ON24 Announces First Quarter 2022 Financial Results

  • Total Revenue of $48.5 million
  • ARR of $167.7 million
  • Added two new board members, Tony Zingale and Anil Arora

ON24 (NYSE: ONTF), a leading sales and marketing platform for digital engagement, today announced financial results for the first quarter ended March 31, 2022.

“In Q1, we’ve made progress on the key priorities that we’ve laid out for 2022. Looking ahead to the remainder of 2022 and beyond, our strategic growth agenda is focused on evolving our digital engagement platform for a post-pandemic world. We’ve launched two new products in the last two quarters which we believe will be meaningful future growth drivers in expanding our platform and the market opportunity,” said Sharat Sharan, co-founder and CEO of ON24. “We are confident in our strong market position and the large opportunity in front of us despite the impact from near-term macro uncertainty, particularly in EMEA.”

First Quarter 2022 Financial Highlights

  • ARR of $167.7 million as of March 31, 2022, an increase of 3% year-over-year.
  • Revenue:
    • Total revenue was $48.5 million, a decrease of 3% year-over-year.
    • Subscription and Other Platform Revenue was $43.5 million, an increase of 1% year-over-year.
    • Professional Services Revenue was $5.0 million, a decrease of 30% year-over-year.
  • GAAP Operating Loss was $15.2 million, compared to GAAP operating loss of $2.2 million in the first quarter of 2021.
  • Non-GAAP Operating Loss was $5.7 million, compared to non-GAAP operating income of $2.8 million in the first quarter of 2021.
  • GAAP Net Loss attributable to common stockholders was $15.5 million, or $(0.32) per diluted share, compared to net loss attributable to common stockholders of $3.4 million, or $(0.10) per diluted share in the first quarter of 2021.
  • Non-GAAP Net Loss was $6.0 million, or $(0.13) per diluted share, compared to a non-GAAP net income of $2.2 million, or $0.05 per diluted share in the first quarter of 2021.
  • Cash Flow: Net cash used in operating activities was $6.8 million, compared to $3.7 million provided by operating activities in the first quarter of 2021. Free cash flow was negative $7.8 million for the quarter, compared to $3.2 million in the first quarter of 2021.
  • Cash, Cash Equivalents and Marketable Securities totaled $359.0 million as of March 31, 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

  • Added two new board members, Tony Zingale and Anil Arora, who will provide guidance as we evolve our platform to drive ongoing, continuous engagement across the customer lifecycle.
  • Launched ON24 Forums, a new live engagement experience as part of the ON24 platform for sales and marketing to drive high-touch, interactive moderated discussions that deepen audience participation. This adds to the recent addition of ON24 Go Live to our suite of digital experience offerings.
  • Announced the acquisition of VIBBIO to integrate video capabilities across the ON24 platform for sales and marketing to produce video content that creates more engagement, generates first-party data, and drives further personalization.
  • Enhanced our integration with HubSpot, with all ON24 first-party engagement and conversion data now available in HubSpot CRM for customers to drive deeper, more personalized interactions and qualify leads for sales follow-up.
  • Held our Momentum Partner Summit where we brought together thousands of attendees across partners, customers and prospects as we continue to strengthen our partner ecosystem.
  • Enterprise and midmarket users rated ON24 Webcast Elite as the #1 webinar software for the fourth consecutive quarter on G2, one of the largest software marketplace and services review platforms.

Financial Outlook

For the second 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 47.6 million basic and diluted shares outstanding.

Updated 2022 Outlook:

We have updated our outlook for full year 2022 to reflect the current macro-economic environment, particularly in EMEA, as well as the potential impact of organizations continuing to assess their post-pandemic digital budgets.

ON24 is now expecting the following results for the full year 2022:

  • Total revenue of $191 to $195 million.
  • Non-GAAP operating loss of $30 to $27 million.
  • Non-GAAP net loss per share of $(0.64) to $(0.58) using approximately 48.1 million basic and diluted shares outstanding.

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) 394-8218, and international parties can access the call by dialing (323) 794-2588, using the conference ID 2902665.

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 and stock-based compensation. We define non-GAAP net income (loss) as net income (loss) excluding cumulative preferred dividends allocated to preferred shareholders and stock-based compensation. 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, including our revenue growth; 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, 4 of the 5 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)

 

 

 

March 31, 2022

 

December 31, 2021

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

97,500

 

 

$

164,948

 

Marketable securities

 

 

261,527

 

 

 

217,609

 

Accounts receivable, net

 

 

42,078

 

 

 

46,117

 

Deferred contract acquisition costs, current

 

 

14,345

 

 

 

11,921

 

Prepaid expenses and other current assets

 

 

11,759

 

 

 

8,467

 

Total current assets

 

 

427,209

 

 

 

449,062

 

Property and equipment, net

 

 

8,672

 

 

 

8,780

 

Operating right-of-use assets

 

 

6,755

 

 

 

 

Deferred contract acquisition costs, non-current

 

 

18,023

 

 

 

20,887

 

Other long-term assets

 

 

1,469

 

 

 

1,760

 

Total assets

 

$

462,128

 

 

$

480,489

 

Liabilities and Stockholders’ Equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

5,149

 

 

$

3,123

 

Accrued and other current liabilities

 

 

18,707

 

 

 

19,011

 

Deferred revenue

 

 

92,127

 

 

 

96,225

 

Finance lease liabilities, current

 

 

1,637

 

 

 

1,768

 

Operating lease liabilities, current

 

 

2,462

 

 

 

 

Total current liabilities

 

 

120,082

 

 

 

120,127

 

Finance lease liabilities, non-current

 

 

1,377

 

 

 

1,648

 

Operating lease liabilities, non-current

 

 

6,744

 

 

 

 

Other long-term liabilities

 

 

1,379

 

 

 

3,624

 

Total liabilities

 

 

129,582

 

 

 

125,399

 

Stockholders’ equity

 

 

 

 

Common stock

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

545,144

 

 

 

550,839

 

Accumulated deficit

 

 

(210,998

)

 

 

(195,519

)

Accumulated other comprehensive loss

 

 

(1,605

)

 

 

(235

)

Total Stockholders’ equity

 

 

332,546

 

 

 

355,090

 

Total liabilities and stockholders’ equity

 

$

462,128

 

 

$

480,489

 

 

 

 

 

 

ON24, INC.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

 

2021

 

Revenue:

 

 

 

 

Subscription and other platform

 

$

43,477

 

 

$

42,910

 

Professional services

 

 

5,015

 

 

 

7,189

 

Total revenue

 

 

48,492

 

 

 

50,099

 

Cost of revenue:

 

 

 

 

Subscription and other platform(1)

 

 

9,602

 

 

 

7,485

 

Professional services(1)

 

 

3,342

 

 

 

3,209

 

Total cost of revenue

 

 

12,944

 

 

 

10,694

 

Gross profit

 

 

35,548

 

 

 

39,405

 

Operating expenses:

 

 

 

 

Sales and marketing(1)

 

 

29,193

 

 

 

23,925

 

Research and development(1)

 

 

10,644

 

 

 

7,946

 

General and administrative(1)

 

 

10,877

 

 

 

9,768

 

Total operating expenses

 

 

50,714

 

 

 

41,639

 

Loss from operations

 

 

(15,166

)

 

 

(2,234

)

Interest expense

 

 

54

 

 

 

231

 

Other (income) expense, net

 

 

177

 

 

 

116

 

Loss before provision for income taxes

 

 

(15,397

)

 

 

(2,581

)

Provision for income taxes

 

 

82

 

 

 

249

 

Net loss

 

 

(15,479

)

 

 

(2,830

)

Cumulative preferred dividends allocated to preferred stockholders

 

 

 

 

 

(558

)

Net loss attributable to common stockholders

 

$

(15,479

)

 

$

(3,388

)

Net loss per share attributable to common stockholders:

 

 

 

 

Basic and diluted

 

$

(0.32

)

 

$

(0.10

)

Weighted-average shares used in computing net loss per share attributable to common stockholders:

 

 

 

 

Basic and diluted

 

 

47,631,813

 

 

 

32,615,648

 

(1) Includes stock-based compensation as follows:

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

Cost of revenue

 

 

 

 

Subscription and other platform

 

$

868

 

$

237

Professional services

 

 

174

 

 

62

Total cost of revenue

 

 

1,042

 

 

299

Sales and marketing

 

 

3,692

 

 

1,692

Research and development

 

 

1,981

 

 

782

General and administrative

 

 

2,792

 

 

2,221

Total stock-based compensation expense

 

$

9,507

 

$

4,994

ON24, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

Net loss

 

$

(15,479

)

 

$

(2,830

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

1,207

 

 

 

1,160

 

Stock-based compensation expense

 

 

9,507

 

 

 

4,994

 

Amortization of deferred contract acquisition cost

 

 

4,067

 

 

 

3,674

 

Provision for allowance for doubtful accounts and billing reserve

 

 

260

 

 

 

517

 

Non-cash lease expense

 

 

519

 

 

 

 

Other

 

 

254

 

 

 

 

Change in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

3,779

 

 

 

2,522

 

Deferred contract acquisition cost

 

 

(3,627

)

 

 

(5,450

)

Prepaid expenses and other assets

 

 

(3,555

)

 

 

(5,053

)

Accounts payable

 

 

1,742

 

 

 

601

 

Accrued liabilities

 

 

(752

)

 

 

373

 

Deferred revenue

 

 

(4,098

)

 

 

3,322

 

Other non-current liabilities

 

 

(594

)

 

 

(126

)

Net cash (used in) provided by operating activities

 

 

(6,770

)

 

 

3,704

 

Cash flows from investing activities:

 

 

 

 

Purchase of property and equipment

 

 

(984

)

 

 

(520

)

Purchase of marketable securities

 

 

(60,271

)

 

 

 

Proceeds from maturities and paydowns of marketable securities

 

 

14,708

 

 

 

 

Net cash used in investing activities

 

 

(46,547

)

 

 

(520

)

Cash flows from financing activities:

 

 

 

 

Proceeds from initial public offering, net of underwriting discounts

 

 

 

 

 

353,397

 

Proceeds from exercise of options

 

 

1,157

 

 

 

1,411

 

Payment of tax withholding obligations related to net share settlements on equity awards

 

 

(1,756

)

 

 

(2,001

)

Payment for repurchase of common stock

 

 

(13,074

)

 

 

 

Repayments of long-term debt

 

 

(66

)

 

 

(22,407

)

Repayment of capital lease obligations

 

 

(417

)

 

 

(577

)

Payments of offering costs

 

 

 

 

 

(2,305

)

Net cash (used in) provided by financing activities

 

 

(14,156

)

 

 

327,518

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

 

27

 

 

 

(6

)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(67,446

)

 

 

330,696

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

165,043

 

 

 

58,345

 

Cash, cash equivalents and restricted cash, end of period

 

$

97,597

 

 

$

389,041

 

Supplemental disclosures of cash flow information:

 

 

 

 

Cash paid for taxes, net of refunds

 

$

31

 

 

$

11

 

Cash paid for interest

 

$

46

 

 

$

256

 

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 March 31,

 

 

 

2022

 

 

 

2021

 

Net loss

 

$

(15,479

)

 

$

(2,830

)

Add:

 

 

 

 

Interest expense

 

 

54

 

 

 

231

 

Other (income) expense, net

 

 

177

 

 

 

116

 

Provision for income taxes

 

 

82

 

 

 

249

 

Stock-based compensation

 

 

9,507

 

 

 

4,994

 

Non-GAAP operating income (loss)

 

$

(5,659

)

 

$

2,760

 

 

 

 

 

 

Reconciliation of net loss to non-GAAP net income (loss)

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

 

2021

 

Net loss

 

$

(15,479

)

 

$

(2,830

)

Add: Stock-based compensation expense

 

 

9,507

 

 

 

4,994

 

Non-GAAP net income (loss)

 

$

(5,972

)

 

$

2,164

 

 

 

 

 

 

Reconciliation of net loss available to common stockholders

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

 

2021

 

Net loss attributable to common shareholders

 

$

(15,479

)

 

$

(3,388

)

Add: Cumulative preferred dividends allocated to preferred shareholders

 

 

 

 

 

558

 

Add: Stock-based compensation expense

 

 

9,507

 

 

 

4,994

 

Non-GAAP net income (loss) attributable to common stockholders

 

$

(5,972

)

 

$

2,164

 

GAAP net loss per share, basic and diluted

 

$

(0.32

)

 

$

(0.10

)

Non-GAAP net income (loss) per share, basic

 

$

(0.13

)

 

$

0.07

 

Non-GAAP net income (loss) per share, diluted

 

$

(0.13

)

 

$

0.05

 

Shares Used in GAAP Per Share Calculations:

 

 

 

 

GAAP weighted-average shares used to compute GAAP net loss per share, basic and diluted

 

 

47,631,813

 

 

 

32,615,648

 

Shares Used in Non-GAAP Per Share Calculations:

 

 

 

 

Non-GAAP weighted-average shares used to compute non-GAAP net income (loss) per share, basic

 

 

47,631,813

 

 

 

32,615,648

 

Non-GAAP weighted-average shared used to compute non-GAAP net income (loss) per share, diluted

 

 

47,631,813

 

 

 

42,163,113

 

ON24, INC.

Net Income (Loss) Per Share

(in thousands, except share and per share data)

 

GAAP Basic and Diluted Net Loss Per Share

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

 

2021

 

GAAP basic and diluted net loss per share:

 

 

 

 

Net loss

 

$

(15,479

)

 

$

(2,830

)

Less: Cumulative preferred dividends allocated to preferred stockholders

 

 

 

 

 

(558

)

Net loss attributable to common stockholders, basic

 

 

(15,479

)

 

 

(3,388

)

Weighted average common stock outstanding, basic and diluted

 

 

47,631,813

 

 

 

32,615,648

 

Basic and diluted net loss per share of common stock

 

$

(0.32

)

 

$

(0.10

)

 

 

 

 

 

Non-GAAP Net Income (Loss) Per Share

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

 

2021

 

Non-GAAP basic and diluted net income (loss) per share:

 

 

 

 

Net loss available to common stockholders

 

$

(15,479

)

 

$

(3,388

)

Add: Cumulative preferred dividends allocated to preferred stockholders

 

 

 

 

 

558

 

Add: Stock-based compensation

 

 

9,507

 

 

 

4,994

 

Non-GAAP net income (loss) attributable to common stockholders, basic and diluted

 

$

(5,972

)

 

$

2,164

 

 

 

 

 

 

Non-GAAP weighted-average shares used to compute non-GAAP income (loss) per share, basic

 

 

47,631,813

 

 

 

32,615,648

 

Non-GAAP weighted-average shares used to compute non-GAAP income (loss) per share, diluted

 

 

47,631,813

 

 

 

42,163,113

 

Non-GAAP net income (loss) per share of common stock:

 

 

 

 

Non-GAAP net income (loss) per share, basic

 

$

(0.13

)

 

$

0.07

 

Non-GAAP net income (loss) per share, diluted

 

$

(0.13

)

 

$

0.05

 

 

 

 

 

 

ON24, INC.

Reconciliation of GAAP Cash Flow from Operating Activities to Free Cash Flow

(in thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

 

2021

 

Net cash (used in) provided by operating activities:

 

$

(6,770

)

 

$

3,704

 

Less: Purchases of property and equipment

 

 

(984

)

 

 

(520

)

Free cash flow

 

$

(7,754

)

 

$

3,184

 

 

 

 

 

 

 

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