Overview of ON24’s Financial Performance

ON24 is a leading provider of a cloud-based intelligent engagement platform that enables sales and marketing organizations to capture and act on customer insights at scale. The company’s platform offers a portfolio of interactive and personalized digital experience products that generate actionable data from millions of professionals.

In 2024, ON24’s total revenue decreased by 10% to $148.1 million compared to $163.7 million in 2023. This decline was primarily due to lower subscription and other platform revenue, which fell 9% year-over-year, as well as a 16% drop in professional services revenue. The company’s core platform revenue, excluding the Virtual Conference product, decreased 8% in 2024.

ON24’s net loss improved from $51.8 million in 2023 to $42.2 million in 2024, a 19% reduction. This was driven by the company’s cost control measures, including workforce reductions and other spending cuts, which helped offset the revenue decline.

Revenue and Profit Trends

ON24’s subscription and other platform revenue, which makes up 92% of total revenue, decreased 9% in 2024 compared to 2023. This was primarily due to lower net customer numbers and reduced annual recurring revenue (ARR) as the company saw less demand for its Virtual Conference product, which it has been deemphasizing.

Professional services revenue, which accounts for the remaining 8% of total revenue, declined 16% year-over-year. This was attributed to more customers choosing to be “self-service” and not utilizing ON24’s professional services offerings, as well as the overall decrease in customer count.

Despite the revenue declines, ON24 was able to improve its gross margin from 72% in 2023 to 74% in 2024. This was mainly due to the company’s cost control efforts, including headcount reductions and other spending cuts related to its restructuring activities.

ON24’s net loss decreased from $51.8 million in 2023 to $42.2 million in 2024, a 19% improvement. This was driven by the lower operating expenses, particularly in sales and marketing, research and development, and general and administrative areas, as the company focused on streamlining its operations.

Key Business Metrics

ON24 tracks several key metrics to measure its performance:

1. Number of Customers: ON24 had 1,645 customers as of December 31, 2024, down from 1,784 customers in 2023. This decrease was primarily due to customer churn, offset in part by new customer acquisitions.

2. Annual Recurring Revenue (ARR): ON24’s ARR was $129.7 million as of December 31, 2024, down from $139.7 million in 2023. The decrease was mainly due to customer churn, rationalization of contractual entitlements, and lower demand for the deemphasized Virtual Conference product.

3. Dollar-Based Net Retention Rate (NRR): ON24’s NRR was 89% as of December 31, 2024, up from 82% in 2023. The improvement was driven by better customer retention as clients realized the value of the company’s solutions, including the new AI-powered Analytics and Content Engine (ACE).

4. Customers Contributing $100,000 or More to ARR: ON24 had 305 customers contributing at least $100,000 in ARR as of December 31, 2024, down from 325 in 2023. This decrease was primarily due to fewer new customer acquisitions, customers reducing their spend below the $100,000 threshold, and fewer customers increasing their spending.

Strengths and Weaknesses

Strengths:

• Innovative platform that provides a comprehensive suite of digital engagement solutions for sales and marketing organizations
• Strong customer retention, as evidenced by the improving dollar-based net retention rate
• Continued investment in product development, including the launch of the AI-powered ACE solution
• Ability to manage costs and improve profitability through restructuring efforts

Weaknesses:

• Declining customer count and annual recurring revenue, indicating potential challenges in acquiring and retaining customers
• Reliance on the deemphasized Virtual Conference product, which has seen reduced demand
• Ongoing need to invest in sales and marketing to drive new customer acquisition and expansion within the existing customer base

Outlook and Future Prospects

Looking ahead, ON24 faces both opportunities and challenges. The company believes it has a significant market opportunity as businesses continue to modernize their sales and marketing processes and seek more effective digital engagement solutions.

To capitalize on this opportunity, ON24 plans to focus on the following key areas:

1. Acquiring New Customers: The company will need to continue investing in its sales and marketing efforts to attract new customers, particularly in the Enterprise, Commercial, Mid-Market, and SMB segments.

2. Retaining and Expanding Existing Customers: ON24 will aim to further penetrate its existing customer base by adding new users and products, as well as through upsell and cross-sell opportunities.

3. Innovating and Expanding the Platform: The company intends to develop new products and enhance the functionality of its platform to drive customer engagement and capture additional market share. This includes the continued development of its AI-powered capabilities, such as the ACE solution.

4. International Expansion: ON24 sees a significant opportunity to expand its international presence, both in countries where it currently operates and new markets.

However, the company also faces several challenges that could impact its future performance:

• Cost Management: ON24 will need to continue its cost control efforts, including further workforce reductions, to improve profitability in the near term.
• Macroeconomic Conditions: The current economic environment, with budget pressures in marketing departments, may continue to impact the company’s ability to acquire new customers and retain existing ones.
• Competition: ON24 operates in a competitive market, and it will need to maintain its technological edge and continue to innovate to stay ahead of its rivals.

Overall, ON24’s financial performance in 2024 was mixed, with revenue declines offset by improved profitability through cost-cutting measures. The company’s long-term success will depend on its ability to navigate the current macroeconomic challenges, acquire new customers, retain and expand its existing customer base, and continue innovating its platform to meet the evolving needs of sales and marketing organizations.