Q2 2021 ON24 Inc Earnings Call
Good afternoon and welcome. Please note that the live and interactive webcast of today's call maybe accessed via the Investor Relations section of the company's website at Www Dot investors Dot on 24 dotcom upon completion of the prepared remarks.
We will open the call for questions, which may be submitted via the webcast portal or the dollar line. Please note that this call is being recorded.
At this time I would like to turn the conference over to Lauren Sloane with Blue shirt group.
Thank you Hello, and good afternoon, everyone. Welcome to on 24 second quarter 2021 earnings conference call on.
On the call with me today are sure Armstrong, the founder and CEO of the on 24, and Chief Financial Officer, Steve Absolutely I would like to remind everyone of some information provided during the call may include forward looking statements, including without limitation statements on on <unk> future event.
Expected financial and operating results.
This trend global economic trends.
The expected timing and benefits if any of such strength.
These forward looking statements may contain such words as project outlook future expects well and set the paid believes intends or referred to our guidance.
These forward looking statements reflect beliefs estimates and predictions as of today and on 24 expressly assumes no obligation to update any such forward looking statements.
Forward looking statements are only predictions and are subject to substantial risks.
Factors that could cause or contribute to such differences include but are not limited to risks associated with our ability to attract new customers and expansion of existing customers fluctuation in our performance competition in our market and any decline in demand for our solutions, our ability to expand our sales and marketing capable.
And otherwise manage our growth.
The COVID-19 pandemic and other risks identified in the company the SEC filings.
For a detailed description of risks and uncertainties, which could impact of these forward looking statements you should review on 24 periodic SEC filings, including the risks identified today.
The financial press release.
We would like to point out that on todays call ill of course, both GAAP and non-GAAP results.
We use these non-GAAP financial measures to evaluate our ongoing operation and for internal planning and forecasting purposes non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP.
Let's do the reconciliation of these non-GAAP financial measures. Please refer to today's financial press release I'll now turn the call of Registrar Trapp. Please go ahead.
Thank you.
Welcome everyone on 20 force second quarter 2021 financial results conference call. Thank you for joining us.
For the second quarter, we reported total revenue of <unk>.
The $1.1 billion, which grew 43% year over year.
Subscription on the platform revenue grew by 68% year over year, excluding legacy.
Additionally, we continue to demonstrate significant leverage which drove non-GAAP operating income of coupon of $5 million and $5.7 million on free cash flow for the core.
Our second quarter EBITDA walk was.
164, 1 million up 44% from $114.2 million in the second quarter of 2020, which itself was up 70% from the second quarter COVID-19.
Q2, 2021 was the transition quarter, where we went from a peak of Covid in Q2, 2020, So peak of vaccinations in Q2.
The 21.
New business bookings remained healthy even though in Q2.2021, there was some uncertainty as many business as anticipated the might be starting to return to some form of course pandemic normalcy.
On the second quarter, we added 183, new customer logos similar to Q1, and almost 10% of higher than Q4.
However, we also experienced higher than expected chart and down sell from customers, we signed up in the second quarter last year during the peak of Covid.
This higher churn was primarily in the first time renewal cohort of customers, who signed up 1 year contracts last year and were up for renewal.
We of course recognize that during the pandemic companies of every size, we're searching for tools to quickly deploy to reach customers.
They could no longer connect with the person.
That was true.
The buyers and non ICP ideal customer profile of buyers focused on 1 time events, who rush to find alternative solutions to in person business.
This is normally thought on primary target audience.
As a result, Q2.2021 what was our largest renewal of cohort.
And the share of horse non renewals in Q2, 2021 was outsize accounting for over 60% of the cohort.
We saw significantly higher charge and down sales within this group, while the rest of our business had strong retention equal on the pre pandemic levels.
We expect the business from the first time renewal base that did renew who have the same strong retention profile as our existing customer base.
We anticipate that the Jordan of downhole pressure will ease of meaningfully on the second half of the year on the proportion of forced on renewals continues to drop from over 60% in Q2, the 30% of Q4, a significant reduction that brings us more in line with pre Covid cohorts.
Additionally, the <unk>.
Q3, and Q4 renewal of cohorts are meaningfully smaller than Q2.
Most importantly, when we look at Q2 the logo churn was up primarily in the SMB.
Enterprise customers remained very solid throughout the quarter and the.
In addition.
Our customer quality has increased for example.
In Q2, we added over 20, net new 100 K the.
Our customers similar to recent force.
Our growth enterprise logo retention was the same as the pre Covid enterprise retention.
We saw some downsizing of these accounts the normalized for some of the peak of Covid, but what I'm very pleased the enterprise customer retention.
We also saw multiyear deals grow as a percentage of IRR and the number of customers buying multiple products increased in Q2 over Q1.
As a result of these factors, we believe that we have gotten past the worst of the chart and we have significantly reduced the number of customers that do not meet our normal target profile.
It also speaks to the underlying strength of our business, especially in our focus area the enterprise.
Enterprises deploy our platform is the data rich system of engagement purpose built for enterprise class marketing and sales many of our enterprise customers enabled by the self service capabilities and the platform deliver hundreds of thousands of experiences per year.
For many of these customers we have become their top line generating platform and Theyre standardizing on the non 24 for the prospect of engagement and conversion.
The pandemic has accelerated the global enterprise the awareness of our offerings.
And we now have a larger market than ever before and as the new digital first enterprise business pattern emerges and as our category leadership grows our future is more exciting than ever before.
Importantly, our digital system of engagement provides our customers with the assurance that regardless of the uncertainty of what the new normal may look like and any chance of Stuart.
On 20, <unk> platform will support our customers' revenue continuity, but having the sales and marketing solution that drives revenue.
Our solution is available globally with enterprise scale and options and features to enable our customers to make privacy and compliance choices the aligned to their needs.
Our market leadership position has been further validated by the numerous industrial recognitions and awards we have received.
In June 2021, it was announced by the G to 1 of the largest soccer marketplace on user of your platforms. The based on user reviews on 24 of elite was recognized as the top webinar software for enterprises of mid market companies.
In addition in July of 2021 frustrated yes. Another of your site for business technology named on 44 of the best Webinar software for enterprises.
Let me now walk you through some tier 2 customer examples.
The 3 core use cases that we focus on it on 24 of these are demand generation partner enablement and event marketing. These are all categories of very large global and growing.
Starting with demand generation.
Enabling thousands of customers to convert millions of prospects the buyers.
Our customers can scale prospect engagement in terms of engagement into actionable insight, thereby increasing sales conversion and driving revenue growth.
1 Great example of it is where the large approximately 15 billion market cap architecture engineering and construction software company.
We'll do the expanded investment of of all 24 within approximately half of million dollar deal.
The standardized webinar demand generation and virtual customer engagement on on 24, using on 24 League and the engagement hubs and adding new breakouts for the way engagement last year, the ran more than a thousand experiences the alts.
So leverage on what people connect for deep data integration with Sap's marketing flow or.
Over the past 2 years, we've increased our with this customer but 800%.
Another important use cases partner enablement on.
When you put provides the scalable digital approach for companies to enable and frame houses of the Oems distributors.
<unk> partners and advisors on their extensive portfolio of products and services. These companies spanned industries, including manufacturing consumer packaged goods.
The National services and Pharmaceuticals, 1 of the world's largest construction equipment manufacturer expanded the spend in Q2 and is nearly $1 million in annual spend with the all 24.
Q2, the began to expand our solutions globally deployed on 24 of elite and virtual conference across Europe, and Latin America to provide training and education to the vast network of theaters and consultants.
Finally for events and field marketing professionals entrepreneurs will provide webinars virtual conferences and integrated on demand digital engagement hubs. We are seeing event marketing as a growing use case for our platform.
In addition, the on 24 platform can uniquely support hybrid of you been engagement, providing the same interactive experiences to both virtual and physical audiences simultaneously.
1 of the world's leading exhibition Organisers, who runs thousands of physical and virtual events for leading VW brands across the Asia, North America, and the Middle East expanded the investment in non 24 after having successfully deployed nearly creek housing all of 'twenty for experiences. The recently increased the number of experiences by over 30% from.
Meet growing client demand.
In addition to these great use case examples I wanted to highlight some additional new customer wins and customer expansions from this past quarter and the <unk>.
Second quarter, we acquired new customers from various industries, including Technology Life Sciences financial services higher education and others.
1 new 6 figure win was with 1 of the Board's thought medical device companies. They chose on 24 or other solutions. They use on 24 of lead on engagement helped to drive the top of funnel engagement and continuous activity or the prospect of an existing customers.
The ability to deliver branded experiences and integrate our data with sales force of CRM and Adobe Mark ghettos marketing automation were deciding factors in choosing on 24.
Next.
The leading cloud based HR solution company switched from a competitor solution to all 24 of late.
I believe the collect audience engagement data and make that data actionable through our Salesforce CRM integration was viewed as critically important differentiator.
A large fortune 500 of American Bank holding company.
The meeting our platform purpose built for sales and marketing chose on 24 as the preferred vendor for their webinars.
All of 2.1 for its ability to provide first person data and buying readiness signals to the marketing of sales organization was the major competitive advantage, they're using all of the 24 of late and on 24 correct.
In addition to the new customer wins, we saw a large number of expansion deals in Q2, let me share just a few of the incredible examples.
1 large expansion deal nearing half of million dollars wasn't 1 of the world's largest pharmaceutical companies. The quadrupling the number of experiences they deliver with the onshore for of linked the engage educate key opinion leaders and their health care providers on new drugs and treatments.
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The top 20 business insurance company increase the span of almost 300% with on 24 for both lead generation and virtual events.
They were previously using the combination of those the wholesale event the thousands of attendees, but wanted to deliver a better attendee experience. So they're shifting to on 24 virtual conference.
1 of the world's largest network of telecommunication companies increase the.