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OI

ON24 INC. (ONTF)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue of $34.6M and non-GAAP EPS of $0.03 both exceeded the company’s guidance; gross margin remained strong at 76% non-GAAP, and free cash flow was positive for the seventh consecutive quarter .
  • ON24 raised FY2025 guidance: total revenue to $138.6–$139.2M and non-GAAP EPS to $0.05–$0.06; Q4 guidance calls for $33.9–$34.5M revenue and non-GAAP EPS of $0.01–$0.02 .
  • Management disclosed indications of interest for a potential acquisition; the Board is evaluating with Goldman Sachs, representing a potential stock reaction catalyst alongside the new LinkedIn integration .
  • While ARR softened sequentially (Q3 total ARR $124.5M vs. $127.1M in Q2), management expects a meaningful improvement in Q4 ARR, with life sciences headwinds and deal slippage cited as near-term pressures .

What Went Well and What Went Wrong

What Went Well

  • Revenue/earnings beat and strong profitability metrics: non-GAAP EPS $0.03; adjusted EBITDA positive ($0.7M); free cash flow $2.2M; gross margin 76% non-GAAP .
  • AI momentum and product breadth: “nearly one in five customers” paying for AI offerings; expanding AI portfolio with AI Propel+ and ON24 Translate; broader multi-product adoption at all-time highs .
  • Strategic LinkedIn partnership: integrated ON24 events into LinkedIn Events with frictionless registration and promotion, laying groundwork for future monetization via lookalike audiences; “game changer” for customer acquisition and engagement .

Quote: “We are pleased to deliver Q3 results above guidance…With nearly one in five customers buying ON24’s AI offerings… and by recently partnering with LinkedIn, we are driving the next generation of event marketing.” — Sharat Sharan, CEO .

What Went Wrong

  • ARR softness and deal slippage: total ARR fell to $124.5M (from $127.1M in Q2); “slower new growth bookings,” especially in life sciences; $6–8M of deals slipped into Q4 (60–65% closed early in Q4) .
  • Life sciences headwinds: short‑term pressure cited over the last 6–9 months despite strong historical traction, contributing to Q3 growth softness .
  • GAAP losses persist: GAAP operating loss $8.0M and GAAP net loss $6.4M (−$0.15 per share), highlighting ongoing non‑cash charges and restructuring/legal costs despite positive non-GAAP EPS and FCF .

Financial Results

Revenue, EPS, Margins (quarterly)

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Total Revenue ($USD)$36.325M $34.733M $35.333M $34.602M
GAAP EPS ($USD)$0.02 $(0.21) $(0.17) $(0.15)
Non-GAAP EPS ($USD)$0.02 $(0.01) $0.02 $0.03
GAAP Gross Margin (%)74% 74% 75% 75%
Non-GAAP Gross Margin (%)77% 77% 77% 76%

Notes: Q3 2024 EPS shown per non-GAAP net income disclosure (press release summary); GAAP EPS for Q3 2025 from the operations table .

Segment Revenue Breakdown

SegmentQ1 2025Q2 2025Q3 2025
Core Platform Subscription & Other ($USD)$31.758M $31.885M $31.449M
Core Platform Professional Services ($USD)$2.394M $2.695M $2.521M
Total Core Platform ($USD)$34.152M $34.580M $33.970M
Virtual Conf. Subscription & Other ($USD)$0.543M $0.556M $0.538M
Virtual Conf. Professional Services ($USD)$0.038M $0.197M $0.094M
Total Virtual Conference ($USD)$0.581M $0.753M $0.632M
Total Revenue ($USD)$34.733M $35.333M $34.602M

KPIs and Cash Flow

KPIQ1 2025Q2 2025Q3 2025
Total ARR ($USD)$128.2M $127.1M $124.5M
Core Platform ARR ($USD)$125.9M $125.1M $122.4M
Cash, Cash Equivalents & Marketable Securities ($USD)$181.0M $179.6M $175.2M
Cash from Operations ($USD)$3.412M $2.567M $2.533M
Free Cash Flow ($USD)$1.939M $2.075M $2.162M
Share Repurchases (Period) ($USD)$4.493M $8.841M YTD $7.011M in Q3; $13.8M since May

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD)FY 2025$137.7M–$138.7M $138.6M–$139.2M Raised
Core Platform Revenue ($USD)FY 2025$135.2M–$136.2M $136.0M–$136.6M Raised
Non-GAAP Operating Loss ($USD)FY 2025$5.2M–$3.8M $4.2M–$3.6M Improved (narrower loss)
Non-GAAP EPS ($USD)FY 2025$0.02–$0.05 $0.05–$0.06 Raised
Total Revenue ($USD)Q4 2025N/A$33.9M–$34.5M New
Core Platform Revenue ($USD)Q4 2025N/A$33.3M–$33.9M New
Gross Margin (%)Q4 2025N/A76%–77% New
Non-GAAP Operating Loss ($USD)Q4 2025N/A$0.8M–$0.2M New
Non-GAAP EPS ($USD)Q4 2025N/A$0.01–$0.02 (44.8M diluted shrs) New
Restructuring Charge ($USD)Q4 2025N/A$0.5M–$0.8M (excluded from non-GAAP) New
ARR OutlookQ4 2025N/ACore ARR −1% to +$0.5M vs Q3; VC ARR $2M YE25 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2025)Trend
AI/Technology InitiativesQ1/Q2: AI ACE adoption rising; ON24 IQ agents launched; multi‑product usage at records ~20% of customers pay for AI; launches AI Propel+ and Translate; plans for agentic AI, social publishing, LLM search discoverability Accelerating product cadence and adoption
Partnerships (LinkedIn)Not present in Q1; no mention in Q2 Phase 1 integration live; frictionless registration and promotion; monetization via lookalike audiences expected by Q1 2026 New strategic channel; potential top-line driver
Regulated Industries FocusQ2: growth in financial services & life sciences ARR; enterprise traction 50% of business from regulated verticals; FS/professional services mid‑single‑digit YoY growth; ~90% gross retention Mix shift toward higher retention segments
Life Sciences DemandQ2: sector growing sequentially Short‑term pressure; contributed to slower new bookings Near-term headwind
Go-to-market EfficiencyQ1: new $50M buyback; leadership augments; campaign launch S&M down to $14.4M (42% of revenue); targeted double-digit % improvement over 2 years Improving spend efficiency
Capital ReturnQ1: $50M program initiated ~$7M in Q3; ~$13.8M used since May; prior programs returned $191M Ongoing return; supports valuation
Strategic AlternativesNoneBoard evaluating indications of interest with Goldman Sachs Potential M&A catalyst

Management Commentary

  • “We delivered Q3 results above guidance…nearly one in five customers buying ON24’s AI offerings… partnering with LinkedIn…driving the next generation of event marketing.” — Sharat Sharan, CEO .
  • “Average core ARR per customer reached its highest level ever at over $80,000… percentage of ARR in multi‑year agreements hit another all‑time high… customers using two or more products hit an all‑time high.” — Steve Vattuone, CFO .
  • “This [LinkedIn] collaboration… will be a game changer… publish events directly on LinkedIn… lookalike audiences… monetizable skew that will impact our top line.” — Sharat Sharan .
  • “We have streamlined our go-to-market… reduced S&M quarterly spending from ~$25M in mid‑2022 to < $15M in Q3… deploying AI to increase efficiency… return to ARR growth in 2026.” — Steve Vattuone .

Q&A Highlights

  • AI monetization and expansion: Management expects AI offerings to become the largest driver of expansion next year; 40–50% of new deals include AI modules .
  • Sales & marketing efficiency: S&M down ~$10M per quarter from mid‑2022; AI tools and resource reallocation toward regulated industries drive sustainable reductions without impairing enterprise momentum .
  • Deal slippage and pipeline: $6–8M of deals slipped from Q3 to Q4, with 60–65% already closed early in Q4; Q4 ARR targeted to be among best gross retention quarters in 4–5 years .
  • LinkedIn integration roadmap: Phase 1 live; monetizable lookalike audience features targeted by February/Q1; expected top-line inflection as integration tightens .
  • Enterprise focus execution: Regulated industries now ~50% of mix; FS/pro services growing mid‑single digits; win-backs highlight platform differentiation vs. generic collaboration tools .

Estimates Context

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue Consensus Mean ($USD)$35.618M*$34.227M*$34.695M*$33.872M*
Actual Revenue ($USD)$36.325M $34.733M $35.333M $34.602M
Primary EPS Consensus Mean ($USD)$(0.00065)*$(0.021)*$0.0075*$0.01*
Actual Non-GAAP EPS ($USD)$0.02 $(0.01) $0.02 $0.03

Values retrieved from S&P Global.*

  • Q3 2025 beat: revenue +$0.73M vs. consensus; EPS +$0.02 vs. consensus .
  • Q2 2025 beat: revenue +$0.64M; EPS +$0.0125 .
  • Q1 2025 “less negative” EPS versus consensus; modest revenue beat .

Key Takeaways for Investors

  • ON24 delivered another operational beat with positive FCF, strong gross margin and raised FY guidance, while acknowledging near-term ARR softness from life sciences and summer seasonality .
  • The LinkedIn integration is strategically important, expanding funnel reach and lowering friction; monetizable audience products by Q1 could become a top‑line catalyst into 2026 .
  • AI products are scaling rapidly and are embedded in new deals and expansions; management expects AI modules to become the largest expansion driver next year .
  • Go-to-market efficiency is a tangible profit lever: S&M spend down materially since 2022; the company targets mid‑30s S&M/revenue within 12 months and low‑30s within two years, supporting margin accretion .
  • Capital return continues with $13.8M repurchased since May and a strong cash/investments balance ($175M), bolstering downside protection and optionality .
  • Strategic alternatives (indications of interest) introduce scenario optionality and potential re-rating; focus diligence on ARR trajectory, AI monetization pace, and enterprise/regulatory vertical mix .
  • Near term, watch Q4 ARR performance (range −1% to +$0.5M vs. Q3) and gross retention; medium term thesis hinges on AI monetization, LinkedIn partnership ramp, and continued mix shift to high‑retention verticals .