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OI

ON24 INC. (ONTF)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 delivered revenue of $35.3M (+1.7% q/q, -5.4% y/y), non-GAAP EPS of $0.02, and sixth straight quarter of positive operating and free cash flow; gross retention reached a four-year high and total ARR ended at $127.1M with Core ARR at $125.1M .
  • Results beat S&P Global consensus: revenue $35.33M vs $34.69M estimate and EPS $0.02 vs $0.0075 estimate; both were modest beats driven by improved retention, enterprise traction, and boomerang customer win-backs (Wall Street estimates from S&P Global)*.
  • FY25 guidance was narrowed with a modest raise to total revenue ($137.7–$138.7M vs prior $136.0–$139.0M) and Core revenue ($135.2–$136.2M vs prior $133.7–$136.7M); non-GAAP operating loss range narrowed and non-GAAP EPS was maintained at $0.02–$0.05 .
  • Management reiterated ARR inflecting positive in Q4, underpinned by stronger gross retention, enterprise mix shift, multi-year commitments (>50% of ARR), and growing AI-powered ACE adoption (mid-teens % of customers) .

What Went Well and What Went Wrong

  • What Went Well

    • Retention and enterprise mix: In-period gross retention hit a four-year high; $100K+ ARR customers grew by five and represented ~two-thirds of ARR; >50% of ARR now in multi-year agreements .
    • AI momentum: “A mid-teens percentage of our customers are paying for AI-powered ACE,” with new capabilities like ON24 Translate to support 64 languages and multi-language campaigns .
    • Profitability/cash flow discipline: Positive adjusted EBITDA ($0.2M), sixth straight quarter of positive FCF ($2.1M), OCF $2.6M; balance sheet robust with $179.6M cash and marketable securities .

  • What Went Wrong

    • Year-over-year revenue decline: Total revenue down 5.4% y/y amid Virtual Conference softness and ongoing normalization vs pandemic-era peaks .
    • Non-GAAP operating loss: Non-GAAP opex control improved y/y, but non-GAAP operating loss of $(0.9)M worsened y/y vs $(0.3)M in Q2’24; adjusted EBITDA also below Q2’24 .
    • ARR still slightly down sequentially: Total ARR $127.1M vs $128.2M in Q1; management still expects ARR growth only by Q4, with Q3 seasonally softer .

Financial Results

Revenue and earnings vs prior periods

MetricQ2 2024Q1 2025Q2 2025
Total Revenue ($M)37.349 34.733 35.333
Core Platform Revenue incl. services ($M)36.485 34.152 34.580
GAAP Net Loss ($M)(11.175) (8.703) (7.277)
GAAP Diluted EPS ($)(0.27) (0.21) (0.17)
Non-GAAP Net Income ($M)1.540 (0.358) 0.976
Non-GAAP Diluted EPS ($)0.03 (0.01) 0.02
Non-GAAP Gross Margin (%)77% 77% 77%
Adjusted EBITDA ($M)0.774 (0.957) 0.221
Operating Cash Flow ($M)1.388 3.412 2.567
Free Cash Flow ($M)0.898 1.939 2.075
Cash & Marketable Securities ($M)—181.0 179.6

Q2 actual vs consensus (S&P Global)

MetricQ2 2025 ActualQ2 2025 Consensus*Surprise
Total Revenue ($M)35.333 34.695*+0.638 (~+1.8%)*
Non-GAAP Diluted EPS ($)0.02 0.0075*+$0.0125*

Segment revenue (Core vs. Virtual Conference)

Revenue ($M)Q2 2024Q1 2025Q2 2025
Core Platform – Subscr. & other33.479 31.758 31.885
Core Platform – Prof. services3.006 2.394 2.695
Total Core Platform36.485 34.152 34.580
Virtual Conf. – Subscr. & other0.668 0.543 0.556
Virtual Conf. – Prof. services0.196 0.038 0.197
Total Virtual Conference0.864 0.581 0.753

KPI trends

KPIQ4 2024Q1 2025Q2 2025
Total ARR ($M, end of period)129.7 128.2 127.1
Core Platform ARR ($M)127.3 125.9 125.1
Customers (#)——1,566
$100K+ ARR customers——+5 net adds; ~2/3 of ARR
% ARR in multi-year51% Record (not disclosed) >50%
Avg Core ARR/customer——~$80K (highest ever)
AI ACE paying customers——Mid-teens % of customers

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($M)FY25$136.0–$139.0 $137.7–$138.7 Raised (midpoint +$0.7M)
Core Platform Rev. ($M)FY25$133.7–$136.7 $135.2–$136.2 Narrowed; midpoint +$0.5M
Non-GAAP Op. Loss ($M)FY25$(5.5)–$(3.5) $(5.2)–$(3.8) Narrowed; midpoint unchanged
Non-GAAP EPS ($)FY25$0.02–$0.05 $0.02–$0.05 Maintained
Gross Margin (%)FY25—76–77% New disclosure
Total Revenue ($M)Q3’25—$33.6–$34.2 New
Core Platform Rev. ($M)Q3’25—$33.0–$33.6 New
Non-GAAP Op. Loss ($M)Q3’25—$(1.3)–$(0.7) New
Non-GAAP EPS ($)Q3’25—$0.00–$0.02 (≈45M diluted) New
Gross Margin (%)Q3’25—~76% New
Pro. Services Mix (%)Q3’25—~7% of revenue New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
AI/Technology initiativesQ4: ACE >20% of growth ARR bookings; 2024 ended with strong retention and AI roadmap execution . Q1: Introduced ON24 IQ agents; continued winbacks; new marketing campaign .Mid-teens % of customers paying for AI ACE; launched ON24 Translate (64 languages); five AI pillars incl. segmentation/personalization, content engine, Translate, event automation (IQ), and first-party data insights .Improving adoption and feature breadth.
Enterprise focus & multi-yearQ4: Foundation for growth; multi-year contracts 51% of ARR . Q1: Record % of ARR in multi-year; record % using ≥2 products .$100K+ ARR customers +5; ~two-thirds of ARR from these; >50% ARR in multi-year; avg core ARR/customer ~$80K (highest ever) .Mix shift to larger, longer-term customers accelerating.
Regulated industriesQ1: Focused go-to-market; FS deepen engagement .FS and life sciences ARR increased sequentially; notable multi-year 7-figure life sciences expansion .Strengthening vertical traction.
ARR trajectoryQ4: Aimed to return to ARR growth in 2025 . Q1: Total ARR $128.2M; Core $125.9M .Q2 ARR $127.1M (Core $125.1M); expect Q3 ARR roughly consistent with Q2 and positive in Q4 (+$0–$1M Core); VC ARR to $1.8M by Q4 .Nearing inflection; Q4 positive targeted.
Capital returnsQ1: New $50M buyback authorized .Repurchased $4.3M in Q2 and $2.5M more in Q3-to-date; cumulative ~$6.8M utilized .Active deployment underway.
Margins/FCFQ4: 7th straight profitability beat; FY24 adj. EBITDA $2.0M; FCF positive . Q1: Non-GAAP op loss $(2.1)M; FCF $1.9M .Q2 adj. EBITDA $0.2M; FCF $2.1M; guide Q3 gross margin ~76% and FY 76–77%; expect EBITDA positive 2025 and positive FCF for 2025 (ex non-GAAP items) .Stable GM; consistent FCF.

Management Commentary

  • “Our in-period gross retention was the highest in four years... A mid-teens percentage of our customers are paying for AI-powered ACE... We achieved positive adjusted EBITDA in Q2 and generated positive free cash flow for the sixth consecutive quarter” — Sharat Sharan, CEO .
  • “The average core ARR per customer reached approximately $80,000 at the end of the second quarter, the highest we have ever reported... the percentage of our ARR in multiyear agreements [was] the highest ever at the end of Q2 at over 50%” — Sharat Sharan .
  • “We delivered over the high end of our revenue guidance for Q2... we’re EBITDA profitable in Q2... raising our full year revenue guidance... we expect to be EBITDA and EPS positive in Q3, Q4 and for 2025 as a whole” — Steve Vattuone, CFO .
  • “We expect to return to positive ARR growth in Q4 of this year” — Steve Vattuone .

Q&A Highlights

  • Demand environment and GenAI as catalyst: CEO cited growing AI agenda among enterprises, with stronger traction in FS and life sciences; highlighted win-backs and larger multi-year/expansion deals driving pipeline improvements .
  • Q4 ARR confidence: CFO pointed to beats on revenue, EBITDA, and cash flow in Q2, raised FY revenue, and reiterated expectation for Q4 ARR growth (Core +$0–$1M), while noting seasonal softness in Q3 .
  • Enterprise penetration: CEO emphasized execution improvements, higher average core ARR per customer, and record multi-year mix, driven by adoption of additional products and AI capabilities .

Estimates Context

  • Q2 2025: Revenue $35.33M vs $34.695M consensus*; Non-GAAP diluted EPS $0.02 vs $0.0075 consensus* — both beats.
  • Estimate breadth: 4 estimates for revenue and EPS in Q2 2025*.
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • ON24 is nearing an ARR inflection, with Q3 seasonally softer but Q4 targeted to return to ARR growth, supported by improved retention, enterprise mix, and AI adoption .
  • Quality of revenue is improving: more $100K+ customers, higher average core ARR per customer, and >50% in multi-year commitments should stabilize ARR and reduce churn volatility .
  • Profitability and cash discipline are durable: consistent 77% non-GAAP gross margin, positive FCF and adj. EBITDA, and a strong net cash position ($179.6M) provide downside protection and capital return capacity .
  • AI features (ACE, IQ, Translate) are differentiators that can expand use cases and cross-sell, especially in regulated verticals (FS, life sciences), aiding pipeline conversion and multi-product adoption .
  • FY25 outlook modestly improved on revenue with stable EPS range; near-term catalysts include Q3 delivery vs guidance and evidence of ARR turning positive in Q4; active buyback adds support .
  • Watch Virtual Conference headwinds and y/y comps; sustained Core Platform momentum is key to offsetting legacy declines .
  • For trading: beats vs consensus and raised FY revenue range are positive; confirmation of Q4 ARR growth and continued FCF could be the next stock-moving proof points (consensus from S&P Global, actuals from company)* .

Appendix: Additional Relevant Press Releases During/around Q2 2025

  • $50M share repurchase authorization (May 12, 2025) — foundational to capital return; $6.8M utilized through early Q3 .
  • Vertical/customer momentum and product accolades (Apr–May 2025) — e.g., FS client engagement, #1 in G2 Spring; supports enterprise go-to-market narrative .

Notes:

  • Values retrieved from S&P Global.