ON24 INC. (ONTF)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 delivered total revenue of $34.7M and non-GAAP diluted EPS of $(0.01), both better than internal Q4 guidance ranges; revenue and EPS also beat S&P Global consensus modestly as seasonally soft quarter absorbed macro uncertainty . Values retrieved from S&P Global.
• Management initiated a new $50M share repurchase program and highlighted the highest in-period gross retention in four years, record multi-year ARR mix, and record multi-product adoption—key signals of stabilization in the enterprise base .
• FY 2025 revenue guidance was lowered (Core: $133.7–$136.7M; Total: $136.0–$139.0M) while non-GAAP EPS ($0.02–$0.05) and margin targets were maintained; Q2 guidance implies adjusted EBITDA and EPS turning positive .
• Catalysts: accelerating AI roadmap (ACE and new ON24 IQ agents), strengthened go-to-market leadership (new CMO, enhanced enterprise sales), and buyback support; risks: increased macro uncertainty with softness in international/commercial segments and ARR expected down modestly in Q2 before improving in H2 .

What Went Well and What Went Wrong

What Went Well

• Record retention and enterprise mix: “Customer retention, measured by in-period gross retention, improved sequentially… [and] was at the highest level we have seen in the last 4 years” and >50% of ARR now in multi‑year contracts; multi-product adoption at an all-time high .
• AI traction and product innovation: ACE paying customers reached low-teens percent; management launched ON24 IQ intelligent agents and reiterated a steady stream of AI advancements to drive personalization, efficiency and performance insights .
• Capital allocation and liquidity: New $50M repurchase program approved; cash, cash equivalents and marketable securities totaled $181.0M at quarter-end, with five consecutive quarters of positive free cash flow .

Quotes:

• “We continue to generate positive operating and free cash flow, improve our gross retention rates, and win back customers, while also delivering a steady stream of AI innovation.” — CEO Sharat Sharan .
• “We do expect to be adjusted EBITDA and EPS positive in Q2 and for the rest of the quarters in 2025.” — CFO Steve Vattuone .

What Went Wrong

• Top-line pressure and ARR decline: Core ARR ended Q1 at $125.9M, down ~$1.4M from Q4; total ARR was $128.2M; management guides further modest ARR decline in Q2 before H2 improvement .
• Macro-driven conservatism: Increased uncertainty and late-quarter softness, especially in international and commercial segments, led to more conservative FY revenue guidance despite internal operational progress .
• Profitability mixed on seasonality: Adjusted EBITDA of $(0.957)M in Q1 vs positive in prior two quarters; non-GAAP operating loss widened YoY (to $(2.121)M) given the seasonally soft quarter, though still better than Q4 guidance .

Financial Results

Core P&L vs Prior Quarters

Segment and Mix

KPIs and Balance Sheet

Guidance Changes

Q1 2025 Actual vs Q4 2024 Guidance

Earnings Call Themes & Trends

Management Commentary

• Strategic focus: “We are accelerating our enterprise-focused market initiatives, augmenting our go-to-market leadership and execution, and launching a new marketing campaign.” — CEO Sharat Sharan .
• Buyback rationale: “We believe our business is undervalued.” — CEO Sharat Sharan (announcing $50M buyback) .
• Profitability cadence: “We do expect to be adjusted EBITDA and EPS positive in Q2 and for the rest of the quarters in 2025.” — CFO Steve Vattuone .
• Macro stance: “There is now a lot more macro uncertainty… we are being incrementally more conservative with our annual revenue guidance.” — CFO Steve Vattuone .

Q&A Highlights

• $100k ARR cohort trajectory: Management expects to “very close to turning this number positive,” with 299 customers >$100k ARR and stability at the enterprise tier despite lower-end churn .
• Macro softness and guidance: Late-quarter softness plus macro uncertainty prompted conservative FY revenue guidance; still expect sequential ARR improvement through 2025 with more progress in H2 .
• AI agents and pricing: ON24 IQ intelligent agents will automate repetitive tasks; expect more AI SKUs and packages within 30–60 days targeting enterprise scalability and efficiency .
• Marketing leadership and GTM: New CMO to drive solutions-based, ROI-focused messaging and pipeline alignment with sales; early pipeline indications improving .
• Vertical performance: Life sciences and financial services now ~1/3 of business, generally higher gross and net retention; diversified base to drive growth .

Estimates Context

Values retrieved from S&P Global.*

Implications: Small beats vs consensus on a seasonally soft quarter support near-term sentiment; however, lowered FY revenue guidance may cap estimate revisions until H2 pipeline visibility improves .

Key Takeaways for Investors

• Q1 delivered modest revenue and EPS beats vs consensus and exceeded internal guidance—seasonality and macro headwinds acknowledged, but operating discipline and cash generation persisted . Values retrieved from S&P Global.*
• FY 2025 revenue guidance lowered while non-GAAP EPS and margin targets held; watch for H2 ARR improvement given management’s more conservative stance .
• AI is increasingly monetized: ACE paying customers in low-teens % and the introduction of ON24 IQ agents broaden the AI growth vector; expect more AI SKUs near term .
• Enterprise quality mix strengthens: record multi‑year contracts (>50% ARR), record multi-product adoption, and highest retention in four years—supports durability of ARR base .
• Buyback adds support: $50M authorization on top of prior capital returns, funded by $181M in cash and investments; potential floor for shares amid execution on profitability .
• Near-term trading: Balanced—beat and buyback are positives; guidance cut may temper upside until macro stabilizes or AI monetization accelerates. Monitor Q2 adjusted EBITDA/EPS inflection and ARR trend .
• Medium-term thesis: If AI-led engagement (ACE/IQ) continues to drive ROI and win-backs while enterprise retention remains high, ON24 can return to ARR growth and expand margins toward long-term double-digit EBITDA targets .

Additional Relevant Press Releases (Q1 2025 window)

• ON24 ranked #1 in Enterprise Webinar Platforms (G2 Spring 2025) — reinforces market presence and satisfaction, supporting GTM momentum .
• Appointment of David Lee as CMO — bolsters enterprise solutions-based marketing and ROI messaging .
• Authorization of $50M share repurchase program — capital return and valuation signal .