAP results. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes. Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP. To see the reconciliations of these non-GAAP financial measures, please refer to today's financial press release. I will now turn the call over to Shirat.

Thank you and welcome everyone to the ON24 First Quarter 2025 Earnings Call. I appreciate you joining us today. With me is Steve Dattuani, our Chief Financial Officer, who will be sharing details on our Q1 performance shortly. Before we dive into the numbers, I'd like to take a moment to highlight a few key driving forces to be mindful of as we move through 2025. Constant innovation is mission critical at ON24. In this quarter, we'll continue to roll out exciting AI innovation behind our intelligent engagement platform roadmap. You'll see exciting product advancements around AI-powered content nurture, hyper-personalization, multi-language capability, efficiency-driven AI agents, and AI-enabled performance insights. At the same time, we recognize we are operating in a time of macro uncertainty, where customer buying decisions and outcomes are more measured. We have navigated through this type of environment before, and we know that in times of uncertainty, it is even more critical to focus on the customer, so we've doubled down on our commitment to customer satisfaction, engagement, and retention, ensuring we are delivering measurable value for our clients at every stage of their journey with ON24. As we look to help our customers do more with less, we will sharpen our focus on ongoing product innovation and platform extensibility, particularly through AI-powered features and enterprise-grade capabilities. These enhancements deepen the impact of our platform while also enabling us to better execute on our value-added sales strategy, expanding within our existing customer base by aligning with their evolving needs and long-term customer engagement goals. From the rollout of AI-powered analytics and content engine ACE to new product innovations, enterprise expansion wins, and improving customer retention trends, we are reinforcing ON24's position as the intelligent engagement platform of choice for global enterprises and laying the foundation for sustainable, profitable growth. Our results for Q1 demonstrate our improving gross retention profile, operating expense discipline, and cash flow improvement. Revenue from our core platform, including services, was $34.2 million, and total revenue, including virtual conference, was $34.7 million. In terms of ARR, we ended the quarter with $125.9 million of core platform ARR, and total ARR was $128 From a cash flow perspective, we drove positive free cash flow for the fifth consecutive quarter, and we remain committed to a long-term profitability target of generating double-digit EBITDA margins. I'd like to highlight some areas where we have been effecting change and improved our business. First, we made meaningful progress in accelerating our enterprise-focused, go-to-market initiatives. Under new North America sales leadership, we delivered the best enterprise new logo performance in the last five quarters. Specifically in Q1, we saw continued win-back momentum with Boomerang customers, with the largest number of customers and largest dollar value of ARR in the last five quarters. We continue to drive our AI-powered innovation product roadmap which I will discuss in more detail shortly. At the end of Q1, low-teens percentage of our customers are paying for AI-powered ACE products. Customer retention, measured by inferior gross retention, improved sequentially from last quarter and was at the highest level we have seen in the last four years. As we move ahead in 2025, we are focused on three core areas. AI innovation, improved enterprise go-to-market execution, and a commitment to positive cash flow. Starting with product innovation, you'll continue to see a steady and exciting stream of AI advancements. AI is fundamentally changing sales and marketing, and our customers trust us to help bring their engagement strategies into the AI era. Our product development focus is based upon ON24's five core pillars, all of which are directed towards enabling our customers to power positive business outcomes, achieve greater cost efficiency, and deliver massive enterprise-grade scalability. Let's briefly touch on these five pillars. The first is our AI-powered content and nurture. which allows customers to leverage the ON24 platform with AI-powered analytics and content engine, ACE, to engage their audience in an entirely new way with experiences that are intelligent and personalized and content that is always on. This not only accelerates content creation and execution, but also scales reach, ultimately propelling consistent pipeline growth for our customers. Second, we are introducing ON24 IQ, intelligent agents who expand the capability of our existing ON24 AI-powered ACE so participants can minimize manual repetitive tasks like event QA, handling, and others. We believe every event can become a data-driven, highly unique experience that keeps audiences engaged. Our platform's personalization capabilities allow customers to dynamically customize event experiences based on audience behaviors and to deliver personalized certifications and continued education programs that align with audience needs and regulatory requirements. Our fourth pillar leverages the platform's AI capabilities to provide deep performance insights that allow our customers go-to-market teams to capitalize on ON24's first-party engagement data to make data-driven decisions that drive growth. And lastly, our new multilingual capability unlocks global engagement. Now customers can automatically localize event registration and activation pages, translate post-event recording, and generate derivative content including e-books, social posts, blogs, key takeaways, transcripts, and more. This enables global enterprises to scale their efforts and drive faster results globally. The second core area is our enterprise-focused go-to-market strategy. As part of our strategic evolution, ON24 has made meaningful progress in accelerating our enterprise-focused go-to-market initiatives. We are aligning our sales, marketing, and customer success model to drive deeper value and long-term growth in the global enterprise segment. First, we've shifted to a solutions-based go-to-market approach tailored to the complex needs of enterprise buyers. This strategy enables us to align more directly with our customers' strategic objectives, whether that's accelerating pipeline, improving buyer or client engagement, or delivering more personalized experiences at scale. We are excited to announce the launch of a new global integrated marketing campaign called Propel Forward, focused on our solutions-based go-to-market approach. Our Propel Forward campaign highlights the deep ROI we provide by segment, as well as our ability to enable customers to maximize the first-party engagement experience and capitalize on the power of personalization and AI to accelerate the customer journey and propel positive business outcomes. ON24 can propel pipeline for technology providers, accelerate client relationships for financial services, and deliver engagement and certification for healthcare professionals. This integrated campaign should increase demand and brand awareness, thereby driving new acquisition accounts and facilitating customer expansion. We are pleased to announce David Lee as our new Chief Marketing Officer. David comes to us with extensive B2B experience, previously serving as Chief Marketing Officer for InvestNet, Yodlee, and Vice President of Marketing for SonicWall. With the hiring of David and the previous changes that we made in our North America sales leadership, we are focused on driving improved sales velocity and customer expansion. In fact, We've already seen meaningful progress in accelerating our enterprise-focused go-to-market initiatives, having delivered the best new business performance in the core. To highlight some of the new logos that we closed in Q1, we acquired a new customer, one of the leading AI companies in the world, building a foundational AI system. With a clear focus on expanding the B2B and enterprise footprint, the customer turned to ON24 to shift their go-to-market strategy from traditional marketing to a scalable data-driven digital funnel. In the pharmaceutical space, a commercial stage biopharma company turned to ON24 to build a more mature omnichannel strategy. With compliance top of mind and a need to strong partner integration, they selected ON24 to deliver interactive experiences that could be reviewed before launch by compliance and accessed on demand by healthcare professionals. Another major new logo is a leading provider of legal, tax, and business services, providing multi-state certifications. With the ON24 platform and AI PowerDays, they've been able to automate the certification process by creating personalized on-demand experiences, leveraging real-time analytics. Fourth, in Q1, we experienced the highest number of win-backs from Boomerang customers in the last five quarters. In the technology vertical, we re-engaged a Fortune 500 IT technology solutions provider. Their goals were ambitious, elevate their event strategy, increase engagement and conversions, and scale their content strategy. By leveraging the ON24 platform, the team is now able to drive tangible growth by personalizing digital experiences based on their target audiences. Specifically, they can scale channel effectiveness through a multimedia engagement hub that allows users to register once and consume all content while tracking interactivity and attributing it back to revenue. Additionally, they're accelerating content creation through ON24's AI-powered ACE to rapidly produce derivative assets and streamline operations. Lastly, we remain focused on regulated industry verticals, including financial services and life sciences. Our robust and secure offering is well suited to the high demands of these enterprise-grade customers that require automated workflows, reliability, security, and compliance. I want to highlight our work with one of the largest international financial services companies in the world providing global investment management, investment services, and wealth management. We are working with this global financial institution to consolidate their disparate demand generation, education, and leadership training programs and systems under a single intelligent engagement solution to bring together institutional investors, financial advisors, wealth managers, and more. they've been able to consolidate multiple use cases on the ON24 platform while exiting some of the other point solutions that they were using. In summary, with continued improvement in our gross retention rate and positive free cash flow generation, we believe we have stabilized our business. As we focus on returning to growth, we have made significant strides in our go-to-market execution, including enhancements to our leadership team. Early results are good, with encouraging signs across multiple dimensions, including new business acquisition, win-backs from boomerang customers, and increased penetration with regulated industry verticals, which are now over a third of our business. In addition, our AI-driven innovation, which has seen our AIAs become an important growth vector, sets us up for continued innovation and momentum. While we have laid the foundation for a return to growth, our stock price has experienced new lows. Given this dynamic, we believe our current market valuation does not reflect our long-term growth potential and strategy, presenting a compelling opportunity for us to repurchase our undervalued shares. Specifically, we are announcing a new $50 million share repurchase program that Steve will discuss. And with that, I will turn it to Steve.