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ON24, Inc. (NYSE:ONTF) Q1 2023 Earnings Conference Call May 9, 2023 5:00 PM ET Company Participants Lauren Sloane - Investor Relations Sharat Sharan - Co-Founder and Chief Executive Officer Steve Vattuone - Chief Financial Officer Conference Call Participants Scott Berg - Needham Patrick Schulz - Baird Dan Reagan - Canaccord Genuity Operator Greetings, and welcome to the ON24 First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only-mode. [Operator Instructions] As a r ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _____ Commission File Number: 001-39965 ON24, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 94-3292599 (State ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _____ Commission File Number: 001-39965 ON24, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 94-3292599 (State or o ...

ON24, Inc. (NYSE:ONTF) Q4 2022 Earnings Conference Call February 28, 2023 5:00 PM ET Company Participants Lauren Sloane - IR Sharat Sharan - Co-Founder and CEO Steve Vattuone - CFO Conference Call Participants Arjun Bhatia - William Blair Patrick Schulz - Robert W. Baird DJ Hynes - Canaccord Noah Herman - JPMorgan Scott Berg - Needham Hannah Rudolph - Piper Sandler Operator Greetings and welcome to the ON24 Fourth Quarter and Full Year 2022 Financial Results. At this time all participants are in listen-onl ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _____ Commission File Number: 001-39965 ON24, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 94-3292599 (S ...

ON24, Inc. (NYSE:ONTF) Q3 2022 Earnings Conference Call November 9, 2022 5:00 PM ET Company Participants Lori Barker - Investor Relations Sharat Sharan - Co-Founder, President and Chief Executive Officer Steven Vattuone - Chief Financial Officer Conference Call Participants Rob Oliver - Robert W. Baird & Co., Inc. Faith Brunner - William Blair & Company Noah Herman - JPMorgan Chase & Co. Michael Rackers - Needham & Company, LLC David Hynes - Canaccord Genuity Corp. Thomas Blakey - KeyBanc Capital Markets In ...

[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 assumptions, which involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially - This report contains forward-looking statements based on management's beliefs and assumptions, which involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[9](index=9&type=chunk)[10](index=10&type=chunk) - Key risks include the ability to attract and expand sales to customers, potential decline in revenue growth, fluctuations in performance, competition, adverse economic conditions, impact of COVID-19, technology disruptions, cybersecurity attacks, and compliance with various laws and regulations[12](index=12&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(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, revenue disaggregation, marketable securities, fair value measurements, balance sheet components, business combinations, intangible assets, leases, credit facilities, commitments, contingencies, equity incentive plans, income taxes, net loss per share, and related party transactions for the periods ended June 30, 2022 and 2021 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Assets | $445,191 | $480,489 | | Total Liabilities | $125,814 | $125,399 | | Total Stockholders' Equity | $319,377 | $355,090 | | Cash and cash equivalents | $79,914 | $164,948 | | Marketable securities | $264,955 | $217,609 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :----------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Revenue | $48,238 | $52,118 | $96,730 | $102,217 | | Net Loss | $(16,212) | $(2,517) | $(31,691) | $(5,347) | | Basic and Diluted EPS | $(0.34) | $(0.05) | $(0.67) | $(0.15) | [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :--------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net Loss | $(16,212) | $(2,517) | $(31,691) | $(5,347) | | Total Other Comprehensive Loss | $(553) | $96 | $(1,923) | $90 | | Total Comprehensive Loss | $(16,765) | $(2,421) | $(33,614) | $(5,257) | [Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--------------------------- | :----------------------------- | :------------------------------- | | Total Stockholders' Equity | $319,377 | $355,090 | | Accumulated Deficit | $(227,210) | $(195,519) | | Additional Paid-in Capital | $548,740 | $550,839 | - The company repurchased common stock totaling **$21.8 million** for the six months ended June 30, 2022[22](index=22&type=chunk) - Stock-based compensation expense for the six months ended June 30, 2022, was **$19.2 million**[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash (used in) provided by operating activities | $(9,438) | $10,575 | | Net cash used in investing activities | $(53,691) | $(43,051) | | Net cash (used in) provided by financing activities | $(22,098) | $325,848 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(84,951) | $293,480 | | Cash, cash equivalents and restricted cash, end of period | $80,092 | $351,825 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) [Note 1. Description of Business and Significant Accounting Policies](index=11&type=section&id=Note%201.%20Description%20of%20Business%20and%20Significant%20Accounting%20Policies) - ON24, Inc. provides a leading, cloud-based platform for digital engagement, enabling businesses to convert customer engagement into revenue through interactive webinar, virtual event, and multimedia content experiences[27](index=27&type=chunk) - The company completed its initial public offering (IPO) on February 5, 2021, raising approximately **$347.8 million** in net proceeds[28](index=28&type=chunk) - The company adopted the new lease standard (ASU No. 2016-02, Leases Topic 842) effective January 1, 2022, recognizing **$7.2 million** in additional right-of-use assets and **$9.6 million** in additional lease liabilities[41](index=41&type=chunk) [Note 2. Revenue](index=13&type=section&id=Note%202.%20Revenue) | Revenue Type | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Subscription and other platform | $43,064 | $44,377 | $86,541 | $87,287 | | Professional services | $5,174 | $7,741 | $10,189 | $14,930 | | Total Revenue | $48,238 | $52,118 | $96,730 | $102,217 | - Total revenue decreased by **7%** for the second quarter of 2022 and **5%** for the first half of 2022 compared to the same periods in 2021, primarily due to customer churn and downsell in subscription revenue and reduced demand for professional services[45](index=45&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk) - As of June 30, 2022, the aggregate amount of transaction price allocated to remaining performance obligations was **$154.8 million**, with **78%** expected to be recognized as revenue over the subsequent 12 months[49](index=49&type=chunk) [Note 3. Marketable Securities](index=15&type=section&id=Note%203.%20Marketable%20Securities) | Marketable Securities | June 30, 2022 (Fair Value, in thousands) | December 31, 2021 (Fair Value, in thousands) | | :-------------------- | :--------------------------------------- | :------------------------------------------- | | U.S. Treasury securities | $205,927 | $157,277 | | Certificates of deposit | $17,642 | $6,490 | | Corporate debt securities | $27,539 | $36,327 | | Commercial paper | $13,444 | $11,620 | | Asset-backed securities | $403 | $5,895 | | Total marketable securities | $264,955 | $217,609 | - All marketable securities are classified as available for sale and are in an unrealized loss position totaling **$2.359 million** as of June 30, 2022[54](index=54&type=chunk)[55](index=55&type=chunk) [Note 4. Fair Value Measurement](index=16&type=section&id=Note%204.%20Fair%20Value%20Measurement) | Financial Instrument | June 30, 2022 (Total, in thousands) | December 31, 2021 (Total, in thousands) | | :----------------------------------- | :---------------------------------- | :------------------------------------ | | Cash equivalents (Level 1) | $76,915 | $151,079 | | Marketable Securities (Level 2) | $264,955 | $217,609 | | Total cash equivalents and marketable securities | $341,870 | $368,688 | [Note 5. Balance Sheets Components](index=17&type=section&id=Note%205.%20Balance%20Sheets%20Components) | Asset/Liability | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Prepaid expenses and other current assets | $9,945 | $8,467 | | Property and equipment, net | $8,076 | $8,780 | | Accrued and other current liabilities | $18,798 | $19,011 | [Note 6. Business Combination](index=19&type=section&id=Note%206.%20Business%20Combination) - In April 2022, ON24 acquired Vibbio AS, a privately-held cloud video software company, for approximately **$3.0 million** in cash[66](index=66&type=chunk) - The acquisition aims to integrate Vibbio's video capabilities into the ON24 platform to enhance customer engagement and data generation[66](index=66&type=chunk) [Note 7. Intangible Assets](index=19&type=section&id=Note%207.%20Intangible%20Assets) | Intangible Asset | June 30, 2022 (in thousands) | | :----------------- | :--------------------------- | | Developed technology (Gross Carrying Amount) | $2,700 | | Accumulated Amortization | $(137) | | Net Carrying Amount | $2,563 | - The acquired intangible asset is amortized on a straight-line basis over a useful life of **4 years**[70](index=70&type=chunk) [Note 8. Leases](index=20&type=section&id=Note%208.%20Leases) | Lease Type | June 30, 2022 (in thousands) | | :-------------------------- | :----------------------------- | | Operating lease assets | $6,199 | | Finance lease assets | $2,184 | | Total leased assets | $8,383 | | Total leased liabilities | $11,061 | - The weighted-average remaining lease term for operating leases is **3.3 years** with a discount rate of **3.77%**[75](index=75&type=chunk) - The weighted-average remaining lease term for finance leases is **1.4 years** with a discount rate of **4.59%**[75](index=75&type=chunk) [Note 9. Credit Facility](index=21&type=section&id=Note%209.%20Credit%20Facility) - The company has a revolving credit facility with a maximum borrowing capacity of **$50.0 million**, maturing in August 2024[76](index=76&type=chunk) - As of June 30, 2022, the company had not drawn on its line of credit but had an outstanding standby letter of credit of **$1.2 million**[76](index=76&type=chunk)[78](index=78&type=chunk) [Note 10. Commitment and Contingencies](index=22&type=section&id=Note%2010.%20Commitment%20and%20Contingencies) - Non-cancelable purchase commitments totaled **$4.6 million** as of June 30, 2022, primarily for software license fees and co-location services[79](index=79&type=chunk) - The company is a defendant in a consolidated putative class action and a shareholder derivative complaint, both alleging misstatements in the IPO registration statement and prospectus[82](index=82&type=chunk)[83](index=83&type=chunk) - The company believes the allegations in the legal proceedings are without merit and is unable to reasonably estimate a possible loss at this early stage[82](index=82&type=chunk)[83](index=83&type=chunk) [Note 11. Stockholders' Equity (Deficit) and Equity Incentive Plan](index=23&type=section&id=Note%2011.%20Stockholders'%20Equity%20(Deficit)%20and%20Equity%20Incentive%20Plan) | Equity Item | June 30, 2022 | | :------------------------------------------ | :-------------- | | Stock options outstanding | 8,352,183 | | Restricted stock units outstanding | 3,992,506 | | Remaining shares available for future grant (2021 Equity Incentive Plan) | 6,734,418 | | Remaining shares available for future issuance (ESPP) | 1,613,045 | | Total shares of common stock reserved | 20,692,152 | - Total stock-based compensation expense was **$19.2 million** for the six months ended June 30, 2022[91](index=91&type=chunk) - The company repurchased **1,531,209 shares** for **$21.8 million** in the first half of 2022 under a **$50.0 million** share repurchase program, with **$21.0 million** remaining for future buybacks[94](index=94&type=chunk) [Note 12. Income Taxes](index=25&type=section&id=Note%2012.%20Income%20Taxes) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :-------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Provision for (benefit from) income taxes | $41 | $(282) | $123 | $(33) | - The change in income tax provision was primarily driven by tax shortfalls associated with stock-based compensation benefits in a foreign jurisdiction[95](index=95&type=chunk) [Note 13. Net Loss Per Share Attributable to Common Stockholders](index=25&type=section&id=Note%2013.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Net loss attributable to common stockholders (in thousands) | $(16,212) | $(2,517) | $(31,691) | $(5,905) | | Net loss per share of common stock, basic and diluted | $(0.34) | $(0.05) | $(0.67) | $(0.15) | | Weighted-average common stock outstanding, basic and diluted | 47,187,586 | 46,570,195 | 47,408,479 | 39,664,436 | - Over **12 million** potential common shares were excluded from the computation of diluted net loss per share for both the three and six months ended June 30, 2022, due to their antidilutive effect[99](index=99&type=chunk) [Note 14. Related Party Transactions](index=26&type=section&id=Note%2014.%20Related%20Party%20Transactions) - The company incurred **$1.4 million** in engineering and quality assurance costs from a third-party vendor whose CEO is an immediate family member of ON24's Chief Technology Officer for the six months ended June 30, 2022[100](index=100&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of ON24's business, its financial performance for the three and six months ended June 30, 2022, and key factors affecting its operations, highlighting a decline in revenue and increased net losses, discussing the evolving impact of the COVID-19 pandemic, outlining strategies for customer acquisition and retention, and detailing the company's liquidity and capital resources, including cash flows and contractual obligations [Overview](index=27&type=section&id=Overview) - ON24 provides a cloud-based platform for digital engagement, offering interactive webinar, virtual event, and multimedia content experiences to B2B companies to convert customer engagement into revenue[103](index=103&type=chunk) - The company transitioned to a SaaS model in 2013 and has expanded its product portfolio with offerings like ON24 Elite, Virtual Conference, Engagement Hub, Target, Breakouts, Go Live, and Forums[106](index=106&type=chunk)[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk)[110](index=110&type=chunk) | Metric | Three Months Ended June 30, 2022 (in millions) | Six Months Ended June 30, 2022 (in millions) | | :--------- | :--------------------------------------------- | :------------------------------------------- | | Revenue | $48.2 | $96.7 | | Net Loss | $(16.2) | $(31.7) | [COVID-19 Update](index=28&type=section&id=COVID-19%20Update) - The COVID-19 pandemic initially accelerated digital transformation and platform usage in 2020 and early 2021[115](index=115&type=chunk) - As the impact of COVID-19 lessens, revenue decreased by **7%** in Q2 2022 and **5%** in H1 2022 compared to 2021, as customers increasingly resume in-person marketing activities[116](index=116&type=chunk) [Key Factors Affecting Our Performance](index=28&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) - The company focuses on acquiring new customers across Enterprise (**2,000+ employees**) and Commercial (**1-1,999 employees**) segments[118](index=118&type=chunk) - Growth is also driven by retaining and expanding usage within existing customers through new users, products, and upsell/cross-sell opportunities[119](index=119&type=chunk) - International expansion is a significant opportunity, with approximately **25%** of revenue derived from outside the United States for Q2 and H1 2022[121](index=121&type=chunk) [Key Business Metrics](index=29&type=section&id=Key%20Business%20Metrics) | Metric | June 30, 2022 | March 31, 2022 | December 31, 2021 | June 30, 2021 | | :------------------------------------ | :-------------- | :------------- | :---------------- | :-------------- | | Customers | 2,101 | 2,145 | 2,122 | 2,078 | | ARR (in thousands) | $167,832 | $167,657 | $171,384 | $164,130 | | $100k Customers | 349 | 367 | 366 | 345 | - Net customers decreased by **44** in Q2 2022 compared to Q1 2022, primarily due to less commercial customer acquisition and higher churn among small and midsize customers[123](index=123&type=chunk) - Annual Recurring Revenue (ARR) decreased from **$171.4 million** as of December 31, 2021, to **$167.8 million** as of June 30, 2022, mainly due to customer churn and downsell[125](index=125&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) [Revenue](index=32&type=section&id=Revenue) | Revenue Type | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | % Change (YoY) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------- | | Subscription and other platform | $43,064 | $44,377 | (3)% | $86,541 | $87,287 | (1)% | | Professional services | $5,174 | $7,741 | (33)% | $10,189 | $14,930 | (32)% | | Total revenue | $48,238 | $52,118 | (7)% | $96,730 | $102,217 | (5)% | - The decline in professional services revenue was primarily due to more customers electing 'self-service' and not utilizing professional service offerings[130](index=130&type=chunk) [Cost of Revenue and Gross Margin](index=32&type=section&id=Cost%20of%20Revenue%20and%20Gross%20Margin) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | % Change (YoY) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------- | | Total cost of revenue | $13,301 | $11,873 | 12% | $26,245 | $22,567 | 16% | | Gross profit | $34,937 | $40,245 | (13)% | $70,485 | $79,650 | (12)% | | Gross margin | 72% | 77% | -5 ppts | 73% | 78% | -5 ppts | - The increase in cost of revenue was primarily attributable to higher personnel-related expenses and increased stock-based compensation[133](index=133&type=chunk) - Gross margin is expected to decrease in 2022 due to investments in infrastructure and increased utilization of the public cloud for newer product offerings[135](index=135&type=chunk) [Operating Expenses](index=33&type=section&id=Operating%20Expenses) [Sales and Marketing](index=33&type=section&id=Sales%20and%20Marketing) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | % Change (YoY) | | :------------------ | :---------------------------------------------- | :---------------------------------------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------- | | Sales and marketing | $28,850 | $25,465 | 13% | $58,043 | $49,390 | 18% | - The increase was primarily driven by higher personnel-related expenses (**$3.0 million** for Q2, **$7.6 million** for H1) and increased stock-based compensation expense (**$2.1 million** for Q2, **$4.1 million** for H1)[136](index=136&type=chunk) [Research and Development](index=34&type=section&id=Research%20and%20Development) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | % Change (YoY) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------- | | Research and development | $10,948 | $8,162 | 34% | $21,592 | $16,108 | 34% | - The increase was primarily due to higher personnel-related expenses (**$1.7 million** for Q2, **$3.5 million** for H1), increased stock-based compensation (**$1.1 million** for Q2, **$2.3 million** for H1), and higher contractor costs[137](index=137&type=chunk) [General and Administrative](index=34&type=section&id=General%20and%20Administrative) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | % Change (YoY) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------- | | General and administrative | $11,158 | $9,100 | 23% | $22,035 | $18,868 | 17% | - The increase was primarily due to higher personnel-related expenses (**$1.4 million** for Q2, **$2.6 million** for H1), increased stock-based compensation (**$0.9 million** for Q2, **$1.5 million** for H1), and higher legal and accounting fees[139](index=139&type=chunk) [Interest Expense](index=35&type=section&id=Interest%20Expense) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | % Change (YoY) | | :--------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------- | | Interest expense | $49 | $106 | (54)% | $103 | $337 | (69)% | - The decrease in interest expense was primarily due to the full repayment of the **$22.4 million** line of credit in the first quarter of 2021[141](index=141&type=chunk) [Other (Income) Expense, Net](index=35&type=section&id=Other%20(Income)%20Expense,%20Net) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | % Change (YoY) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------- | | Other (income) expense, net | $103 | $211 | (51)% | $280 | $327 | (14)% | [Provision for (Benefit from) Income Taxes](index=36&type=section&id=Provision%20for%20(Benefit%20from)%20Income%20Taxes) | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | % Change (YoY) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | % Change (YoY) | | :-------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :--------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------- | | Provision for (benefit from) income taxes | $41 | $(282) | 115% | $123 | $(33) | 473% | - The change in income tax provision was primarily driven by tax impacts associated with stock-based compensation in a foreign jurisdiction[144](index=144&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash Flow Summary](index=36&type=section&id=Cash%20Flow%20Summary) - As of June 30, 2022, the company had **$344.9 million** in cash, cash equivalents, and marketable securities[145](index=145&type=chunk) | Cash Flow Activity | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :-------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash (used in) provided by operating activities | $(9,438) | $10,575 | | Net cash used in investing activities | $(53,691) | $(43,051) | | Net cash (used in) provided by financing activities | $(22,098) | $325,848 | - The decrease in cash from financing activities was primarily due to **$21.8 million** in share repurchases and the absence of IPO proceeds (**$349.9 million** in 2021)[156](index=156&type=chunk) [Commitments and Contractual Obligations](index=38&type=section&id=Commitments%20and%20Contractual%20Obligations) | Obligation Type | Total (in thousands) | Less than 1 year (in thousands) | 1-3 years (in thousands) | 3-5 years (in thousands) | | :-------------------------- | :------------------- | :------------------------------ | :----------------------- | :----------------------- | | Operating lease obligations | $9,108 | $1,402 | $5,548 | $2,158 | | Finance lease obligations | $2,563 | $876 | $1,687 | $0 | | Equipment loans | $445 | $138 | $307 | $0 | | Other | $4,588 | $2,132 | $2,353 | $103 | | Total | $16,704 | $4,548 | $9,895 | $2,261 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to interest rate fluctuations, which affect its investment portfolio of highly liquid, investment-grade securities, where a hypothetical increase in interest rates would lead to a decrease in the fair value of these marketable securities - The company's primary market risk relates to changes in interest rates, affecting its investment portfolio which consists of money market mutual funds, U.S. Treasury securities, and corporate debt[163](index=163&type=chunk)[164](index=164&type=chunk) | Marketable Securities (June 30, 2022) | Fair Value (in thousands) | Hypothetical Fair Value (150 BPS increase, in thousands) | | :------------------------------------ | :------------------------ | :------------------------------------------------------- | | Total marketable securities | $264,955 | $263,123 | [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2022, with no material changes in internal control over financial reporting occurring during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2022[167](index=167&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended June 30, 2022[168](index=168&type=chunk) [Part II. Other Information](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 3. Legal Proceedings](index=39&type=section&id=Item%203.%20Legal%20Proceedings) The company is currently involved in a consolidated putative class action and a shareholder derivative complaint, both alleging misstatements in its IPO registration statement and prospectus, and while the company believes these allegations are without merit, it cannot estimate potential losses at this early stage, with no other material legal proceedings currently anticipated - ON24, its CEO, CFO, certain directors, and IPO underwriters are defendants in a consolidated putative class action alleging untrue statements in the IPO registration statement[169](index=169&type=chunk) - A shareholder derivative complaint, based on similar allegations, has also been filed against the company's officers and directors[170](index=170&type=chunk) - The company believes the allegations are without merit and is unable to reasonably estimate a possible loss or range of possible loss from these matters at this early stage[169](index=169&type=chunk)[170](index=170&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks associated with investing in ON24's common stock, covering business and industry-specific challenges, operational and technological vulnerabilities, legal and regulatory compliance issues, and factors affecting common stock ownership, including declining revenue growth, intense competition, cybersecurity threats, evolving privacy laws, and stock price volatility [Summary of Risk Factors](index=40&type=section&id=Summary%20of%20Risk%20Factors) - Investing in ON24 common stock involves a high degree of risk, including those related to revenue growth, market competition, economic conditions, COVID-19 impact, cybersecurity, and compliance[173](index=173&type=chunk)[174](index=174&type=chunk) [Risks Related to Our Business and Our Industry](index=40&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Our%20Industry) - The company has not consistently sustained its revenue growth rate, with declines of **7%** for Q2 2022 and **5%** for H1 2022 compared to 2021, and future declines are possible[174](index=174&type=chunk) - Quarterly results may fluctuate significantly due to factors such as customer retention, sales cycles, operating expenses, and market conditions, which may not fully reflect underlying business performance[176](index=176&type=chunk)[177](index=177&type=chunk) - Intense competition from various software providers and larger companies with greater resources could harm operating results, potentially leading to market share loss or pricing pressure[180](index=180&type=chunk)[181](index=181&type=chunk) - Adverse or weakened general economic and market conditions, including inflation and geopolitical developments, may cause a reduction in spending on sales and marketing technology, adversely affecting revenue and cash flows[182](index=182&type=chunk)[183](index=183&type=chunk) - The company has a history of net losses and expects increased expenses, making future profitability uncertain, especially as costs associated with customer acquisition are incurred upfront[186](index=186&type=chunk) - The COVID-19 pandemic's long-term effects are uncertain; easing restrictions may lead to decreased platform usage as customers and users resume more in-person marketing activities[189](index=189&type=chunk) [Risks Related to Our Operations and Technology](index=45&type=section&id=Risks%20Related%20to%20Our%20Operations%20and%20Technology) - Heavy reliance on third-party providers for computing, storage, and content delivery makes the company vulnerable to service interruptions, delays, or outages, which could harm business and reputation[192](index=192&type=chunk) - Cybersecurity-related attacks, significant data breaches, or disruptions of information technology systems could lead to unauthorized data access, platform disruption, regulatory actions, and reputational damage[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk) - Failure to respond to rapid technological changes, extend the platform, or develop new features could impair customer retention and market acceptance, making the platform obsolete[206](index=206&type=chunk)[207](index=207&type=chunk) - The experience of customers depends on the interoperability of the platform across devices, operating systems, and third-party applications, which are not controlled by the company, posing risks if compatibility is not maintained[217](index=217&type=chunk)[218](index=218&type=chunk) [Risks Related to Legal and Regulatory Compliance](index=54&type=section&id=Risks%20Related%20to%20Legal%20and%20Regulatory%20Compliance) - Actual or perceived failure to comply with evolving global privacy laws (e.g., GDPR, CCPA) could lead to significant fines, penalties, increased liability, and reduced demand for the platform[237](index=237&type=chunk)[238](index=238&type=chunk)[248](index=248&type=chunk) - The company is subject to U.S. export control, sanctions, and anti-boycott laws and regulations, non-compliance with which could result in fines, reputational harm, and loss of access to certain markets[249](index=249&type=chunk)[253](index=253&type=chunk)[254](index=254&type=chunk) - The use of open source software in the platform may subject the company to litigation or other actions, potentially requiring disclosure of proprietary source code or leading to increased security risks[262](index=262&type=chunk)[263](index=263&type=chunk) - Allegations or determinations that the company's technology infringes the intellectual property rights of others could result in costly litigation, redesigns, settlement or license agreements, or damage awards[264](index=264&type=chunk)[265](index=265&type=chunk) [Risks Related to Ownership of Our Common Stock](index=58&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) - The trading price of the company's common stock may be volatile or decline steeply and suddenly, regardless of operating performance, due to market fluctuations, industry trends, and analyst expectations[284](index=284&type=chunk)[285](index=285&type=chunk) - Substantial future sales of shares by existing stockholders, or the perception of such sales, could depress the market price of the common stock[288](index=288&type=chunk) - Provisions in the company's organizational documents and Delaware corporate law may delay or prevent its acquisition by a third party, potentially limiting opportunities for stockholders to receive a premium[289](index=289&type=chunk)[292](index=292&type=chunk)[294](index=294&type=chunk) - The company does not intend to pay dividends for the foreseeable future, requiring stockholders to rely on sales of their common stock after price appreciation to realize gains[303](index=303&type=chunk) - As an 'emerging growth company,' the company benefits from reduced disclosure requirements, which may make its common stock less attractive to some investors[300](index=300&type=chunk)[302](index=302&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's share repurchase activities during the second quarter of 2022, indicating that **566,314 shares** of common stock were repurchased for approximately **$7.5 million**, with **$21.0 million** remaining under the authorized program | Period | Number of shares repurchased | Average price per share | Total repurchase costs (in millions) | Maximum remaining for repurchase (in millions) | | :-------------------------- | :--------------------------- | :---------------------- | :----------------------------------- | :--------------------------------------------- | | April 1, 2022 to April 30, 2022 | 514,493 | $13.29 | $7.5 | $21.7 | | May 1, 2022 to May 31, 2022 | 51,821 | $13.08 | N/A | $21.0 | | June 1, 2022 to June 30, 2022 | — | $— | N/A | $21.0 | | Total (Q2 2022) | 566,314 | $13.27 | $7.5 | $21.0 | [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item states that there are no defaults upon senior securities to report - Not applicable; there are no defaults upon senior securities[305](index=305&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item states that there are no mine safety disclosures to report - Not applicable; there are no mine safety disclosures[306](index=306&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) This item indicates that there is no other information to report - No other information to report[307](index=307&type=chunk) [Item 6. Exhibits](index=62&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate organizational documents, certifications from principal officers, and XBRL interactive data files - Key exhibits include the Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, certifications of principal executive and financial officers, and various Inline XBRL documents[308](index=308&type=chunk)

ON24, Inc. (NYSE:ONTF) Q2 2022 Earnings Conference Call August 9, 2022 5:00 PM ET Company Participants Lori Barker - Investor Relations Sharat Sharan - Co-Founder, Chief Executive Officer, President & Chair Steven Vattuone - Chief Financial Officer Conference Call Participants Arjun Bhatia - William Blair Scott Berg - Needham Noah Herman - JPMorgan Mauro Molina - Piper Sandler Operator Good afternoon and thank you for standing by. And welcome to the ON24, Inc. Second Quarter 2022 Financial Results Conferenc ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 OR ¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______ to _____ Commission File Number: 001-39965 ON24, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 94-3292599 (State ...