ON24’s first quarter results reflected ongoing revenue challenges but also some stabilization in key business metrics. While year-over-year sales declined, management pointed to improved gross retention rates, a stronger focus on enterprise customers, and positive free cash flow as evidence of underlying progress. CEO Sharat Sharan highlighted, “Customer retention, measured by in-period gross retention, improved sequentially from last quarter and was at the highest level we have seen in the last four years.” The company cited enhancements in its sales leadership and product innovation as additional drivers of performance.
Is now the time to buy ONTF? Find out in our full research report (it’s free).
ON24 (ONTF) Q1 CY2025 Highlights:
- Revenue: $34.73 million vs analyst estimates of $34.23 million (7.9% year-on-year decline, 1.5% beat)
- Adjusted EPS: -$0.01 vs analyst estimates of -$0.02 ($0.01 beat)
- Adjusted Operating Income: -$2.12 million vs analyst estimates of -$2.88 million (-6.1% margin, relatively in line)
- The company dropped its revenue guidance for the full year to $137.5 million at the midpoint from $140.1 million, a 1.9% decrease
- Management reiterated its full-year Adjusted EPS guidance of $0.04 at the midpoint
- Operating Margin: -30.1%, up from -33.1% in the same quarter last year
- Annual Recurring Revenue: $128.2 million at quarter end, down 6.1% year on year
- Billings: $39.61 million at quarter end, up 8.5% year on year
- Market Capitalization: $224.7 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions ON24’s Q1 Earnings Call
- Rob Morelli (Needham & Company) asked about the trajectory for $100,000+ ARR enterprise customers. CEO Sharat Sharan indicated that this metric is close to turning positive, emphasizing ongoing focus on enterprise retention and upsell.
- Luke (Canaccord, for DJ Hynes) inquired about late-quarter softness and the rationale behind more conservative guidance. CFO Steve Vattuone attributed this to macro uncertainty, leading to increased caution for the second half of the year.
- Luke (Canaccord, for DJ Hynes) also requested more detail on ON24 IQ and AI strategy. Sharan discussed plans for additional AI product launches and expanding monetization through new packages, especially for enterprise clients.
- Linda Lee (William Blair) questioned the marketing strategy under new CMO David Lee. Sharan described a shift to outcome-driven, solutions-based messaging focused on ROI and closer sales and marketing alignment.
- Linda Lee (William Blair) further asked which industry verticals showed resilience on retention. Sharan highlighted that life sciences and financial services are now a larger part of the business and demonstrate better gross and net retention.
Catalysts in Upcoming Quarters
In the coming quarters, our team will be monitoring (1) the pace of AI product adoption and conversion of free users to paid ACE features, (2) continued improvement in enterprise customer retention and new logo acquisition, and (3) the impact of the new “Propel Forward” campaign on pipeline generation and expansion in target verticals. We will also track any further adjustments to revenue guidance or cost structure in response to evolving macroeconomic conditions.
ON24 currently trades at $5.29, up from $4.71 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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