Core Insights - The Q3 earnings season has shown surprising gains in small-cap stocks, which have historically underperformed, indicating a potential shift in investor sentiment [1] Group 1: Market Performance - Small-cap stocks are experiencing standout gains during a challenging earnings season, suggesting that investors are relieved by their performance [1] Group 2: Analyst Background - Gary Alexander has extensive experience in technology sectors, both on Wall Street and in Silicon Valley, and has been advising seed-round startups [1]

Group 1 - The article does not provide any specific content related to a company or industry [1]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $34.6 million, with subscription and other platform revenue at $32 million, and professional services revenue at $2.6 million, representing approximately 8% of total revenue [19] - Total ARR at the end of Q3 was $124.5 million, with core platform ARR at $122.4 million [20] - Gross margin in Q3 was 76%, consistent with the year-to-date gross margin of 77% [22][24] - Operating loss for Q3 was $0.4 million, or a negative 1% operating margin, compared to a loss of $0.8 million and a negative 2% margin in the same period last year [24] Business Line Data and Key Metrics Changes - The average core ARR per customer reached over $80,000 at the end of Q3, with the percentage of ARR in multi-year contracts hitting an all-time high [21][22] - Nearly one in five customers are now using and paying for AI solutions, with this number expected to increase [21][37] - The $100,000 and above customer cohort represented approximately two-thirds of total ARR, with 294 customers in this cohort [22] Market Data and Key Metrics Changes - The company experienced deal slippage in Q3, particularly in the life sciences vertical, but expects improved performance in Q4 [5][20] - The company noted a seasonal softness in Q3, which is typically a slower quarter [5][48] Company Strategy and Development Direction - The company is focused on leveraging AI tools to improve operational efficiency and reduce sales and marketing expenses as a percentage of revenue [16][31] - A new partnership with LinkedIn aims to enhance event marketing capabilities and drive customer engagement [7][8][51] - The company is targeting growth in regulated industries, particularly financial services and professional services, which are expected to grow mid-single digits year over year [62] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Q4 performance, expecting significantly better ARR performance compared to Q3 [5][32] - The company anticipates a strong retention rate and growth in AI offerings, which are expected to drive future revenue [32][49] - Management acknowledged short-term pressures in the pharma business but remains confident in the overall growth strategy [48] Other Important Information - The company has received indications of interest for a potential acquisition, which is currently being evaluated [18] - The company has maintained a strong balance sheet with approximately $175 million in cash and investments at the end of Q3 [26] Q&A Session Summary Question: Insights on AI solutions uptake - Management noted that nearly 20% of customers are paying for AI solutions, with expectations for continued growth in this area [36][37] Question: Components of go-to-market efficiency - Management highlighted a reduction in sales and marketing expenses from $25 million to less than $15 million quarterly, attributing improvements to AI deployment and resource reallocation [42][44] Question: Deal slippage from Q3 to Q4 - Management indicated that deal slippage was primarily due to a lack of urgency in closing new business, with many deals already closed in Q4 [48] Question: Monetization opportunities from LinkedIn partnership - Management described the partnership as a game changer, with initial phases focused on customer retention and future phases expected to include monetizable features [51][53] Question: AI search discoverability agenda - Management provided insights into plans for enhancing content discoverability through AI, aiming to make customer-generated content indexable by LLMs [56][57] Question: Performance of new go-to-market strategy - Management reported that the enterprise-focused strategy has resulted in significant growth in regulated industries, which now account for about 50% of the business [62]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $34.6 million, with subscription and other platform revenue at $32 million, and professional services revenue at $2.6 million, representing approximately 8% of total revenue [19] - Total ARR at the end of Q3 was $124.5 million, with core platform ARR at $122.4 million [20] - Gross margin for Q3 was 76%, consistent with the year-to-date gross margin of 77% [22][24] - Net income for Q3 was $1.2 million, or 3 cents per share, compared to $1.1 million, or 2 cents per share in Q3 last year [24] Business Line Data and Key Metrics Changes - The average core ARR per customer reached over $80,000 at the end of Q3, with the percentage of ARR in multi-year contracts hitting an all-time high [5][21] - Nearly 20% of customers are now paying for AI solutions, with expectations for continued growth in this area [6][21] Market Data and Key Metrics Changes - The company experienced deal slippage in Q3, particularly in the life sciences vertical, but expects improved ARR performance in Q4 [5][20] - The $100,000 and above customer cohort represented approximately two-thirds of total ARR, with 294 customers in this cohort [22] Company Strategy and Development Direction - The company is focused on enhancing its AI offerings and has launched new products like AI Translate and AI Propel Plus [6][9] - A significant partnership with LinkedIn aims to transform digital events and improve customer engagement [7][8][51] - The company is targeting a reduction in sales and marketing expenses as a percentage of revenue, aiming for mid-30s in 12 months and low 30s in two years [16][31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Q4 performance, expecting strong gross retention and improved ARR driven by AI offerings and the LinkedIn partnership [32] - The company is evaluating indications of interest for a potential acquisition, with Goldman Sachs as its financial advisor [18] Other Important Information - The company generated positive free cash flow for the seventh consecutive quarter, amounting to $2.7 million in Q3 [25] - A capital return program has utilized approximately $13.8 million for share repurchases since its launch in May [26] Q&A Session Summary Question: Insights on AI solutions impact on contracts and ACV - Management noted that nearly 20% of customers are paying for AI solutions, which is expected to increase, contributing positively to retention and expansion [36][38] Question: Components of go-to-market efficiency - The company has streamlined its go-to-market organization, reducing sales and marketing spending significantly while reallocating resources to high-growth areas [42][44] Question: Deal slippage commonalities - Deal slippage was primarily observed in new business, with a seasonal slowdown noted in Q3, but many deals have already closed in Q4 [47][48] Question: Monetization opportunities from the LinkedIn partnership - The partnership is expected to enhance customer retention and provide monetizable opportunities through lookalike audience data in future phases [53] Question: AI search discoverability agenda - The company is focused on making content discoverable by LLMs, enhancing the indexing of webinars and derivative content [56][57]

Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $34.6 million, with subscription and other platform revenue at $32 million, and professional services revenue at $2.6 million, representing approximately 8% of total revenue [19] - Total ARR at the end of Q3 was $124.5 million, with core platform ARR at $122.4 million [20] - Gross margin in Q3 was 76%, consistent with the year-to-date gross margin of 77% [24][27] - Operating loss for Q3 was $0.4 million, or a negative 1% operating margin, compared to a loss of $0.8 million and a negative 2% margin in the same period last year [25] Business Line Data and Key Metrics Changes - The average core ARR per customer reached over $80,000 at the end of Q3, with the percentage of ARR in multi-year contracts hitting an all-time high [20][42] - The percentage of customers using two or more products also reached an all-time high, with nearly one in five customers paying for AI solutions [21][22] Market Data and Key Metrics Changes - The company experienced deal slippage in Q3, particularly in the life sciences vertical, but expects improved ARR performance in Q4 [5][20] - The $100,000 and above customer cohort represented approximately two-thirds of total ARR, with a total customer count of 1,521 at the end of Q3 [23] Company Strategy and Development Direction - The company is focused on deploying AI tools to improve efficiency and streamline operations, targeting a reduction in sales and marketing expenses as a percentage of revenue [17][31] - A new partnership with LinkedIn aims to enhance event marketing capabilities, allowing seamless integration and audience reach [8][46] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q4, expecting significantly better ARR performance compared to Q3, driven by improved gross retention and AI penetration [32] - The company is evaluating indications of interest for a potential acquisition, with Goldman Sachs as its financial advisor [18] Other Important Information - The company generated positive free cash flow for the seventh consecutive quarter, with Q3 free cash flow at $2.7 million [26] - The company has a strong balance sheet with approximately $175 million in cash and investments at the end of Q3 [27] Q&A Session Summary Question: Insights on AI solutions uptake - Management noted that nearly 20% of customers are paying for AI solutions, with expectations for continued growth in this area [33][34] Question: Components of go-to-market efficiency - The company has streamlined its go-to-market organization, reducing sales and marketing spending significantly while focusing on high-growth potential areas [39] Question: Deal slippage from Q3 to Q4 - Management indicated that deal slippage was primarily due to a lack of urgency in closing new business deals, with many already closed in Q4 [41] Question: Monetization opportunities from LinkedIn partnership - The partnership with LinkedIn is expected to enhance customer retention and provide monetizable opportunities through audience targeting [46][47] Question: AI search discoverability agenda - The company is focused on making content discoverable by LLMs, enhancing the indexing of webinars and derivative content [48][49]

Financial Metrics - Total ARR reached $124.5 million[8] - 77% of customers have ARR greater than $100K[8] - The company has maintained positive free cash flow for the past 7 quarters[8] - 51% of ARR is attributed to multi-year agreements[8] - 66% of ARR comes from customers with ARR exceeding $100K[8] - 39% of customers utilize 2 or more products[8] Market Opportunity and Digital Transformation - The company estimates a large total addressable market (TAM) of $42 billion[8] - Approximately 80% of B2B sales interactions are expected to occur in digital channels by 2025[15] - Nearly 70% of B2B buyers prefer to conduct their own research online[16, 17] - 47% of marketing teams are projected to use AI for customer engagement[18, 19]

Revenue Performance - Total revenue for the three months ended September 30, 2025, was $34,602,000, a decrease of 4.7% compared to $36,325,000 for the same period in 2024[17] - Subscription and other platform revenue for the nine months ended September 30, 2025, was $96,729,000, down 5.5% from $102,836,000 in 2024[17] - Revenue from the United States for the three months ended September 30, 2025, was $26.842 million, down from $27.902 million in 2024, representing a decline of 3.8%[38] - The Company recorded $34.602 million in revenue for the three months ended September 30, 2025, down from $36.325 million in 2024, reflecting a 5% decline[92] Net Loss and Profitability - Net loss for the three months ended September 30, 2025, was $6,375,000, compared to a net loss of $11,406,000 for the same period in 2024, representing a 44.5% improvement[17] - The net loss for the nine months ended September 30, 2025, was $22.355 million, an improvement from a net loss of $33.284 million for the same period in 2024[28] - The net loss per share for the three months ended September 30, 2025 was $(0.15), an improvement from $(0.27) in the same period of 2024[86] Operating Expenses - Total operating expenses for the three months ended September 30, 2025, were $33,852,000, down from $40,332,000 in 2024, indicating a reduction of 16.0%[17] - The total stock-based compensation expense for the three months ended September 30, 2025, was $7.258 million, compared to $11.876 million for the same period in 2024[80] - The company recorded stock-based compensation expense of $21.766 million for the nine months ended September 30, 2025, down from $34.289 million in 2024[28] - Total restructuring costs for the three months ended September 30, 2025 amounted to $0.107 million, a decrease of 78% compared to $0.486 million in the same period of 2024[89] Cash and Liquidity - Cash and cash equivalents increased to $47,241,000 as of September 30, 2025, from $14,933,000 as of December 31, 2024[15] - Cash provided by operating activities for the nine months ended September 30, 2025, was $8.512 million, compared to $3.821 million for the same period in 2024[28] - The total cash, cash equivalents, and restricted cash at the end of the period was $47.329 million, significantly up from $11.108 million at the end of September 2024[28] - As of September 30, 2025, the Company’s cash equivalents and marketable securities total $168.365 million[51] Assets and Liabilities - Total assets decreased to $224,788,000 as of September 30, 2025, from $250,953,000 as of December 31, 2024[15] - Total liabilities decreased to $80,463,000 as of September 30, 2025, from $91,541,000 as of December 31, 2024[15] - The accumulated deficit increased to $(370,024,000) as of September 30, 2025, from $(347,669,000) as of December 31, 2024[15] Future Commitments and Plans - The company entered into a 65-month lease agreement for its new headquarters in San Francisco, with total committed lease payments of approximately $5.4 million, commencing in October 2025[61] - The company has $38.6 million available for future share repurchases under the 2025 Repurchase Program, which allows discretionary repurchases of common stock[71] - The Company expects to incur additional restructuring costs of $0.5 million to $0.8 million in the fourth quarter of 2025[90] Performance Obligations and Deferred Revenue - As of September 30, 2025, the total amount of remaining performance obligations is $122.1 million, with $58.1 million billed and $64.0 million unbilled, expecting to recognize 72% as revenue in the next 12 months[43] - Deferred revenue recognized during the three months ended September 30, 2025, that was included in deferred revenue at the beginning of the period was $10.5 million[42] Other Financial Metrics - The fair value of marketable securities as of September 30, 2025, is $127.926 million, down from $167.803 million as of December 31, 2024[47] - The Company had outstanding standby letters of credit of $1.4 million as of September 30, 2025, as a guarantee for its leased space[57] - The revolving line of credit was amended to decrease borrowing capacity from $50.0 million to $25.0 million, with a maturity date in August 2026[57] - The prime referenced rate for the revolving credit facility was 7.25% as of September 30, 2025, down from 7.50% as of December 31, 2024[58] Legal and Tax Matters - The company believes it is reasonably possible that a loss will result from sales and use tax assessments in the range of zero to $0.5 million, but has not recorded an accrual as of September 30, 2025[64] - The company has not recorded any accrued litigation expense related to ongoing legal proceedings, as it is unable to reasonably estimate a possible loss at this early stage[65] Stock and Shareholder Information - The company reported a weighted-average share count of 42,654,869 for the three months ended September 30, 2025[17] - As of September 30, 2025, the company had 15,376,506 shares of common stock reserved for future issuance under its equity incentive and employee share purchase plans[67] - In the three months ended September 30, 2025, the company repurchased 1,287,003 shares at an average price of $5.45 per share, totaling $7.1 million[71]

Financial Performance - Total revenue for Q3 2025 was $34.6 million, with Core Platform revenue of $34.0 million[5] - Total Annual Recurring Revenue (ARR) reached $124.5 million as of September 30, 2025, with Core Platform ARR at $122.4 million[6] - GAAP net loss was $6.4 million, or $(0.15) per diluted share, an improvement from a net loss of $11.4 million, or $(0.27) per diluted share in Q3 2024[6] - Non-GAAP net income was $1.2 million, or $0.03 per diluted share, compared to $1.1 million, or $0.02 per diluted share in Q3 2024[6] - Free cash flow for the quarter was $2.2 million, up from $0.1 million in Q3 2024[6] - Total revenue for Q3 2025 was $34.602 million, a decrease of 4.7% from $36.325 million in Q3 2024[29] - Subscription and other platform revenue for the nine months ended September 30, 2025, was $96.729 million, down 5.5% from $102.836 million in the same period of 2024[29] - Gross profit for Q3 2025 was $25.863 million, compared to $26.987 million in Q3 2024, reflecting a gross margin of 75%[29][37] - Operating expenses for Q3 2025 totaled $33.852 million, a decrease of 16.1% from $40.332 million in Q3 2024[29] - Net loss for Q3 2025 was $6.375 million, an improvement from a net loss of $11.406 million in Q3 2024[29] - Non-GAAP gross profit for Q3 2025 was $26.416 million, compared to $27.942 million in Q3 2024, with a non-GAAP gross margin of 76%[37] - Total revenue for the three months ended September 30, 2025, was $34,602, a decrease of 4.0% compared to $36,325 in the same period of 2024[48] - Subscription and other platform revenue for the core platform was $31,449 for the three months ended September 30, 2025, down from $33,272 in 2024, representing a decline of 5.5%[48] - Non-GAAP net income for the three months ended September 30, 2025, was $1,238, compared to $1,096 in the same period of 2024, reflecting an increase of 12.9%[42] - GAAP net loss for the three months ended September 30, 2025, was $(6,375), an improvement from $(11,406) in 2024[41] - Free cash flow for the three months ended September 30, 2025, was $2,162, significantly up from $143 in the same period of 2024[46] - Non-GAAP operating loss for the three months ended September 30, 2025, was $(376), compared to $(843) in 2024, indicating a reduction of 55.5%[40] - Total core platform revenue for the nine months ended September 30, 2025, was $102,702, down from $108,908 in 2024, a decrease of 5.7%[48] - Adjusted EBITDA for the three months ended September 30, 2025, was $673, compared to $228 in the same period of 2024, showing an increase of 195.7%[41] Cash and Securities - Cash, cash equivalents, and marketable securities totaled $175.2 million as of September 30, 2025[6] - Total cash, cash equivalents, and restricted cash at the end of Q3 2025 was $47.329 million, significantly up from $11.108 million at the end of Q3 2024[35] - Cash provided by operating activities for the nine months ended September 30, 2025, was $8.512 million, compared to $3.821 million in the same period of 2024[35] Restructuring and Expenses - The company reported stock-based compensation expense of $7.258 million for Q3 2025, down from $11.876 million in Q3 2024[35] - The company incurred restructuring costs of $107 thousand in Q3 2025, compared to $486 thousand in Q3 2024[32] - Operating expenses for Q3 2025 totaled $33.852 million, a decrease of 16.1% from $40.332 million in Q3 2024[29] Future Outlook - ON24 expects Q4 2025 total revenue to be between $33.9 million and $34.5 million, with Core Platform revenue in the range of $33.3 million to $33.9 million[11] AI Solutions - Nearly 20% of customers are now utilizing ON24's AI-powered solutions, indicating a growing adoption of AI offerings[3] - ON24 AI Propel+ was introduced as a new solution to enhance virtual events with AI-generated content[11] Collaboration - The company announced a collaboration with LinkedIn to enhance event marketing capabilities[11] Stock Information - The weighted average common stock outstanding for basic and diluted was 42,654,869 for the three months ended September 30, 2025, compared to 41,870,709 in 2024[44] Professional Services - Total professional services revenue for the three months ended September 30, 2025, was $2,615, slightly up from $2,465 in 2024, an increase of 6.1%[48]

Core Insights - ON24 is set to report earnings after market hours, with analysts expecting a revenue decline of 6.8% year on year to $33.85 million, consistent with a 7.4% decrease from the same quarter last year [2] - The company previously reported revenues of $35.33 million, down 5.4% year on year, but beat analysts' revenue expectations by 1.9% [1] - ON24 has a history of exceeding Wall Street's expectations, beating revenue estimates by an average of 2.8% over the past two years [3] Revenue and Earnings Expectations - Analysts expect adjusted earnings to be $0.01 per share for the upcoming quarter [2] - The average analyst price target for ON24 is $5, while the current share price is $4.94, indicating a slight potential upside [5] Peer Performance - In the sales and marketing software segment, AppLovin reported year-on-year revenue growth of 17.3%, beating expectations by 4.5%, while Integral Ad Science saw a revenue increase of 15.6%, exceeding estimates by 3.4% [4] - ON24's share price has decreased by 7.3% over the past month, contrasting with the stable performance of its peers [5]

[Front Matter](index=1&type=section&id=Front%20Matter) - Company Name: **ON24, INC.**[2](index=2&type=chunk) - Report Type: **10-Q Quarterly Report**[1](index=1&type=chunk)[2](index=2&type=chunk) - Report Quarter End Date: **June 30, 2025**[2](index=2&type=chunk) - Stock Ticker: **ONTF (New York Stock Exchange)**[4](index=4&type=chunk) - As of July 31, 2025, the number of common shares outstanding was **42,306,290**[5](index=5&type=chunk) [SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements based on management's beliefs and current information, primarily found in the "Risk Factors" and "Management's Discussion and Analysis" sections, which involve known and unknown risks and uncertainties that could cause actual results to differ materially from expectations, with no obligation to update these statements except as required by law - Forward-looking statements address the company's ability to grow revenue, performance fluctuations, attract new customers, market competition, macroeconomic conditions, cybersecurity risks, and intellectual property[13](index=13&type=chunk) - The report warns investors not to place undue reliance on these forward-looking statements, as actual future results may differ materially from expectations[11](index=11&type=chunk) [PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section provides ON24's unaudited condensed consolidated financial statements as of June 30, 2025, including balance sheets, statements of operations, comprehensive loss, changes in stockholders' equity, and cash flows, along with related notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, the company's total assets were $235.1 million, a decrease from $250.95 million at the end of 2024, with total liabilities decreasing from $91.54 million to $85.10 million, and stockholders' equity decreasing from $159.41 million to $150.02 million, while cash and cash equivalents significantly increased to $37.73 million Balance Sheet Key Data (in thousands of dollars) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $37,732 | $14,933 | | Total current assets | $214,868 | $228,330 | | **Total assets** | **$235,116** | **$250,953** | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $82,128 | $88,199 | | **Total liabilities** | **$85,099** | **$91,541** | | **Total stockholders' equity** | **$150,017** | **$159,412** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company's total revenue for Q2 and H1 2025 was $35.33 million and $70.07 million, respectively, both lower than the prior year's $37.35 million and $75.08 million, while net loss narrowed to $7.28 million in Q2 (vs. $11.18 million prior year) and $15.98 million in H1 (vs. $21.88 million prior year) Operating Performance Comparison (in thousands of dollars, except per share amounts) | Metric | 2025 Q2 | 2024 Q2 | 2025 H1 | 2024 H1 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $35,333 | $37,349 | $70,066 | $75,076 | | Gross profit | $26,532 | $27,811 | $52,162 | $55,756 | | Operating loss | $(9,172) | $(13,059) | $(19,638) | $(25,533) | | **Net loss** | **$(7,277)** | **$(11,175)** | **$(15,980)** | **$(21,878)** | | Net loss per share (basic and diluted) | $(0.17) | $(0.27) | $(0.38) | $(0.53) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In the first half of 2025, net cash provided by operating activities improved to $5.98 million from $3.53 million in the prior year, investing activities provided $24.73 million primarily due to reduced purchases and maturities of marketable securities, and financing activities used $8.10 million, mainly for stock repurchases Cash Flow Summary (for the six months ended June 30, in thousands of dollars) | Item | 2025 | 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $5,979 | $3,526 | | Net cash from investing activities | $24,733 | $(31,941) | | Net cash from financing activities | $(8,099) | $(9,114) | | Net increase (decrease) in cash and equivalents | $22,806 | $(37,726) | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) The notes detail the company's accounting policies, revenue recognition, contract balances, equity compensation, legal proceedings, and restructuring activities, highlighting total remaining performance obligations of **$131.2 million** as of June 30, 2025, a **$50 million** stock repurchase program approved by the board, and workforce reductions for cost structure optimization - As of June 30, 2025, the company's total remaining performance obligations (RPO) amounted to **$131.2 million**, with **72%** expected to be recognized as revenue within the next 12 months[40](index=40&type=chunk) - In May 2025, the Board of Directors approved a **$50 million** stock repurchase program, with **$45.7 million** remaining available for future repurchases as of June 30, 2025[67](index=67&type=chunk)[69](index=69&type=chunk) - In the first half of 2025, the company continued workforce reductions to lower its cost structure, incurring **$1.506 million** in restructuring costs, primarily for severance and one-time termination benefits[87](index=87&type=chunk) - The company faces a securities class action lawsuit regarding its IPO, which was dismissed by the trial court but appealed by the plaintiffs, with the company believing the allegations lack merit but unable to reasonably estimate potential losses[62](index=62&type=chunk) [Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's business overview, performance drivers, key business metrics, and operating results, noting a **7%** year-over-year revenue decline to **$70.07 million** in the first half of 2025 but a narrowed net loss, with key metrics showing declining customer count and Annual Recurring Revenue (ARR), as the company addresses challenges through cost management, product innovation (e.g., AI-driven ACE and ON24 IQ), and prudent expense control [Overview and Key Factors](index=25&type=section&id=Overview%20and%20Key%20Factors) The company provides a cloud-based intelligent engagement platform for sales and marketing, with recent performance influenced by cost management, new customer acquisition, existing customer retention and expansion, platform innovation (especially AI capabilities), and international expansion, having launched new products like ON24 Lumina and ON24 IQ to enhance competitiveness - The company focuses on reducing net loss through cost management and continued workforce reductions in the first half of 2025[108](index=108&type=chunk) - The company plans to drive growth through continuous product innovation, including the launch of AI-driven ACE, the Lumina design system, and ON24 IQ intelligent agents[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[112](index=112&type=chunk) - As of June 30, 2025, the company had **1,566** customers[106](index=106&type=chunk) [Key Business Metrics](index=28&type=section&id=Key%20Business%20Metrics) As of June 30, 2025, the company's total customer count was **1,566** and Annual Recurring Revenue (ARR) was **$127.1 million**, both declining from prior periods, with the customer count decrease primarily due to a net reduction in small and medium-sized business (SMB) customers, and ARR decline attributed to customer churn and reduced new customer acquisition Key Business Metrics Trends (amounts in thousands of dollars) | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Customer count | 1,566 | 1,645 | 1,682 | | Annual Recurring Revenue (ARR) | $127,135 | $129,659 | $133,702 | | Core Platform ARR | $125,084 | $127,341 | $131,032 | | Customers contributing over $100K ARR | 304 | 305 | 319 | - The decline in customer count is primarily due to a net reduction in SMB customers, reflecting marketing budget pressures in some organizations[115](index=115&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Total revenue for the first half of 2025 decreased **7%** year-over-year to **$70.07 million**, mainly due to reduced subscription and platform revenue, while gross margin remained stable at **74%**, and all operating expenses (sales & marketing, R&D, G&A) decreased year-over-year due to lower personnel-related costs and stock-based compensation, leading to a narrowed operating and net loss - Total revenue decreased **7%** in the first half of 2025, primarily due to a reduction in subscription revenue driven by fewer customers and lower ARR[123](index=123&type=chunk)[124](index=124&type=chunk) - Sales and marketing expenses decreased **10%** year-over-year in the first half of 2025, mainly due to reduced personnel-related costs from restructuring activities[130](index=130&type=chunk) - Research and development expenses decreased **8%** year-over-year in the first half of 2025, primarily due to lower stock-based compensation expense[132](index=132&type=chunk) - General and administrative expenses decreased **18%** year-over-year in the first half of 2025, primarily due to a **$3.6 million** reduction in stock-based compensation expense[136](index=136&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company held **$179.6 million** in cash, cash equivalents, and marketable securities, deeming its existing liquidity sufficient to meet needs for at least the next 12 months, having initiated a **$50 million** stock repurchase program in May 2025, and generating **$6 million** in net cash flow from operating activities in the first half, an improvement from the prior year - As of June 30, 2025, the company held **$179.6 million** in cash, cash equivalents, and marketable securities[141](index=141&type=chunk) - In the first half of 2025, the company spent **$8.8 million** on stock repurchases, with **$43.2 million** remaining available under the new **$50 million** repurchase program as of August 8, 2025[142](index=142&type=chunk) - The company's revolving credit facility with Comerica Bank was amended in August 2024, reducing the limit from **$50 million** to **$25 million**, and remained unused as of the reporting period end[154](index=154&type=chunk) [Item 3 Quantitative and Qualitative Disclosures about Market Risk](index=39&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's market risks primarily stem from foreign currency exchange rates and interest rate fluctuations, with limited foreign exchange exposure due to most revenue being USD-denominated, and interest rate risk mainly impacting its investment portfolio, which is managed by investing in high-quality, highly liquid securities, with a sensitivity analysis provided for interest rate changes on marketable securities' fair value - The company's market risks have not significantly changed since the 2024 annual report, primarily consisting of foreign exchange and interest rate risks[159](index=159&type=chunk) Interest Rate Risk Sensitivity Analysis (as of June 30, 2025, in thousands of dollars) | Parallel Shift in Interest Rates | Assumed Fair Value | | :--- | :--- | | -150 BPS | $143,213 | | -100 BPS | $142,751 | | -50 BPS | $142,290 | | **Current Fair Value** | **$141,828** | | +50 BPS | $141,366 | | +100 BPS | $140,905 | | +150 BPS | $140,443 | [Item 4 Controls and Procedures](index=40&type=section&id=Item%204%20Controls%20and%20Procedures) Management, including the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level, with no significant changes in internal control over financial reporting during the quarter - The company's CEO and CFO concluded that the disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[164](index=164&type=chunk) - There were no material changes to the company's internal control over financial reporting during the three months ended June 30, 2025[165](index=165&type=chunk) [PART II OTHER INFORMATION](index=40&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company, its officers, and IPO underwriters are defendants in a securities class action lawsuit concerning its IPO, alleging material misstatements or omissions in the registration statement and prospectus, which was dismissed by the district court in March 2024 but appealed by the plaintiffs, with the company believing the allegations are without merit - The company is facing a securities class action lawsuit regarding its IPO, alleging material misstatements in its prospectus[166](index=166&type=chunk) - Although the trial court dismissed the lawsuit in March 2024, the plaintiffs have appealed, and the litigation remains ongoing[166](index=166&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks associated with investing in the company's common stock, including business and industry risks (e.g., revenue decline, intense competition, macroeconomic impacts, technological changes, cybersecurity threats), legal and compliance risks (e.g., privacy laws, export controls, intellectual property disputes), and risks related to stock ownership (e.g., price volatility, equity concentration, anti-takeover provisions) [Risks Related to Our Business and Our Industry](index=41&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Our%20Industry) The company faces multiple business and industry risks, including recent revenue declines and uncertain future growth, intense market competition, adverse macroeconomic conditions potentially reducing customer marketing spend, reliance on and risks associated with new technologies like AI, and threats from cybersecurity attacks and data breaches, in addition to dependence on third-party infrastructure where service interruptions or performance issues could harm the business - The company's revenue has declined in recent years, and future growth is uncertain due to factors like reduced customer budgets and increased market competition[171](index=171&type=chunk) - Market competition is intense, with competitors including Zoom, Microsoft, and Cisco, who may offer lower-priced or broader products[179](index=179&type=chunk) - Cybersecurity attacks and data breaches pose significant risks, potentially leading to regulatory actions, litigation, and reputational damage, as exemplified by a ransomware incident in June 2021[192](index=192&type=chunk) - The company's increasing use of artificial intelligence (AI) in its platform introduces new risks such as data errors, infringement, and algorithmic flaws[188](index=188&type=chunk) [Risks Related to Legal, Regulatory, and Intellectual Property](index=54&type=section&id=Risks%20Related%20to%20Legal%2C%20Regulatory%2C%20and%20Intellectual%20Property) The company faces risks from a complex global legal and regulatory environment, including challenges in complying with evolving privacy laws (e.g., GDPR and CCPA) that may restrict data processing and marketing activities, adherence to US and other countries' export controls and sanctions laws, and significant risks from intellectual property infringement claims and difficulties in protecting its own intellectual property - The company's operations are subject to strict and evolving global data privacy laws, such as GDPR and CCPA, with non-compliance potentially leading to substantial fines and business restrictions[233](index=233&type=chunk)[239](index=239&type=chunk) - As an international company, its business is restricted by US and other countries' export controls, economic sanctions, and anti-corruption laws like the FCPA, with violations leading to severe consequences[246](index=246&type=chunk)[257](index=257&type=chunk) - The company may face intellectual property infringement lawsuits from third parties or encounter difficulties in protecting its own patents, trademarks, and trade secrets, which could harm its brand and competitiveness[264](index=264&type=chunk)[268](index=268&type=chunk) [Risks Related to Ownership of Our Common Stock](index=65&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Investing in the company's common stock carries multiple risks, including that stock repurchase programs may not enhance long-term shareholder value and consume cash, share price can fluctuate significantly due to market factors, performance changes, and analyst ratings, high equity concentration may limit retail shareholder influence, and anti-takeover provisions in the company's charter may deter potential changes in control - Stock repurchase programs, such as the **$50 million** plan approved in May 2025, consume cash reserves and may increase stock price volatility, not necessarily enhancing long-term shareholder value[286](index=286&type=chunk) - As of February 28, 2025, the company's executive officers, directors, and 5% or greater shareholders collectively controlled approximately **55%** of the shares, indicating high equity concentration[290](index=290&type=chunk) - The company's certificate of incorporation and Delaware law (e.g., Section 203) contain anti-takeover provisions that could delay or prevent third-party acquisitions, limiting shareholders' opportunities to receive a premium[292](index=292&type=chunk)[295](index=295&type=chunk) - The company reached an agreement with activist investor Indaba Capital Management L.P. to avoid a proxy contest at the 2026 annual meeting of stockholders[304](index=304&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the company's stock repurchase activities during the second quarter of 2025, disclosing the number of common shares repurchased, the average price per share, and the maximum amount remaining available for future repurchases under publicly announced plans Q2 2025 Stock Repurchase Summary | Period | Total Shares Repurchased | Average Price Per Share | Remaining Amount Under Plan | | :--- | :--- | :--- | :--- | | May 2025 | 387,261 | $5.45 | $47.9 million | | June 2025 | 406,685 | $5.50 | $45.7 million | | **Total** | **793,946** | **$5.48** | **$45.7 million** | - Repurchase activities were conducted under the **$50 million** 2025 repurchase program authorized by the Board of Directors in May 2025[313](index=313&type=chunk) [Item 5. Other Information](index=72&type=section&id=Item%205.%20Other%20Information) This section discloses that the company's Chief Executive Officer, Sharat Sharan, adopted a Rule 10b5-1 trading plan on May 14, 2025, which provides for the sale of a portion of net shares acquired upon option exercise and RSU/PSU vesting, subject to certain limitations, through February 28, 2026 - Company CEO Sharat Sharan adopted a Rule 10b5-1 trading plan on May 14, 2025, for the sale of shares acquired through equity awards[316](index=316&type=chunk)