ON24, Inc. Q4 FY2024 earnings call

• Launched AI-powered ACE in January 2024, which accounted for over 20% of growth ARR bookings. - In Q4, percentage of customers with two or more products reached an all-time high near 40%, and ARR from multi-year deals increased to 51%. - Gross retention for 2024 improved to the highest in three years, with net retention for Enterprise business at 91%. - Non-GAAP gross margin improved from 75% in 2023 to 77% in 2024. - Adjusted EBITDA margin improved by almost 200 basis points in 2024. - Free cash flow for 2024 was positive $2.6 million compared to negative $14.4 million in 2023. - Focus on platform innovation with AI at the center, leveraging content and first-party data. - Strengthened enterprise go-to-market strategy, adding senior sales leaders and focusing on regulated industries.

In Q4, revenue from the core platform including services was $36 million, and total revenue including Virtual Conference was $36.7 million. Subscription and other platform revenue was $33.6 million, and professional services revenue was $3.1 million. Core platform ARR ended the quarter at $127.3 million, a decrease of $2.3 million from Q3, with total ARR including Virtual Conference at $129.7 million. The ARR contribution from the $100,000 plus customer cohort represented approximately two-thirds of total ARR. The percentage of ARR in multi-year contracts was 51%, and the number of customers using two or more products was 39% at the end of 2024, an all-time high.

• Expect to return to ARR growth in 2025, with ending 2025 Core ARR expected to be higher than 2024 levels. - Q1 Core Platform revenue including services expected to be in the range of $33.4 million to $33.9 million, total revenue including Virtual Conference in $34 million to $34.5 million. - Full-year core platform revenue including services expected to be $136.3 million to $139.3 million, total revenue $138.6 million to $141.6 million. - Expect to be adjusted EBITDA positive for 2025, with Q1 being the trough for profitability and positive EBITDA in subsequent quarters. - Gross margin expected to be approximately 76% for 2025.

• Risks include ability to grow revenue, attract new customers, and expand sales to existing customers. - Success of new products and capabilities is uncertain. - Impact of adverse economic conditions and macroeconomic deterioration could affect results.

Q: Can you provide an overview of what you're seeing in the marketing budget environment and green shoots in the technology vertical?

A: 2024 was tough for marketing budgets, but 2025 has some green shoots. Customers are reinvesting in growth initiatives, AI is providing immediate ROI, and there are winbacks from boomerang customers. Technology vertical is showing positive signs with investments in AI-powered ACE.

Q: Should we expect free cash flow positive again in 2025?

A: We are guiding to EPS profitability in 2025, and we would expect to be free cash flow positive as well, excluding one-time or restructuring charges.