ON24, Inc. (ONTF) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call shows strong financial performance with improved net income, positive free cash flow, and reduced expenses. Despite some deal slippage, the company has a positive outlook for Q4 ARR driven by AI offerings and the LinkedIn partnership. The enterprise-focused strategy and AI solutions are gaining traction, with a growing percentage of customers adopting AI. The Q&A reinforced positive sentiment with expectations of AI becoming a major growth driver. Overall, the financial health and strategic initiatives suggest a positive stock price reaction.
Key Financial Performance
Total Revenue $34.6 million, with a year-over-year decrease from $34 million in Q3 2024. The reasons for the change include seasonally softer summer quarter and deal slippage in the life sciences vertical.
Total Subscription and Other Platform Revenue $32 million, no specific year-over-year comparison provided.
Total Professional Services Revenue $2.6 million, representing approximately 8% of total revenue, no specific year-over-year comparison provided.
Total ARR (Annual Recurring Revenue) $124.5 million, with softness in growth business and deal slippage in the life sciences vertical contributing to the performance.
Core Platform ARR $122.4 million, no specific year-over-year comparison provided.
Average Core ARR per Customer Over $80,000, reaching its highest level ever, driven by a focus on enterprise customers and longer-term commitments.
Percentage of ARR in Multiyear Agreements Increased sequentially each quarter in 2025, reaching an all-time high at the end of Q3.
Gross Margin 76% for Q3, consistent with the year-to-date gross margin of 77% for 2025.
Sales and Marketing Expense $14.4 million, decreased from $15.9 million in Q3 2024, representing 42% of total revenue compared to 44% last year. The decrease is attributed to deploying AI tools to increase efficiency.
R&D Expense $6.6 million, slightly decreased from $6.7 million in Q3 2024, representing 19% of total revenue compared to 18% last year. Continued investment in product innovation, including AI-enabled features.
G&A Expense $5.8 million, decreased from $6.2 million in Q3 2024, representing 17% of total revenue, attributed to streamlining G&A functions.
Operating Loss $0.4 million, improved from $0.8 million in Q3 2024, representing a negative 1% operating margin compared to a negative 2% last year.
Net Income $1.2 million or $0.03 per share, compared to $1.1 million or $0.02 per share in Q3 2024.
Free Cash Flow Positive $2.7 million excluding restructuring and other costs, compared to positive $0.1 million in Q3 2024. Including all items, free cash flow was positive $2.2 million.
Cash Provided by Operations $2.5 million, compared to $0.3 million in Q3 2024.
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Operating Highlights
AI Propel+: A new AI-forward solution that transforms webinars or digital events into omni-channel campaigns. It includes AI-powered analytics and content engines for repurposing content into derivative forms like video clips and blog posts.
AI Translate: A multilingual translation offering that allows content localization in over 60 languages. It supports global campaigns and ensures consistent branding and faster timelines.
One-click social publishing: An AI-powered tool for creating and posting short-form video clips across social media platforms with a single click.
Agentic AI video translation: Converts videos into multiple languages while maintaining the speaker's voice, tone, and delivery.
Agentic AI video clip optimization: Allows customers to refine video clips for different use cases and dynamically configure layouts for social media sharing.
AI and LLM search discoverability: Helps optimize content for LLM indexing and readability, enhancing landing pages and summarizing content for better search engine discoverability.
Partnership with LinkedIn: A collaboration to integrate ON24 events with LinkedIn, enabling seamless workflows, frictionless registration, and expanded audience reach. This partnership aims to transform digital events into connected campaigns.
Global market expansion: ON24's AI Translate has enabled a global technology company to localize over 4,500 events annually in 12 languages, enhancing engagement in international markets.
AI-driven operational efficiencies: AI tools are being deployed to improve productivity, especially in sales and marketing, targeting a double-digit reduction in sales and marketing expenses as a percentage of revenue over the next two years.
Cost reduction in G&A: Streamlining G&A functions has led to reduced expenses, contributing to improved profitability.
Focus on AI innovation: ON24 is positioning itself as an AI-enabled engagement platform, driving measurable results for customers.
Customer winbacks: Significant winbacks from boomerang customers, particularly in regulated industries, showcasing the platform's value in automating engagement and integrating insights.
Potential acquisition: The company has received indications of interest for a potential acquisition and is evaluating these with Goldman Sachs.
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Risk or Challenges
Slower New Growth Bookings: The company experienced slower new growth bookings in Q3, particularly in the life sciences vertical, which impacted ARR growth.
Deal Slippage: Some deals were delayed in Q3, although many have closed in Q4. This delay could affect revenue timing and financial performance.
Seasonal Softness: Q3 was seasonally soft, which contributed to lower-than-expected ARR performance.
Economic Conditions: Adverse economic conditions and macroeconomic deterioration are cited as risks that could impact future results.
Customer Retention Challenges: While customer metrics improved, retaining and expanding the customer base remains a challenge, especially in competitive and regulated industries.
Regulatory Compliance: The need for compliance in regulated industries, such as pharmaceuticals, adds complexity and potential risk to operations.
AI Integration Costs: The company is heavily investing in AI tools and solutions, which could strain resources and impact profitability if not managed effectively.
Potential Acquisition Uncertainty: The company has received indications of interest for a potential acquisition, creating uncertainty about its future direction and operations.
Sales and Marketing Efficiency: Efforts to reduce sales and marketing expenses as a percentage of revenue could impact customer acquisition and retention if not executed carefully.
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Guidance & Outlook
ARR Performance: ON24 expects significantly better ARR performance in Q4 2025 compared to Q3, setting up for a stronger 2026. Core ARR performance in Q4 is expected to range from a decrease of 1% to an increase of $0.5 million compared to Q3 levels. For the virtual conference product, ARR is expected to be $2 million at the end of 2025.
Revenue Guidance: Q4 2025 total revenue is expected to range from $33.9 million to $34.5 million, with core platform revenue (including services) ranging from $33.3 million to $33.9 million. Professional services are expected to represent approximately 8% of total revenue. For the full year 2025, total revenue is projected to be between $138.6 million and $139.2 million, with core platform revenue (including services) between $136 million and $136.6 million.
Profitability and Cost Reduction: ON24 expects to deliver positive adjusted EBITDA for Q4 2025 and the full year 2025. The company is targeting a double-digit reduction in sales and marketing expenses as a percentage of revenue over the next two years, aiming to reduce it to the mid-30s in 12 months and the low-30s in two years. These cost reductions are expected to improve profitability in 2026 and beyond.
AI Integration and Efficiency: ON24 is actively deploying AI tools to improve operational efficiency and streamline sales and marketing functions. The company expects these AI-driven efficiencies to contribute to higher profit margins and a more profitable operating model in 2026.
Partnership with LinkedIn: ON24 has announced a partnership with LinkedIn to enhance event marketing. The integration will roll out in phases, enabling seamless workflows, expanded audience reach, and improved digital event promotion. This collaboration is expected to drive business growth for customers and prospects.
AI Product Expansion: ON24 plans to expand its AI solutions, including launching new capabilities like one-click social publishing, agentic AI video translation, and AI-powered video clip optimization. These innovations aim to enhance customer engagement and content discoverability, positioning ON24 as a leader in AI-enabled engagement platforms.
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Shareholder Return Plan
Capital Return Program: ON24 announced a $50 million capital return program in May 2025. In Q3, approximately $7 million was utilized for share repurchases, with an additional $2.4 million used in Q4. Since the program's inception, a total of $13.8 million has been spent on share repurchases. This program follows three earlier capital return programs that collectively returned $191 million to shareholders.
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Key Q&A
Q:What percentage of customers are paying for AI solutions, and how is it impacting contracts and ACV?
A:Nearly 20% of customers are paying for AI solutions, and this percentage is increasing quarterly. AI solutions are contributing to retention, expansion, and new deals, with 40-50% of new deals including AI offerings. AI solutions are expected to become the largest driver of expansion for ON24 next year.
Q:What are the components of go-to-market efficiency improvements, and how is AI contributing?
A:The company has streamlined its go-to-market organization, reducing sales and marketing spending by $10 million per quarter since mid-2022. AI is being deployed internally to increase efficiency, and resources are being reallocated to focus on high-growth areas like financial and professional services. The company aims to maintain the right number of resources to return to ARR growth in 2026.
Q:What caused deal slippage from Q3 to Q4, and what is the outlook for Q4 ARR?
A:Deal slippage was due to less urgency in closing deals during Q3, a seasonally softer quarter. $600,000-$700,000 worth of deals slipped into Q4, with 60-65% already closed. Q4 ARR guidance is 0.5% to -1%, with expectations for strong gross retention, momentum from AI offerings, and benefits from the LinkedIn partnership.
Q:What is the potential of the LinkedIn partnership, and how will it be monetized?
A:The LinkedIn partnership aims to transform digital events by driving audiences from LinkedIn to ON24 events and enabling seamless registration. Future phases will include monetizable features like look-alike audiences, expected to launch by Q1 2024, which will impact ON24's top line.
Q:What is the vision for the AI search discoverability agenda?
A:The AI search discoverability agenda focuses on making event content, including derivative content like blogs and transcripts, indexable and searchable by LLMs. This will enable continuous engagement and improve content discoverability across platforms.
Q:How has the new enterprise-focused go-to-market motion performed?
A:The enterprise-focused go-to-market motion has performed well, with regulated industries now accounting for 50% of the business. Financial and professional services are growing mid-single digits year-over-year with high gross retention. The focus on strategic accounts and regulated industries has driven success.
Q:How has the onboarding of the new CMO, David Lee, impacted the company?
A:David Lee has ramped up quickly, bringing in new leaders for demand generation and corporate marketing. The marketing team is closely aligned with sales and customer success, focusing on campaigns for regulated industries, AI offerings, and LinkedIn initiatives.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the AI search discoverability agenda, stating that it is early and not all information can be disclosed. Additionally, they did not provide clear guidance on Q4 ARR, citing the back-end loaded nature of the quarter.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI Propel
AI agent
AI efficiency
AI engagement
AI offering
AI solution
AI video
CRM experience
LLM search
LinkedIn
Translate
discoverability
engagement AI
engagement insight
engagement platform
event registration
indication interest
insight CRM
language
lobby page
marketing percentage
medium channel
offering AI
platform user
retirement
today result
translation
user result
video clip
webinar event
winbacks industry
ONTF Transcript
ON24, Inc. (ONTF) Q3 2025 Earnings Call Transcript
Positive11-11
The earnings call shows strong financial performance with improved net income, positive free cash flow, and reduced expenses. Despite some deal slippage, the company has a positive outlook for Q4 ARR driven by AI offerings and the LinkedIn partnership. The enterprise-focused strategy and AI solutions are gaining traction, with a growing percentage of customers adopting AI. The Q&A reinforced positive sentiment with expectations of AI becoming a major growth driver. Overall, the financial health and strategic initiatives suggest a positive stock price reaction.
ON24, Inc. (ONTF) Q2 2025 Earnings Call Transcript
Positive8-8
The earnings call reflects a positive sentiment due to strong revenue performance, exceeding expectations, and consistent gross margins. Despite an operating loss, the company is EBITDA positive and maintains a strong balance sheet. The share repurchase program and investments in AI and innovation are favorable. The Q&A section indicates confidence in Q4 ARR growth and strong enterprise customer metrics. Despite some economic challenges, the company's strategic initiatives and operational discipline suggest a positive outlook, likely leading to a 2% to 8% stock price increase over the next two weeks.
ON24, Inc. (ONTF) Q1 2025 Earnings Call Transcript
Unknown5-7
The earnings call reflects mixed signals: a decline in core platform revenue and ARR, alongside a positive cash flow and a significant share repurchase program. The Q&A section highlights macroeconomic uncertainties impacting guidance, but also notes potential recovery in high-value customer segments. The company's AI strategy and focus on regulated industries are promising, but unclear management responses and conservative guidance temper optimism. Overall, the sentiment is neutral, with balanced positive and negative factors.
ON24, Inc. (ONTF) Q4 2024 Earnings Call Transcript
Unknown2-25
The earnings call presents a mixed picture: while there are signs of improvement in ARR and operational efficiency, the company faces challenges in customer retention and economic conditions. Positive factors include a share repurchase program and improved financial metrics, but the lack of clarity in management's responses and ongoing risks temper optimism. The neutral sentiment reflects these balanced positives and negatives, suggesting a stock price movement within the -2% to 2% range.
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Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
