ON24 Announces First Quarter 2023 Financial Results

• On track to achieve Q2 2023 profitability target
• ARR of $149.2 million on our Core Platform
• First quarter total revenue of $43.1 million
• Expanded capital return program to $125 million; cash dividend of $1.09 per share
• Added three new board members: Cynthia Paul, Ron Mitchell and Teresa Anania

ON24 (NYSE:ONTF), a leading sales and marketing platform for B2B digital engagement, today announced financial results for the first quarter ended March 31, 2023.

"I am pleased with our first quarter results and the progress we have made accelerating our path to profitability. We are on track to reach break-even non-GAAP EPS by Q2 and are now targeting break-even non-GAAP EBITDA by Q4 2023, with continued improvement in the quarters ahead," said Sharat Sharan, co-founder and CEO of ON24. "While many marketing budgets are facing temporary economic pressure, resulting in greater deal scrutiny and softness in our key customer verticals which has impacted our near-term top-line, we believe we are well positioned to capture market share and are confident in our ability to deliver profitable growth."

First Quarter 2023 Financial Highlights

• Core Platform ARR of $149.2 million as of March 31, 2023, a decrease of 4% year-over-year.
• Total ARR of $155.6 million as of March 31, 2023, a decrease of 7% year-over-year.
• Revenue:
  • Revenue from our Core Platform, including services, was $41.2 million, a decrease of 7% year-over-year.
  • Total revenue was $43.1 million, a decrease of 11% year-over-year.
• GAAP Operating Loss was $19.9 million, compared to GAAP operating loss of $15.2 million in the first quarter of 2022.
• Non-GAAP Operating Loss was $4.2 million, compared to non-GAAP operating loss of $5.7 million in the first quarter of 2022.
• GAAP Net Loss was $17.6 million, or $(0.37) per diluted share, compared to GAAP net loss of $15.5 million, or $(0.32) per diluted share in the first quarter of 2022.
• Non-GAAP Net Loss was $1.8 million, or $(0.04) per diluted share, compared to a non-GAAP net loss of $6.0 million, or $(0.13) per diluted share in the first quarter of 2022.
• Cash Flow: Net cash used in operating activities was $4.2 million, compared to $6.8 million used in operating activities in the first quarter of 2022. Free cash flow was negative $4.3 million for the quarter, compared to negative $7.8 million in the first quarter of 2022.
• Cash, Cash Equivalents and Marketable Securities totaled $315.7 million as of March 31, 2023.

For more information regarding non-GAAP operating income (loss), non-GAAP net income (loss) and free cash flows, see the section titled "Non-GAAP Financial Measures" below. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measure, see the tables at the end of this press release.

Recent Business Highlights:

• Strong enterprise customer tenure with our top 25 customers expanding Core Platform ARR at an aggregate rate of over 5X over 5 years.
• Continued adoption of multiple products with Q1 2023 ASP for new customers increasing YoY to its highest level in the last 4 quarters.
• Introduced two key generative AI capabilities, Smart Text for automated content creation and Key Moments for enhanced reporting, to help our customers improve revenue results with less resources.
• Achieved industry recognition as a differentiated digital engagement platform based on excellent customer satisfaction ratings, earning the third consecutive "Top-Rated Award" by TrustRadius and winning the "Appealie Awards" that represents excellence in customer success for the marketing category.
• Announced that the annual ON24 global user conference, The ON24 Experience 2023, will be held virtually on June 13 - 15, where our latest platform innovations and customer success stories will be showcased.

Financial Outlook

For the second quarter of 2023, ON24 expects:

• Core Platform Revenue, including services, to be in the range of $39.5 million to $40.5 million.
• Total revenue of $41.1 million to $42.1 million.
• Non-GAAP operating loss of $2.4 million to $1.8 million.
• Non-GAAP net income per share of $0.00 per share, or break-even EPS, using approximately 50.5 million diluted shares outstanding.
  • Restructuring charge of $1.5 million to $2.3 million, excluded from the Non-GAAP amounts above.
  • Charge for underutilized real estate of $1.3 million to $1.5 million, excluded from the Non-GAAP amounts above.

For the full year 2023, ON24 now expects:

• Core Platform Revenue, including services, to be in the range of $156.5 million to $159.5 million.
• Total revenue of $162.0 million to $165.0 million.
• Non-GAAP operating loss of $10.5 million to $8.0 million.
• Non-GAAP net loss per share of $(0.07) to net income of $0.00 per share using approximately 45.1 million basic and diluted shares outstanding and 49.7 million diluted shares outstanding, respectively.

Conference Call Information

ON24 will host a conference call and live webcast for analysts and investors today at 2:00 p.m. Pacific Time. Parties in the United States can access the call by dialing (877) 497-9071 or +1 (201) 689-8727.

A webcast and management's prepared remarks for today's call will be accessible on ON24's investor relations website at investors.on24.com. Approximately one hour after completion of the live call, an archived version of the webcast will be available on the Company's investor relations website.

Definitions of Certain Key Business Metrics

Core Platform: The ON24 Core Platform products include:

ON24 Elite: live, interactive webinar experience that engages prospective customers in real-time and can be made available in an on-demand format.

ON24 Breakouts: live breakout room experience that facilitates networking, collaboration and interactivity between users.

ON24 Forums: live, interactive experience that facilitates video-to-video interaction between presenters and audiences.

ON24 Go Live: live, interactive video event experience that enables presenters and attendees to engage face-to-face in real-time and can also be made available in an on-demand format.

ON24 Engagement Hub: always-on, rich multimedia content experience that prospective customers can engage anytime, anywhere.

ON24 Target: personalize and curate, rich landing page experience that engages specific segments of prospective customers to drive desired action.

Annual Recurring Revenue ("ARR"): ARR is calculated as the sum of the annualized value of our subscription contracts as of the measurement date, including existing customers with expired contracts that we expect to be renewed. Our ARR amounts exclude professional services, overages from subscription customers and Legacy revenue.

Non-GAAP Financial Measures

In addition to our results determined in accordance with generally accepted accounting principles in the United States, or "GAAP", we consider our non-GAAP operating income (loss), non-GAAP net income (loss) and free cash flow in evaluating our operating performance. We define non-GAAP operating income (loss) as net income (loss) excluding, interest expense, other (income) expense, net, income tax, stock-based compensation, amortization of acquired intangible assets, shareholder activism related costs, restructuring costs, charges for underutilized real estate, and certain other costs. We define non-GAAP net income (loss) as net income (loss) excluding stock-based compensation, amortization of acquired intangible assets, shareholder activism related costs, restructuring costs, charges for underutilized real estate, and certain other costs. We define free cash flow as net cash provided by (used in) operating activities, less purchases of property and equipment.

We use non-GAAP operating income (loss) and non-GAAP net income (loss) to evaluate our ongoing operations and for internal planning and forecasting purposes, and we use free cash flow to measure and evaluate cash generated through normal business operations. We believe non-GAAP operating income (loss) and non-GAAP net income (loss) may be helpful to investors because they provide consistency and comparability with past financial performance. We believe free cash flow may be helpful to investors because it reflects that some purchases of property and equipment are necessary to support ongoing operations, while providing a measure of cash available to acquire customers, expand within existing customers and otherwise pursue our business strategies.

However, these non-GAAP financial measures are each presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Non-GAAP financial measures have no standardized meanings prescribed by GAAP and are not prepared under a comprehensive set of accounting rules or principles. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measure as a tool for comparison.

Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measure are included in the tables at the end of this press release.

Forward-Looking Statements

This document contains "forward-looking statements" under applicable securities laws. Such statements can be identified by words such as: "outlook," "expect," "convert," "believe," "plan," "future," "may," "should," "will," and similar references to future periods. Forward-looking statements include express or implied statements regarding our expected financial and operating results, the execution of our capital return program, the size of our market opportunity, the success of our new products and capabilities, the impact of the COVID-19 pandemic on the way people do business, and other statements regarding our ability to achieve our business strategies, growth, or other future events or conditions. Such statements are based on our current beliefs, expectations, and assumptions about future events or conditions, which are subject to inherent risks and uncertainties, including our ability to attract new customers and expand sales to existing customers, decline in our growth rate; fluctuation in our performance, our history of net losses and expected increases in our expenses; competition and technological development in our markets and any decline in demand for our solutions; our ability to expand our sales and marketing capabilities and otherwise manage our growth; the impact of the COVID-19 pandemic; disruptions or other issues with our technology or third-party services; compliance with data privacy, import and export controls, customs, sanctions and other laws and regulations; intellectual property matters; and matters relating to our common stock, along with the other risks and uncertainties discussed in the filings we make from time to time with the Securities and Exchange Commission. Actual results may differ materially from those indicated in forward-looking statements, and you should not place undue reliance on them. All statements herein are based only on information currently available to us and speak only as of the date hereof. Except as required by law, we undertake no obligation to update any such statement.

About ON24

ON24 is on a mission to re-imagine how companies engage, understand and build relationships with their audience in a digital world. Through our leading sales and marketing platform for digital engagement, businesses use our portfolio of webinar, virtual event and content experiences to drive engagement and generate first-party data, delivering revenue growth across the enterprise – from demand generation to customer success to partner enablement.

ON24 powers digital engagement for industry-leading customers worldwide, including 3 of the 5 largest global technology companies, 3 of the 6 largest US banks, 3 of the 5 largest global healthcare companies, and 3 of the 5 largest global industrial manufacturers, enabling organizations to reach millions of professionals a month for billions of engagement minutes per year with all the first-party data being captured, generated and integrated from one place. ON24 is headquartered in San Francisco with global offices in North America, EMEA, and APAC. For more information, visit www.ON24.com.

© 2023 ON24, Inc. All rights reserved. ON24 and the ON24 logo are trademarks owned by ON24, Inc., and are registered in the United States Patent and Trademark Office and in other countries.

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