Q2 2025 ON24 Inc Earnings Call
Following the presentation, we will conduct a question and answer session.
At any time during this call he would require immediate assistance. Please press star zero for operator.
This call is being recorded on Thursday August seven 2035.
I would now like to turn the conference over to Lauren Sloane. Please go ahead.
Thank you Hello, and good afternoon, everyone. Welcome to our 24 second quarter 2025 earnings conference call on the call with me today are Suraj, Ron co founder and CEO of <unk>, 24, and Steve Thats money Chief Financial Officer on 'twenty.
Sure.
Before we begin I would like to remind everyone that some information provided during this call will include forward looking statements regarding future events and financial performance, including guidance for the third quarter and fiscal year of 2025, as well as certain third quarter and full year non-GAAP projections.
These forward looking statements are subject to known and unknown risks and uncertainties that could adversely affect our 2000 and for its future results and cause. These forward looking statements to be inaccurate, including our ability to grow revenue attract new customers and expand sales to existing customers. The success of our new products and capabilities.
<unk> other statements regarding our ability to achieve our business strategies growth or other future events or conditions, such as the impact of adverse economic conditions and macroeconomic deterioration.
<unk> cautions that these statements are not guarantees of future performance.
All forward looking statements made today reflect our current expectations only and we undertake no obligation to update any statements to reflect the events that occur after this call.
Please refer to the company's periodic SEC filings and today's financial press release for factors that could cause our actual results to differ materially from any forward looking statements.
Speaker #3: Good afternoon, ladies and gentlemen, and welcome to the ON24 second quarter 2025 earnings conference call. At this time, all lines are in a listen-only mode.
We'd also like to point out that on todays call ill report, both GAAP and non-GAAP results.
We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes non.
Speaker #3: Following the presentation, we will conduct a estion-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.
non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP to see the reconciliation of these non-GAAP financial measures. Please refer to today's financial press release.
Speaker #3: This call is being recorded on Thursday, August 7, 2025. I would now like to turn the conference over to Lawrence Sloan, please go head.
I will now turn the call over to shrunk. Please go ahead.
Thank you and welcome everyone to the on 24 second quarter 2025 earnings call.
Speaker #4: Thank you. Hello, and good afternoon, everyone. Welcome to ON24, second quarter 2025 earnings conference call. On the call with me today are Sharat Sharan, co-founder and CEO of ON24, and Steven Vattuone, chief financial officer of ON24.
I appreciate you joining us today.
With me is feedback <unk>, our chief financial Officer.
Our Q2 results exceeded our expectations.
Speaker #4: Before we begin, I would like to remind everyone that some information provided during this call will include forward-looking statements regarding future events and financial performance, including guidance for the third quarter and fiscal year of 2025 as well as certain third quarter and full year non-GAAP projections.
We drove improvements in ERO performance, ending the quarter with $127 $1 million in total Iraq and.
Cool platform EUR, one $145 1 million.
Our impeded gross retention was the highest in four years.
Supported by deeper customer engagement and expanded use cases.
Speaker #4: These forward-looking statements are subject to known and unknown risks and uncertainties. That could adversely affect ON24's future results and cause these forward-looking statements to be inaccurate.
100, K plus even our customer base grew in Q2.
Signaling traction in enterprise segments with.
Speaker #4: Including our ability to grow revenue, attract new customers, and expand sales to existing customers, the success of our new products and capabilities, other statements regarding our ability to achieve our business strategies, growth, or other future events or conditions such as the impact of adverse economic conditions and macroeconomic deterioration.
With high value accounts, leveraging our solutions to deliver pipeline and business results.
We saw continued win back momentum from Boomerang customers, many of which are returning and increasing their commitment with us compared to the previous engagements.
Our product innovations, including AI powered solutions continued to build momentum.
Speaker #4: ON24 cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statements to reflect the events that occur after this call.
A mid teens percentage of our customers are paying for AI powered is a number that has grown consistently since we launched it last year.
We achieved positive adjusted EBITDA in Q2 and generated positive free cash flow for the sixth consecutive quarter underscoring our continued focus on operational discipline.
Speaker #4: Please refer to the company's periodic SEC filings and today's financial press release for factors that could cause our actual results to differ materially from any forward-looking statements.
Speaker #4: We'd also like to point out that on today's call, we will report both GAAP and non-GAAP results. We use these non-GAAP financial measures to evaluate our ongoing operations and for internal planning and forecasting purposes.
Lastly, total revenue beat our expectations coming in at $35 3 million.
We believe we have laid a solid foundation for improvement in our top and bottom line performance in the second half of the year.
Speaker #4: Non-GAAP financial measures are presented in addition to and not as a substitute for financial measures calculated in accordance with GAAP. To see the reconciliation of these non-GAAP financial measures, please refer to today's financial press release.
Our positive momentum is directly tied to the progress we have made with our strategic initiatives around innovation.
Hence enterprise go to market execution, and a commitment to positive cash flow.
Speaker #4: I will now turn the call over to Sharat. Please go head.
Speaker #5: Thank you. And welcome, everyone, to the ON24 second quarter 2025 earnings call. I appreciate you joining us today. With me is Steven Vattuone, our chief financial officer.
First.
I will elaborate on our product and our innovation strategy.
Our innovation builds on our strengths and first party data.
We have over 1 billion engage in minutes annually on our platform.
Speaker #5: Our Q2 results exceeded our expectations, we drove improvements in ARR performance, ending the quarter with 127.1 million dollars in total ARR, and core platform ARR of 125.1 million dollars.
And we have hundreds of thousands of webinar experiences annually.
In the age of AI content and data wins.
Our vision here is twofold.
One more.
Moving from single digital events to Omnichannel global campaigns, enabling our customers to create intelligent personalized and scalable.
Speaker #5: Our end-peer gross retention was the highest in four years, supported by deeper customer engagement and expanded use cases. A hundred K plus ARR customer base grew in Q2, signaling traction in enterprise segments, with high-value accounts leveraging our solutions to deliver pipeline and business results.
<unk> ecosystem from every life when they deliver.
To helping our customers take the global campaigns and content that they have created on our platform and make it more discoverable in the new world of search and large language models.
Speaker #5: We saw continued win-back momentum from Boomerang customers; many of which are returning and increasing their commitment with us, compared to their previous engagement. Our product innovations including AI-powered ACE solutions continue to build momentum.
And to do all this in an automated scalable way, which drives measurable business outcomes for our customers.
Imagine you've just hosted a 60 to 90 minute long form live product event experience.
Speaker #5: Amid Teams' percentage our customers are paying for AI-powered ACE, a number that has grown consistently since we launched it last year. We achieved positive adjusted EBITDA in Q2, and generated positive free cash flow for the sixth consecutive quarter.
For many companies that's where it ends.
On 20, Florida event is just beginning.
We automatically turn that long form session to transcript blog posts key takeaways.
Short form video clips, even social content.
Speaker #5: Underscoring our continued focus on operational discipline. Lastly, total revenue beat our ectations coming in at 35.3 million dollars. We believe we have laid solid foundation for improvement in our top and bottom-line performance in the second half of the year, our positive momentum is directly tied to the progress we have made with our strategic initiatives around AI innovation, enhanced enterprise go-to-market execution, and a commitment to positive cash flow.
Now layer on our multi language translation capabilities.
That seemed webinar can be translated and launched in French German Spanish four EMEA markets.
And Japanese Korean Mandarin for APAC markets.
Suddenly one digital event becomes a global campaign that reaches audiences worldwide.
Personalized messaging and content tailored to each market.
But we're not stopping there now.
Now, we can leverage our data to hyper personalized content.
In this new world of search and large language models content discover ability is critical.
Speaker #5: First, I will elaborate on our product and AI innovation strategy. Our AI innovation builds on our strength in first-party data. We have over 1 billion engagement minutes annually on our platform.
It's not just about creating content.
It's about making sure that content is found by the right people in the right places and increasingly by AI search and chat bots.
Speaker #5: And we have hundreds of thousands of webinar experiences annually. In the age of AI, content and data wins. Our vision here twofold. One, moving from single digital events to omnichannel global campaigns enabling our customers to create intelligent, personalized, and scalable content ecosystem from every live event they deliver.
Specifically, our product and innovation strategies anchored five core pillars, which enable our customers to benefit from positive business outcomes.
Later efficiencies and global scalability.
Let's touch on these five important pillars.
First our AI powered segmentation and personalization solutions allow customers to leverage our unmatched first party engagement data to tailor every interaction and create dynamic personalized audience journeys.
Speaker #5: Two, helping our customers take the global campaigns and content that they have created on our form and make it more discoverable in the new world of AI search and large language models.
Second.
24, <unk> powered analytics and content engine delivers.
Speaker #5: And to do all this in an automated, scalable way which drives measurable business outcomes for our customers. Imagine you've hosted a 60 to 90-minute long-form live product event experience.
Yes generated content and mercury capabilities, enabling teams to turn that single event into ongoing nurture opportunities.
With AI powered <unk> engagement events are instantly repurpose into derivative content like blog posts E books, social snippets video assets and more creating a powerful content engine that fuels multichannel engagement.
Speaker #5: For many companies, that's where it ends. But with ON24, the event is just beginning. We automatically turn that long-form session to transcripts, blog posts, key takeaways, short-form video clips, even social content.
Enables always on nurture and propels funnel velocity.
Third we just announced the launch of the first phase of on 24 translate.
Speaker #5: Now, layer on our multi-language translation capabilities. That same webinar can be translated and launched in French and German, Spanish, for EMEA markets. And Japanese, Korean, Mandarin for APAC markets.
Integrated AI powered multilingual translation capabilities, which will allow customers to localized registration pages <unk>.
Options and post even assets into 64 languages.
Speaker #5: Suddenly, one digital event becomes a global campaign that reaches audiences worldwide. With personalized messaging and content tailored to each market. But we're not stopping there.
We also offer solutions with Gratulate, webinars, allowing our customers to dramatically scale their business and drive global marketing campaign opportunities.
For <unk> for IQ.
Speaker #5: Now, we can leverage our AI-powered ACE to hyper-personalize content. In this new world of AI search and large language models, content discoverability is critical.
Our autonomous event automation and workflow manager is an intelligent system that streamlines, even creation session setup and live Q&A moderation.
Speaker #5: It's not just about creating content. It's about making sure that content is found by the right people, in the right places, and increasingly by AI search and chatbots.
These AI power tools streamline complex workflows by simplifying event execution, and ultimately driving smarter more personalized events.
Speaker #5: Specifically, our product and AI innovation strategies anchored on five core pillars which enable our customers to benefit from positive business outcomes, greater efficiencies, and global scalability.
Finally.
We continue to enhance our unmatched first party customer engagement data and performance insights.
Delivering real time engagement signals and intent data that helps customers.
Speaker #5: Let's touch on these five important pillars. First, our AI-powered segmentation and personalization solutions allow customers to leverage our unmatched first-party engagement data to tailor every interaction and create dynamic personalized audience journeys.
Insights into actions.
Now go to market teams can effectively personalized outreach neutral audience engagement and propelled significant pipeline and revenue growth for their business.
Together. These five pillars are central to beyond 24 platform.
Our enhanced solutions that enables customers to use on 'twenty forward to expand well beyond a single engagement event.
Speaker #5: Second, ON24's AI-powered analytics and content engine delivers AI-generated content and nurture capabilities enabling teams to turn that single event into ongoing nurture opportunities. With AI-powered ACE, engagement events are instantly repurposed into derivative content like blog posts, e-books, social snippets, video assets, and more, creating a powerful content engine that fuels multi-channel engagement, enables always-on nurture, and propels funnel velocity.
Strengthening audience reach and engagement.
<unk> funnel velocity.
Scaling globally, and improving pipeline and revenue performance.
Let me give you an example.
Especially as it relates to the 124 air powered is solution.
And <unk>, an affiliate of a major pharmaceutical organization.
Partnered with on 'twenty four to host a virtual event for senior oncologists across the country.
Speaker #5: Third, we just announced the launch of the first phase of ON24 Translate. Integrated AI-powered multilingual translation capabilities which will allow customers to localize registration pages, captions, and post-event assets into 64 languages.
The affiliate reaffirmed its commitment to the HCP community by presenting its latest research and development efforts in oncology.
And highlighting clinical data from recent studies.
By leveraging on 'twenty one platform.
<unk> delivered an immersive multi touch live experience that engage participants in real time.
Speaker #5: We also offer solutions to translate webinars allowing our customers to grammatically scale their business and drive global marketing campaign opportunities. Fourth, ON24 IQ. Our autonomous event automation and workflow manager is an intelligent AI assistant that streamlines event creation, session setup, and live Q&A moderation.
To extend the value of the event beyond the life session.
Utilized on 24 is AI powered content engine.
To generate derivative assets.
Such as key moment highlight videos.
<unk> been summaries <unk>.
Transcripts and concise takeaways.
Centralized on a dynamic always on merger page.
Speaker #5: These AI-powered tools streamline complex workflows by simplifying event execution and ultimately driving smarter, more personalized events. Finally, we continue to enhance our unmatched first-party customer engagement data and performance insights.
Through this collaboration.
Pharmaceutical affiliate not only educated at HCP audience, but also created a scalable content ecosystem to sustain engagement and drive long term impact.
The second strategic initiative I wanted to cover is our enterprise focus go to market strategy.
Speaker #5: Delivering real-time engagement signals and intent data that helps customers turn insights into actions. Now, go-to-market teams can effectively personalize outreach, nurture audience engagement, and propel significant pipeline and revenue growth for their business.
In Q2 on 24 made meaningful advances by aligning our sales customer success and marketing organizations around our unified solutions based approach to address the more complex needs of global enterprises.
Speaker #5: Together, these five pillars are central to the ON24 platform. Our enhanced ution set enables customers to use ON24 to expand well beyond a single engagement event.
And drive value in long term growth in this important segment.
This go to market shift allows our sales and customer success teams to directly align with our customers' priorities, such as improving pipeline performance and deepening customer or client engagement and retention.
Speaker #5: Strengthening audience reach and engagement. Increasing funnel velocity. Scaling globally. And improving pipeline and revenue performance. Let me give you an example. Especially as it relates to the ON24 AI-powered ACE solution.
We are delivering meaningful value through innovation that is helping our enterprise clients drive engagement scale globally and improve their business outcomes.
With the help of our differentiated solution, we are experiencing healthy customer activity.
Speaker #5: An Italian affiliate of a major pharmaceutical organization partnered with ON24 to host a virtual event for senior oncologists across the country. The affiliate reaffirmed its commitment to the HCP community by presenting its latest research and development efforts in oncology, and highlighting clinical data from recent studies.
And stable platform demand.
We are seeing the results of these initiatives and some key metrics.
The average core IRR per customer reached approximately $80000 at the end of the second quarter. The highest we have ever reported.
And we added five net new customers with over $100000 in Iraq.
Speaker #5: By leveraging ON24's platform, the affiliate delivered an immersive, multi-touch live experience that engaged participants in real time. To extend the value of the event beyond the live session, the utilized ON24's AI-powered content engine to generate derivative assets.
We have also continued to see a strong positive trend with win backs from Boomerang customers in Q2.
In addition.
Our regulated industries business, which includes financial services and life Sciences continues to build.
Speaker #5: Such key moment highlight videos, event summaries, transcripts, and concise takeaways all centralized on a dynamic, always-on nurture page. Through this collaboration, the pharmaceutical affiliate not only educated its HCP audience but also created a scalable content ecosystem to sustain engagement and drive long-term impact.
With growth from these sectors, increasing as a percentage of our business.
Let me give you some customer examples starting with some of the new logos that we closed in Q2.
A leading global payments platform.
Several challenges in scaling the demand generation efforts, including low registration to attend the conversion rates.
By adopting beyond 'twenty four platform and AI powered capabilities. The unlocked a 24 by seven Omnichannel approach and done they're webinars into a predictable revenue generating pipeline exceeding their conversion deals and driving significant business impact.
Speaker #5: The second strategic initiative I want to cover is our enterprise-focused go-to-market strategy. In Q2, ON24 made meaningful advances by aligning our sales customer success and marketing organizations around a unified solutions-based approach to address the more complex needs of global enterprises and drive value and long-term growth in this important segment.
Another notable win in Q2.
With a leading financial services company that adopted beyond 'twenty four platform and AI powered innovations across three key business lines.
Speaker #5: This go-to-market shift allows our sales and ustomer success teams to directly align with our customers' priorities such as improving pipeline performance and deepening customer or client engagement and retention.
Investment management.
Retail and wealth management.
Workplace solutions.
This customer was a win back for us.
Try to another solution.
Speaker #5: We are delivering meaningful value through innovation. That is helping our enterprise clients drive engagement, scale globally, and improve their business outcomes. With the help of our differentiated solution, we are experiencing healthy customer activity and stable platform demand.
But it was not providing the results they desire.
With on 24 is interactive engagement capabilities always on content and seamless integration with their tech stack, we can leverage real time data and insights to drive sales.
Our solution propelled global scale by enabling multi language programs across business lines.
Speaker #5: We are seeing the results these initiatives in some key metrics. The average core ARR per customer reached approximately 80,000 dollars at the end of the second quarter; the highest we have ever reported.
Another new customer that was a boomerang is a leading health care solutions provider.
To boost pipeline generation and propel funnel velocity.
Speaker #5: And we added five net new customers with over 100,000 dollars in ARR. We have also continued to see a strong positive trend with win-backs from Boomerang customers in Q2.
Adopting on 'twenty, one platform, including <unk>.
And advanced analytics, the improved attendee experiences gen.
Generally valuable first party engagement data and insights and delivered derivative content at scale.
Speaker #5: In addition, our regular industry's business, which includes financial services and life sciences, continues to build. With growth ARR from these sectors, increasing as a percentage of our .
Importantly, <unk>.
$20, a reliable and scalable solution drove greater pipeline velocity and revenue generation.
Next I'll provide a few examples on the renewal and expansion front.
Speaker #5: Let me give you some customer examples starting with some of the new logos that we closed in Q2. A leading global payments platform faced several challenges in scaling their demand generation efforts including low registration to attendee conversion rates, by adopting the ON24 platform and AI-powered ACE capabilities.
We closed one of our largest renewals a high seven figure commitment.
Third over multiple years.
The customer provides education and certification for the technology industry.
On the expansion front I would like to highlight a couple of notable deals.
A large and fast growing insurance organization based in EMEA.
Speaker #5: They unlocked a 24 by 7 omnichannel approach and turned their webinars into a predictable revenue-generating pipeline exceeding their conversion goals and driving significant business impact.
Initially adopter on 2004 and 2022.
We expanded the use of 121 platform and signed a multiyear seven figure deal.
A global leader in life Sciences, and diagnostics renewed and expanded this partnership with <unk> 24, with a seven figure multi year deal with a commitment increase of over 50%.
Speaker #5: Another notable win in Q2 was a leading financial services company that adopted the ON24 platform and AI-powered innovations across three key business lines. Investment management, retail and wealth management, and workplace solutions.
As part of this multi year renewal the customer also expanded its relationship with 124 by adding our engagement hub and our <unk> capability.
Speaker #5: This customer was a win-back for us. They tried another solution but it was not providing the results they desired. With ON24's interactive engagement capabilities, always-on content, and seamless integration with their tech stack, they can leverage real-time data and insights to drive sales.
In summary.
The positive momentum in the quarter underscores that we're making progress on our strategic goals.
Before I turn it over to Steve I'd like to say that as I look at the first half performance in 2025.
Paired with equal in period last year.
Speaker #5: Our solution propels global scale by enabling multi-language programs across business lines. Another new customer that was a Boomerang is a leading healthcare solutions provider that sought to boost pipeline generation and propel funnel velocity.
Almost all customer and financial metrics have trended positively.
Yeah, our performance while marginally negative.
Has improved meaningfully as compared to the same period last year.
Gross retention and new business performance.
Speaker #5: Adopting ON24's platform, including AI ACE, and advanced analytics, they improved attendee experiences and generated valuable first-party engagement data and insights, and delivered derivative content at scale.
Increased significantly.
Free cash flow margin performance continues to be strong and our win rate has improved.
All these factors give us confidence.
And our expectation that the business will be positive in Q4.
Speaker #5: Importantly, ON24's reliable and scalable solution drove greater pipeline velocity and revenue generation. Next, I'll provide a few examples on the renewal and expansion front.
Now I will turn it over to Steve.
Thank you, Sean and good afternoon, everyone.
I'm going to start with our second quarter 2025 results and will then discuss our outlook for the third quarter of 2025 and full year 2025.
Speaker #5: We closed one of our largest renewals; a high seven-figure commitment spread over multiple years. The customer provides education and certification for the technology industry.
Total revenue for the second quarter.
Which includes revenue from our virtual conference products was $35 3 million.
Total subscription and other platform revenue was $32 $4 million.
Speaker #5: On the expansion front, I would like to highlight a couple of notable deals. A large and fast-growing insurance organization based in EMEA initially adopted ON24 in 2022.
Total professional services revenue was $2 9 million.
Representing approximately 8% of total revenue.
Revenue from our core platform, including services in Q2 of 2025 was $34 6 million.
Speaker #5: They expanded the use of ON24's platform and signed a multi-year seven-figure deal. A global leader in life sciences and diagnostics, renewed and expanded its partnership with ON24 with a seven-figure multi-year deal with a commitment increase of over 50%.
Moving onto IRR.
<unk> represents the annualized value of all subscription contracts at the end of the period and excludes professional services and Overages.
Total <unk> at the end of Q2 was $127 1 million and <unk> related to our core platform was in line with expectations at $125 1 million.
Speaker #5: As part of this multi-year renewal, the customer also expanded its relationship with ON24 by adding our engagement hub and AI-powered ACE capability. In summary, the positive momentum in the quarter underscores that we are making progress on our strategic goals.
We are encouraged by the positive momentum we are seeing in our business a shop mentioned earlier during Q2, our interior gross retention was the highest it has been in the past four years.
In addition, we continue to win back customers.
Speaker #5: Before I turn it over to Steven, I'd like to say that as I look at the first half performance in 2025, compared to the equivalent period last year, almost all customer and financial metrics have trended positively.
<unk>, we have seen over the past year.
We believe that these boomerang customers highlight the differentiated nature of our solution.
<unk> provided some examples of customers that returned to us after trying other tools.
A return to on 24, because the other products did not provide the benefits that onto 'twenty four solutions offer.
Speaker #5: ARR performance while marginally negative has improved meaningfully as compared to the same period last year. Gross retention and new business performance increased significantly. Free cash flow margin performance continues to be strong.
These boomerang customers not only highlight the power of our platform, but they also contributed to the improvement in <unk> performance in Q2.
Turning to customer metrics.
Speaker #5: And our win rate has improved. All these factors give us confidence in our expectation that the business will be ARR positive in Q4. Now, I will turn it over to Steven.
We have continued to shift focus to our larger enterprise customers, resulting in improvements in a number of our customer metrics.
In Q2, the number of customers with over $100000 grew by 5% and represented approximately two thirds of our total IRR.
Speaker #5: Thank you, Sharat. And good noon, everyone. I'm going to start with our second quarter 2025 results and will then discuss our outlook for the third quarter of 2025 and full year of 2025.
And as Rob mentioned, our focus on enterprise customers resulted in our average core IRR per customer reached its highest level ever.
Our strategy of moving customers to longer term commitments is also paying off with the percentage of our ALR and multiyear agreements the highest ever at the end of Q2 at over 50%.
Speaker #5: Total revenue for the second quarter which includes revenue from our virtual conference product was 35.3 million dollars. Total subscription and other platform revenue was 32.4 million dollars.
As our customer base continues to adopt more of our products. We have continued to see an increase in customers using two or more products with that metric also hitting an all time high at the end of Q2.
Speaker #5: Total professional services revenue was 2.9 million dollars representing approximately 8% of total revenue. Revenue from our core platform including services in Q2 of 2025 was 34.6 million dollars.
Total.
End of Q2 was 1566% driven by a net reduction in SMB customers.
Speaker #5: Moving on to ARR, ARR represents the annualized value of all subscription contracts at the end of the period and excludes professional services and overages.
Before turning to expense items and profitability I would like to point out that I will be discussing non-GAAP results going forward.
Our non-GAAP results exclude stock based compensation structure.
Speaker #5: Total ARR at the end of Q2 was 127.1 million dollars and ARR related to our core platform was in line with expectations at 125.1 million dollars.
Restructuring charges impairment charges real estate amortization of acquired intangibles shareholder activism related costs certain legal cost related to litigation regarding our 2021, IPO as well as certain other items.
Speaker #5: We are encouraged by the positive momentum we are seeing in our business as Sharat mentioned earlier, during Q2 our end-period gross retention was the highest it has been in the past four years.
Our GAAP financial results, along with a reconciliation between GAAP and non-GAAP results can be found within our earnings release.
Our gross margin in Q2 was 77% consistent with 2020 for gross margins in Q1 of this year.
Speaker #5: In addition, we continue to win back customers; a trend we have seen over the past year. We believe that these Boomerang customers highlight the differentiated nature of our solution.
Now moving on to operating expenses sales.
Sales and marketing expense in Q2 was $15 1 million compared to $15 8 million in Q2 last year.
Speaker #5: Sharat provided some examples of customers that returned to us after trying other tools. They returned ON24 because the other products did not provide the benefits that ON24 solutions offer.
This represents 43% of total revenue compared to 42% in the same period last year and 45% last quarter.
Speaker #5: These Boomerang customers not only highlight the power of our platform but they also contributed to the improvement in our ARR performance in Q2. Turning to customer metrics, we have continued to shift focus to our larger enterprise customers resulting in improvements in a number of our customer metrics.
Our sales and marketing expenses have decreased in absolute dollars, both year over year and from last quarter largely due to the cost savings measures, we have implemented to improve operational efficiency in that organization.
R&D expense in Q2 was $6 9 million.
Compared to $6 7 million in Q2 last year.
Speaker #5: In Q2, the number of customers with ARR of over 100,000 dollars grew by five and represented approximately two-thirds our total ARR. And as Sharat mentioned, our focus on enterprise customers resulted in our average core ARR per customer reaching its highest level ever.
This represents 19% of total revenue compared to 18% in the same period last year and 20% last quarter.
We continue to prioritize investments in product innovation for our platform to drive future growth, including AI enabled features that utilize our first party data advantage.
Speaker #5: Our strategy of moving customers to longer-term commitments is also paying off with the percentage of our ARR and multi-year reements the highest ever at the end of Q2 at over 50%.
G&A expense in Q2 was $6 1 million.
Compared to $6 5 million in Q2 last year.
This represents 17% of total revenue compared to 17% in the same period last year and 18% last quarter. We have continued to take actions to streamline our G&A functions and as a result, our G&A expenses in absolute dollars a decrease compared to the same period last year and last quarter.
Speaker #5: As our customer base continues to adopt more of our products, we have continued see an increase in customers using two or more products with that metric also hitting an all-time high at the end of Q2.
Speaker #5: Total customer count at the end of Q2 was 1,566, driven by a net reduction in SMB customers. Before turning to expense items and profitability, I would like to point out that I will be discussing non-GAAP results going forward.
Moving on to our bottom line performance and cash flow metrics.
Operating loss for Q2 was zero point $9 million or a negative 3% operating margin compared to an operating loss of <unk> $3 million and a negative 1% operating margin in the same period last year.
Speaker #5: Our non-GAAP results exclude stock-based compensation, restructuring charges, impairment charges for real estate, amortization of acquired intangibles, shareholder activism related costs, certain legal costs related to litigation regarding our 2021 IPO as well as certain other items.
Net income in Q2 was zero point $9 million.
Our <unk> per share based on approximately $45 1 million diluted shares outstanding this.
This compares to net income of $1 5 million or <unk> <unk> per share in Q2 last year using approximately $45 8 million diluted shares outstanding.
Speaker #5: Our GAAP financial results along with the reconciliation between GAAP and non-GAAP results can be found within our earnings release. Our growth margin in Q2 was 77% consistent with 2024 growth margins and Q1 of this year.
We delivered positive adjusted EBITA in Q2, as well as our sixth consecutive quarter of positive free cash flow our free cash flow for Q2 was positive $2 5 billion. When you exclude cash outflows related to our structuring efforts shareholder activism fees and certain other legal costs, which collectively <unk>.
Speaker #5: Now, moving on to operating expenses. Sales and marketing expense in Q2 was 15.1 million dollars compared to 15.8 million dollars in Q2 last year.
Speaker #5: This represents 43% of total revenue compared to 42% in the same period last year and 45% last quarter. Our sales and marketing expenses have decreased in absolute dollars both year over year and from last quarter, largely due to the cost savings measures we have implemented to improve operational efficiency in that organization.
<unk> zero point $4 million in Q2 2025.
Our free cash flow in Q2, including all of these items was positive $2 $1 million compared to positive zero point $9 million in Q2 last year.
Cash provided by operations in Q2 was $2 6 million compared to cash provided by operations of $1 4 million in Q2 of last year.
Speaker #5: R&D expense in Q2 was $6.9 million compared to $6.7 million in Q2 last year. This represents 19% of total revenue, compared to 18% in the same period last year and 20% last quarter.
I would like to provide an update on the $50 million capital return program, we announced in May of this year.
Speaker #5: We continue to prioritize investments in product innovation for our platform to drive future growth, including AI-enabled features that utilize our first-party data advantage. G&A expense in Q2 was 6.1 million dollars compared 6.5 million dollars in Q2 last year.
In Q2, we utilized $4 3 million for share repurchases under this program and a further $2 $5 million thus far in Q3 under this program.
For a total of approximately $6 8 million utilized to date under this program.
This share repurchase program. Following the completion of three earlier capital return programs, which collectively returned $191 million to shareholders.
Speaker #5: This represents 17% of total revenue compared to 17% in the same period last year and 18% last quarter. We have continued to take actions to streamline our G&A functions and as a result, our G&A expenses in absolute dollars have decreased compared to the same period last year and last quarter.
Our balance sheet remains strong with just under $180 million of cash and investments at the end of Q2.
Now turning to our guidance regarding Q3 guidance. We expect Q3 total revenue, which includes our virtual conference product in the range of $33 6 million to $34 $2 million.
Speaker #5: Moving on to our bottom-line performance and cash flow metrics. Operating loss for Q2 was 0.9 million dollars or a negative 3% operating margin. Compared to an operating loss 0.3 million dollars and a negative 1% operating margin in the same period last year.
Core platform revenue, including services in the range of 33.0 million to $33 6 million Professor.
Speaker #5: Net income in Q2 was 0.9 million dollars or 2 cents per share based on approximately 45.1 million diluted shares outstanding. This compares to net income of 1.5 million dollars or 3 cents per share in Q2 last year using approximately 45.8 million diluted shares outstanding.
Professional services is expected to represent approximately 7% of total revenue.
We expect our gross margin to be approximately 76% in Q3.
We expect a non-GAAP operating loss in the range of $1 3 million to zero point $7 million and non-GAAP net income per share of zero cents per share to <unk> <unk> per share using approximately 45 million diluted shares outstanding and.
Speaker #5: We delivered positive adjusted EBITDA in Q2 as well as our six consecutive quarter of positive free cash flow. Our free cash flow for Q2 was positive 2.5 million dollars when you exclude cash outflows related to our restructuring efforts.
In Q3, we also expect to be adjusted EBITA positive.
We expect a restructuring charge of 0.1 million zero quite $4 million in Q3 related to our ongoing cost reduction efforts, which is excluded from the non-GAAP amounts provided above.
Speaker #5: Shareholder activism fees and certain other legal costs which collectively totaled 0.4 million dollars in Q2 2025. Our free cash flow in Q2 including all of these items was positive 2.1 million dollars compared to positive 0.9 million dollars in Q2 last year.
Amortization of acquired intangibles shareholder activism costs and certain other legal cost and certain other items are excluded from the Q3 non-GAAP amounts provided above.
Speaker #5: Cash provided by operations in Q2 was 2.6 million dollars compared to cash provided by operations of 1.4 million dollars in Q2 of last year.
Now turning to our annual guidance for 2025.
For the full year, we expect total revenue to be in the range of $137 7 million to $138 7 million profession.
Speaker #5: I would like to provide an update on the 50 million dollar capital return program we announced in May of this year. In Q2, we utilized 4.3 million dollars for share repurchases under this program and a further 2.5 million dollars thus far in Q3 under this program for a total of approximately 6.8 million dollars utilized to date under this program.
Professional services is expected to represent approximately seven 5% of total revenue.
We expect core platform revenue, including services to be in the range of $135 2 million to $136 $2 million.
We expect a non-GAAP operating loss in a range of $5 2 million to $3 8 million and non-GAAP net income per share of <unk> <unk> per share to <unk> <unk> per share using approximately 45 million diluted shares outstanding.
Speaker #5: This share repurchase program followed the completion of three earlier capital return programs which collectively returned 191 million dollars to shareholders. Our balance sheet remains strong with just under 180 million dollars of cash and estments at the end of Q2.
We expect gross margins for the year to be 76% to 77% we.
Speaker #5: Now, turning to our guidance. Regarding Q3 guidance, we expect Q3 total revenue which includes our virtual conference product in the range of 33.6 million dollars to 34.2 million dollars and core platform revenue including services in the range 33.0 million dollars to 33.6 million dollars.
We expect to be adjusted EBITA positive in Q4 and for 2025, our second consecutive year of positive adjusted EBITA.
Excluding any incremental non-GAAP expenses, we expect to deliver positive free cash flow in 2025, our second consecutive year of positive free cash flow.
Speaker #5: Professional services is expected to represent approximately 7% of total revenue. We expect our gross margin to be approximately 76% in Q3. We expect a non-GAAP operating loss in the range of 1.3 million dollars to 0.7 million dollars and non-GAAP net income per share of 0 cents per share to 2 cents per share using approximately 45 million diluted shares of outstanding.
Restructuring charges and amortization of acquired intangibles shareholder activism costs.
Certain other legal costs and certain other items are excluded from the full year non-GAAP amounts provided above.
I also want to provide our outlook for IRR for the second half of this year.
For <unk> in Q3, which has historically been a seasonally softer quarter for us we assume core <unk> performance in Q3 to be relatively consistent with Q2 with core IRR down by zero point $5 million.
Speaker #5: In Q3, we also expect to be adjusted EBITDA positive. We expect a restructuring charge of 0.1 million dollars to 0.4 million dollars in Q3 related to our ongoing cost reduction efforts which is excluded from the non-GAAP amounts provided above.
To $1 5 million compared to Q2 levels.
For our virtual conference product, we expect Q3 <unk> to decline by approximately zero point $1 billion in Q3 and in Q3 at $1 $9 million.
Speaker #5: Amortization of acquired intangibles, shareholder activism costs, certain other legal costs, and certain other items are excluded from the Q3 non-GAAP amounts provided above. Now, turning to our annual guidance for 2025.
We expect to return to positive growth in Q4 of this year driven by improved retention as well as expected improvement in our growth bookings in the fourth quarter.
Speaker #5: For the full year, we expect total revenue to be in the range of 137.7 million dollars to 138.7 million dollars. Professional services is expected to represent approximately 7.5% of total revenue.
We expect to increase the core IRR to be between zero and $1 million in Q4 as compared to Q3.
Actual conference <unk> is expected to be $1 8 million at the end of Q4.
In summary in Q2, we delivered on the goals, we set on our prior earnings call, including delivering positive adjusted EBITA and positive free cash flow in Q2, as well as positive free cash flow for the first six months of this year.
Speaker #5: We expect core platform revenue including services to be in the range of 135.2 million dollars to 136.2 million dollars. We expect a non-GAAP operating loss in the range of 5.2 million million dollars and non-GAAP net income per share of 2 cents per share to 5 cents per share using approximately 45 million diluted shares outstanding.
We're executing on the $50 million share repurchase program, we announced in may to capitalize on the opportunity to acquire more of our undervalued stock.
We are committed to delivering positive adjusted EBITA for 2025, while continuing to invest in AI focused innovation that capitalizes on our first party data advantage.
Speaker #5: We expect gross margins for the year to be 76% to 77%. We expect to be adjusted EBITDA positive in Q4 and for 2025. Our second consecutive year of positive adjusted EBITDA.
We expect our strategic initiatives and positive momentum to drive a return to a growth in Q4 of this year.
Speaker #5: Excluding any incremental non-GAAP expenses, we expect to deliver positive free cash flow in 2025; our second consecutive year of positive free cash flow. Restructuring charges and amortization of acquired intangibles, shareholder activism costs, certain other legal costs, and certain other items are excluded from the full year non-GAAP amounts provided above.
With that.
And I will open the call up for questions.
Thank you ladies and gentlemen, we will now begin the question and answer session.
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Speaker #5: I also want to provide our outlook for ARR for the second half of this year. For ARR in Q3, which has historically been a seasonally softer quarter for us, we assume core ARR performance in Q3 to be relatively consistent with Q2.
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Yes.
Okay.
Your first question comes from the line of Rob Oliver Your line is now open.
Speaker #5: With core ARR down by 0.5 million dollars to 1.5 million dollars compared to Q2 levels. For our virtual conference product, we expect Q3 ARR to decline by approximately 0.1 million dollars in Q3 and in Q3 at 1.9 million dollars.
Great Hi, good afternoon, guys. Thanks for taking my question.
I have two one for you and then Steve one for you. So try it I was wondering if you could just provide a bit more color just on the general market environment.
Within your customer base in terms of buying trends what youre seeing if there is if you feel as if.
Speaker #5: We expect to return to positive ARR growth in Q4 of this year driven by improved retention as well as expected improvement in our growth bookings in fourth quarter.
Jenny I is starting to be a bit of a catalyst for you guys. Given where you are with AI powered <unk>. So whether it's still freezing marketing department is a little bit and then Steve for you. My question is around just that pipeline heading into Q4 and the confidence around.
Speaker #5: We expect the increase in core ARR to be between 0 and 1 million dollars in Q4 as compared to Q3. Virtual conference ARR is expected to be 1.8 million dollars at the end of Q4.
The strength in Q4, and how that pipeline looks.
Speaker #5: In summary, in Q2, we delivered on the goals we set on our prior earnings call including delivering positive adjusted EBITDA and positive free cash flow in Q2 as well as positive free cash flow for the first six months of this year.
Any color you can provide around making us comfortable around that number would be great. Thank you guys both very much.
Uh huh.
Rob just for sure absolutely. So let me take I think.
Your first comment was about how the customer conversations look in Q2, we saw good enterprise new business performance.
Speaker #5: We're executing on the 50 million dollar share repurchase program we announced in May to capitalize on the opportunity to acquire more of our undervalued stock.
Improved growth and attention and traction with AI powered days.
Speaker #5: We are committed to delivering positive adjusted EBITDA for 2025 while continuing to invest in AI-focused innovation that capitalizes on our first-party data advantage. We expect our strategic initiatives and positive momentum to drive a return to ARR growth in Q4 of this year.
We continue to see customer win backs and these customers are signing up for larger deals compared to the previous engaging with us there.
There are a couple of key highlights that we're seeing in these customer conversations one as you said there is excitement Rob further into our AI offerings and increased sophistication as most companies are now dealing with their own agenda.
Speaker #5: With that, Sharat and will open the call up for questions.
<unk> seeing more traction in areas like financial services and life Sciences for our AI powered <unk> offering that earlier had started slower out of the gate.
Speaker #3: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you have a estion, please press star followed by the number one on our touchstone phone.
Now the best of our appetite overall in the market environment does depend on market segments. Some segments are beginning to focus more on growth initiatives like the financial services segment and others are still challenge like the manufacturing segment.
Speaker #3: You will hear a prompt that you will hear a three-tone prompt acknowledging your request. If you would like to cancel your request, please press star two.
Speaker #3: Please ensure you lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from the line of Rob Oliver.
Now as examples that are highlighted in the prepared remarks in Q2, we saw some good performance from some of our larger customers one of our largest customer which is an education and certification company for the technology industry renewed its multi year commitment to on 24 and larger customers and insurance and life Sciences expanded there.
Speaker #3: Your line is now open.
Speaker #6: Great. Hi. Good afternoon, guys. Thanks for taking my question. I had to, Sharat, one for you and then Steve, one for you. So, Sharat, I was wondering if you could just provide a bit more color just on the general market environment.
Arguments by using more on 24 products, including holidays and expanding across their business segments. Now you also asked the question and I will give the guidance kind of question to Steve on pipeline Q2 was a strong pipeline generation quarter for US. This is this was encouraging because we made some go to market.
Speaker #6: Within your customer base in terms of buying trends, are you seeing, if you feel as if Gen AI is starting to be a bit of a catalyst for you guys given where you are with AI-powered ACE, or whether it's, you know, still freezing marketing departments a little bit?
Improvements that included new sales and marketing leadership and the launch of new positioning and messaging. So that was quite encouraging I believe that we will continue to see improvements here as the year progresses.
Speaker #6: And then, Steve, for you, my question is around just that pipeline heading into Q4 and the confidence around the ARR strength in Q4. And how that pipeline oks and any color you can provide around, you know, making us comfortable around that number would be great.
Steve.
Rob you asked about how we're thinking about guidance. So let me start by saying that we are seeing some good signs in the business and we're making progress Maury.
Speaker #6: Thank you guys both very much.
Speaker #7: Rob, this is Sharat. So, let me take I think your first comment was about how are the customer conversations. Look, in Q2, we saw good enterprise new business performance.
<unk> delivered over the high end of our revenue guidance for Q2.
And on the P&L side, where EBITA profitable in Q2 annual free cash flow positive for the sixth consecutive quarter and were also raising our full year revenue guidance as well.
Speaker #7: Improved growth retention and traction with AI-powered ACE. We continue to see customer win-backs and these customers are signing up for larger deals compared to their previous engagement with us.
Quick in terms of profitability and cash flow, we do expect to be EBITA EPS positive.
Three Q4 and for 2025 as a whole.
And for cash flow, we expect to be cash flow positive for 2025, excluding any incremental non-GAAP items like restructuring now Sean talked about <unk>, but just briefly Q3 is a seasonally softer quarter for us and we expect it to be relatively consistent with Q.
Speaker #7: There are a couple of key highlights that we are seeing in these customer conversations. One, as you said, there is excitement, Rob, pertaining to our AI offerings and increased sophistication as most companies are now dealing with their own AI agenda.
Speaker #7: I'm increasingly seeing more traction in areas like financial services and life sciences for our AI-powered ACE offering that earlier had started slower out of the gate.
You too.
Our performance, we provided guidance on now and as we look at the second half we do expect to be positive in Q4, with an increase of zero to $1 million and expect to exit 2025 with some growth in Q4.
Speaker #7: Now, customer appetite overall in the market environment does depend on market segments. Some segments are beginning to focus more on growth initiatives like the financial services segment.
And just to just to add to what Steve said.
Speaker #7: And others are still challenged like the manufacturing segment.
We are very we were very close to being <unk> positive in Q2, and as I talked in the prepared remarks.
Speaker #6: Okay. Now, as examples highlighted in the prepared remarks, in Q2, we saw some good performance from some of our larger customers; one of our largest customers is in the education and certification sector for the technology industry.
If you compare.
SaaS growing 25% through the first half 2024, almost all financial and customer metrics trended positively that's what gives us confidence.
Speaker #6: Renewed its multi-year commitment to ON24. And larger customers in insurance and life sciences expanded their commitments by using more ON24 products including AI-powered ACE and expanding across their business segments.
Two we expect <unk> performance for Q4 to grow between zero and $1 million, it's tied around improvements in gross retention new business performance, our focus on regular industry like financial services and life Sciences and continued traction in our AI offerings and win backs from Boomerang customers. So as I look at 2026. It is early and we're not.
Speaker #6: Now, you'd also asked the question, and I'll give the guidance kind of estion to Steve, on pipeline. Q2 was a strong pipeline generation quarter for us.
Given 2025 guidance, but based on the progress we have made I expect to be at or positive for the year.
Speaker #6: This was encouraging because we made some go-to-market improvements that included new sales and marketing leadership. And the launch of new positioning and messaging. So that was quite encouraging.
Super helpful. Okay. Appreciate it guys. Thank you very much.
Yeah.
Speaker #6: I believe that we will continue to see improvements here as the year progresses. Steve?
Your next question comes from the line of <unk> Black from Needham and company. Your line is now open.
Speaker #4: Rob, you asked about how we're feeling about guidance. So let me start by saying that we are seeing some good signs in the business and we're making progress.
Hi, guys congratulations on the growth in hunting take us.
Customer count.
Speaker #4: We're delivered over the high end of our revenue guidance for Q2. And on the P&L side, we're EBITDA profitable in Q2 and we're free cash flow positive for the six consecutive quarters.
How are you driving greater penetration within your enterprise customers like if the balance between volume versus cross sell just some insight into that would be great. Thank you.
Speaker #4: And we're also raising our full year revenue guidance as well. Really quick, in terms of profitability and cash flow, we do expect to be EBITDA and EPS positive in Q3, Q4, and for 2025 as a whole.
Yes so.
On the 100, K plus customers that base grew in Q2.
Signaling fraction and enterprise segments, we saw good traction in new business acquisitions, and we also saw customers up leveling.
Speaker #4: And for cash flow, we expect to be cash flow positive for 2025, excluding any incremental non-GAAP items like restructuring. Now, Sharat talked about ARR but just briefly, Q3 is a seasonally softer quarter for us and we expect it to be relatively consistent with Q2, you know, ARR performance.
Their commitment to $1 24, I gave I gave a couple of those examples in the in the prepared remarks.
Now, while there may be some quarter to quarter seasonality, especially in the slower quarters. We are seeing improvements in our enterprise execution, our focus on regular industries win backs et cetera.
Speaker #4: We provided guidance on that. And as we look at the second half, we do expect to be ARR positive in Q4 with an increase of 0 to 1 million dollars.
Alright, a couple of things our enterprise customer metrics in Q4 was.
Quite strong average core <unk> per customer was the highest ever and the percentage of Ara in multiyear agreements was the highest ever and that is what we're focused on so this is based on more adoption of different use cases more adoption of AI powered days and also more strength in the new business kind of acquisition business.
Speaker #4: And expect to exit 2025 with some ARR growth in Q4.
Speaker #7: Just to add to what Steve said, you know, we are very we were very close to being ARR positive in Q2. And as I talked in the prepared remarks, if you compare the first half of 2025 to the first half of 2024, we almost all financial and customer metrics tended positively.
Ian.
Great.
Thank you.
Speaker #7: That's what gives us confidence. To expect ARR performance for Q4 to grow between $0 and $1 million, it's tied around improvements in gross retention, new business performance, our focus on regular industries like financial services and life sciences, and continued traction in our AI offerings and win-backs from Boomerang customers.
There are no further questions at this time.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker #7: So as I look 2026, it is early and we are not giving 2025 guidance. But based on the progress we have made, I expect to be ARR positive for the year.
Speaker #6: Super helpful. Okay. Appreciate it, guys. Thank you very much.
Speaker #3: Your next question comes from the line of Ian Black from Midterm and Company. Your line is now open.
Speaker #8: Hi, guys. Congratulations on the growth in hunting cake costs plus customer count. How are you driving greater penetration within your enterprise customers? Like, is it balanced between volume versus product cross-sell?
Speaker #8: Just some insight into that would be great. Thank you.
Speaker #7: Yeah. So, you ow, on the hunting cake plus customers, that base grew in Q2. Signaling traction in enterprise segments, we saw good traction in new business acquisitions.
Speaker #7: And we also saw customers up-leveling their commitment to ON24. I gave a couple of those examples in the prepared remarks. Now, while there may be some quarter-to-quarter seasonality, especially in slower quarters, we are seeing improvements.
Speaker #7: In our enterprise execution, our focus on regular industries, win-backs, etc., and I'll highlight a couple of ings. Our enterprise customer metrics in Q2 were quite strong.
Speaker #7: Average core ARR per customer was the highest ever, and the percentage of ARR in multi-year agreements was the highest ever. That is what we are focused on.
Speaker #7: So this is based on more adoption of different use cases, more adoption AI-powered ACE, and also more strength in the new business kind of acquisition business at Ian.
Speaker #6: Great. Thank you.