ON24 INC. Q1 FY2025 earnings call

Key Points:

• Constant innovation is mission-critical, with AI-powered features like Content and Nurture, ON24 IQ, personalization, performance insights, and multi-lingual capability driving business outcomes.
• Accelerated enterprise-focused go-to-market initiatives include new sales leadership, launch of Propel Forward campaign, hiring of new CMO, and strong new logo wins and win-backs.
• Improved gross retention rate, highest in four years, and highest number of win-backs from boomerang customers in five quarters.
• Focus on regulated industry verticals like financial services and life sciences, with examples of new customers in these sectors leveraging the ON24 platform for tailored solutions.

Core platform revenue including services in Q1 2025 was $34.2 million, with total revenue including Virtual Conference at $34.7 million. ARR for core platform ended Q1 at $125.9 million, and total ARR was $128.2 million. Gross margin in Q1 was 77%. Sales and marketing expense in Q1 was $15.6 million, R&D expense was $6.8 million, and G&A expense was $6.3 million. Free cash flow was positive $2.8 million in Q1, marking the fifth consecutive quarter of positive free cash flow.

Q2 Guidance:

• Core platform revenue including services expected to be in the range of $33.8 million to $34.4 million, total revenue (including Virtual Conference) in the range of $34.5 million to $35.1 million.
• Gross margin expected to be 76%.
• Non-GAAP operating loss in the range of $1.5 million to $0.7 million, non-GAAP net income per share $0.00 to $0.02.
• ARR core expected to be down by $0.5 million to $1.5 million compared to Q1 levels, and Virtual Conference ARR expected to decline approximately $0.2 million in Q2.

Full-Year 2025 Guidance:

• Core Platform revenue including services expected to be in the range of $133.7 million to $136.7 million, total revenue in the range of $136 million to $139 million.
• Non-GAAP operating loss in the range of $5.5 million to $3.5 million, non-GAAP net income per share $0.02 to $0.05.
• Gross margins expected to be approximately 76%, with adjusted EBITDA positive for 2025 and positive free cash flow excluding incremental non-GAAP expenses.

• Adverse economic conditions and macroeconomic deterioration could impact revenue growth, customer acquisition, and product success.
• Uncertainty in the macro environment adds risk to near-term top-line guidance.

Q: Concern about $100,000 ARR cohort decline, visibility on trough.

A: Rob Morelli was told they are very close to turning this number positive, with focus on $100k+ customers retaining overall spend.

Q: Softness at end of Q1, incremental conservatism.

A: Steve Vattuone and Sharat Sharan explained macro uncertainty leads to more conservative outlook but positive signs in retention, go-to-market, AI, win-backs.

Q: ON24 IQ fit in AI strategy and pricing.

A: Sharat Sharan stated ON24 IQ is part of AI strategy to drive business outcomes, cost efficiency, scalability, with aggressive innovation agenda and room to expand with more SKUs.

Q: David Lee's marketing action plans, verticals with better churn.

A: Sharat Sharan said David focuses on solutions-based, ROI-driven approach, pipeline improvement; life sciences and financial services have higher retention, better net retention, diversified business.