SEC Form 10-Q filed by ON24 Inc.

8/7/24 6:12:41 PM ET

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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 June 30, 2024


¨			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 other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
50 Beale Street, 8th Floor, San Francisco, CA			94105
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (415) 369-8000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

ONTF

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of August 1, 2024, the registrant had 41,529,271 shares of common stock outstanding.

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		Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		2

PART I	FINANCIAL INFORMATION	3
Item 1	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders' Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4	Controls and Procedures	32

PART II	OTHER INFORMATION	32
Item 1	Legal Proceedings	32
Item 1A	Risk Factors	33
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	57
Item 3	Defaults Upon Senior Securities	57
Item 4.	Mine Safety Disclosures	57
Item 5	Other Information	57
Item 6	Exhibits	58

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or this Report, contains forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to our management. The forward-looking statements are contained principally in, but not limited to, the sections titled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts”, “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements include, but are not limited to, statements about

•our ability to grow our revenue;

•fluctuation in our performance, our history of net losses and any increases in our expenses;

•our ability to attract new customers and expand sales to existing customers.

•competition and technological development in our markets and any decline in demand for our solutions or generally in our markets;

•adverse general economic and market conditions and spending on sales and marketing technology;

•our ability to expand our sales and marketing capabilities and achieve growth;

•disruptions, interruptions, outages or other issues with our technology or our use of third-party services, data connectors and data centers;

•the impact of any cybersecurity-related attack, significant data breach or disruption of the information technology systems or networks on which we rely;

•the impact of the resumption of in-person marketing activities on our customer growth rate;

•our sales cycle, our international presence and our timing of revenue recognition from our sales;

•interoperability with other devices, systems and applications;

•compliance with data privacy, import and export controls, customs, sanctions and other laws and regulations;

•intellectual property matters, including any infringements of third-party intellectual property rights by us or infringement of our intellectual property rights by third parties; and

•the market for, trading price of and other matters associated with our common stock.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in the section entitled “Risk Factors” and elsewhere in this Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Report. You should read this Report completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ON24, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)


	June 30, 2024		December 31, 2023
Assets
Current assets
Cash and cash equivalents	$	15,485	$	53,209
Marketable securities	178,317		145,497
Accounts receivable, net of allowances and reserves of $3,900 and $3,621 as of June 30, 2024 and December 31, 2023, respectively	24,025		37,939
Deferred contract acquisition costs, current	11,932		12,428
Prepaid expenses and other current assets	6,246		4,714
Total current assets	236,005		253,787
Property and equipment, net	5,344		5,371
Operating right-of-use assets	2,269		2,981
Intangible asset, net	984		1,305
Deferred contract acquisition costs, non-current	13,391		15,756
Other long-term assets	1,019		1,102
Total assets	$	259,012	$	280,302
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	2,014	$	1,914
Accrued and other current liabilities	14,627		16,907
Deferred revenue	66,007		74,358
Finance lease liabilities, current	—		127
Operating lease liabilities, current	2,856		2,779
Total current liabilities	85,504		96,085

Operating lease liabilities, non-current	1,101		2,483
Other long-term liabilities	1,560		1,517
Total liabilities	88,165		100,085
Commitments and contingencies (Note 8)
Stockholders’ equity
Common stock, $0.0001 par value per share; 500,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 41,973,042 and 41,189,321 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	4		4
Additional paid-in capital	498,574		485,291
Accumulated deficit	(327,391)		(305,513)
Accumulated other comprehensive income (loss)	(340)		435
Total stockholders’ equity	170,847		180,217
Total liabilities and stockholders’ equity	$	259,012	$	280,302

See accompanying notes to condensed consolidated financial statements.

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ON24, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(Unaudited)




	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue
Subscription and other platform	$	34,147	$	38,336	$	68,976	$	77,700
Professional services	3,202		3,750		6,100		7,449
Total revenue	37,349		42,086		75,076		85,149
Cost of revenue
Subscription and other platform	7,032		9,066		14,378		18,955
Professional services	2,506		3,134		4,942		6,451
Total cost of revenue	9,538		12,200		19,320		25,406
Gross profit	27,811		29,886		55,756		59,743
Operating expenses
Sales and marketing	19,457		22,628		39,531		47,045
Research and development	9,081		10,930		18,190		22,029
General and administrative	12,332		12,105		23,568		26,383
Total operating expenses	40,870		45,663		81,289		95,457
Loss from operations	(13,059)		(15,777)		(25,533)		(35,714)
Interest expense	10		33		21		62
Other income, net	(2,305)		(3,193)		(4,582)		(5,765)
Loss before provision for income taxes	(10,764)		(12,617)		(20,972)		(30,011)
Provision for income taxes	411		230		906		426
Net loss	$	(11,175)	$	(12,847)	$	(21,878)	$	(30,437)


Net loss per share
Basic and diluted	$	(0.27)	$	(0.28)	$	(0.53)	$	(0.65)

Weighted-average shares used in computing net loss per share
Basic and diluted	41,991,996		45,866,022		41,652,834		46,581,527

See accompanying notes to condensed consolidated financial statements.

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ON24, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(11,175)	$	(12,847)	$	(21,878)	$	(30,437)
Other comprehensive (loss) income
Foreign currency translation adjustment, net of tax	(1)		27		(246)		18
Unrealized (loss) gain on available for sale debt securities, net of tax	(78)		(394)		(529)		584
Total other comprehensive (loss) income	(79)		(367)		(775)		602
Total comprehensive loss	$	(11,254)	$	(13,214)	$	(22,653)	$	(29,835)

See accompanying notes to condensed consolidated financial statements.

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ON24, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares	Amount
Balance as of March 31, 2024	41,796,012	$	4	$	490,896	$	(316,216)	$	(261)	$	174,423
Repurchase of common stock	(840,856)	—		(5,006)		—		—		(5,006)

Issuance of common stock upon exercise of stock options	152,762	—		241		—		—		241
Issuance of common stock upon release of restricted stock units	798,460	—		—		—		—		—
Issuance of common stock under Employee Stock Purchase Plan (ESPP)	66,664	—		367		—		—		367
Stock-based compensation expense	—	—		12,076		—		—		12,076
Other comprehensive loss	—	—		—		—		(79)		(79)
Net loss	—	—		—		(11,175)		—		(11,175)
Balance as of June 30, 2024	41,973,042	$	4	$	498,574	$	(327,391)	$	(340)	$	170,847


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares	Amount
Balance as of March 31, 2023	46,847,621	$	5	$	562,151	$	(271,317)	$	97	$	290,936
Cash dividend declared ($1.09 per share)	—	—		(49,872)		—		—		(49,872)
Repurchase of common stock	(2,821,451)	(1)		(23,492)		—		—		(23,493)
Excise taxes on repurchase of common stock	—	—		(155)		—		—		(155)
Issuance of common stock upon exercise of stock options	290,371	—		633		—		—		633
Issuance of common stock upon release of restricted stock units	614,764	—		—		—		—		—
Issuance of common stock under ESPP	82,438	—		546		—		—		546
Stock-based compensation expense	—	—		11,605		—		—		11,605
Other comprehensive income	—	—		—		—		(367)		(367)
Net loss	—	—		—		(12,847)		—		(12,847)
Balance as of June 30, 2023	45,013,743	$	4	$	501,416	$	(284,164)	$	(270)	$	216,986


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares	Amount
Balance as of December 31, 2023	41,189,321	$	4	$	485,291	$	(305,513)	$	435	$	180,217
Repurchase of common stock	(1,543,476)	—		(10,276)		—		—		(10,276)

Issuance of common stock upon exercise of stock options	466,943	—		779		—		—		779
Issuance of common stock upon release of restricted stock units	1,793,590	—		—		—		—		—
Issuance of common stock under ESPP	66,664	—		367		—		—		367
Stock-based compensation expense	—	—		22,413		—		—		22,413
Other comprehensive loss	—	—		—		—		(775)		(775)
Net loss	—	—		—		(21,878)		—		(21,878)
Balance as of June 30, 2024	41,973,042	$	4	$	498,574	$	(327,391)	$	(340)	$	170,847


	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total Stockholders' Equity
	Shares	Amount
Balance as of December 31, 2022	47,554,801	$	5	$	562,555	$	(253,727)	$	(872)	$	307,961
Cash dividend declared ($1.09 per share)	—	—		(49,872)		—		—		(49,872)
Repurchase of common stock	(4,100,578)	(1)		(34,212)		—		—		(34,213)
Excise taxes on repurchase of common stock	—	—		(215)		—		—		(215)
Issuance of common stock upon exercise of stock options	398,222	—		888		—		—		888
Issuance of common stock upon release of restricted stock units	1,078,860	—		—		—		—		—
Issuance of common stock under ESPP	82,438	—		546		—		—		546
Stock-based compensation expense	—	—		21,726		—		—		21,726
Other comprehensive income	—	—		—		—		602		602
Net loss	—	—		—		(30,437)		—		(30,437)
Balance as of June 30, 2023	45,013,743	$	4	$	501,416	$	(284,164)	$	(270)	$	216,986

See accompanying notes to condensed consolidated financial statements.

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ON24, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net loss	$	(21,878)	$	(30,437)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	2,454		2,792
Stock-based compensation expense	22,413		21,726
Amortization of deferred contract acquisition costs	7,595		7,844
Provision for allowance for doubtful accounts and billing reserves	1,201		1,699
Non-cash lease expense	779		941
Accretion of marketable securities	(2,935)		(3,711)
Lease impairment charge	—		1,209
Other	70		156
Changes in operating assets and liabilities:
Accounts receivable	12,713		10,744
Deferred contract acquisition costs	(4,734)		(6,263)
Prepaid expenses and other assets	(1,743)		(848)
Accounts payable	344		(471)
Accrued liabilities	(2,888)		(2,747)
Deferred revenue	(8,351)		(8,994)

Other liabilities	(1,514)		(2,123)
Net cash provided by (used in) operating activities	3,526		(8,483)
Cash flows from investing activities:
Purchase of property and equipment	(1,528)		(732)

Purchase of marketable securities	(126,421)		(195,825)
Proceeds from maturities of marketable securities	91,648		276,470
Proceeds from sale of marketable securities	4,360		9,321
Net cash (used in) provided by investing activities	(31,941)		89,234
Cash flows from financing activities:

Proceeds from exercise of stock options	994		884
Proceeds from issuance of common stock under ESPP	367		546

Payment for repurchase of common stock	(10,276)		(33,306)
Payment of cash dividend	—		(49,872)
Repayment of equipment loans	(72)		(131)
Repayment of finance lease obligations	(127)		(942)


Net cash used in financing activities	(9,114)		(82,821)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(197)		229
Net decrease in cash, cash equivalents and restricted cash	(37,726)		(1,841)
Cash, cash equivalents and restricted cash, beginning of period	53,298		27,169
Cash, cash equivalents and restricted cash, end of period	$	15,572	$	25,328
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets:
Cash and cash equivalents	$	15,485	$	25,158
Restricted cash included in other assets, non-current	87		170
Total cash, cash equivalent and restricted cash	$	15,572	$	25,328
Supplemental disclosures of cash flow information:
Cash paid for taxes, net of refunds	$	474	$	438
Cash paid for interest	$	2	$	36

See accompanying notes to condensed consolidated financial statements.

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ON24, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1. Description of Business and Significant Accounting Policies

Description of Business

ON24, Inc. and its subsidiaries (together, ON24 or the Company) provides a leading, cloud-based intelligent engagement platform that combines best-in-class experiences with personalization and content, to enable sales and marketing organizations to capture and act on connected insights at scale. The Company’s platform offers a portfolio of interactive and hyper-personalized digital experience products that creates and captures actionable, real-time data at scale from millions of professionals to provide businesses with buying signals and behavioral insights to efficiently convert prospects into customers. The Company was incorporated in the state of Delaware in January 1998 as NewsDirect, Inc. and in December 1998 changed its name to ON24, Inc. The Company is headquartered in San Francisco, California.

Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of ON24 Inc. and its wholly owned subsidiaries and have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial reporting. Certain information and note disclosures included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2023. In the opinion of management, the condensed consolidated financial statements reflect all adjustments that are normal and recurring in nature and necessary for fair financial statement presentation. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates and assumptions include, but are not limited to, the determination of standalone selling price for the Company’s performance obligations, the expected benefit period for deferred contract acquisition costs, the allowance for doubtful accounts and billing reserves, the useful lives of long-lived assets and the assumptions used to measure stock-based compensation. Actual results could differ materially from these estimates.

Significant Accounting Policies

The Company’s significant accounting policies are disclosed in its annual report on Form 10-K for the year ended December 31, 2023. There have been no significant changes to these policies during the six months ended June 30, 2024.

Recently Issued Accounting Standards

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands income tax disclosure to require consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid. This ASU is effective with the Company’s 2026 reporting period, with early application permitted. The Company is currently assessing the impact of the requirements and does not expect the adoption of this ASU to have a material impact on its consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This ASU is effective beginning with the Company’s 2024 annual reporting period. Early adoption is permitted and the amendments must be applied retrospectively to all prior periods presented. The Company is currently assessing the impact of the requirements and does not expect the adoption of this ASU to have a material impact on its consolidated financial statements and disclosures.

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Note 2. Revenue

Disaggregation of Revenue

The following table depicts the disaggregation of revenue by geographic region based on the shipping address of customers (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
United States	$	28,701	$	32,611	$	57,813	$	65,943
EMEA	6,688		7,020		13,109		13,884
Other	1,960		2,455		4,154		5,322
Total revenue	$	37,349	$	42,086	$	75,076	$	85,149

No individual foreign country contributed 10% or more of the total revenue during the three and six months ended June 30, 2024 and 2023

No single customer accounted for 10% or more of the total revenue during the three and six months ended June 30, 2024 and 2023. Additionally, no single customer accounted for 10% or more of accounts receivable as of June 30, 2024 and December 31, 2023.

Contract Balances

Accounts receivable: The Company records accounts receivable when the Company has a contractual right to consideration. In some arrangements, a right to consideration for the Company’s performance under the customer contract may occur before invoicing to the customer, resulting in an unbilled receivable. As of June 30, 2024 and December 31, 2023, unbilled receivables were included within accounts receivable, net of allowance for doubtful accounts and billing reserves on the condensed consolidated balance sheets and were not material.

Contract assets: The Company records a contract asset when the Company has satisfied a performance obligation but does not yet have an unconditional right to consideration. Contract assets are included in prepaid expenses and other current assets in the condensed consolidated balance sheets and were not material as of June 30, 2024 and December 31, 2023.

Contract liabilities: The Company defers its revenue when the Company has the right to invoice in advance of performance under a customer contract. The current portion of deferred revenue balances is recognized during the following 12-month period and the remaining portion is recorded as noncurrent, which is included in other long-term liabilities on the condensed consolidated balance sheet. The amount of revenue recognized in the three and six months ended June 30, 2024 that was included in deferred revenue at the beginning of the period was $21.5 million and $52.4 million, respectively

Remaining Performance Obligations

The terms of the Company’s subscription agreements are primarily annual and, to a lesser extent, multi-year. The Company may bill for the full term in advance or on an annual, quarterly or monthly basis, depending on the terms of the agreement. As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $121.9 million, which consists of both billed consideration in the amount of $66.4 million and unbilled consideration in the amount of $55.5 million that the Company expects to recognize as revenue. As of June 30, 2024, the Company expects to recognize 77% of its remaining performance obligations as revenue over the subsequent 12 months and the remainder thereafter.

Costs to Obtain a Contract

The Company capitalizes sales commissions and associated payroll taxes paid to internal sales personnel and third-party referral fees that are incremental costs resulting from obtaining a contract with a customer. These costs are recorded as deferred contract acquisition costs on the condensed consolidated balance sheets. The Company determines whether costs should be deferred based on its sales compensation plans and if the commissions are incremental and would not have occurred absent the customer contract.

Sales commissions paid upon the initial acquisition of a customer contract are amortized over an estimated period of benefit of five years as the Company specifically anticipates renewals of customer contracts and commissions paid on renewal contracts are not commensurate with commissions paid on new customer contracts. Sales commissions paid upon renewal of customer contracts are amortized over the contractual renewal term. Amortization is recognized on a

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straight-line basis commensurate with the pattern of revenue recognition. Sales commissions paid related to professional services are amortized over the expected service period. The Company determines the period of benefit for commissions paid for the acquisition of the initial customer contract by taking into consideration the initial estimated customer life and the technological life of its platform and related significant features. Amortization of deferred contract acquisition costs was $3.8 million and $7.6 million for the three and six months ended June 30, 2024, respectively, and $3.9 million and $7.8 million for the three and six months ended June 30, 2023, respectively. Amortization of deferred contract acquisition costs is included in sales and marketing expense in the condensed consolidated statements of operations.

The Company periodically reviews these deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit. The Company had no impairment losses relating to deferred contract acquisition costs during the periods presented.

Note 3. Marketable Securities

Marketable securities consisted of the following as of the periods presented (in thousands):



	June 30, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Marketable securities
U.S. Treasury securities	$	178,620	$	13	$	(316)	$	178,317




Total marketable securities	$	178,620	$	13	$	(316)	$	178,317


	December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

Marketable securities
U.S. Treasury securities	$	135,850	$	271	$	(40)	$	136,081
U.S. Agency securities	5,906		—		(3)		5,903

Corporate debt securities	1,696		—		(1)		1,695
Commercial paper	1,819		—		(1)		1,818
Total marketable securities	$	145,271	$	271	$	(45)	$	145,497

The Company’s marketable securities have been classified as available for sale. All available for sale debt securities are available for use in current operations. Accordingly, they have been classified as current.

Marketable securities that have been in a continuous unrealized loss position consisted of the following as of the periods presented (in thousands):


	June 30, 2024
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. Treasury securities	$	153,361	$	(316)	$	—	$	—	$	153,361	$	(316)





Total	$	153,361	$	(316)	$	—	$	—	$	153,361	$	(316)

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	December 31, 2023
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. Treasury securities	$	60,150	$	(40)	$	—	$	—	$	60,150	$	(40)
U.S. Agency securities	4,176		(3)		—		—		4,176		(3)

Corporate debt securities	1,695		(1)		—		—		1,695		(1)
Commercial paper	1,818		(1)		—		—		1,818		(1)
Total	$	67,839	$	(45)	$	—	$	—	$	67,839	$	(45)

The Company periodically evaluates whether any security has experienced credit-related declines in fair value. The Company did not recognize any credit loss related to its available for sales debt securities during the three and six months ended June 30, 2024 or 2023.

The amount of realized gains or losses from marketable securities that were reclassified out from accumulated other comprehensive income (loss) to other (income) expense, net was based on specific identification and such amount was immaterial in the three and six months ended June 30, 2024 and six months ended June 30, 2023. The Company had no realized gains or losses from marketable securities that were reclassified out of accumulated other comprehensive income (loss) in the three months ended June 30, 2023.

The following summarizes the remaining contractual maturities of the Company’s marketable securities as of June 30, 2024 (in thousands):


	Fair Value
One year or less	$	163,700
Over one year through three years	14,617
Total marketable securities	$	178,317

Note 4. Fair Value Measurement

The following tables summarize the Company’s financial instruments recorded at fair value on a recurring basis by level within the fair value hierarchy as of the periods presented (in thousands):


	June 30, 2024
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash equivalents - money market mutual funds	$	10,611	$	—	$	—	$	10,611

Marketable securities
U.S. Treasury securities	—		178,317		—		178,317





Total cash equivalents and marketable securities	$	10,611	$	178,317	$	—	$	188,928


	December 31, 2023
	Level 1		Level 2		Level 3		Total
Cash and cash equivalents
Cash equivalents - money market mutual funds	$	33,952	$	—	$	—	$	33,952
Marketable securities
U.S. Treasury securities	—		136,081		—		136,081
U.S. Agency securities	—		5,903		—		5,903

Corporate debt securities	—		1,695		—		1,695
Commercial paper	—		1,818		—		1,818
Total cash equivalents and marketable securities	$	33,952	$	145,497	$	—	$	179,449

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As of June 30, 2024 and December 31, 2023, the Company classified its cash equivalents within level 1 of the fair value hierarchy because they are valued using quoted market prices. The Company classified its marketable securities within level 2 of the fair value hierarchy because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security, which may not be actively traded.

Note 5. Balance Sheets Components

Property and Equipment, Net

Property and equipment, net consisted of the following as of the periods presented (in thousands):


	June 30, 2024		December 31, 2023
Computer, equipment and software(1)	$	33,380	$	33,220
Furniture and fixtures	1,109		1,091
Leasehold improvements	3,744		3,801
Property and equipment, gross	38,233		38,112
Less: Accumulated depreciation and amortization(2)	(32,889)		(32,741)
Property and equipment, net	$	5,344	$	5,371

(1)Includes assets recorded under finance leases of nil and $1.7 million as of June 30, 2024 and December 31, 2023, respectively.

(2)Includes amount for assets recorded under finance leases of nil and $1.6 million as of June 30, 2024 and December 31, 2023, respectively.

Depreciation and amortization expense for property and equipment was $1.1 million and $2.2 million for the three and six months ended June 30, 2024, respectively, and $1.2 million and $2.5 million for the three and six months ended June 30, 2023, respectively.

The following table presents the property and equipment, net of depreciation and amortization, by geographic region as of the periods presented (in thousands):


	June 30, 2024		December 31, 2023
United States	$	5,096	$	5,069
EMEA	238		284
Other	10		18
Total property and equipment, net	$	5,344	$	5,371

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following as of the periods presented (in thousands):


	June 30, 2024		December 31, 2023
Accrued compensation and benefits	$	4,050	$	4,223
Accrued bonus and commissions	4,148		7,095
Other	6,429		5,589
Accrued and other current liabilities	$	14,627	$	16,907

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Note 6. Intangible Assets

The Company’s acquired intangible asset subject to amortization as of the periods presented was as follows (in thousands):


	June 30, 2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	2,700	$	(1,268)	$	1,432
Effect of foreign currency translation	(475)		27		(448)
Total	$	2,225	$	(1,241)	$	984


	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	$	2,700	$	(992)	$	1,708
Effect of foreign currency translation	(397)		(6)		(403)
Total	$	2,303	$	(998)	$	1,305

The intangible asset is amortized on a straight-line basis over its useful life of 4 years. As of June 30, 2024, the intangible asset had a remaining amortization period of 1.8 years.

The amortization expense was $0.2 million and $0.3 million for both of the three and six months ended June 30, 2024 and 2023. The amortization expense was included in research and development in the condensed consolidated statements of operations as the acquired technology is used to enhance our existing product capabilities.

The estimated future amortization expense for the intangible asset is as follows (in thousands):


Remainder 2024	$	280
2025	556
2026	148
Total	$	984

Note 7. Credit Facility

In September 2021, the Company amended its revolving line of credit with a financial institution effective August 2021, which increased the Company's borrowing capacity to a maximum of $50.0 million with a letter of credit sublimit of $4.0 million and a credit card sublimit of $1.0 million. The amendment allows the Company to borrow up to $50.0 million if the Company maintains at least $100.0 million on deposit at the institution. If such deposit is less than $100.0 million, the Company may borrow up to the lesser of $50.0 million or an amount determined by the Company's trailing five months of recurring revenue, annualized renewal rate and annualized monthly churn rate, as defined by the agreement. As of June 30, 2024, the Company had not drawn down on its line of credit and has a borrowing capacity of $50.0 million. The terms of the agreement permit voluntary prepayment without premium or penalty. The revolving credit facility matures in August 2024 and is secured by substantially all of the Company’s assets. The outstanding principal balance on the revolving line of credit, if any, is due at maturity. The Company is required to pay quarterly in arrears a commitment fee of 0.15% per annum on the undrawn portion available under the revolving line of credit. As of June 30, 2024, the Company had an outstanding standby letter of credit of $1.2 million as a guarantee for a leased space.

Interest on the revolving credit facility is payable monthly in arrears at a rate equal to the lender’s prime referenced rate as defined in the agreement. The prime referenced rate was 8.50% as of June 30, 2024 and December 31, 2023.

The revolving credit facility is subject to certain restrictions and financial covenants, including the requirement of maintaining a minimum debt to EBITDA ratio when the Company’s current portion of the total borrowing exceeds $5.0 million and the Company fails to maintain $100.0 million in deposits. As of June 30, 2024, the Company was not subject to the financial covenant as the Company met the deposit requirement and had not drawn down from its line of credit. In addition, the revolving line of credit agreement restricts the Company from paying dividends without prior approval from the financing institution. In April 2023, the Company further amended its revolving line of credit to allow for certain transactions including payment of dividends and share repurchases from open market purchases or through an accelerated share repurchase program, subject to certain terms and conditions.

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Note 8. Commitment and Contingencies

Purchase Obligations

As of June 30, 2024, the Company has non-cancelable unrecognized purchase commitments primarily related to software license fees and co-location facilities and services as follows (in thousands):


	Purchase Obligations(1)
Remainder 2024	$	2,078
2025	2,878
2026	1,117
2027	115
Total	$	6,188

(1)Excludes non-cancelable recognized purchase commitments related to software license fees of $1.9 million that are included in accrued liabilities and other long-term liabilities in the condensed consolidated balance sheets.

Contingencies

The Company has agreed to indemnify its directors and executive officers for costs associated with any fees, expenses, judgments, fines, and settlement amounts incurred by any of these persons in any action or proceeding to which any of those persons is, or is threatened to be, made a party by reason of the person’s service as a director or officer, including any action by the Company, arising out of that person’s services as the Company’s director or officer or that person’s services provided to any other company or enterprise at the Company’s request. The Company maintains director and officer insurance coverage that may enable the Company to recover a portion of any future amounts paid.

FASB ASC 450-20, Contingencies, sets forth the rules for accounting for uncertain tax positions for taxes not based on income. When a loss contingency exists, the likelihood of the incurrence of the liability can range from probable to remote. The Company believes it is reasonably possible that a loss will result from the sales and use tax assessments in the range of zero to $0.4 million. The Company has not recorded an accrual as of June 30, 2024 and December 31, 2023.

Legal Proceedings

The Company, its Chief Executive Officer, its Chief Financial Officer, certain current and former members of its Board of Directors and the underwriters that participated in the Company’s IPO are named as defendants in a consolidated putative class action, captioned In re ON24, Inc. Securities Litigation, 4:21-cv-08578-YGR (filed in November 2021), that is currently pending in the United States District Court for the Northern District of California. The consolidated complaint purports to assert claims under Sections 11 and 15 of the Securities Act of 1933 on behalf of all persons and entities that purchased, or otherwise acquired, the Company’s common stock issued in connection with the Company’s IPO. The complaint alleges that the Company’s registration statement and prospectus contained untrue statements of material fact and/or omitted material facts about ON24’s growth and customer base. Plaintiff seeks, among other things, an award of damages and attorneys’ fees and costs. The defendants filed a motion to dismiss the complaint in May 2022, which the district court granted with leave to amend in July 2023. Plaintiff filed its amended complaint in September 2023, and the defendants filed a motion to dismiss the amended complaint in October 2023. In March 2024, the district court granted the defendants’ motion to dismiss with prejudice. Plaintiff has filed a notice of appeal of the district court’s order and briefing in the appeal is currently ongoing. The Company believes the allegations in the amended complaint are without merit. The Company is unable to reasonably estimate a possible loss or range of possible loss, if any, arising from this matter at this early stage. Accordingly, no accrued litigation expense has been recorded in the accompanying condensed consolidated financial statements.

In the ordinary course of business, the Company may be subject from time to time to various proceedings, lawsuits, disputes or claims. Although the Company cannot predict with assurance the outcome of any litigation, the Company does not believe there are currently any actions, other than those described in the prior paragraph, that if resolved unfavorably, would have a material impact on its financial condition, results of operations or cash flows.

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Note 9. Stockholders’ Equity and Equity Incentive Plan

Preferred Stock

The Company’s amended and restated certificate of incorporation authorized the issuance of 10,000,000 shares of undesignated preferred stock with a par value of $0.0001 per share.

Common Stock

The Company’s amended and restated certificate of incorporation authorized the issuance of 500,000,000 shares of common stock, $0.0001 par value per share. Holders of common stock are entitled to one vote per share.

Common Stock Reserved for Future Issuance

As of June 30, 2024, the Company had the following shares of common stock reserved for future issuance under its equity incentive plan and employee share purchase plan:


Stock options outstanding			6,344,587
Restricted stock outstanding			7,804,502
Remaining shares available for future grant under 2021 Equity Incentive Plan(1)			2,658,747
Remaining shares available for future issuance under 2021 Employee Stock Purchase Plan(2)			2,163,252
Total shares of common stock reserved as of June 30, 2024			18,971,088

(1)Includes the automatic annual increase of 2,059,466 additional shares under the Company’s 2021 Equity Incentive Plan on January 1, 2024.

(2)Includes the automatic annual increase of 411,893 additional shares under the Company’s 2021 Employee Stock Purchase Plan on January 1, 2024.

Repurchase of Common Stock

In February 2024, the Company completed the $75 million share repurchase program as part of its $125 million capital return program. In March 2024, the Company’s board of directors approved a new $25 million share repurchase program (the “2024 Repurchase Program”) allowing the Company to repurchase shares of common stock on a discretionary basis from time to time over a 12-month term through open market purchases, privately negotiated transactions, or other means.

The following table presents certain information regarding shares repurchased during the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Number of shares repurchased	840,856		2,821,451		1,543,476		4,100,578
Average price per share, including commissions	$	5.95	$	8.33	$	6.66	$	8.34
Total repurchase costs, including commissions (in millions)	$	5.0	$	23.5	$	10.3	$	34.2

As of June 30, 2024, the Company has $20.0 million available for future share repurchases under the 2024 Repurchase Program.

The Company repurchased 529,265 shares of common stock at an average per share price of $6.14 from July 1, 2024 through August 6, 2024 pursuant to the 2024 Repurchase Program.

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Grant Activities

Stock Options

A summary of stock option activity and related information is as follows:



	Options Outstanding
	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)
Balance as of December 31, 2023	6,974,082	$	5.98
Granted	—	—

Exercised	(466,943)	1.67			$	2,540
Cancelled and forfeited	(162,552)	13.63
Balance as of June 30, 2024	6,344,587	$	6.74	4.50	$	16,927
Vested and exercisable	6,090,033	$	6.27	4.42	$	16,925

Restricted Stock Units

A summary of RSU activity and related information is as follows:



	RSUs Outstanding
	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance as of December 31, 2023	5,952,386	$	10.89
Granted	2,682,878	6.59

Vested	(1,842,069)	11.21
Cancelled and forfeited	(207,755)	13.57
Unvested balance as of June 30, 2024	6,585,440	$	8.92

The total fair value of RSUs vested in the three and six months ended June 30, 2024 was $9.9 million and $20.6 million, respectively. The total fair value of RSUs vested in the three and six months ended June 30, 2023 was $8.3 million and $16.1 million, respectively.

Restricted Stock Unit with Performance Conditions

In the second quarter of 2024, the Company’s board of directors granted 805,494 market performance-based restricted stock units (“PSUs”) to certain executive officers with a grant date fair value of $6.8 million. The PSUs vest following three annual performance periods beginning in 2024, each in an amount equal to one-third of the target number of PSUs multiplied by a percentage determined by comparing the Company’s total stockholder return to a benchmark index during the performance period. The actual payout can range from 0% to 200% of the shares granted under this award, with the maximum earned PSUs capped at 125% for the first two performance periods. The maximum payout for the entire award is capped at 200% of the granted shares. These PSUs additionally are subject to continued service by the award holders through the end of each performance period. As of June 30, 2024, none of these PSUs have vested.

In the second quarter of 2023, the Company’s board of directors granted 203,000 market performance-based restricted stock units to certain executive officers with a grant date fair value of $2.5 million. The PSUs vest following three annual performance periods beginning in 2023, each in an amount equal to one-third of the target number of PSUs multiplied by a percentage determined by comparing the Company’s total stockholder return to a benchmark index during the performance period. The actual payout can range from 0% to 200% of the shares granted under this award, with the maximum earned PSUs capped at 125% for the first two performance periods. The maximum payout for the entire award is capped at 200% of the granted shares. These PSUs additionally are subject to continued service by the award holder through the end of each performance period. In May 2023, an additional 32,204 PSUs were issued in connection with the anti-dilution adjustment. As of June 30, 2024, 47,819 of these PSUs have vested.

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In the fourth quarter of 2022, the Company’s board of directors granted 341,404 market performance-based restricted stock units to an executive officer with a grant date fair value of $4.2 million. The PSUs vest following three annual performance periods beginning in 2023, each in an amount equal to one-third of the target number of PSUs multiplied by a percentage determined by comparing the Company’s total stockholder return to a benchmark index during the performance period. The actual payout can range from 0% to 200% of the shares granted under this award, with the maximum earned PSUs capped at 125% for the first two performance periods. The maximum payout for the entire award is capped at 200% of the granted shares. These PSUs additionally are subject to continued service by the award holder through the end of each performance period. In May 2023, an additional 54,167 PSUs were issued in connection with the anti-dilution adjustment. As of June 30, 2024, 75,976 of these PSUs have vested.

Stock-Based Compensation

The stock-based compensation expense by line item in the condensed consolidated statements of operations is summarized as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of revenue
Subscription and other platform	$	687	$	709	$	1,355	$	1,494
Professional services	129		144		250		296
Total cost of revenue	816		853		1,605		1,790
Sales and marketing	3,338		3,555		6,396		6,612
Research and development	2,246		2,363		4,374		4,384
General and administrative	5,676		4,834		10,038		8,940
Total stock-based compensation expense	$	12,076	$	11,605	$	22,413	$	21,726

The following table presents the unrecognized stock-based compensation expense and weighted-average recognition periods as of June 30, 2024 (in thousands, except years):


	Stock Option		Restricted Stock		ESPP
Unrecognized stock-based compensation expense	$	5,093	$	57,382	$	81
Weighted-average amortization period	0.46 years		1.98 years		0.38 years

Note 10. Other Income, Net

Other income, net consisted of the following for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Interest income	$	(939)	$	(1,539)	$	(1,794)	$	(2,497)
Accretion on marketable securities	(1,428)		(1,885)		(2,935)		(3,711)
Foreign currency losses	66		226		153		491
Other	(4)		5		(6)		(48)
Other income, net	$	(2,305)	$	(3,193)	$	(4,582)	$	(5,765)

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Note 11. Income Taxes

The Company’s provision for income taxes were as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Provision for income taxes	$	411	$	230	$	906	$	426

The Company’s provision for income taxes for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items, if any. The Company updates its estimate of the annual effective tax rate and makes a year-to-date adjustment to the provision quarterly. Provision for income taxes for the three and six months ended June 30, 2024 increased $0.2 million and $0.5 million, respectively, compared to the three and six months ended June 30, 2023. The increase in provision for income taxes was primarily driven by increases in realized foreign exchange gains in foreign jurisdictions and a tax provision true-up. The increase in the six months ended June 30, 2024 was partially offset by the decreased income in foreign jurisdictions.

The Company regularly performs an assessment of the likelihood of realizing benefits of its deferred tax assets. As of June 30, 2024, the Company recorded a valuation allowance against its U.S. deferred tax assets based on available evidence. However, if there are favorable changes to actual operating results or to projections of future income, the Company may determine that it is more likely than not that such deferred tax assets may be realizable.

Utilization of net operating loss carryforwards, tax credits and other attributes may be subject to future annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions.

Note 12. Net Loss Per Share

The following tables set forth the computation of basic and diluted net loss per share for the periods presented (in thousands, except share and per share data):



	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss	$	(11,175)	$	(12,847)	$	(21,878)	$	(30,437)


Net loss per share of common stock, basic and diluted	$	(0.27)	$	(0.28)	$	(0.53)	$	(0.65)
Weighted-average common stock outstanding, basic and diluted	41,991,996		45,866,022		41,652,834		46,581,527

The following table sets forth the potential shares of common stock that were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Stock options	6,344,587	7,534,542	6,344,587	7,534,542
Restricted stock units	6,585,440	6,196,553	6,585,440	6,196,553
Performance stock units	1,219,062	630,775	1,219,062	630,775
ESPP purchase rights	70,022	91,158	70,022	91,158
Total antidilutive securities	14,219,111	14,453,028	14,219,111	14,453,028

Note 13. Related Party Transactions

The Company incurred engineering and quality assurance costs from a third-party vendor in the three and six months ended June 30, 2024 and 2023. The chief executive officer of the third-party vendor is considered an immediate family member of the Company’s chief technology officer. The Company recorded $0.7 million and $1.3 million in the three and six months ended June 30, 2024, respectively, and $0.7 million and $1.4 million in the three and six months ended June 30, 2023, respectively, in research and development expense relating to this third-party vendor on the condensed consolidated statements of operations. The Company recorded $0.4 million and $0.2 million in accounts payable as of June 30, 2024 and December 31, 2023, respectively, on the condensed consolidated balance sheets for the amount owed to this third-party vendor.

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Note 14. Restructuring

In the third quarter of 2022, the Company initiated a strategic cost reduction plan to reduce its cost structure and lower its net loss, including voluntary and involuntary global headcount reductions as well as reductions in spending with various vendors. This plan was substantially completed in the first quarter of 2023. The Company has pursued additional reductions in its workforce in 2023 and in the three and six months ended 2024 to further reduce its cost structure.

The following table summarizes the restructuring costs and impairment charge in the condensed consolidated statements of operations (in thousands):


	Three Months Ended June 30, 2024						Six Months Ended June 30,
	Severance and Related Charges(1)		Lease Impairment Charge(2)		Total		Severance and Related Charges(1)		Lease Impairment Charges(2)		Total
Cost of revenue
Subscription and other platform	$	21	$	—	$	21	$	213	$	—	$	213
Professional services	1		—		1		13		—		13
Total cost of revenue	22		—		22		226		—		226
Sales and marketing	330		—		330		1,005		—		1,005
Research and development	—		—		—		112		—		112
General and administrative	149		—		149		339		—		339
Total restructuring costs	$	501	$	—	$	501	$	1,682	$	—	$	1,682


	Three Months Ended June 30, 2023						Six Months Ended June 30, 2023
	Severance and Related Charges(1)		Lease Impairment Charge(2)		Total		Severance and Related Charges(1)		Lease Impairment Charges(2)		Total
Cost of revenue
Subscription and other platform	$	720	$	89	$	809	$	1,505	$	89	$	1,594
Professional services	50		101		151		104		101		205
Total cost of revenue	770		190		960		1,609		190		1,799
Sales and marketing	597		208		805		1,808		208		2,016
Research and development	340		472		812		1,113		472		1,585
General and administrative	52		339		391		282		339		621
Total restructuring costs	$	1,759	$	1,209	$	2,968	$	4,812	$	1,209	$	6,021

(1)Severance and related charges primarily include severance and one-time termination benefits.

(2)Lease impairment charge represents the underutilized real estate charge on the Company’s headquarters lease.

The Company paid restructuring costs of $0.8 million and $1.5 million during the three and six months ended June 30, 2024, respectively, and $1.7 million and $4.1 million during the three and six months ended June 30,2023, respectively. As of June 30, 2024 and December 31, 2023, the restructuring liability was $0.3 million and $0.1 million, respectively, and is included in accrued and other current liabilities on the condensed consolidated balance sheets.

The Company expects to incur additional restructuring costs of $0.4 million to $0.7 million in the third quarter of 2024 and may incur additional costs in future periods for restructuring activities.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this Report. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Risk Factors” and in other parts of this Report.

Overview

We provide a leading, cloud-based intelligent engagement platform that combines best-in-class experiences with personalization and content, to enable sales and marketing organizations to capture and act on connected insights at scale. Our platform’s portfolio of interactive and hyper-personalized digital experience products create and capture actionable, real-time data at scale from millions of professionals to provide businesses with buying signals and behavioral insights to efficiently convert prospects into customers.

Similar to what has taken place in the business-to-consumer, or B2C, market, our platform for digital engagement empowers business-to-business, or B2B, companies with insights to better personalize their engagement. Large social media platforms have been successful at leveraging experiences and insights of consumers on their platforms to enable B2C companies to effectively understand their potential consumers. While these have been effective in the B2C market, B2B companies often lack deep insights about prospective customers to effectively understand and engage them.

Businesses today primarily use traditional sales and marketing solutions, such as digital advertising and email, for marketing. While these traditional solutions reach large numbers of prospective customers, they have generally failed to deepen customer engagement because they were designed with the simple purpose of pushing marketing messages in one direction — from the business to the prospective customer. For most businesses to succeed, we believe their sales and marketing strategies must utilize digital engagement that is powered by the latest technology. Our platform provides an innovative way both to scale digital marketing and deepen prospective customer engagement. We believe our opportunity to help businesses convert digital engagement into revenue will continue to grow as industries modernize their sales and marketing processes.

We sell subscriptions to our platform’s products that are backed by analytics and our ecosystem of third-party integrations. Before 2013, we offered services and licensed software for managing webinars and virtual events primarily on a per event basis. In 2013, we transitioned to be a software-as-a-service company with the release of ON24 Elite as our self-service cloud-based subscription product. ON24 Virtual Conference, which we have de-emphasized, was also launched as a managed-service cloud-based subscription product. Substantially all our customers subscribe to ON24 Elite, which is our Core Platform’s flagship product, and enables customers to seamlessly broadcast video-based content and drive real-time interactivity in a single immersive experience. We have since added six other products to our Core Platform.

In 2018, we launched two complementary experience products, ON24 Engagement Hub and ON24 Target, to provide our customers with a system for digital engagement, offering customers the ability to curate and disseminate rich, multimedia content experiences. In addition to our products, we also provide professional services such as experience management, monitoring and premium support services, which provide the opportunity for recurring revenue, as well as implementation and other services.

In 2021, we launched ON24 Breakouts, which expanded the functionality and interactivity of webinars built with ON24 Elite. For example, breakouts enable attendees and presenters to network with each other face-to-face, sales teams to connect immediately with prospects and subject matter experts to offer two-way communication to support customer education and training.

In 2021, we also launched ON24 Go Live, which provides a new self-service virtual event solution for companies to stand up live-streaming video events faster and easier. Organizations can build a complete end-to-end external or internal event ranging from roadshows, customer conferences, virtual pop-ups, town halls, and company meetings, using pre-built templates and an easy-to-use and engaging interface.

In 2022, we launched ON24 Forums that joins our portfolio of experience products and unifies engagement and data. ON24 Forums provides a new way to moderate interactive discussions and drive immediate action with audiences. For example, it enables audiences to participate in face-to-face, two-way video discussions.

In April 2022, we acquired Vibbio AS (“Vibbio”), a video software company in Norway. The integration of Vibbio’s video capabilities across the ON24 platform is intended to allow customers to produce video content that creates more engagement, generates first-party data, and drives further personalization.

In January 2024, we launched the ON24 AI-powered Analytics and Content Engine (“ACE”). This solution enables hyper-personalization at scale across ON24 experiences, uses generative artificial intelligence (“AI”) to automatically create content and videos to feed ongoing nurture streams and provides an advanced set of intelligent analytics to our customers.

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We deliver our platform products as cloud-based subscriptions that are easy to use and purpose-built for sales and marketing professionals. As of June 30, 2024, we had 1,682 customers.

Our revenue for the second quarter and first half of 2024 was $37.3 million and $75.1 million, respectively, compared to $42.1 million and $85.1 million for the same periods of 2023, representing a period-over-period decrease of 11% and 12%. We had a net loss of $11.2 million and $21.9 million for the second quarter and first half of 2024, respectively, and $12.8 million and $30.4 million for the same periods of 2023.

Key Factors Affecting Our Performance

Cost Management

We initiated a number of cost control measures in the latter part of 2022 to reduce our cost structure and lower our net loss, including voluntary and involuntary global headcount reductions as well as reductions in spending with various vendors. We pursued additional reductions in our workforce in 2023 to further reduce our cost structure and have continued to do so in the first half of 2024. We expect to incur additional restructuring costs in the second half of 2024 related to our ongoing cost reduction efforts.

Acquiring New Customers

We are focused on growing the number of customers that use our platform. We define a customer as a unique organization, including its subsidiaries and affiliates, that has entered into an agreement for paid access to our platform. A single customer may have multiple agreements with us for separate divisions, subsidiaries or affiliates. Our operating results and growth prospects will depend in part on our ability to attract new customers. While we believe we have a significant market opportunity that our platform addresses, it is difficult to predict customer adoption rates or the future growth rate and size of the market for our platform. We will need to continue to invest in our sales and marketing functions over time in order to address this opportunity by hiring, developing and retaining talented sales personnel who are able to achieve desired productivity levels in a reasonable period of time while we actively manage costs given the current macro-economic environment.

We believe our market is still relatively underpenetrated and, as a result, we see significant opportunity to market our solutions globally. We intend to pursue new customers through specialized and aligned sales teams focused on Enterprise customers, which includes companies with more than 2,000 employees, and Commercial customers, which includes companies with less than 2,000 employees, which we further divide into Mid-Market companies with 200-1,999 employees, and small and midsize, or SMB, companies with 1-199 employees.

Retention and Expansion of ON24 Across Existing Customers

We believe we can achieve growth in our business by retaining and further penetrating our existing customer base with the addition of new users and new products, and through upsell and cross sell. Our multi-dimensional land and expand model drives onboarding and allows us to acquire customers via free trials, live demos and continuous engagement with an efficient sales and marketing investment. As we continue to drive more actionable revenue generating marketing insights, we believe that we have a significant opportunity to further increase sales among existing customers across different functional and geographic departments within each respective organization. Our ability to pursue this opportunity will require us to retain our customers, scale our sales and marketing organization and otherwise increase our operating expenses, and we may not be successful on the timetable we anticipate, or at all, for any number of reasons, which may cause our results to vary from period to period.

Innovation and Expansion of Our Platform

We plan to continually develop new products that enhance the functionality of our platform, improve our user experiences and drive customer engagement in order to further capitalize on new opportunities, which includes building AI-powered capabilities into our product offerings. For example, our new AI-powered ACE became available across our platform starting in January 2024. We intend to sell these new solutions to both existing and new customers, with the goal of driving an increase in revenue as the breadth and depth of our solutions and use cases expands. We also intend to continue investing in our platform and related infrastructure over time to improve capacity, security and scalability. These development efforts will require significant investments, some of which may be episodic or otherwise cause our expenses to vary from period to period.

International Expansion

We believe the expansion of real-time, revenue-generating marketing intelligence in international markets is a significant opportunity. For the second quarter and first half of 2024 and 2023, approximately 23% of our revenue came from outside the United States. We believe there is a compelling opportunity to continue to elevate expansion opportunities for our solutions internationally, both in countries where we currently operate and countries where we do not

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yet sell subscriptions to our solutions. Expanding our international operations will require considerable management attention and other resources and may present challenges associated with complying with local expectations, customs, laws and regulations, and geopolitical disputes (including the Ukraine-Russia war and Gaza-Israel conflict), which may impact our ability to sell subscriptions to our solutions and otherwise cause our results to vary from period to period.

Key Business Metrics

We review the following key business metrics to measure our performance, identify trends, formulate financial projections and make strategic decisions. Our methods for calculating these metrics may differ from similarly titled metrics at other companies, which may hinder comparability with other companies. The following table sets forth our number of customers, our annual recurring revenue (“ARR”) and our customers contributing at least $100,000 in ARR (“$100k Customers”) as of the dates indicated (dollars in thousands):


	June 30, 2024		March 31, 2024		December 31, 2023		June 30, 2023		March 31, 2023
Customers	1,682		1,698		1,784		1,826		1,916
ARR	$	133,702	$	136,480	$	139,708	$	144,792	$	155,584
ARR - Core Platform(1)	$	131,032	$	133,265	$	136,155	$	140,619	$	149,242


$100k Customers	319		324		325		323		333

(1)ARR for Core Platform excludes Virtual Conference product.

Number of Customers

Increasing awareness of our platform and its broad range of capabilities has enabled us to substantially expand our customer base over the years. We define a customer as a unique organization, including its subsidiaries and affiliates, that has entered into an agreement for paid access to our platform. We serve customers of all sizes, ranging from small businesses to global Fortune 100 organizations across a diverse set of industries, including technology, financial services, healthcare, industrial and manufacturing, professional services and B2B information services companies. We had a diverse customer base of 1,682 customers as of June 30, 2024. We have seen a decrease in our customer count in recent years, and our net customers decreased by 16 in the second quarter of 2024 compared to the first quarter of 2024, primarily due to customer churn, particularly in the lower value contracts, offset in part by more new customers acquired during the period. While we believe the change in our net customer numbers reflects the current budget pressures in marketing departments in some organizations, our platform is designed with a long-term view toward our customer relationships and to grow with customers as their needs expand.

Annual Recurring Revenue

We believe that ARR is a key metric to measure our business because it is driven by our ability to acquire new subscription customers and to maintain and expand our relationship with existing subscription customers. 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. As of June 30, 2024, December 31, 2023 and June 30, 2023, our ARR was $133.7 million, $139.7 million and $144.8 million, respectively, and our ARR for Core Platform, which excludes Virtual Conference product, was $131.0 million, $136.2 million and $140.6 million, respectively. The decrease in ARR from March 31, 2024 and December 31, 2023 was primarily due to customer churn and rationalizing contractual entitlements, and decreased demand for our deemphasized Virtual Conference product, offset in part by new customer contracts and contract expansions within existing customers.

Customers Contributing $100,000 or More to ARR

As of June 30, 2024, December 31, 2023 and June 30, 2023, we had 319, 325 and 323 $100k Customers, respectively, demonstrating our penetration of larger organizations. The decrease in ARR contribution from our $100k Customers from the first quarter of 2024 was primarily driven by lower value contract renewals and downsells from existing customers. The decrease in ARR contribution from our $100k Customers from December 31, 2023 was primarily driven by downsells from existing customers and fewer new customer acquisitions in the period.

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Results of Operations

We manage and operate as one reportable segment. The discussion below summarizes our results of operations for the periods presented, which we derived from the condensed consolidated financial statements included elsewhere in this Report.

The following tables set forth selected condensed consolidated statements of operations data for each of the periods presented:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

	(in thousands)
Revenue:
Subscription and other platform	$	34,147	$	38,336	$	68,976	$	77,700
Professional services	3,202		3,750		6,100		7,449
Total revenue	37,349		42,086		75,076		85,149
Cost of revenue:
Subscription and other platform(1)(4)	7,032		9,066		14,378		18,955
Professional services (1)(4)	2,506		3,134		4,942		6,451
Total cost of revenue	9,538		12,200		19,320		25,406
Gross profit	27,811		29,886		55,756		59,743
Operating expenses:
Sales and marketing(1)(4)	19,457		22,628		39,531		47,045
Research and development(1)(2)(4)	9,081		10,930		18,190		22,029
General and administrative(1)(3)(4)	12,332		12,105		23,568		26,383
Total operating expenses	40,870		45,663		81,289		95,457
Loss from operations	(13,059)		(15,777)		(25,533)		(35,714)
Interest expense	10		33		21		62
Other income, net	(2,305)		(3,193)		(4,582)		(5,765)
Loss before provision for income taxes	(10,764)		(12,617)		(20,972)		(30,011)
Provision for income taxes	411		230		906		426
Net loss	$	(11,175)	$	(12,847)	$	(21,878)	$	(30,437)

(1)Includes stock-based compensation as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

	(in thousands)
Cost of revenue
Subscription and other platform	$	687	$	709	$	1,355	$	1,494
Professional services	129		144		250		296
Total cost of revenue	816		853		1,605		1,790
Sales and marketing	3,338		3,555		6,396		6,612
Research and development	2,246		2,363		4,374		4,384
General and administrative	5,676		4,834		10,038		8,940
Total stock-based compensation expense	$	12,076	$	11,605	$	22,413	$	21,726

(2)Research and development expense includes amortization of acquired intangible asset of $138 thousand and $276 thousand for the three and six months ended June 30, 2024, respectively, and $135 thousand and $277 thousand for the three and six months ended June 30, 2023. respectively.

(3)General and administrative expense for the three and six months ended June 30, 2023 includes professional advisory expenses associated with activism defense and related costs of $210 thousand and $2,656 thousand, respectively. We did not incur such costs in the three and six months ended June 30, 2024.

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(4)The results of operations include restructuring costs, which primarily represent severance and related expense due to restructuring activities, and impairment charges on our headquarters lease, as follows. See Note 14 for additional information.


	Three Months Ended June 30, 2024						Six Months Ended June 30, 2024
	Severance and related Charges		Lease Impairment Charge		Total		Severance and related Charges		Lease Impairment Charge		Total

	(in thousands)
Cost of revenue
Subscription and other platform	$	21	$	—	$	21	$	213	$	—	$	213
Professional services	1		—		1		13		—		13
Total cost of revenue	22		—		22		226		—		226
Sales and marketing	330		—		330		1,005		—		1,005
Research and development	—		—		—		112		—		112
General and administrative	149		—		149		339		—		339
Total restructuring costs	$	501	$	—	$	501	$	1,682	$	—	$	1,682


	Three Months Ended June 30, 2023						Six months ended June 30, 2023
	Severance and related Charges		Lease Impairment Charge		Total		Severance and related Charges		Lease Impairment Charge		Total

	(in thousands)
Cost of revenue
Subscription and other platform	$	720	$	89	$	809	$	1,505	$	89	$	1,594
Professional services	50		101		151		104		101		205
Total cost of revenue	770		190		960		1,609		190		1,799
Sales and marketing	597		208		805		1,808		208		2,016
Research and development	340		472		812		1,113		472		1,585
General and administrative	52		339		391		282		339		621
Total restructuring costs	$	1,759	$	1,209	$	2,968	$	4,812	$	1,209	$	6,021

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Revenue



	Three Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Subscription and other platform	$	34,147	91%	$	38,336	91%	$	(4,189)	(11)%
Professional services	3,202		9%	3,750		9%	(548)		(15)%
Total revenue	$	37,349	100%	$	42,086	100%	$	(4,737)	(11)%

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	Six Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Subscription and other platform	$	68,976	92%	$	77,700	91%	$	(8,724)	(11)%
Professional services	6,100		8%	7,449		9%	(1,349)		(18)%
Total revenue	$	75,076	100%	$	85,149	100%	$	(10,073)	(12)%


	Three Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Core Platform
Subscription and other platform	$	33,479	90%	$	37,000	88%	$	(3,521)	(10)%
Professional services	3,006		8%	3,460		8%	(454)		(13)%
Total core platform revenue	36,485		98%	40,460		96%	(3,975)		(10)%
Virtual Conference
Subscription and other platform	668		1%	1,336		3%	(668)		(50)%
Professional service	196		1%	290		1%	(94)		(32)%
Total virtual conference revenue	864		2%	1,626		4%	(762)		(47)%
Total revenue	$	37,349	100%	$	42,086	100%	$	(4,737)	(11)%


	Six Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Core Platform
Subscription and other platform	$	67,539	90%	$	74,811	88%	$	(7,272)	(10)%
Professional services	5,761		8%	6,855		8%	(1,094)		(16)%
Total core platform revenue	73,300		98%	81,666		96%	(8,366)		(10)%
Virtual Conference
Subscription and other platform	1,437		2%	2,889		3%	(1,452)		(50)%
Professional service	339		—%	594		1%	(255)		(43)%
Total virtual conference revenue	1,776		2%	3,483		4%	(1,707)		(49)%
Total revenue	$	75,076	100%	$	85,149	100%	$	(10,073)	(12)%

Total revenue decreased $4.7 million, or 11%, in the second quarter of 2024 and decreased $10.1 million, or 12%, in the first half of 2024, compared to the same periods of 2023. Revenue excluding our Virtual Conference product decreased $4.0 million, or 10%, in the second quarter of 2024 and decreased $8.4 million, or 10%, in the first half of 2024, compared to the same periods of 2023. We continue to see less demand for our Virtual Conference product and we have deemphasized this product.

Subscription and other platform revenue decreased $4.2 million in the second quarter of 2024 and decreased $8.7 million in the first half of 2024, compared to the same periods of 2023. Subscription and other platform revenue excluding our Virtual Conference product decreased $3.5 million in the second quarter of 2024 and decreased $7.3 million in the first half of 2024, compared to the same periods of 2023. These decreases were primarily due to lower net customers and reduced ARR as discussed in the section titled “Key Business Metrics.”

Professional services revenue decreased $0.5 million in the second quarter of 2024 and decreased $1.3 million in the first half of 2024, compared to the same periods of 2023. Professional services revenue excluding our Virtual Conference product decreased $0.5 million in the second quarter of 2024 and decreased $1.1 million in the first half of 2024,

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compared to the same periods of 2023. These decreases were primarily due to more customers electing to be “self-service” and not utilize our professional services offerings.

Cost of Revenue and Gross Margin


	Three Months Ended June 30,
	2024			As a % of Total Revenue	2023			As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Subscription and other platform	$	7,032		19%	$	9,066		22%	$	(2,034)	(22)%
Professional services	2,506			7%	3,134			7%	(628)		(20)%
Total cost of revenue	$	9,538		26%	$	12,200		29%	$	(2,662)	(22)%
Gross profit	$	27,811		74%	$	29,886		71%	$	(2,075)	(7)%
Gross margin	74		%		71		%


	Six Months Ended June 30,
	2024			As a % of Total Revenue	2023			As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Subscription and other platform	$	14,378		19%	$	18,955		22%	$	(4,577)	(24)%
Professional services	4,942			7%	6,451			8%	(1,509)		(23)%
Total cost of revenue	$	19,320		26%	$	25,406		30%	$	(6,086)	(24)%
Gross profit	$	55,756		74%	$	59,743		70%	$	(3,987)	(7)%
Gross margin	74		%		70		%

Cost of Revenue

Cost of revenue decreased $2.7 million, or 22%, for the second quarter of 2024 and decreased $6.1 million, or 24%, for the first half of 2024, compared to the same periods of 2023, primarily reflecting the result of our active cost management and headcount reduction related to our restructuring activities. We anticipate the restructuring activities to continue in the second half of 2024.

Gross Margin

Gross margin was 74% for the second quarter of 2024 compared to 71% of the same period in 2023. Gross margin was 74% for the first half of 2024, compared to 70% for the same period of 2023. The favorable changes in gross margin primarily reflect the result of our active cost management and headcount reduction related to our restructuring activities. While we continued to invest in our cloud infrastructure capabilities to support our business needs, we have made cost reductions across our business since the second half of 2022 to streamline our operations.

We expect gross margin for the remainder of 2024 to be relatively consistent with 2023. We have continued to increase our utilization of the public cloud for our newer product offerings while we actively manage costs given the current macro-economic environment.

Operating Expenses

Sales and Marketing


	Three Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Sales and marketing	$	19,457	52%	$	22,628	54%	$	(3,171)	(14)%

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	Six Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Sales and marketing	$	39,531	53%	$	47,045	55%	$	(7,514)	(16)%

Sales and marketing expense decreased $3.2 million, or 14%, in the second quarter of 2024 and decreased $7.5 million, or 16%, in the first half of 2024, compared to the same periods of 2023. The decrease in each respective period was primarily attributable to a decrease in personnel-related expenses of $2.4 million and $5.4 million due to headcount reduction related to our restructuring activities. The remainder of these decreases was primarily driven by our active cost management as we focused on driving improved sales efficiency under the current macro-economic environment.

We expect our sales and marketing expense to decrease in absolute dollars in the remainder of 2024 compared to 2023 as we continue to tighten our sales and marketing spend given the current macro-economic environment while supporting demand for our digital experiences and our next generation intelligent engagement platform.

Research and Development


	Three Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Research and development	$	9,081	24%	$	10,930	26%	$	(1,849)	(17)%


	Six Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Research and development	$	18,190	24%	$	22,029	26%	$	(3,839)	(17)%

Research and development expense decreased $1.8 million, or 17%, in the second quarter of 2024 and decreased $3.8 million, or 17%, in the first half of 2024, compared to the same periods of 2023. The decrease in each respective period was primarily attributable to a decrease in personnel-related expenses of $1.1 million and $2.7 million due to headcount reduction related to our restructuring activities. The remainder of these decreases was primarily driven by our active cost management. We have been applying a disciplined approach to focus our investments on research and development areas that offer the greatest opportunities, including our investments in generative AI capabilities for our product offering, such as ACE, as we expand our platform and bring new products to the market.

We expect our research and development expense to decrease moderately in absolute dollars in the remainder of 2024 compared to 2023 as we focus on further developing our platform and infrastructure while we actively manage costs given the current macro-economic environment.

General and Administrative


	Three Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
General and administrative	$	12,332	33%	$	12,105	29%	$	227	2%

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	Six Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
General and administrative	$	23,568	31%	$	26,383	31%	$	(2,815)	(11)%

General and administrative expense increased $0.2 million, or 2%, in the second quarter of 2024 and decreased $2.8 million, or 11%, in the first half of 2024, compared to the same periods of 2023. Excluding the $0.8 million and $1.1 million increase of stock-based compensation expense in each respective period, general and administrative expense decreased $0.6 million and $3.9 million compared to the same periods of 2023. These decreases were primarily due to our active cost management and headcount reduction related to our restructuring activities. The decrease in the first half of 2024 was also attributable to the $2.7 million professional advisory expenses associated with activism defense we incurred in the first half of 2023, which we did not incur in the same period of 2024.

We expect our general and administrative expense to decrease modestly in absolute dollars in the remainder of 2024 compared to 2023 as we continue to actively manage costs given the current macro-economic environment.

Interest Expense


	Three Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Interest expense	$	10	—%	$	33	—%	$	(23)	(70%)


	Six Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Interest expense	$	21	—%	$	62	—%	$	(41)	(66%)

Interest expense for the second quarter and first half of 2024 remained relatively flat in absolute dollars compared to the same periods of 2023.

Other Income, Net


	Three Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Other income, net	$	(2,305)	(6)%	$	(3,193)	(8)%	$	(888)	(28)%


	Six Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Other income, net	$	(4,582)	(6)%	$	(5,765)	(7)%	$	(1,183)	(21)%

The decreases in other income, net for the second quarter and first half of 2024 compared to the same periods of 2023 were primarily driven by the decrease in investment income. See Note 10 for additional information.

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Provision for Income Taxes


	Three Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Provision for income taxes	$	411	1%	$	230	1%	$	181	79%


	Six Months Ended June 30,
	2024		As a % of Total Revenue	2023		As a % of Total Revenue	$ Change		% Change

	(in thousands, except percentages)
Provision for income taxes	$	906	1%	$	426	1%	$	480	113%

The increases in provision for income taxes for the second quarter and first half of 2024 compared to the same periods of 2023 were primarily driven by increases in realized foreign exchange gains in foreign jurisdictions and a tax provision true-up. The increase in the first half of 2024 was partially offset by the decreased income in foreign jurisdictions.

Liquidity and Capital Resources

As of June 30, 2024, we had cash, cash equivalents and marketable securities of $193.8 million. Our investments generally consist of money market mutual funds, U.S. Treasury securities, U.S. Agency securities and debt securities, all of which are available for use in our current operations. Our liquidity requirements arise primarily from our working capital needs, capital expenditures and debt service requirements. We have historically funded our liquidity requirements through sales of convertible preferred stock, cash generated from our operations, borrowings and availability under our revolving credit facility, and most recently through our IPO in February 2021.

Prior to the conclusion of our $125 million capital return program in February 2024, we spent a total of $5.3 million on share repurchases (including commissions) during the first quarter of 2024. In March 2024, our board of directors approved a new $25 million share repurchase program (the “2024 Repurchase Program”) allowing us to purchase shares of our common stock on a discretionary basis from time to time over a 12-month term through open market repurchases, privately negotiated transactions, or other means. In the second quarter and first half of 2024, we spent $5.0 million and $10.3 million, respectively, on share repurchases (including commissions) pursuant to the 2024 Repurchase Program. In the third quarter of 2024 through August 6, 2024, we spent $3.3 million on share repurchases (including commissions).and had $16.7 million available for future share repurchases under the 2024 Repurchase Program.

In an ongoing effort to streamline our organization, we have pursued additional reductions in our workforce in the first half of 2024 to further reduce our cost structure. We incurred aggregate restructuring and other charges of $0.5 million and $1.7 million in the second quarter and first half of 2024, respectively, primarily related to severance and one-time termination benefits. See Note 14 to the condensed consolidated financial statements for further information. We expect to incur additional restructuring costs of $0.4 million to $0.7 million in the third quarter of 2024 related to our ongoing cost reduction efforts and may incur additional costs in future periods for restructuring activities.

Our principal uses of cash in recent periods have been to fund our operations, invest in research and development, purchase investments and to a lesser extent fund share repurchases and strategic transactions.

We believe our existing cash, cash equivalents and marketable securities will be sufficient to meet our needs for at least the next 12 months. Our future capital requirements will depend on many factors including our revenue growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support further sales and marketing and research and development efforts and the timing and extent of additional capital expenditures to invest in existing office spaces. We may in the future enter into arrangements to acquire or invest in complementary businesses, products, services and technologies, and we may need to seek additional equity or debt financing. In the event that additional financing is needed from outside sources, we may not be able to raise the necessary capital or raise the capital on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations and financial condition could be materially and adversely affected.

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The following table summarizes our cash flows for the periods presented (in thousands):


	Six Months Ended June 30,
	2024		2023
Net cash provided by (used in) operating activities	$	3,526	$	(8,483)
Net cash (used in) provided by investing activities	(31,941)		89,234
Net cash used in financing activities	(9,114)		(82,821)

Operating Activities

Our largest source of operating cash is cash collections from our customers for subscriptions to use our platform. Our primary uses of cash from operating activities are from personnel-related expenditures, costs related to hosting our platform and marketing expenses. Our cash flow from operating activities will continue to be influenced principally by the extent to which we increase spending on our business and our working capital requirements.

Net cash provided by (used in) operating activities is primarily impacted by our net loss adjusted for certain non-cash items such as stock-based compensation, depreciation and amortization, amortization of deferred contract acquisition costs, amortization (accretion) on marketable securities, as well as the effect of changes in operating assets and liabilities. Our cash flows from operating activities provided net cash of $3.5 million in the six months ended 2024 compared to used net cash of $8.5 million in the same period of 2023, resulting in an increase of cash inflow of $12.0 million. The increase was primarily attributable to the $8.6 million decrease in net loss and $4.5 million favorable changes in operating assets and liabilities between the periods, partially offset by the $1.1 million decrease in non-cash expenses. In the second quarter of 2024, we made total restructuring related payments of $1.5 million compared to $4.1 million in the same period of 2023. See Note 14 for additional information.

The total non-cash adjustments for the six months ended 2024 was $31.5 million compared to $32.6 million for the same period of 2023, reflecting a $1.1 million unfavorable change of non-cash adjustment.

Working capital used cash of $6.3 million in the six months ended 2024 compared to $10.8 million in the same period of 2023, a decrease of cash outflow of $4.5 million. This favorable change in working capital was impacted by, among other items, the timing of vendor payments and prepayment as well as the timing of cash receipts from customers.

Investing Activities

Net cash used in investing activities for the six months ended 2024 was $31.9 million compared to provided cash of $89.2 million for the same period of 2023. The unfavorable change was primarily driven by a decrease in proceeds from maturities and sales of marketable securities of $189.8 million, offset in part by a decrease in purchases of marketable securities of $69.4 million.

Our most significant capital expenditures have been investments in our equipment to support ongoing operations. We expect our capital investment to continue in the future.

Financing Activities

Net cash used in financing activities for the six months ended 2024 was $9.1 million compared to $82.8 million for the same period of 2023. The decrease in cash outflow was primarily driven by the $49.9 million payment of the special one-time dividend in the second quarter of 2023 and $23.0 million of decreased spending on share repurchases during the period.

Debt Obligations

Revolving Credit Facility

In September 2021, we amended our revolving credit facility with Comerica Bank with an effective date of August 31, 2021, which increases our borrowing capacity to a maximum of $50.0 million with a letter of credit sublimit of $4.0 million and a credit card sublimit of $1.0 million. The amendment allows us to borrow up to $50.0 million if we maintain at least $100.0 million on deposit with Comerica Bank. If such deposit is less than $100.0 million, we may borrow up to the lesser of $50.0 million or an amount determined by our trailing five months of recurring revenue, annualized renewal rate and annualized monthly churn rate. The terms of the agreement permit voluntary prepayment without premium or penalty. The revolving credit facility matures in August 2024 and is secured by substantially all of our assets. We are required to pay a quarterly commitment fee of 0.15% per annum on the undrawn portion available under the revolving line of credit. In April 2023, we further amended our revolving line of credit to allow for certain transactions, including payment of dividends and

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share repurchases from open market purchases or through an accelerated share repurchase program, subject to certain terms and conditions.

Outstanding principal amounts on the revolving credit facility incur interest at a rate equal to Comerica Bank’s prime referenced rate, as defined in the loan agreement. The referenced prime rate was 8.50% as of June 30, 2024 and December 31, 2023.

As of June 30, 2024, we had not drawn down on our line of credit and have a borrowing capacity of $50.0 million under the revolving credit facility.

Commitments and Contractual Obligations

The following table summarizes our non-cancelable contractual obligations as of June 30, 2024 (in thousands):


	Payments Due by Period
	Total		Remainder of 2024		2025 to 2026		2027 to 2028		2029 and Thereafter
Operating lease obligations	$	4,078	$	1,508	$	2,536	$	34	$	—
Purchase commitments(1)	6,188		2,078		3,995		115		—
Other(2)	1,865		845		928		92		—
Total	$	12,131	$	4,431	$	7,459	$	241	$	—

(1)Amounts primarily represent our commitments under various software license and co-location facilities and services agreements. See Note 8 to condensed consolidated financial statements for additional information.

(2)Amounts represent our recognized commitments under various software license agreements and are included in our accrued liabilities and other long-term liabilities on our condensed consolidated balance sheets.

Critical Accounting Policies and Estimates

There has been no significant change during this quarter to our critical accounting policies and estimates as discussed in our annual report on Form 10-K for the year ended December 31, 2023.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There has been no material change in our exposure to market risks from that discussed in Item 7A of our annual report on Form 10-K for the year ended December 31, 2023.

Interest Rate Risk

Our exposure to changes in interest rates relates primarily to our investment portfolio. Changes in U.S. interest rates affect the interest earned on our cash, cash equivalents and investments and the fair value of those investments.

Our cash equivalents primarily consist of money market mutual funds, which are not significantly exposed to interest rate risk. Our marketable securities are subject to interest rate risk because these securities primarily include a fixed interest rate. As a result, the market values of these securities are affected by changes in prevailing interest rates. We attempt to limit our exposure to interest rate risk and credit risk by investing our investment portfolio in instruments that meet the minimum credit quality, liquidity, diversification and other requirements of our investment policy. Our marketable securities consist of liquid, investment-grade securities. We do not enter into investments for trading or speculative purposes.

The following table presents the hypothetical fair values of our marketable securities assuming immediate parallel shifts in the yield curve of 50 basis points (“BPS”), 100 BPS and 150 BPS as of June 30, 2024 (in thousands):


	(150 BPS)		(100 BPS)		(50 BPS)		Fair Value as of June 30, 2024		50 BPS		100 BPS		150 BPS
Marketable securities	$	179,943	$	179,401	$	178,859	$	178,317	$	177,775	$	177,233	$	176,691

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Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of June 30, 2024. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2024, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended June 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We, our Chief Executive Officer, our Chief Financial Officer, certain current and former members of our board of directors, and the underwriters that participated in our initial public offering (“IPO”) are named as defendants in a consolidated putative class action, captioned In re ON24, Inc. Securities Litigation, 4:21-cv-08578-YGR (filed in November 2021), that is currently pending in the United States District Court for the Northern District of California. The consolidated complaint purports to assert claims under Sections 11 and 15 of the Securities Act of 1933 on behalf of all persons and entities that purchased, or otherwise acquired, our common stock issued in connection with our IPO. The complaint alleges that our registration statement and prospectus contained untrue statements of material fact and/or omitted material facts about ON24’s growth and customer base. The plaintiff seeks, among other things, an award of damages and attorneys’ fees and costs. The defendants filed a motion to dismiss the complaint in May 2022, which the district court granted with leave to amend in July 2023. Plaintiff filed its amended complaint in September 2023, and the defendants filed a motion to dismiss the amended complaint in October 2023. In March 2024, the district court granted the defendants’ motion to dismiss with prejudice. Plaintiff has filed a notice of appeal of the district court’s order and briefing in the appeal is currently ongoing. We believe that the allegations in the amended complaint are without merit.

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Except as set forth in the prior paragraph, we are not presently a party to any legal proceedings that we believe, if determined adversely to us, would have a material adverse effect on our business, financial condition, operating results, or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

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Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this report, including our condensed consolidated financial statements and related notes, as well as in our other filings with the SEC, in evaluating our business and before investing in our common stock. The occurrence of any of the events or developments described below could materially and adversely affect our business, financial condition, results of operations, and growth prospects. In such an event, the market price of our common stock could decline, and our stockholders may lose all or part of their investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations.

Summary of Risk Factors

Our business is subject to a number of risks and uncertainties, including those risks discussed at-length below. You should read these risks before you invest in our common stock.

•our ability to grow our revenue;

•fluctuation in our performance, our history of net losses and any increases in our expenses;

•our ability to attract new customers and expand sales to existing customers;