ON24, Inc.

greetings welcome to on 24's third quarter 2025 earnings conference call at this time all participants are in a listen only mode a question and answer session will follow the formal presentation if anyone should require operator assistance during the conference please press star 0 on your telephone keypad please note this conference is being recorded i will now turn the conference over to lauren sloan of investor relations thank you and you may begin

Thank you, hello, and good afternoon, everyone. Welcome to On24's third quarter 2025 earnings conference call. On the call with me today are Shirat Charan, co-founder and CEO of On24, and Steve Gattamoni, 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 in financial performance. including guidance for the fourth quarter and fiscal year 2025, as well as certain fourth quarter and full year non-GAAP projections. These forward-looking statements are subject to known and unknown risks and uncertainties that could adversely affect ON24's future results and cause these forward-looking statements to be inaccurate, including our ability to grow revenue, attract new customers, and expand sales to existing customers, the success of our new products and capabilities, and our ability to achieve our business strategies growth, our process for evaluating indications of interest 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 in 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 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 a reconciliation of these non-GAAP financial measures, please refer to today's financial press release. I will now turn the call over to Shrapp. Please go ahead.

Thank you and welcome everyone to the ON24 third quarter 2025 earnings call. I appreciate you joining us today. With me is Steve Vattuani, our Chief Financial Officer. First, let me touch on Q3 results. From a P&L perspective, I'm happy to share that we delivered a strong Q3 with revenue and profitability above the high end of our guidance and had a strong performance on gross margins and free cash flow. We ended Q3 with $124.5 million in total ARR. While we expected Q3 to be seasonally soft, we did see some unexpected impact to growth ARR in Q3 from slower new growth bookings, including in the life sciences vertical. In Q3, we did see some deal slippage, many of which have already closed in Q4. Importantly, we expect significantly better ARR performance in Q4 compared to Q3, which will set us up well for a stronger 2026. There are a few commercial highlights that I would like to share. First, we recently signed a major new partnership with LinkedIn, which I will discuss shortly. Second, we continue to see strong performance from our AI offerings. Close to one in five of our customers is paying for our AI offerings. And we expect this number to increase into Q4 and future quarters. especially with the launch of two new packages, AI Translate and AI Propel Plus. And third, win-backs from Boomerang customers, especially in regulated industries, continued. While our Q3 ARR performance was below expectations, we are excited that our customer base continues to adopt more of our products, and we continue to see an increase in customers using two or more products, with that metric also hitting an all-time high at the end of Q3. In addition, we are seeing customers commit more and more to our platform, with the average core ARR per customer reaching over 80,000 at the end of Q3. And the percentage of our ARR in multi-year contracts was the highest ever at the end of Q3. Next, I will discuss the exciting announcement we recently made between ON24 and LinkedIn to drive the next generation of event marketing. This partnership brings together ON24, the premier B2B intelligent engagement platform, and LinkedIn, the world's largest professional network. This integration is a game changer for our customers that will enable them to not only multiply event promotion on LinkedIn, but also drive additional audiences to their ON24 email. Ultimately, our collaboration will completely transform digital events by providing customers with seamless workflows that push ON24 events directly into LinkedIn events, frictionless registration that syncs event registration data directly from LinkedIn registration forms directly to ON24, and expanded audience reach, promoting ON24 events to high-quality audiences on LinkedIn. Integration will be rolled out in several phases, and ultimately, this partnership will turn digital events into powerful connected campaigns that will drive business forward for both our customers and new prospects alike. Now, I will discuss the product innovation that is centered around AI. We continue to make significant enhancements with our AI-enabled offering. recently announced on 24 ai propel plus a brand new modern intuitive ai forward solution that can easily turn every webinar or digital event into an omni-channel multi-touch campaign or engagement at the core of ai propel plus is our ai powered analytics and content engine which as a reminder enables our customers to repurpose webinars and other digital events into derivative content, including short video clips, blog posts, nurture assets, which enable a multiplier campaign effect. AI Propel Plus is powered by ON24's first-party engagement data, all of which can be synced into CRM and marketing automation systems for use in retargeting and look-alike audience match. And for those enterprise customers driving global engagement, customers can pair our AI product capabilities with ON24 Translate, our multilingual translation offering, which allows customers to localize every piece of content so they can seamlessly launch their campaign in over 60 countries. Imagine taking a single webinar or virtual event. converting all elements of that, including registration pages, lobby pages, webinar, and all derivative content in over 60 languages. As an example, one of the largest global technology companies expanded its use of ON24 to localize and scale its digital event program across multiple markets. The team needed a faster, more efficient way to translate and publish localized content for regional audiences without relying on external vendors. With ON24's built-in translation and automation capabilities, the company can now localize over 4,500 events annually in 12 languages, ensuring consistent branding, faster campaign timelines, and deeper engagement in key international markets. Next. I will share a couple of new AI powered technology solutions that we will be launching soon. First, one click social publishing, a capability that will help marketers repurpose and refine their content across social media channels. This AI powered solution will further support our customer's ability to create and post short form video clips across major social media channels like YouTube, LinkedIn, Facebook, and X with one click of a button. Second is our focus on AI agents. These ON24 AI agents will help customers automatically set up events with the right registration and lobby pages to ensure the experience is tailored to the right target audience. And for our global customers, We're going to support agentic AI video translation that will convert videos into multiple languages while maintaining the speaker's voice, tone, and delivery. Even synchronize lips to speech to provide a global footprint for presentations. Another area is agentic AI video clip optimization, which will allow our customers to identify and develop different types of video clips using an iterative chat interface to refine the video output of video clips and determine the clip's relevance for different use cases. These video clips will also support dynamically configured layouts such as vertical or portrait as well as horizontal or landscape orientations and be designed for social media sharing to magnify program reach and engagement. Finally, and most importantly, We are focused on AI and LLM search discoverability. As LLMs take a bigger role as default search engines, ON24 will use AI to help our clients create a deep reservoir of fresh LLM search optimized and discoverable content. Our AI discoverability solutions will help customers optimize content for LLM indexing and readability. enhancing landing pages, and summarizing content using the right HTML and JavaScript markup and information architecture. Sales and marketing go to market is being transformed. And ON24 is in the driver's seat to become the AI-enabled engagement platform that empowers business users to do more with less and achieve measurable results. I am proud. that in its latest report, G2, the world's largest and trusted marketplace for software based on user reviews, ranked ON24 as the number one leader in the enterprise grid for webinar platforms as measured for market presence and customer satisfaction. We see this recognition by G2 as proof that our AI-driven engagement engine is delivering ROI to customers at scale. Next, I want to discuss our continued momentum and customer win-backs from Boomerang customers, especially in the regulated industry verticals. Here are a couple of examples. A leading provider of retirement and investment management solutions selected ON24 to enhance and scale its retirement plan education programs. Previously managing a large number of recurring sessions through a legacy provider the team faced challenges with manual workflows and limited personalization. With ON24, they can now automate post-event engagement, integrate insights into their CRM, and deliver personalized participant experiences at scale. Another example of a win-back was from the big pharma space. A global biopharmaceutical leader would join ON24 to elevate its digital HCP engagement strategy, and move beyond basic web conferencing tools. The team needed a compliant, interactive, and data rich platform that could support live education and integrate directly with its CRM and Viva systems. With ON24, they now deliver immersive, fully branded experiences with interactive features, all while capturing first-party engagement data that drives more informed follow-up. Finally, let's turn to how we are using AI to drive efficiencies in our own organization. We generated positive free cash flow for the seventh consecutive quarter and expect to drive further progress on profitability in 2026. Specifically, we are leveraging AI to increase efficiency. and operations. And moving forward, we are actively focused on deploying AI tools within the company to improve productivity, especially in sales and marketing, and to drive higher profit margins. We are targeting a double-digit improvement in sales and marketing expenses as a percentage of revenue in the next two years. Currently, sales and marketing as a percentage of revenue is in the low 40s. And we expect to reduce this to the mid-30s in 12 months and to the low 30s in two years. With the benefits of AI, we believe we can better align our overall expense structure without compromising our innovation roadmap and go-to-market success. To sum up, we believe we are well positioned to capture the growth opportunity in our market by bringing AI innovation to our industry. We are making ON24 the AI-enabled engagement platform that empowers business users to do more with less to achieve measurable results. We continue to see impressive win-backs as boomerang clients crave the power of the ON24 platform to automate post-event engagement, integrate insights into their CRM, and deliver personalized participant experiences at scale. We are excited about the enhanced solutions we can deliver to our customers through our partnership with LinkedIn and the expansion of our AI solutions, including agentic AI. We look forward to driving the company to profitable ARR growth in 2026. Before I turn it over to Steve, I wanted to provide an update. The company has received indications of interest for a potential acquisition of the company. The board is evaluating the indications of interest with Goldman Sachs, its financial advisor. There can be no assurances as to the outcome of this process. The purpose of our call today is our third quarter results, and we ask that you keep your questions focused on this topic. Now, I will turn it over to Steve.